The Short Answer

What Is Small Business Accounting and Finance?

Accounting is keeping the score. Finance is using it. Accounting records what happened to the money and reports it on pages you can read. Finance asks what those pages mean and decides what to do next. Most owners do a little of the first and none of the second. Both come down to four jobs.

1

Record

Write down every dollar in and out, in one place, with the business's money kept apart from yours.

  • Separate accounts
  • Bookkeeping
  • Bank reconciliation
2

Report

Add it up into statements you can actually read, every month, before you make a decision.

  • Income statement
  • Balance sheet
  • Margins and COGS
3

Analyze

Ask what the numbers mean: when cash runs short, what each sale leaves, and what an investment returns.

  • Cash flow
  • Contribution margin
  • Break-even and ROI
4

Decide

Use the score to choose: what to charge, when to borrow, how much to hold back, and what next year looks like.

  • Pricing
  • Debt and financing
  • Budgeting

You do not need to be an accountant. You need to know your score every month and use it before you decide. When the numbers live in one place and get read on a schedule, the business stops running on feel. That is the money side of Dr. Paul's Organize-Plan-Grow™ Strategy: organize the records, plan with them, then grow on purpose.

Every money fire I have seen started with a number nobody looked at. Every fix started with somebody finally looking.

Dr. Paul Borosky, DBA, MBA, Accounting and Finance for Small Businesses

The 20 Foundations

Find the Number That Is Costing You

Each foundation opens with a question a real owner asks. Start with the one that sounds like you. The first ten are accounting: getting the money written down and added up. The second ten are finance: reading the numbers and acting on them. Stuck on a word? The accounting and finance glossary defines 66 terms in plain English.

Part One: Accounting, Keeping the Score

Foundations 1 to 10
01Record

How to Separate Business and Personal Finances

"Are these my coins or the shop's coins? Does it matter?"Chapter 1 · One Pocket, Two Lives: A Monkey's Mix-Up

Separating business and personal finances means the business has its own bank account and its own records, and the owner gets paid through a set owner's draw on a set day.

Read the full guide →
06Record

How to Do a Bank Reconciliation, Step by Step

"Why does the bank say one number and our books say another?"Chapter 6 · Two Crabs, Two Totals: A Shell Game

A bank reconciliation matches your books to your bank statement line by line, sorting every difference into outstanding items, items not yet recorded, and true errors.

Read the full guide →

Part Two: Finance, Using the Score

Foundations 11 to 20
Each foundation gets a full chapter in the book, plus Doctor Owl's Wise Words and Dr. Paul's Nutshell. Every term lives in the glossary.Get all 20 on Amazon →

Read Before You Buy

Read a Chapter: The Fox Who Sold Out and Went Broke

Fast Frankie finally reads his numbers. Then his best week ever leaves him short on payroll. If you have ever had a great month and an empty account, this one is for you. Here is how Chapter 11 begins.

Chapter 11 · Cash Flow

Sold Out and Broke: A Fox's Busiest Month

"How can we sell out and still be broke?"

The harvest festival ran for a week on the village green, Friday to Thursday, and by Tuesday the line at Fast Frankie's truck was still the longest one there.

Doctor Owl stood in it anyway. He had been told about the weekend by Mrs. Owl-Willow, by the newspaper, by Pedro, and by three separate creatures at the post office, and he wanted to see it for himself. It took twenty minutes. He did not mind. He spent them straightening the stack of paper napkins on the counter of the truck beside him, which belonged to a vole selling cider, and which the vole watched him do with growing respect.

The slice, when he got it, was excellent.

"Doc!" said Frankie, from the window, flour to the elbows. "You see this? Sold out Saturday. Sold out Sunday. Ran out of sauce at noon. Busiest weekend in the history of the forest. The paper said so."

"Congratulations," said Doctor Owl. "Mrs. Owl-Willow tells me Friday is payroll."

The window went quiet for a moment, which for Frankie's window was a long time.

"Marco talks too much," said Frankie.

"Marco talks exactly enough," said Doctor Owl. "Is it true?"

Frankie looked at the line, and then at the till under the counter, and then at Doctor Owl.

