A photo of a small business owner doing their bookkeeping by hand. Little does he or she know that there are tips that can make the process a whole lot easier.

Tips to Make Small Business Bookkeeping Easier


Nobody enjoys bookkeeping any more than they enjoy doing laundry. Nevertheless, it has to be done. But what if we told you there’s an easier way? One that would significantly reduce the amount of time and effort you spend on this tedious task?

Well you’re in luck, because in this article we offer accounting advice for small business owners that will streamline the bookkeeping process so that it feels less like a chore and more like a minor nuisance. Because let’s face it: you’re never going to love doing it, but at least you can make it a lot less stressful. Progress over perfection, right? So let’s get started with tip #1:

Keep Business and Personal Banking Separate

There are things in life that should neverunder any circumstancesbe mixed. Chocolate chip cookies and ranch. Popcorn and ketchup. Peanut butter and pickles. Business and personal banking.

Forgive us for the gross imagery, but we needed you to associate mixing business and personal finances with disgust so you won’t ever do it. Call it repulsion therapy. 

“There are several reasons to be proactive about distinguishing between business and personal finances,” writes peer-to-peer lending company Funding Circle. “Tax implications are foremost. The IRS allows business owners to claim deductions for business-related expenses such as travel and supplies, but you must have the proper documentation to support it. If your business is audited, the IRS will look closely at each expense to verify that it is indeed related to the regular operation of the business. When there is no clear paper trail in terms of what the expenses were for, or how you paid for them, it becomes more difficult to validate the deduction.”

Keeping your business and personal expenses separate is also important for liability reasons. One of the advantages of setting your business up as a corporation or limited liability company is that it protects your personal assets should a creditor take action against you for an unpaid debt. However, if there is no clear distinction between your business and personal finances, a creditor can go after your personal assets to settle a debt.

One final thing to consider is your business credit. While you may be able to secure a business credit card based solely on your personal credit history, you will need to build a separate business credit profile to obtain bigger business loans or to establish vendor credit lines. Always keep this long-term perspective in view, because even if you don’t need a loan right now, you may in the future. 

Fortunately, keeping your expenses separate is pretty darn easy. All you have to do is open up a business bank account and make sure that it is only being used for company transactions. 

Automate As Much As Possible

In the world of accounting, technology is your best friend. 

No, seriously. You have no idea how grueling bookkeeping was prior to computers. 

Bookkeeping records written by hand.

In the olden days, everything had to be done by hand. Every single transaction had to be manually recorded and categorized, you had to keep a physical receipt for every purchase, and math was done by either pencil and paper or with the help of a handheld calculator. It was total grunt work, but thankfully we’ve come a long way since then.

Modern accounting software automates much of the data entry process, to the point where it can extract information from your bank account statements and categorize transactions based on pre-existing codes. Some accounting software programs even have receipt scanner apps that can convert all your paper stubs into digital copies. It saves time, space, and money, which is why using software is one of our single most important pieces of accounting advice for small business owners. Later on in the article, we’ll go over which accounting software is best and why. 

Track Billing Carefully

One thing to keep a close eye on as a small business owner is your accounts receivable, or the money customers owe you for products or services rendered. When you have a bunch of unpaid invoices it’s easy to lose track of who owes what and by when. If you’re not careful, you can run into a cash flow problem wherein you don’t have enough money coming in to cover all your expenses. 

Our expert accounting advice for small business owners struggling with this issue is to use the invoice tracking function in your software. It syncs with your bank account to record payments and will automatically send emails to clients with outstanding balances reminding them that payment is due. You can even integrate payment processing so your customer can pay you online right from your emailed invoice. Anything you can do to shorten your collection time and automate getting paid is going to be a big win for your business. 

Consider Small Business Bookkeeping Services in the Cloud

Wouldn’t it be nice if you could get rid of all those filing cabinets and have more room in your office? Well, you can! 

Thanks to cloud computing (AKA “The Cloud”) you can now store all your bookkeeping records online. Doing so comes with a major perk: you can access your files from virtually any location!

Naturally, a lot of business owners have concerns regarding safety and security. While data breaches and file corruption issues are rare, it’s not impossible, which is why we recommend backing up your files to your hard drive as a safety precaution. If you want an added layer of protection, you can always print your records and keep physical copies on hand. 

Two of the most trusted names in cloud storage are Google Drive and Dropbox. This is always a good place to start if you decide to go this route.

Track Business Expenses

You already know that you can write-off business expenses. But did you know that there are different types of business expenses, some of which are fully deductible, some of which are only partially deductible, and others that are non-deductible?

