spb/ultra-sharp-agent-skills Public

1<!--2Author: Simon-Pierre Boucher3Contact: contact@spboucher.ai4-->56# Reference — Bookkeeping for Small Businesses78## Contents9- Sample chart of accounts10- Debit/credit cheat table11- Worked journal entries12- Owner compensation by entity type13- Retention rules (US / Canada)14- Gotchas1516## Sample chart of accounts1718| # | Account | Type |19|---|---|---|20| 1000 | Cash — Operating | Asset |21| 1100 | Accounts Receivable | Asset |22| 1200 | Inventory | Asset |23| 1300 | Prepaid Expenses | Asset |24| 1500 | Equipment | Asset |25| 1510 | Accumulated Depreciation — Equipment | Contra-asset |26| 2000 | Accounts Payable | Liability |27| 2100 | Credit Card Payable | Liability |28| 2200 | Sales Tax Payable (GST/HST/state) | Liability |29| 2300 | Payroll Liabilities | Liability |30| 2500 | Loan Payable | Liability |31| 3000 | Owner's Capital / Common Shares | Equity |32| 3100 | Owner's Draws / Dividends Declared | Equity |33| 3900 | Retained Earnings | Equity |34| 4000 | Sales Revenue | Revenue |35| 4900 | Refunds and Discounts | Contra-revenue |36| 5000 | Cost of Goods Sold | Expense |37| 6000 | Rent | Expense |38| 6100 | Salaries and Wages | Expense |39| 6200 | Payroll Taxes (employer share) | Expense |40| 6300 | Software and Subscriptions | Expense |41| 6400 | Professional Fees | Expense |42| 6500 | Insurance | Expense |43| 6600 | Depreciation Expense | Expense |44| 6700 | Interest Expense | Expense |4546## Debit/credit cheat table4748| Account type | Increase | Decrease | Normal balance |49|---|---|---|---|50| Asset | Debit | Credit | Debit |51| Expense | Debit | Credit | Debit |52| Liability | Credit | Debit | Credit |53| Equity | Credit | Debit | Credit |54| Revenue | Credit | Debit | Credit |5556## Worked journal entries5758**Credit sale with 13% HST (Ontario):**59```text60Dr 1100 Accounts Receivable   1,13061    Cr 4000 Sales Revenue          1,00062    Cr 2200 Sales Tax Payable        13063```6465**Customer pays the invoice:**66```text67Dr 1000 Cash                  1,13068    Cr 1100 Accounts Receivable    1,13069```7071**Remitting the sales tax:**72```text73Dr 2200 Sales Tax Payable       13074    Cr 1000 Cash                     13075```7677**Monthly loan payment $500 ($420 principal, $80 interest):**78```text79Dr 2500 Loan Payable            42080Dr 6700 Interest Expense         8081    Cr 1000 Cash                     50082```8384**Monthly depreciation (straight line, $12,000 equipment / 5 years):**85```text86Dr 6600 Depreciation Expense    20087    Cr 1510 Accumulated Depreciation 20088```8990**Prepaid annual insurance $1,200, monthly recognition:**91```text92At payment:  Dr 1300 Prepaid Expenses 1,200 / Cr 1000 Cash 1,20093Each month:  Dr 6500 Insurance 100 / Cr 1300 Prepaid Expenses 10094```9596## Owner compensation by entity type9798| Entity | Money out is recorded as | Notes |99|---|---|---|100| US sole prop / SMLLC | Owner's Draw (equity) | Not an expense; not payroll |101| US partnership | Partner Draw (equity) per partner | Guaranteed payments are an expense |102| US S-corp | Salary (payroll expense) + distributions (equity) | Reasonable salary required before distributions |103| US C-corp | Salary (expense) and/or dividends (equity) | Dividends are not deductible |104| Canadian sole prop | Owner's Draw (equity) | Taxed via T2125 on the T1 regardless of draws |105| Canadian corporation (CCPC) | Salary (expense, T4) or dividends (equity, T5) | Choice is a planning question — see optimizing-business-taxes |106107## Retention rules108109| Country | Rule | Source |110|---|---|---|111| US | Keep records ≥3 years from filing (6 if income underreported >25%) | irs.gov — Recordkeeping |112| Canada | Keep records 6 years from the end of the last tax year they relate to | canada.ca — Keeping records |113114## Gotchas115- **Transfers between own accounts are not income or expense** — book as transfers, or revenue is overstated.116- **Credit-card payments are not expenses** — the expense was recorded at purchase; the payment clears 2100.117- **Sales-tax input credits (Canada):** GST/HST paid on purchases is recoverable for registrants — track in an ITC account, don't bury it in the expense.118- **Negative liability or negative asset balances** in the trial balance almost always mean a mis-signed entry — investigate before closing.119- **"Miscellaneous" over ~2% of expenses** means categories are missing — split it.120