Bookkeeping basics for small business owners come down to one habit: record every dollar in and every dollar out, on a regular schedule.
Bookkeeping basics for small business: what it is
Bookkeeping is the day-to-day record of your business money. It feeds your taxes, shows whether you are profitable and helps lenders trust your numbers. This article is general information, not accounting or tax advice, so check details with an accountant.
- A record of money in and out
- The base for taxes and decisions
- Lenders and buyers want clean books
Start with a separate business account
Keep business and personal money apart. Our guide on opening a business bank account explains how, and our guide on getting an EIN covers the tax ID you may need. A clean account makes your records far easier to keep. This is the first of the bookkeeping basics for small business owners.
- Open a business account
- Pay business costs only from it
- Move owner pay out on a regular schedule
Bookkeeping basics for small business: what to track
Track income by customer or source, expenses by category, sales tax if you collect it, mileage if you drive for work, and any money you owe or are owed. Save receipts and invoices in one place, on paper or digital. Our guide on sales tax for small business explains what to set aside if you collect tax. Tracking the right items is central to bookkeeping basics for small business.
- Income and where it came from
- Expenses by category
- Receipts, invoices and mileage
Choosing tools and a routine
Small owners often start with a spreadsheet or simple accounting software. The right tool is the one you will actually use. Set a weekly slot to record transactions and a monthly slot to reconcile your bank statement with your records. Little and often beats a pile at year end. A steady routine makes bookkeeping basics for small business easy to keep.
- A spreadsheet or accounting software
- Weekly entry, monthly reconcile
- Back up your records
Keep up with taxes
Good records make taxes easier. Our guide on estimated taxes for small business explains why setting money aside matters, and the IRS small business and self-employed tax center lists record-keeping rules. Ask how long you should keep documents. Taxes are where bookkeeping basics for small business pay off.
- Set aside tax money regularly
- Know the record-keeping rules
- Keep documents as long as required
When to bring in an accountant
An accountant or bookkeeper can set up your books, handle payroll or taxes, and catch errors early. Free guidance is available through SBDCs and SCORE. Using the bookkeeping basics above first makes any professional more affordable. Following the bookkeeping basics for small business first keeps costs down.
- Setting up your books
- Payroll and tax filing
- A yearly review
Related reading on bookkeeping basics for small business
- How to Open a Business Bank Account
- How to Get an EIN for Your Business
- Sales Tax for Small Business Owners: The Basics
- Estimated Taxes for Small Business Owners Explained
- Legal Basics for Starting a Business: A Checklist
- Business Funding Options: A Plain-English Guide for New Owners
- IRS small business and self-employed tax center
- America’s SBDC small business advising
- SCORE free business mentoring
- SBA guide to managing your business
