There's a good chance you started your business for some glorious reason. A chance to work for yourself. The ability to make more money. You wanted to change the world. I can guarantee you that not a single person in the world started their own business to do their own accounting!

So, since it is a necessary evil, I thought I would provide some tips for those of you trying to wear every hat necessary to keep the business running.

Keep your personal and business money separate. You're probably thinking to yourself, "Everyone knows that!" But you'd be surprised the number of small businesses who don't follow this basic advice. If you haven't already, get yourself a separate business checking account and make sure to not co-mingle personal expenses with business expenses. Many folks end up missing out on legitimate business expense deductions because they get to the end of the year and their records don't reflect everything they've spent for the business.
Income - expenses = profit. All the income you receive for selling your product or providing your service less what you spend as ordinary and necessary expenses for running the business equal your profit (or loss if this is a negative number). Bookkeeping in it's simplest form is just keeping track of the financial transactions from your business.
Keep it simple. If you are just starting out or don't have much of an accounting background, come up with a system that will help you keep track of your income and expenses. If this is a simple excel file, great. If you are up to learning Quickbooks, Xero, Microsoft Money, Peachtree, or any other accounting software, that is great. But don't make things too complicated. Have your CPA help you set up a simple system that allows you to keep good records and keep them up to date.
Don't procrastinate. One thing we see over and over again is people who have good intentions of keeping everything in house who just seem to get behind and never get caught back up. You need to decide if you have the skills, ability, and desire to do this yourself. If so, then make sure you don't get too far behind. Remember that not keeping good track of the financial health of your business can end up in missed tax deductions, bank overdraft fees, and an in ability to meet cash flow needs.

Remember that bookkeeping in its most simple form is keeping track of the financial transactions in your business. Don't make it harder on yourself than you need to. If you are considering starting a business, look into our start up consulting services so you can get started on the right foot. It can mean the difference in success or failure of your new venture!