Bookkeeping Basics
Separate sales, service income, refunds, transfers, loan proceeds, owner contributions, and other deposits.
Best for: owners who see many deposits and need to know which ones are true business income.
Important: This article is general bookkeeping education. It is not tax, legal, payroll, or accounting advice. Rules and correct treatment can depend on entity type, industry, location, software setup, and professional judgment.
Not every deposit is income. A deposit may be revenue, transfer, loan proceeds, owner contribution, refund, reimbursement, or adjustment.
What this means
Income categorization explains how the business earned money. Correct categorization separates customer revenue from non-revenue cash movement.
If every deposit is counted as sales, revenue and profit can be overstated. That affects decisions, tax planning, and the reliability of reports.
Core concepts
Sales and service revenue should be supported by invoices, receipts, sales reports, or platform reports.
Money moved between business accounts should not inflate income.
Loan proceeds increase cash and create debt, not revenue.
Owner contributions are equity or financing activity, not customer sales.
Step-by-step workflow
- Gather the source records. Save statements, receipts, reports, screenshots, contracts, confirmations, or notes that support business income and deposits.
- Identify the business event. Decide what actually happened before choosing a category or changing a report.
- Match the money movement. Compare the bookkeeping record to bank, credit card, loan, payroll, or platform activity.
- Choose the right treatment. Separate income, expense, asset, liability, equity, transfer, and owner activity instead of using one catch-all category.
- Review for duplicates and timing. Look for repeated entries, missing transactions, old balances, refunds, chargebacks, and period cut-off issues.
- Save final notes. Keep a clear explanation so the owner, bookkeeper, or accountant can understand the decision later.
Review checklist
- The period, account, and source report being reviewed are clearly identified.
- Transactions are not duplicated or counted in the wrong period.
- Unclear items are placed on a question list instead of guessed.
- Supporting documents are saved in the monthly records folder.
- The final report or template includes notes for unusual activity.
Common mistakes to avoid
- Guessing from the bank description only. Bank descriptions are helpful but often incomplete.
- Using miscellaneous too often. Too many miscellaneous entries make reports less useful.
- Skipping documentation. A correct number is harder to defend when the source is missing.
- Ignoring balance sheet effects. Some activity affects assets, liabilities, or equity rather than the P&L.
Example review map
| Area | What to review |
|---|---|
| Documents | Confirm the files supporting business income and deposits are saved and named clearly. |
| Category | Confirm the category describes the business purpose and account type. |
| Balance | Confirm any related bank, card, loan, tax, payroll, or owner balance makes sense. |
| Questions | List missing details and assign follow-up before closing the month. |
| Handoff | Save a short note for the owner, bookkeeper, accountant, or tax preparer. |
FAQ
Are marketplace payouts always income?
No. Payouts may be net of fees, refunds, reserves, sales tax, and adjustments. Use platform reports.
How should unknown deposits be handled?
Put them on a question list and research the source before categorizing.
Can I use this with a KanderBooks template?
Yes. Use the article as a workflow guide, then use the matching KanderBooks template to organize amounts, notes, dates, confirmations, and review questions.
When should I ask a professional?
Ask a qualified bookkeeper, accountant, payroll provider, or tax professional when the item affects taxes, payroll, loans, prior-period reports, legal compliance, or financial statements used outside the business.
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