You don't need an accounting qualification to run a healthy business — you need a handful of ideas, in plain language. stub does the double-entry bookkeeping for you: every invoice you send, bill you record and transaction you categorise updates your books behind the scenes. This article is here so that when one of these terms turns up on a report, you know exactly what it means.
What accounting is for
- Know where your money went. Record what comes in and what goes out.
- Know how you are doing. Read a handful of reports and see whether the business works.
- Stay out of trouble. Keep records clean so tax season is admin, not archaeology.
The five categories
Every transaction lands in one of five buckets. Together they are your Chart of Accounts, at Settings → Finance → Chart of accounts:
- Income — money you earned selling things.
- Expenses — money you spent running the business.
- Assets — what the business owns: cash, gear, stock, and invoices customers owe you.
- Liabilities — what the business owes: unpaid bills, loans, tax.
- Equity — what's left over for the owners. Assets minus liabilities.
Terms worth knowing
Money in and out
- Cash basis vs accrual basis — cash basis counts money when it moves. Accrual basis counts an invoice when you send it and a bill when it arrives, whenever the money actually changes hands. Your Profit & Loss is accrual; your Cash Flow is cash.
- Cash flow — money actually moving in and out of your accounts.
- Financial year — the twelve months you report on. Set the start month at Settings → Finance.
Profit
- Cost of sales — what the things you sold cost you to make or buy.
- Gross profit — sales minus cost of sales. What's left before your running costs.
- Net profit — what's left after everything. Your bottom line.
What you're owed and what you owe
- Money customers owe you — your unpaid invoices. Check Total outstanding on any customer.
- Money you owe suppliers — your unpaid bills. Check Overdue Bills on your dashboard.
Assets
- Wear and tear (depreciation) — spreading the cost of gear over the years you use it, instead of taking the hit in one month. See Calculate & record depreciation.
- Current vs long-term assets — current turns into cash within a year (bank, stock, unpaid invoices); long-term is the gear you keep.
Equity
- Drawings — money you take out of the business for yourself.
- Retained earnings — profit you left in the business. See Retained earnings.
The machinery
- General Ledger — the full list of every entry in your books, the master log of every transaction. Click General Ledger in the sidebar.
- Debits and credits — how double-entry bookkeeping keeps itself honest. Every transaction hits two accounts, and the two sides always match. stub does this for you; you only meet it head-on if you post a manual entry.
That's the lot. Most businesses never need more than this — and that's rather the point.
Where to go next
- Set up your accounts: Customise Chart of Accounts
- Bring in your starting numbers: Set opening balances
- Read your reports: Profit & Loss report