Tracking Income and Expenses: How to Keep Books for a Small Business

Are you a freelancer or the owner of a small business? Or perhaps you’ve been hired to do the books for your small business employer.

This can be a confusing process, but it’s definitely possible! Understanding how to keep books for a small business can be done.

Keep reading our guide to learn all the basics you need to know to keep track of income and expenses for a small business!

Stay Extremely Organized

As a freelancer, LLC or any type of small business, you are responsible for keeping track of all important financial info and documents.

Start by creating a good filing system – this can be virtual and physical. You should be able to securely store hard copies and digital copies of any receipts, invoices, tax information, etc.

When creating folders on your computer for storing, make sure everything is clearly labeled and easy to navigate. It’s also important to take the time to back up your online information in case anything goes awry with your computer.

Track All of Your Expenses

It’s important to have a system for tracking income and any money you make, but it’s also important to keep a detailed record of your expenses.

Whether you’re a freelancer or run a small business, you have business expenses that cover more than just your supplies. What you regularly use to function and run your business can likely be expensed. Things like your internet, phone plan and computer are all necessary for your work.

Set up a budget and save all of your receipts to track the outgoing cash. The basis of all budgets, bookkeeping and expense sheets are tracking.

Plan Early for Taxes

Without having a big company take care of your taxes, it’s important that you keep track of how much you owe.

There are several things you can do to plan and prepare for your taxes. Continue to keep up with your organization and tracking by keeping note of how much you will owe in a spreadsheet.

Create a separate savings account to keep this percentage of your income. With each paycheck, you can calculate the amount for taxes and move it into this savings account.

Start Bookkeeping and Payroll Systems

Bookkeeping is the day-to-day recording of every transaction, for both income and expenses, and involves settling any bank statements.

Once you get started with the bookkeeping process, make sure you’re logging four key things, including who paid you (or who you paid), the amount, the date and if it was income or an expense.

If you have people working for you, you will need a system for payroll. For a small business, you may want to try a free paystub generator online.

Learning How to Keep Books for a Small Business is Possible

By taking the time now to create an organized and efficient bookkeeping system, you’ll save yourself time and confusion in the future. Learning how to keep books for a small business is a critical step for your success!

Keep reading our blog to learn more about growing your business!