If you're overwhelmed by your small business bookkeeping, this article will teach you everything you need to know about bookkeeping in your business finances. Click through to learn what is bookkeeping, how often you should do your bookkeeping, and get a free guide to small business bookkeeping tasks. #smallbusiness #finances #bookkeeping #accouting #entrepreneur #financialtips

The b-word. You’ve heard it thrown around small business circles like candy, but what the heck does bookkeeping actually mean? You know it has something to do with money and your business, but beyond that you’re clueless about WHAT bookkeeping is and HOW to do it.

Most small business owners blow off their bookkeeping because they don’t know where to start or what to do. I’m doing a DEEP dive into small business bookkeeping. What is it? How often do you need to do it? What should you be doing? I’m answering these questions and more!

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What is bookkeeping? (3:07)

Bookkeeping is the recordkeeping process of your business finances. Here’s the thing – bookkeeping DOES NOT equal an entire business finance system, and this is something people are usually confused about. They think that every single financial task in their business is bookkeeping, and that’s not true.

Bookkeeping is the record keeping aspect of your business finances.

You’re probably thinking of tracking your income and expenses for tax purposes. I think of bookkeeping in three areas: record keeping, accounts payable, and accounts receivable.


We track our income and expenses for taxes and for our own information about our business. When we file our taxes we disclose our financial information to the government. We also use our business finances in order to make strategic decisions about money.

You’re not just tracking for taxes when you’re doing your bookkeeping… you’re also tracking so you can look at your finances and use them as a compass to make intentional business decisions. When we talk about income and expenses, the level of tracking detail will depend on your business finance system.

Accounts Payable

This is keeping track of money that you owe to other people. Depending on your business model and the type of business that you have, accounts payable could be as simple as paying your virtual assistant once per month. OR it could be more complex if you have multiple contractors and employees that you pay several times a month.

If you have a retail store or any situation in which you’re buying things from people with terms (like NET 30, NET 60, etc), you’ll have to think about your accounts payable system within your bookkeeping structure. You’ll want to keep track of when your bills are due so you can ensure healthy cash flow in your business. 

Accounts Receivable

The third aspect of bookkeeping is accounts receivable. This is what other people owe you. The most common accounts receivable process is your invoicing system, but it can be anything to do with how you get paid for your product and services. 

With accounts receivable, you have two main points in the process. You have the billing part, which is telling people what they owe you. Then you have the part where you receive payments or follow up to make sure you will receive payment.

The time that elapses between these two points varies. If you sell online products, you tell the buyer what they owe you via your online cart. Then you receive payment on your checkout platform The time that elapses between the two point is pretty short.

With an invoice invoice-based business, you have tasks associated with generating an invoice, sending it to the customer, and receiving payment. The time between the two points can be much longer, depending on your invoice terms. 

Recordkeeping, accounts payable, and accounts receivable are all part of bookkeeping. 

A lot of people approach their bookkeeping by writing down their receipts and that’s not enough. Then they wonder why their billing is a mess, why they’re always behind on the bills, or why their invoices are never paid. It’s because they have never looked at the entire bookkeeping process as a whole, which is exactly what we’re going to cover next.

organize business finances

Frequency & Schedule (11:40)

How often should I do my bookkeeping? Most people should do their bookkeeping, at the least, once a week. However, if you’re working on your bookkeeping every day, it’s more likely to become a habit.

I do my bookkeeping daily. My bookkeeping takes me between three to five minutes every single day. I have a morning routine where I process my inbox, Facebook notifications, and then I do my bookkeeping. It’s a small, simple task and having it broken down works really well for lots of business owners.

Here’s why you don’t want too much time to pass between your bookkeeping tasks.

First, like any muscle, you have to work it to build it. Your bookkeeping muscle will get stronger when you exercise it. You have to practice. You have to make mistakes. You learn over time. You can’t expect yourself to do your bookkeeping once every six months and wonder why it’s so hard.

How long is it gonna take me to do my bookkeeping?

The general rule of thumb is that the more time that elapses between doing your bookkeeping, the longer it’s going to take. It sounds counterintuitive, but doing it more often help you stay on top of it.

How do you know how often you should do your bookkeeping?

Here are some things to think about:

First, what are your patterns with procrastination? It’s pointless to ask yourself practical stuff if you’re not acknowledging your emotional resistance to money. You can come up with a practical bookkeeping schedule, but if you don’t work with the emotional reasons your resist and avoid your money, you’ll never stick to your perfect schedule. 

Be really honest with yourself because that’ll help you figure out what triggers you to procrastinate. You need to get real with yourself about your habits around procrastination, money, and why you don’t do things that relate to money.

Then you want to ask yourself, how many transactions do I have?

These are credits and debits into and from your accounts. The more transactions you have, the more frequently you need to do your bookkeeping. If you have five transactions per month, you can probably do your bookkeeping once a month. It’s not that much to keep up with.

If you have 500 transactions a month, waiting until the end of the month to process all of that will be AWFUL. You’ll want to break your bookkeeping down into more manageable chunks so it’s less overwhelming. 

What’s my tolerance level for bookkeeping?

How long can you sit and do your bookkeeping without checking out or getting overwhelmed? If it’s only 10 minutes, then daily bookkeeping is for you. If 2 hours is a breeze, you can do your bookkeeping every 2-4 weeks. 

How time sensitive are your tasks?

