Bookkeeping Basics Every Entrepreneur Should Know
Bookkeeping may not be glamorous, but it’s essential for every business - just ask Uncle Sam. Done right, it can save you time, money, and stress. Whether you’re a solo-preneur, small business or hustler (I use the term endearingly), these top bookkeeping tips for entrepreneurs will keep your finances in check—and your sanity intact!
Keep Business and Personal Finances Completely Separated:
The top tip you’ll see from all small business experts - CPAs, Tax Preparers, Bookkeepers, Advisors, and even the late great Notorious BIG (RIP) - is to keep your personal and business completely separated. “Commingling” is a hazard to your business’ health because it can:
Make your personal assets vulnerable to lawsuits.
Increase your tax liability and increase the chance of an audit.
Mess up how you manage your cash flow.
ACTION: Keep separate cards/accounts for your business and your personal on you. And if your wallet is too thick - congrats - just add those cards to your digital wallet.
Track Every Business Transaction, Meticulously:
Bookkeeping is about tracking your income, expenses, and investments so your business stays healthy—and you’re not giving Uncle Sam more than his fair share. The last thing you want is to realize you’re losing money and have no clue why—or to get hit with an audit and end up paying a pricey penalty. Keeping solid records isn’t just a good habit; it’s how you stay on top of your game and avoid unnecessary headaches.
ACTION: Use one tool to track all business transactions digitally. And don’t forget to keep receipts for expenses over $75 for compliance..
Choose the Best Bookkeeping Software for Small Businesses:
There are countless bookkeeping software options out there. From my experience consulting businesses on software, the best tools are those with excellent support, user-friendly interfaces, and a commitment to continuous improvement. We use QuickBooks because it checks all these boxes, but whatever you choose, make sure it works for your needs and, most importantly, that you use it consistently (see next tip).
ACTION: If you don’t want to do a ton of research on the internet on 10 different solutions, ask other business owners or your tax preparer what they recommend and why.
Schedule Regular Time for Your Bookkeeping:
Financial Fridays… I can’t remember where I heard this originally but the concept is simple: Fridays are the day you set aside time to do your finances. If you don’t set it, you’ll forget it or push it until the last minute. Rushing something like your books is not ideal because the price of an error or issue caught too late can be costly.
ACTION: Take these steps to get in rhythm:
Pick a day and time that you’ll dedicate to your books
Put it in the calendar, set the reminders and do it.
BONUS: Suggested cadence of activities: Every week, ensure you’ve collected from your customers and paid your vendors (Cash Flow is King). Weekly or at least monthly, categorize your transactions. Close out the month by reconciling your accounts.
Hire a Bookkeeping Professional to Save Time and Money:
Let’s be honest: crunching numbers probably wasn’t part of the dream when you started your business, was it? Your time is better spent growing your business, not categorizing hundreds of transactions. I might be biased, but hiring a bookkeeper can save you time, money, and a ton of stress—it’s an investment that pays off.
ACTION: Take these steps to figure out if you should get a professional:
Figure out what your goal for your business is this year (or personal)
Assess how much time you’re spending on bookkeeping monthly.
Ask yourself, could you use this time to work toward that goal, or in other areas of life
If so, I know a trusted bookkeeper or two (ahem ahem) that can help
The Key Takeaways:
Use separate accounts and cards for business and personal expenses to avoid commingling.
Keep meticulous records of all business transactions and store them in an organized manner.
Invest in bookkeeping software and make it a habit to use it consistently.
Dedicate a set day and time each week to stay on top of your books—ensuring you’re getting paid and staying organized.
If bookkeeping still feels overwhelming or you’d rather focus on growing your business, hire a professional.
Effective bookkeeping for small businesses is the backbone of financial success. By separating your finances, keeping meticulous records, using bookkeeping software, and seeking professional help, you’ll set your business up for growth and peace of mind.
ACTION: When you’re ready to streamline your small business bookkeeping, contact us for expert help with QuickBooks, cash flow management, and more!"
