Vector of a dollar sign in a briefcase. Represents putting together payroll and accounting processes.

Small Business Accounting and Payroll Basics

Accounting is not the most exciting part of starting a business. But it’s vital to your success.

It ensures you track every expense early on and keeps you on top of tax obligations. 

But you’re likely not an accountant. How are you supposed to set up a bookkeeping system that’s accurate and easy to use? 

With this guide, you’ll learn the basics of setting up and managing accounting and payroll activities for your business.

*Disclaimer: The content of this page and all associated resources are general information and advice. It should not be seen as a substitute for working with a certified accounting professional. 

What is small business accounting?

Accounting is an organized process of recording, analyzing, and reporting the financial transactions of a small business. It helps business owners understand their financial position, make informed decisions, and fulfill tax obligations. 

Accounting basics for small business

Become familiar with small business accounting processes, tools, and services.

What is payroll?

Payroll covers the total wages and salaries a business pays its employees, including taxes and benefits, for a specific period. It also refers to the process of calculating and distributing these payments.

Payroll basics for small business

Here is everything you need to know about setting up a payroll system.

Get the rest of your business finances in order

Check out the rest of our startup financial resources to better understand your path to profitability.

Accounting and payroll FAQ

Yes, small business owners can handle their own accounting using manual methods or accounting software. However, as the business grows or financial matters become more complex, consulting or hiring an accountant or bookkeeper might be beneficial.

While not mandatory, it’s beneficial for small business owners to have a basic understanding of accounting. This knowledge helps inform financial decisions and ensure regulatory compliance.

To get started, open a business bank account and track your expenses. Then, explore bookkeeping and payroll systems options to make ongoing management easy and accurate.

It depends on your business structure. Sole proprietors and partners typically don’t draw a salary but take “draws” from the business profits. Suppose the business is structured as an S or C-corporation. In that case, the owner should be on the payroll and receive a regular salary to maintain compliance with tax regulations.