Sometimes, we have things that need to be done right away and we might not be doing them. A great example of this is invoicing. Let’s say that you have only 10 transactions a month, but five of those are invoicing clients. Do you really want to wait an entire month between invoicing? Probably not.


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Methods (21:34)

Now it’s time to answer the big question, how do you do your bookkeeping? There are three methods that I’ll cover, and then we’re gonna talk about how you can figure out which method is right for you.

The Envelope Method

I’m hearing more from small business owners these days about a “bookkeeping method” of organizing their receipts into envelopes. They take their receipts and put them into envelopes organized by month and at the end of the year they write down their receipts in a notebook and give that to their tax preparer.

My thoughts: This isn’t a very good method for bookkeeping because, while you’re organizing your income and expenses, bookkeeping is recordkeeping and tracking. You’re not actually capturing any information when you just put your receipts into an envelope. You’re staying very organized and that’s awesome, but you’re not doing the recordkeeping.

The Spreadsheet Method

Spreadsheets are great for people who are starting off and need a low barrier of entry for their bookkeeping. It may feel really overwhelming to use an actual accounting program. Even the word accounting might make you freeze up, but a spreadsheet is something that a lot of people are familiar with.

Many small business owners don’t start their bookkeeping because they don’t know where to start and how to start, so a spreadsheet is a good method to get you to START. I have free spreadsheet called the Bookkeeping QuickStart Spreadsheet, which is already formatted for you. All you have to do is download it and start using it.

My thoughts: Now the cons of a spreadsheet is that they’re not as robust as a digital accounting program. You’re not going to get as much data. You can deal with it for tracking for taxes, but if you’re moving into a point of your business where you need to track for information, the spreadsheet isn’t going to do it for you.

Also, there’s a lot of manual processes involved with spreadsheets so you won’t be saving much time in your bookkeeping. Spreadsheets should be looked at as a stepping stone in your bookkeeping journey, not the final destination.

Digital Accounting Program Method

Your final ending point really should be a digital accounting program. They’re meant to be simple enough for newer businesses and robust enough for more complicated businesses. My favorite digital accounting system is Quickbooks Online (use this link to get 50% off your QuickBooks Online subscription for the first 12 months)

My thoughts: What I love about QuickBooks Online is that you can upgrade and evolve your bookkeeping as your business grows. You don’t have to have everything all at once and that helps you stay focused on learning the most essential tasks first.

A digital accounting program continues to grow and evolve with you. There will be a point where you’re just like, “I’m done with this. I have enough money. I just want to hire somebody.” When you reached that point, it is a lot easier to hand off a digital accounting system to a bookkeeper then converting from a spreadsheet. 

How to choose the right method for you

First, think about what your bookkeeping needs are? What actually needs to get done in your bookkeeping? What are your tasks? What are your needs to get started?

For example, if you haven’t been doing your bookkeeping, what’s holding you back? Is it the fear of technology? In that case, starting with Quickbooks Online isn’t a good option for you. It’s better to start with a spreadsheet.

What else is holding you back from getting started? It could be time. A learning curve. Or the initial investment. Maybe you don’t have extra money to put into a digital accounting program, so you need to start with something free. Think about these things in terms of your needs.

The last thing is if you’re doing your bookkeeping on an ongoing basis, what would you like to be different? What would you like to change about your bookkeeping process? What you change about your bookkeeping process is going to help you figure out which method you want to use.

For example, if typing stuff into a spreadsheet and feels tedious and boring, then you want to change from a manual process to automation. You’re probably going to start leveling up your bookkeeping system.

Those are three basic questions to start with. I actually talk in depth about the process of choosing a bookkeeping program for your business in a previous post. 

Tasks (30:43)

Your bookkeeping tasks will vary based on your business and your financial needs. Not every business has the same bookkeeping tasks, which is why it’s difficult for people to find information about what they should be doing for their bookkeeping. Every business is different, and every business is has a different set of tasks.

Developing a task list for your business and your finances will help you stay on track with your bookkeeping.

Start with a task list. Think about the things that you need to do daily, weekly, monthly, quarterly and annually. Daily and weekly tasks can be interchangeable, but the monthly, quarterly and annual stuff should be planned out. That’ll help you plan and not get into that cycle of constantly being behind.

I know people who want to skip the foundational work, but it’s really important to plan ahead with a task list. You can tune in at 34:32 in the video in order to view the task list that I created. It’s a template that you can download for free! From there, you can see what tasks I’ve listed into the daily, weekly, monthly, quarterly, and yearly categories.

Here are a few items on my list (download the full task list here):

  • Daily Tasks:
    • Clear receipts from your wallet
    • File digital receipts
    • Open financial mail and take action
    • Log business mileage
  • Weekly Tasks:
    • Log and categorize payments
    • Log and categorize business expenses
    • Update invoice tracking sheet
    • Send invoice reminders
  • Monthly
    • Reconcile all accounts
    • Run and review a Profit & Loss Statement
    • Review business budget
    • Calculate tax savings
    • Pay yourself
  • Quarterly:
    • Make estimated tax payment
    • Review 1099 tracking sheet
    • Check in on financial goals
  • Annual
    • Close out our bookkeeping
    • File 1099s
    • Review year-end Profit & Loss statement
    • Tax prep (check out my digital training Panic-Free Tax Prep for a complete list of tax prep tasks)

Remember, these are just some of the bookkeeping tasks that could be on your list. Download the free bookkeeping task list, cross out the tasks that don’t apply to you, and get started on a bookkeeping method that’ll work for you!

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