Article 5 min read
Simple bookkeeping for small businesses
Many small shops and home-based businesses are packed with customers but never know their actual net profit. Simple bookkeeping solves this problem without needing an accounting degree: just the discipline to separate and record.
Step zero: separate business and personal money
This is the number one mistake small business owners make: using a single wallet for inventory purchases and household groceries. As a result, profits can never be accurately calculated because expenses are mixed together.
Separate them however simply you can: different bank accounts, separate envelopes, or distinct ledgers. In the Catatku app, you can create a dedicated Book for your business, ensuring business and personal records never mix even within one app.
Record these three things every day
- Sales revenue: Record it before closing shop. A daily aggregate total is plenty if transactions are frequent and small.
- Business expenses: Inventory purchases, gas, stall electricity, delivery fees, and porter charges. Record all money spent on business operations.
- Personal withdrawals (Drawings): This is where leaks happen most often: taking money from the register without a record. Taking money is fine, leaving it unrecorded is not.
Pay yourself a fixed salary
Set a fixed amount that you take each month as your salary, and never take money outside of that amount. Without a fixed salary, the shop till becomes a personal ATM, and a business that is genuinely profitable can still fail from drained capital.
The salary amount is up to you, as long as the business can comfortably afford it and the number remains consistent.
Calculate your profit once a month
The formula is a simple single line: net profit = total sales minus all business expenses. A monthly example: Sales of Rp 9,000,000, inventory costs of Rp 5,500,000, operational costs of Rp 1,500,000. The net profit is Rp 2,000,000. The true health of your business is revealed in this number, whereas a bustling crowd of customers can easily be misleading.
If your daily records are kept consistently, Catatku's Monthly Reports organize these three figures automatically and can be exported to PDF or Excel format whenever you need an attachment for loan or capital applications.
The four most common mistakes
- Mistaking revenue for profit: Sales of Rp 9,000,000 could mean a Rp 2,000,000 profit, or an actual loss.
- Recording weekly from memory: What gets forgotten is almost always minor expenses, making profits appear much larger than reality.
- Ignoring goods consumed personally: Goods taken from your own stock for personal use still count as a business cost.
- Putting off recording customer tabs: An unrecorded customer tab is effectively lost inventory. Learn how to record them in our guide on debts and receivables.
Questions about this
Do I need a POS/cashier app or is bookkeeping enough?
They serve two distinct functions. A POS/cashier app handles the checkout transaction with the customer, while bookkeeping monitors the ongoing financial health of the business. For a small business just starting out, tidy bookkeeping is usually needed first.
My business and personal money are already mixed up. Where do I start?
No need to stress over untangling the past. Declare today as day one: count available cash, decide how much serves as business capital, log it as your opening balance, and stay disciplined from that point forward.
How much should my own salary be?
Start with a figure the business can comfortably pay while still having ample cash to restock inventory. It is far better to start small and raise it gradually than to set a high amount that eats away at working capital.
Put it into practice with Catatku
Track spending, set budgets, and read your reports in one app. Free to start, works fully offline.
