Good bookkeeping is the foundation of a healthy business. Staying organized, managing your finances accurately, and keeping detailed records will help you avoid costly mistakes, stay compliant at tax time, and maintain a clear view of your company’s financial health. Whether you’re just starting out or managing an established business, these bookkeeping tips will help you stay on top of your numbers and set your business up for long-term success.
At Keep A Count, we help small business owners simplify their books and build financial systems that save time, money, and stress. Here are some of the most important bookkeeping practices to keep your business running smoothly year-round.
1. Keep Your Records Organized
One of the most essential bookkeeping tips for small businesses is to stay organized throughout the year so you’re not scrambling come tax season.
Gather and organize all receipts, mileage logs, and documentation for purchases.
Keep records of furniture, equipment, and asset acquisitions.
Review all tax forms for accuracy and report them correctly.
Track all income sources, including cash, checks, credit cards, and PayPal.
Being proactive about organization ensures smoother tax filing and accurate financial reporting.
2. Keep Your Personal and Business Finances Separate
Mixing personal and business finances can cause serious confusion and tax issues later.
Open a separate bank account for your business from day one.
Pay all business expenses through that account, even if you occasionally need to transfer personal funds to cover costs.
Use a dedicated business debit or credit card to keep transactions clear and easy to track.
This separation makes bookkeeping easier, prevents reporting errors, and provides a clear financial picture for your business.
3. Create a Simple but Functional Chart of Accounts
Your chart of accounts categorizes every transaction your business makes and forms the backbone of your bookkeeping system.
Set up only the accounts you need—avoid unnecessary categories.
Keep account names generic and functional.
Always assign the correct account type to prevent reporting errors.
Most accounting software includes a basic chart of accounts template, but customizing it to fit your business—and getting professional setup from a bookkeeper or CPA—can save you major headaches down the line.
4. Regularly Reconcile Your Bank Statements
Even if you’re diligent about recording transactions, failing to reconcile your bank statements can lead to discrepancies and reporting errors.
Reconcile your accounts monthly to catch mistakes early.
Watch for transposed numbers, missing entries, or duplicate charges.
Regular reconciliations ensure your books match your actual bank balance and keep your financial records accurate.
5. Track Financial Data Monthly
Tracking your expenses and income by month allows you to identify trends and prepare for future growth.
Evaluate peak seasons and off-season cash flow.
Compare monthly and quarterly data to identify profitable areas and potential improvements.
Use these insights to adjust your budget, marketing, or spending plans.
Monthly tracking gives you actionable insights to guide smarter business decisions.
6. Document and Deduct Business-Related Personal Expenses
If you use assets like your car or phone for both business and personal purposes, you can deduct a portion of those expenses.
Keep detailed logs of mileage, calls, or business use percentages.
Store supporting documentation to back up your deductions at tax time.
Accurate records protect you during audits and maximize your deductible expenses.
7. Maintain Detailed Inventory Records
Proper inventory tracking prevents loss, theft, and overspending.
Record all purchases, sales, and adjustments.
Monitor product trends and customer demand.
Use your inventory data to optimize future buying decisions.
Accurate inventory records also simplify end-of-year reporting and improve cash flow management.
8. Separate Receivables from Borrowed Funds
Never mix client payments with loans or credit advances.
Record each in separate accounts to maintain clear cash flow tracking.
Use bookkeeping software to automatically distinguish between income and debt.
Keeping these funds separate prevents confusion and helps maintain accurate profit and loss statements.
9. Treat Checks Like Cash
Checks carry the same financial weight as cash and should be tracked carefully.
Record and file every check as it’s written.
Keep cancelled checks organized and documented.
Avoid letting check documentation pile up—track it as you go.
A consistent check recording system ensures your books remain accurate.
10. Take Control of Accounts Receivable
Strong sales mean little if payments don’t come in on time.
Establish clear payment terms and deadlines.
Follow up promptly on overdue invoices.
Require deposits or prepayment from repeat late payers.
Managing accounts receivable effectively protects your cash flow and keeps your operations stable.
11. Plan for Major Expenses
Forecast and budget for significant costs like inventory, repairs, and maintenance.
Set aside reserves before drawing profits from your business.
Avoid unnecessary spending just because there’s cash in the bank.
Planning ahead prevents financial strain and helps you reinvest wisely into your company.
12. Plan for Taxes
Taxes shouldn’t be a surprise.
Set aside funds monthly based on your sales and profit levels.
Stay current on estimated tax payments to avoid penalties.
By preparing early, you’ll prevent year-end cash flow issues and make filing smoother.
13. Take Advantage of Small Business Tax Credits and Deductions
Proper bookkeeping helps you qualify for available tax benefits.
Track health care costs, auto expenses, software purchases, and charitable donations.
Work with a tax professional to identify credits that apply to your business.
Accurate financial records ensure you never miss valuable deductions.
14. Create an Audit Trail
An audit trail makes it easy to retrace transactions and verify data.
Keep invoices, checks, and receipts in chronological and numerical order.
Avoid skipping check or invoice numbers.
Store documents by date for easy retrieval.
This system simplifies audits, protects your data, and ensures compliance during tax season.
15. Keep Petty Cash Records
Even small cash transactions can add up.
Record every petty cash purchase and require receipts.
Reconcile your petty cash regularly to identify inconsistencies.
Monitoring petty cash discourages theft and keeps day-to-day spending transparent.
16. Choose the Right Accounting Method
Selecting the proper accounting method affects how your business reports income.
Cash basis: Record income when money changes hands—ideal for simple, cash-based operations.
Accrual basis: Record income when earned and expenses when incurred—better for growing businesses.
Choosing the right method from the start ensures accurate reporting and tax compliance.
17. Avoid Paying Business Expenses in Cash
Cash payments are difficult to trace and easy to misplace.
Use checks, debit cards, or credit cards instead.
Maintain clear records for every transaction.
Avoiding cash ensures that all expenses are properly documented and deductible.
Simplify Your Bookkeeping with Keep A Count
Proper bookkeeping helps you make informed financial decisions, stay compliant with tax laws, and set your business up for sustainable growth. By following these best practices, you can streamline your accounting and focus on what matters most—running your business.
At Keep A Count, we make bookkeeping simple, accurate, and tailored to your needs. Whether you’re just starting out or looking to clean up your books, our team is here to help.
Call 815-439-8022 or contact us today to learn how we can help you stay organized and financially confident year-round.