Bookkeeping Basics for Small Business Owners: Everything You Need to Start Doing Your Own Bookkeeping
Why Bookkeeping Matters for Small Businesses
Accurate bookkeeping is essential for understanding your financial health, managing cash flow, and ensuring tax compliance. Without organized books, business owners risk making poor financial decisions or missing out on key tax deductions.
Download Our Free Brochure →Steps to Start Your Bookkeeping Process
Step 1: Separate Business and Personal Expenses
Open a dedicated business bank account. This simplifies tracking and ensures you don’t miss important business deductions. It also protects personal assets in case of audits or legal issues.
Step 2: Choose a Bookkeeping System
- Single-Entry Bookkeeping: Records transactions once (income or expense). Ideal for freelancers or hobby businesses.
- Double-Entry Bookkeeping: Every transaction is recorded twice, as a debit and a credit, ensuring balanced books. Preferred for established businesses.
Step 3: Select an Accounting Method
- Cash Accounting: Records transactions when cash changes hands. Simple and suitable for small businesses with straightforward finances.
- Accrual Accounting: Records income and expenses when they’re earned or incurred, giving a better long-term view.
Step 4: Choose the Right Tools
- Accounting Software: QuickBooks, Xero, or Wave for automated tracking.
- Spreadsheets: Ideal for simple tracking with tools like Excel.
- Professional Services: Outsource to services like Remote Books Online for accuracy and stress-free bookkeeping.
Step 5: Categorize Transactions
Categorize all financial transactions under accounts like:
- Revenue (e.g., product sales)
- Expenses (e.g., office supplies, utilities)
- Assets (e.g., equipment, inventory)
- Liabilities (e.g., loans, payables)
This helps identify trends and capture more tax deductions.
Step 6: Organize Document Storage
Use cloud-based systems like Google Drive or Dropbox to securely store receipts, invoices, and financial records. Apps like Shoeboxed can also digitize paper receipts.
Step 7: Track Deductions
Understand which expenses are tax-deductible. The IRS requires deductions to be ordinary and necessary. Keep documentation to support deductions, especially for high-ticket items.
Step 8: Make Bookkeeping a Habit
Schedule a dedicated time weekly or monthly to update and review financial records. Consistency helps avoid errors and ensures accurate reporting.
DIY vs. Professional Bookkeeping
DIY Bookkeeping:
- Ideal for startups or side businesses.
- Use spreadsheets or basic accounting software.
- Consult a CPA initially to set up your system correctly.
Outsourcing to Professionals:
Download Our Free Brochure →- Ideal for growing businesses that require accurate and timely reports.
- Remote Books Online offers expert bookkeeping services, monthly reports, and tax-ready financials.
- Focus on growing your business while experts handle your books.
Why Choose Remote Books Online?
- Expert Bookkeepers: Dedicated professionals ensure accurate and up-to-date financials.
- Stress-Free Tax Season: Receive year-end financial statements ready for filing.
- Secure Cloud Access: View financial reports anytime, from anywhere.
- Time-Saving: Let professionals handle your books while you focus on your business.
- Catch-Up Bookkeeping: Get help if you’re behind on organizing your books.
Bookkeeping is the foundation of any successful business. Whether you choose to do it yourself or outsource to Remote Books Online, organized financial records will give you better control over your business finances.
Get started with Remote Books Online today and enjoy peace of mind knowing your books are in expert hands!