"Come by the restaurant Thursday night, when the festival's packed up. It's shut all week, we're all out here on the green," he said. "Two minutes! I've always got two minutes..." He stopped himself. "No. Thursday. As long as it takes."

It was the first time Doctor Owl had heard him offer more than two.

Frankie was at his desk in the back corner of the kitchen when Doctor Owl came in on Thursday evening, the festival over and the trucks parked. The restaurant was dark around them. He had Dex's page for the week in front of him, and the till's cash count beside it, and he had already put them side by side.

"Dex did the whole week," said Frankie. "Everything. The festival, the trucks, wages, all of it. Like you showed us." He pushed it across.

Festival week, as Dex's page sees it
Walk-up sales on the green140
Three catering orders for festival parties (billed, paid in 30 days)120
Revenue260
Festival flour, sauce, cheese, boxes (paid cash at the market)80
Space on the green30
Wages for the week55
Fuel, three trucks20
New tire, truck two25
Rent and lights, the week's share17
Total expenses227
Net profit for the week33

"Thirty-three coins of profit," said Frankie. "In one week. That's our best week ever. Twice a normal one." He pulled the cash count over. "And the till's got seventy-five in it. Friday I owe fifty-five in payroll and fifty-five to the supplier for last week's flour. A hundred and ten." He looked up. "I've never missed a payroll in my life. So which one's lying? The page or the till?"

"Neither," said Doctor Owl.

"One of them has to be."

"Neither of them is lying, Frankie. They are answering two different questions." He took a scroll from his coat, rolled it once, and unrolled it on the desk beside the page. "The page tells you what you earned. The till tells you what you have. Those are not the same question. They are almost never the same answer."

Thirty-three coins earned, thirty-five coins short. Where did the money go, and can Frankie make Friday's payroll? The rest of Chapter 11 is in the book.

Keep Reading on Amazon →

The 60-Second Self-Check

Do You Know Your Numbers, or Just Your Bank Balance?

Four questions, one for each job. They come straight from line 2 of the Owner's Scorecard in the back of the book. Yes or no. No partial credit.

  1. Record

    Does every dollar in or out get written down, in one place, at least once a week, with the business's money kept apart from mine?

  2. Report

    Do I read an income statement every month, and could I tell you today what the business owns, what it owes, and what is left?

  3. Analyze

    Do I know when my cash runs low in the next thirteen weeks, and what each job, product, or sale actually leaves after its own costs?

  4. Decide

    Before I set a price, borrow, or buy equipment, do I add up the total cost and check it against a budget with a bad-year column?

Your score: four yeses is a 5. Three is a 4. Two is a 3. One is a 2. None is a 1. Most owners start at a 2. That is normal, and it is fixable.

Scored 3 to 5

Build the missing foundation yourself

Take your one "no," find its foundation in the 20 above, and work through that chapter and its Nutshell steps this month. Then score yourself again in 90 days.

Get the Book on Amazon →

Scored 1 or 2

You need a CFO's eyes, not a full-time CFO.

When nobody is reading the numbers, the first fix is getting someone to read them with you. Dr. Paul works with owners as a part-time financial lead: cash flow, pricing, budgets, and the decisions in between. Call or text (321) 948-9588, or see fractional CFO services.

The Book

Accounting and Finance for Small Businesses

Accounting and Finance for Small Businesses by Dr. Paul Borosky, DBA, MBA

Book 2 of Dr. Paul's Fabled Forest Business School Series. The owners from Book 1 have their businesses running. Now they have to find out whether the businesses are working. Each chapter follows one of them through one money problem and teaches one real accounting or finance idea by its real name. Doctor Owl still asks before he answers. This time, he asks for the numbers.

