spb/ultra-sharp-agent-skills Public

1---2name: bookkeeping-for-small-businesses3description: Sets up and maintains double-entry books for a small business — chart of accounts, journal entries, debits/credits, monthly close, and reconciliation. Use when the user asks to set up bookkeeping or a chart of accounts, record or categorize transactions, reconcile bank or credit-card statements, do a monthly close, choose cash vs accrual accounting, or record owner draws, payroll, or sales tax collected. Do not use for producing formal financial statements (preparing-financial-statements) or for filing tax returns (filing-us-business-taxes, filing-canadian-business-taxes).4---56<!--7Author: Simon-Pierre Boucher8Contact: contact@spboucher.ai9-->1011# Bookkeeping for Small Businesses1213## When to use / when NOT to use14- **Use for:** setting up books, recording/categorizing transactions, reconciliations, monthly close, cash-vs-accrual decisions, owner-compensation entries, sales-tax bookkeeping (US and Canada).15- **Do NOT use for:** building the income statement / balance sheet / cash flow (→ `preparing-financial-statements`) or preparing tax filings (→ the filing skills).1617## Important limits18- Educational help, not professional accounting or tax advice — complex or high-stakes cases go to a CPA.19- Figures and deadlines are tax-year-stamped and MUST be verified against irs.gov / canada.ca before use.20- Never assist with evasion, backdating, or falsified records; refuse and explain.2122## Core rules23241. **Chart of accounts: 5 root types, numbered ranges.** 1000s assets, 2000s liabilities, 3000s equity, 4000s revenue, 5000s+ expenses. Start small (~25 accounts); add only when a category is reused.252. **Debit/credit rules, stated plainly.** Debits increase assets and expenses; credits increase liabilities, equity, and revenue. Every entry balances: total debits = total credits, no exceptions.26   - ✅ `Dr Equipment 2,000 / Cr Cash 2,000`27   - ❌ A one-sided "expense" line with no offsetting account283. **Cash vs accrual: accrual becomes the default the moment inventory or receivables exist.** Pure cash basis only for simple service businesses; note that tax filings may still use a cash basis where allowed (US small businesses; Canada mainly farmers/fishers) — keep books on one basis and note the other.294. **Separate business and personal money absolutely.** Dedicated bank account + card from day one. Owner money in = capital contribution (equity); owner money out = draw (equity) for sole props/partnerships, salary or dividend for corporations — never "misc expense".30   - ✅ `Dr Owner's Draw / Cr Cash` for a sole prop owner withdrawal31   - ❌ Booking the owner's groceries to Office Expense325. **Sales tax collected is a LIABILITY, not revenue.** GST/HST/state sales tax goes to a `Sales Tax Payable` account and is cleared when remitted.33   - ✅ Sale $100 + $13 HST → `Dr Cash 113 / Cr Revenue 100 / Cr HST Payable 13`34   - ❌ `Cr Revenue 113`356. **Reconcile monthly, to the penny.** Bank and credit-card statements against the books; investigate every unmatched item — do not plug differences to a suspense account and move on.367. **Keep the paper.** Receipt/invoice for every entry. Retention: IRS at least 3 years (6 for large underreporting); CRA 6 years from the end of the tax year. Digital copies acceptable in both countries.3738## Monthly close workflow39401. Import/enter all transactions; sweep the uncategorized list to zero.412. Reconcile every bank and credit-card account to its statement.423. Review AR aging (chase >30 days) and AP aging (schedule payments).434. Post recurring entries: depreciation, loan interest split (principal → liability, interest → expense), prepaid amortization.445. Verify sales-tax payable matches the filing-period report.456. **Validate:** run a trial balance — total debits must equal total credits, and cash per books must equal reconciled cash. If either fails, fix before closing the month.4647## Edge cases & failure modes48- **Mixed personal/business card in the past** → reclassify personal items to draws/contributions; do not delete transactions.49- **Missing receipts** → record the transaction anyway with a note; flag for the owner to source documentation.50- **Loan payments** → never expense the full payment; split principal/interest per the amortization schedule.51- **Refunds** → reverse against the original revenue/expense account, not a new one.5253## References54Sample chart of accounts, worked journal entries, and gotchas: see [references/reference.md](references/reference.md).55