Knowing the difference can save you a lot of trouble come tax time. 

For example, if you rent an office space you can deduct the full amount, but if you work from home you can only deduct a portion of your rent and utilities since you’re also living there. Expenses that are non-deductible include political contributions, lobbying efforts, and education costs incurred to help you meet a minimum requirement.

A common mistake small business owners make is putting all their business expenses into one giant expense bucket. Instead, what you need to do is categorize them by expense type. This will make filing your taxes much easier.

Keep Your Books At The Top of Your Priorities

It’s easy to let bookkeeping fall to the wayside when there are a million other tasks on your to-do list, but you can’t keep putting it off forever. Eventually, you’re going to need these records in order to file your taxes. So you’re not doing yourself any favors by kicking the can down the road.

As you can imagine, we always get a ton of catch-up projects during tax season. And while we’re certainly not complaining about the influx of business, there are other reasons (taxes aside) why you don’t want to fall behind on bookkeeping. 

For starters, it’s much easier to spot and correct errors the closer they are to the time that they occurred. Let’s say, for example, that a restaurant you took a client to accidentally double-charged you for your meal. You’re far more likely to get a refund if you spot it within a few weeks of happening than you are nine months down the line. 

Let’s look at another example. Say that an employee of yours has been making fraudulent purchases on the company card. If you had caught it early on, you could have nipped it in the bud. But now that ten months have gone by, you’re out thousands of dollars in charges that have accumulated over time. Ouch.

Let’s look at one final example, one that is all too common among small businesses. One of the products you’re selling is actually costing you money rather than making you money, and you don’t know because you haven’t been tracking your profits and losses. It happens all the time, especially if your other products are performing well, as they mask the issue. All you know is that things must be going well if your bank account balance looks good (which, by the way, is why you should never judge the performance of your business based on your bank account balance alone). 

How do you prevent this from happening? Simple: make bookkeeping a top priority. Do it every single month at minimum. 

Choose the Right Bookkeeping Software

There are dozens of bookkeeping software programs on the market, and chances are you’ve heard of some of the biggest names—QuickBooks, Xero, FreshBooks, and Wave to name a few. You may be wondering, How different can they really be?! Well, as it turns out, quite a lot different. 

At CapForge, it’s no secret that we’re #TeamQuickBooks. Bear with us for a moment while we explain why. 

The first reason is that QuickBooks is the most widely used accounting software in the U.S. This is a huge plus, as it means you can take your QuickBooks files to virtually any accountant in the country and they’ll be familiar with how to use the system. 

The second reason is that it integrates well with tax software which makes filing your taxes a whole heck of a lot easier. QuickBooks, in case you didn’t know, is powered by Intuit, the same company that operates TurboTax.

Another cool perk is that the system allows for multiple user logins with different levels of access. FYI: you should never share your admin login with anyone else. Allowing multiple administrative access to accounts is one of the deadly sins of bookkeeping, as it often leads to double entries and other errors.

And lastly, QuickBooks consistently receives high ratings. Don’t believe us? It was ranked the #1 accounting software by Business News Daily


Don't Make These QuickBooks Rookie Mistakes...

Enter your name and email to receive a free downloadable copy of our ebook which will teach you how to avoid making the 10 most common QuickBooks mistakes.

View our privacy policy


Another viable option, especially if you’re located outside of the U.S., is Xero. 

Capability wise, it has all the same bells and whistles as QuickBooks. The main difference is that it’s a New Zealand-based company and therefore produces financial reports in a different style than Americans are typically used to. It’s also worth noting that there are more Xero users in New Zealand, Australia, along with a close number in Europe, so if you live in one of these regions it’s the better choice.

In our experience, other software programs like GoDaddy Bookkeeping, FreshBooks, and Wave lack some of the critical features that QuickBooks and Xero have. For that reason, we recommend sticking with one of these two options. 


Now that you’re equipped with these small business accounting tips, it’s time to put them into practice!

Of course, if you really want to make things as stress-free and easy as possible, keep in mind that you can always outsource your bookkeeping. That way, you don’t ever need to worry about tracking your expenses, storing your files in the cloud, and learning how to use accounting software—a team of highly-trained professionals takes care of all that for you. Best of all, it’s very affordable. At CapForge, we offer flat-rate monthly bookkeeping plans starting at $199/mo. Most business owners find that the price is well worth the peace of mind that comes with knowing their bookkeeping is being done correctly and on time. 

If this is of interest to you, feel free to contact us for a free consultation. You can reach us by phone at (858) 633-3573 or by email at info@capforge.com

Spread the word:

Similar Posts