  • 20 chapters in two parts: accounting (keeping the score) and finance (using it)
  • Dr. Paul's Nutshell after every chapter: what it is, why it matters, how to use it, and one question for you
  • Doctor Owl's Wise Words and Mrs. Owl-Willow's Reminder: the lesson in one line, twice
  • The Talon Way: seven money shortcuts that sound smart and cost more than they save
  • A full glossary with every accounting and finance term defined
  • Line 2 of the Owner's Scorecard, to pick the first fix and measure it in 90 days
Get the Book on Amazon →
For Business Students and Teachers

Terms like accounts receivable, contribution margin, and working capital are taught by their textbook names and tied to a story you will remember at exam time. The numbers stay small on purpose, so the concept is the hard part, not the math. That makes the book a plain-English companion for intro accounting, finance, and small business courses. Want to practice on a real company? See how to read financial statements, using Apple’s 10-K. Teaching one and want to talk about using it? Call or text Dr. Paul at (321) 948-9588.

The Series

Ten Books, One Owner's Scorecard

Every book in Dr. Paul's Fabled Forest Business School Series adds one line to the Scorecard. Management came first so the business could run. Accounting and finance come second so you can tell whether it is working.

Book 1 · Free GuideManagement and Leadership →The 20 foundations of running the work and leading the people. Book 2 · You Are HereAccounting and Finance →Keeping the score, then using it to price, borrow, and plan. Book 3Operations →How the work flows, where it gets stuck, and how to scale it. Book 4Marketing →Getting the right customers to find you and come back.

Want to go deeper on two of these foundations? Cash flow and budgeting each have their own full-length Fabled Forest finance book. See both on Dr. Paul's business books page. Ready for the owner’s whole money picture, from startup costs to the 13-week forecast? Read Small Business Finance for Beginners: What Your CFO Would Tell You.

FAQ

Common Questions About Small Business Accounting and Finance

What is the difference between accounting and finance?
Accounting is keeping the score: recording what happens to the money and reporting it on statements you can read. Finance is using the score: analyzing what the numbers mean and deciding what to do next, like setting a price, borrowing, or buying equipment. Accounting looks backward. Finance looks forward. You need the first to do the second.
What are the three main financial statements?
The income statement, the balance sheet, and the cash flow statement. The income statement shows whether a period made money. The balance sheet shows what the business owns, owes, and has left on one day. Cash flow shows when money actually moves in and out. Each answers a different question, so an owner needs all three.
Why can a profitable business run out of cash?
Because profit and cash move on different schedules. A sale counts as profit the day you earn it, but the cash may not arrive for 30 days or more, while bills like payroll come due on a fixed date. A 13-week cash flow forecast shows a short week before it arrives.
What accounting should a small business owner do every month?
Four things. Reconcile the bank account to your books, read your income statement, look at your balance sheet, and update your cash flow forecast for the next 13 weeks. Record transactions every week so the monthly review takes an hour, not a weekend.
Who is Accounting and Finance for Small Businesses written for?
Small business owners, managers who run a business for someone else, and business students. Every idea is taught by its real textbook name, defined in a glossary, and summed up in Dr. Paul's Nutshell at the end of each chapter, so it works for an owner fixing a cash problem this month or a student studying for an exam.
Do I need to be good at math to understand my business finances?
No. The book uses small, round numbers you can add in your head, because the hard part is not the arithmetic. The hard part is knowing which number to look at and when. If you can count what came in and what went out, you can learn every foundation on this page.

Learn the score with the book. Call when you want a second set of eyes on yours.

Get the Book → Call or text (321) 948-9588

Dr. Paul Borosky, DBA, MBA

Business Consultant, Fractional CFO & Author | 14+ Years

DBA, National University MBA, Focus in Finance, Webster University

Dr. Paul Borosky, DBA, MBA is a business consultant, author, and educator, and the founder of Quality Business Plan. He builds financial models, business plans, and budgets for small businesses across the United States and Canada, and serves as a part-time financial lead for owners who need a CFO's thinking without a full-time salary. He has written financial projections behind more than $100M in funded projects, is the author of numerous books on Amazon, and has published over 1,000 business videos on YouTube. He has taught as an adjunct college instructor and teaches in Florida public schools.

14+
Years Experience
1,000+
Clients Served
$100M+
Projects Funded
1,000+
YouTube Videos
About Dr. Paul Accounting and Finance Book YouTube Channel

This page is for general educational purposes only. It is not legal, financial, tax, accounting, or lending advice. Tax rules change by place and by year, so talk with a qualified tax professional about your own situation. The Fabled Forest, its characters, and its businesses are fictional.