For small business bookkeeping, keeping accurate financial records is crucial for managing cash flow, taxes, and business growth. Here’s a breakdown of what you need to know, including DIY options and professional services.

Key Bookkeeping Tasks for Small Businesses

1. Track Income & Expenses

   • Record all sales, invoices, and business expenses.

   • Use receipt scanning apps (like Expensify or Dext) for easy tracking.

2. Reconcile Bank & Credit Card Accounts

   • Match transactions in your bookkeeping software with bank statements.

3. Manage Invoices & Accounts Receivable

   • Send invoices promptly and follow up on overdue payments.

4. Handle Accounts Payable

   • Track bills and schedule payments to avoid late fees.

5. Payroll Processing

   • If you have employees, ensure accurate payroll calculations and tax withholdings.

6. Prepare for Taxes

   • Maintain organized records for quarterly estimated taxes and year-end filings.

Best Bookkeeping Methods for Small Businesses

1. DIY Bookkeeping (For Budget-Conscious Owners)

• Software Options:

  • QuickBooks Online ($30–$180/month) – Best overall for scalability.

  • Xero ($13–$70/month) – Great for invoicing and integrations.

  • FreshBooks ($17–$55/month) – Best for freelancers/service businesses.

  • Wave (Free) – Best free option for basic bookkeeping.

• Pros:

  • Lower cost, full control over finances.

• Cons:

  • Time-consuming, risk of errors if not properly managed.

2. Hybrid Approach (Software + Outsourced Help)

• Use software but hire a virtual bookkeeper (e.g., Bench, Bookkeeper.com) for monthly cleanup.

• Cost: $150–$500/month (depends on transaction volume).

3. Full-Service Bookkeeping & Accounting

• Hire a CPA firm or online bookkeeping service (like Pilot or KPMG Spark).

• Best for: Growing businesses needing tax planning & financial insights.

• Cost: $500+/month (for advanced reporting & tax prep).

Small Business Bookkeeping Tips

✅ Separate Business & Personal Finances – Use a dedicated business bank account.
✅ Automate Where Possible – Bank feeds, expense tracking, and recurring invoices save time.
✅ Stay Consistent – Update books weekly/monthly (not just at tax time).
✅ Backup Records – Use cloud storage (Google Drive, Dropbox) or accounting software backups.
✅ Plan for Taxes – Set aside 25–30% of income for tax payments.

When to Hire a Professional Bookkeeper?

• You’re spending too much time on bookkeeping instead of growing the business.

• Your transactions are complex (inventory, payroll, multiple revenue streams).

• You need tax planning or help with IRS compliance.

Next Steps

• If you’re just starting, try Wave (free) or QuickBooks Simple Start ($30/month).

• If you’re overwhelmed, consider Bench ($299/month for full-service bookkeeping).