If you run a small business with a team (agency, clinic, shop, startup), your accounting becomes more structured because you need to track:
- Revenue and client payments
- Employee salaries and obligations
- Operating expenses
- Taxes and liabilities
👉 Compared to freelancers, this setup focuses more on payroll, compliance, and clearer expense tracking.
✅ Step 1: Set Up Your Income Accounts
Sales / Service Income (Design Income)
Your main revenue source.
Why you need it:
- Tracks all earnings from customers or clients
- Forms the basis of your Profit & Loss report
👉 Rename depending on your business:
- Service Income (agency, clinic)
- Sales (retail or mixed business)
Sales Return (Optional)
Why you need it:
- Tracks refunds separately
- Keeps revenue reporting accurate
Not needed if:
- Refunds are rare or negligible
Other Income (Optional)
Examples:
- Interest Earned
- Gain/Loss on Sale of Assets
Why it’s optional:
- Keeps your core business income clean
✅ Step 2: Set Up Your Asset Accounts
Bank
Your main business account.
Why you need it:
- Tracks all cash movements
- Matches your actual bank balance
Accounts Receivable
Money customers owe you.
Why you need it:
- Tracks unpaid invoices
- Helps manage cash flow
👉 Very important for service or B2B businesses.
Cash (Optional)
Why you need it:
- If your business handles physical cash
Not needed if:
- Fully digital payments
Undeposited Funds (Optional)
Why you need it:
- Helps reconcile grouped payments
✅ Step 3: Set Up Your Liability Accounts
This is where small businesses differ the most from freelancers.
Accounts Payable
Money you owe suppliers.
Why you need it:
- Tracks unpaid bills
- Keeps vendor relationships organized
Salary Payable
Salaries owed but not yet paid.
Why you need it:
- Ensures payroll is properly recorded
- Important for accurate monthly reporting
Expense Claims Payable
Reimbursements owed to employees.
Examples:
- Staff paid for transport or supplies
Why you need it:
- Keeps reimbursements separate from expenses
Income Tax Payable
Taxes owed.
Why you need it:
- Prevents mixing tax with expenses
- Helps with compliance
Sales Tax
Taxes collected from customers.
Why you need it:
- Ensures tax is not counted as income
Unearned Revenue (Optional)
Why you need it:
- For advance payments from customers
Bank Loans (Optional)
Why you need it:
- Tracks long-term financing
✅ Step 4: Set Up Your Expense Accounts
This is where your business will have the most activity.
Wage & Salary Expenses
Why you need it:
- Tracks employee compensation
- Usually your biggest expense
Rent Expenses
Why you need it:
- Office, store, or workspace costs
Utilities Expenses
Examples:
- Electricity
- Water
- Internet
Why you need it:
- Essential operating costs
Insurance Expenses
Why you need it:
- Business protection
- Often required for compliance
Accounting & Audit Fees
Why you need it:
- Professional services (accountants, auditors)
Sales & Marketing Expenses
Why you need it:
- Tracks growth-related spending
Office Expenses
Examples:
- Supplies
- Software
Travel & Meals
Why you need it:
- Business-related travel and meetings
Bank Charges / Stripe Fee
Why you need it:
- Tracks transaction costs
❌ Accounts You Usually DON’T Need (And Why)
Inventory / COGS (If Service-Based Business)
Why not applicable:
- You don’t sell physical products
👉 Only needed if you also sell goods.
Manufacturing Overhead
Why not applicable:
- Only for production-heavy businesses
Finished Goods Inventory
Why not applicable:
- No products to store
Advanced FX Accounts
Why not applicable:
- Only needed for international operations
⚙️ Optional Advanced (Use Only If Needed)
- Workers’ Compensation → for employee benefits
- Depreciation / Fixed Assets → if you own equipment
- Amortization Expenses → for long-term assets
- Bad Debt → if customers fail to pay
🚀 Simple Setup Summary
If you want a clean and scalable setup, start with:
Income
- Sales / Service Income
Assets
- Bank
- Accounts Receivable
Liabilities
- Accounts Payable
- Salary Payable
- Income Tax Payable
Expenses
- Salaries
- Rent
- Utilities
- Office Expenses
✨ Final Tip
For small businesses:
Clarity in payroll + expenses = better control of profit
Most issues come from:
- Mixing personal and business expenses
- Not tracking liabilities properly