The Small Biz Bookkeeping Simple Start Guide

The single biggest mistake new business owners make is mixing business and personal spending.

It creates digital chaos and makes it so you have to comb through every transaction in all bank accounts to identify what happened in your business. 

It’s one of the main reasons bookkeeping feels hard for beginners.

Here’s what to do instead:
Open a dedicated business checking account and business debit or credit card.
This keeps everything clean, trackable, and easy to reconcile every month.

My favorite bank for small business owners, for both checking accounts and credit cards is Chase.
👉 Learn why here.

Once your business income only hits your business account, and your business purchases only come from your business card, bookkeeping becomes 100x easier.

To keep things simple and accurate, do your bookkeeping monthly - not yearly.

The ideal time is around the 5th of the following month, when all charges have cleared.

Each month:

• Pull your business bank statements

• Pull your business credit card statements

• Export your transactions into a spreadsheet
  – or copy/paste
  – or hand-key them into your own sheet

No software needed.

Group your income by the main products or services you offer.

This helps you see where your money is actually coming from and where you should focus your efforts.

Examples:

• 1:1 services

• Digital products

• Consulting

• Coaching

• Physical services (if applicable)

Again, keep this simple. No need to overcomplicate.

Most small business expenses fit into 8-12 simple categories.

Here are the CPA-approved categories for beginners:

• Software & Subscriptions

• Contracted Labor

• Office Supplies

• Marketing & Advertising

• Business Development (think Education & Training, networking, coaching, etc)

• Travel (business-related)

• Meals (business-related)

• Shipping & Postage

• Utilities (business-specific for your physical location, not home office)

• Bank & Processing Fees

Avoid calculating these on your own:

• Auto expenses

• Home office

• Depreciation

• Complicated reimbursements

(These require more detailed rules and are best handled by a professional.)

This is where people make the most mistakes, so let’s make it easy:

• Loan payments are not expenses (only the interest is)

• Transferring money into your business is not income

• Paying yourself is not an expense

• Personal items purchased with your business card = Owners Draw (not expenses)

This one clarification alone can fix 80% of beginner bookkeeping errors.

Loan payments are a reduction of a liability that should be on your Balance Sheet (not your Profit and Loss, and does not impact your profit, income or taxes).

Money moving between the owner's personal accounts whether funding the business, drawing the profit, or erroneous personal expenses, are equity. They also do not impact your profit, income, or taxes.

Profit is the number that shows how your business is actually performing.

Profit = Income - Expenses

This tells you:

• Whether you’re priced correctly

• Whether your spending is aligned

• How much money you’re keeping

• Whether your business can actually support your life

It’s simple math, but it gives you powerful clarity.

Profit percentage =
Profit ÷ Total Sales

This tells you how much of each dollar you actually kept once you were done paying the costs.

Examples:

• 20% profit = you kept $0.20 of every $1

• 40% profit = you kept $0.40

• 5% profit = you are undercharging or overspending

This number helps you make decisions, not guesses.

To stay organized and reduce stress:

• Do this every month

• Review your Quarter 1, 2, 3, and 4 totals

• Summarize everything at year-end for tax time

Once this rhythm is in place, you will never feel behind again.