Small Business Bookkeeping Checklist | 7 Tasks to Stay Organized

Understanding the ins and outs of small business bookkeeping isn’t always easy. But it’s a vital part of stressing less and earning more when you’re self-employed, which is why I have created this bookkeeping checklist just for you!

Even though you can (and probably should!) hire an accountant to help manage your bookkeeping, it’s still important to understand how it all works.

Small business finances can get complicated quickly and having a good handle on what’s going on every month will give you confidence about your money.

That’s what being a smart and financially savvy business owner is all about. If you want to be organized and keep your small business finances running smoothly, I’ve got some tips that will help.

7 Bookkeeping Basics for Small Business Owners

Here are 7 simple tasks to incorporate within your bookkeeping checklist for your small business every month.

  1. Use simple bookkeeping software
  2. Categorize business transactions
  3. Save and verify receipts
  4. Perform a monthly check-in
  5. Send invoices to clients
  6. Save for quarterly taxes
  7. Plan ahead for the next month

1. Use simple bookkeeping software

I know, you’re probably thinking, “duh”. Yes, everyone should use some sort of bookkeeping software but finding the right one, is a whole other question.

In my many years of being a self-employed freelancer, I’ve tested out many different accounting software.

I actually have two favorite online bookkeeping programs:

Why? Well, together they make up an entire system of accounting that I need every month. Unfortunately, there isn’t an entire all-in-one program (that I’ve found) that will perform all of the bookkeeping tasks I need as a freelancer.

FreshBooks is used for keeping track of client data, invoices, and income. Quickbooks Self-Employed is used for calculating quarterly taxes, printing financial reports, and organizing business income.

And yes, I actually do recommend that you use two different programs. Keep one bookkeeping program as your main accounting software and then use another one to calculate taxes, print reports, or track customer info.

You could also use a simple spreadsheet to keep track of monthly income and expenses.

Either way, it’s important to have a backup, especially if your accounting information is stored in the Cloud or online.

Don’t put yourself in the position of losing all your financial information in the event you make a mistake or your program crashes.

2. Categorize business transactions

I actually review my bank accounts every single day. It’s been part of my routine since I was responsible for the bookkeeping for multiple small businesses in Texas.

It’s crazy what can happen in one day with a business bank account, so I like to know what’s happening daily.

Keep all of your business and personal bank accounts separate, including your savings accounts and credit cards. This way you’re able to organize all of your business transactions separate from your personal bills.

Even if you’re not an LLC, and are only a sole proprietor, go ahead and open a second account at another bank and mark it for business-only transactions.

Review all of your account balances regularly, so you know how much money you have, and where it’s going.

3. Save and verify receipts

When deducting business expenses on Schedule C, you have to be able to prove that the cost was business-related.

The best way to do this is by saving and verifying your business receipts regularly.

There are multiple ways you can do this:

  • Capture pictures of receipts with the QuickBooks mobile app and upload them to your QBSE account.
  • Store all of your receipts in one box, file or folder to be reviewed every month.
  • Use a scanner, to save all your receipts and link them to the correct expense.

I actually save and verify my receipts the old-fashioned way, with a budgeting planner and my credit card statement.

I use a business credit card for all my business purchases, because of the simplicity and the fact that I get cashback.

Every Monday morning I go through all the receipts, verify the amounts and expenses, and pay my credit card bill for the week. All receipts related to my business are put into a folder that I create at the beginning of the year.

This makes it easy to save tax-related receipts, income statements from client payments, and other documents, that I’ll need when I file my taxes.

4. Perform a monthly check-in

How much did you earn from client work this week? What big expenses do you have coming up?

Take time to have a quick check-in with your business finances every week. Not so much to check in on the numbers but to see the big picture of things.

Is your income still enough to cover your bills, and pay your quarterly taxes? Do you need to move money from your business checking to your personal account to pay rent?

Verify all your bank accounts, retirement balances, and your debts. Are you making progress, or do you need to hustle a bit more?

Take yourself on a weekly money date and have fun with it! Bring your favorite snack or drink, then reward yourself with some ice cream or chocolate.

Just don’t underestimate this time, as it’s extremely important for keeping your business running smoothly.

5. Send invoices to business clients

A big part of freelancing is actually getting paid. But this is an often-overlooked part of bookkeeping that freelancers easily forget, or procrastinate.

It’s not always easy to talk about money, or enforcing clients to pay you for work you’ve completed. But it’s a very important part of valuing yourself and your services.

Set up an invoicing process where you bill clients on a regular basis (I do this twice a month). Then have automatic payment reminders be sent out if they are late.

Request that you be paid via PayPal or direct deposit, as those are often the forms of payment with the lowest fees, and wait times, attached to them.

Again, set aside time during the month to bill out all of the freelance work you’ve completed so far. Make it a date!

And don’t forget to send follow-up emails to clients who are overdue.

Making this part of your regular bookkeeping checklist routine will allow you to feel more comfortable with asking for money, as well as increase your cash flow.

6. Set aside money for quarterly taxes

Another important bookkeeping checklist task to do every month is set aside money for quarterly taxes.

Although these are only due every quarter, your freelance business may be at a point where that tax bill is several thousands of dollars.

It’s a good idea to calculate each month instead of waiting until the end of the quarter.

I actually calculate my quarterly taxes as I receive the funds, and then verify that this amount is correct at the end of every week.

It’s also a good idea to set up weekly or monthly transfers from your business checking account to a savings account to cover this payment.

This way you won’t accidentally spend the money that’s due to the IRS. You definitely don’t want to owe them money.

Learn More: How to Do Your Own Taxes & Prepare for Filing

7. Plan ahead for the next month

At the end of every month, I perform a quick review of my financial progress and look ahead at the upcoming month.

It’s extremely difficult to plan ahead when you have irregular income, but there are things you can do to help ease the inconsistency.

  • Create monthly income and expense reports
  • Review pending payments from invoices
  • Look over your profit and loss statement
  • Calculate upcoming bills and projected income
  • Categorize all transactions in your bookkeeping software
  • Review all types of income and adjust
  • Calculate quarterly taxes to make sure you’re on target
  • Do an audit of all biz expenses and cut back
  • Keep a time journal to see how your time’s being spent

There are more ways to look back at the current month and plan ahead for the next month, but these are the basics.

Create Your Best Small Business Bookkeeping Checklist Today!

Use this bookkeeping checklist during your money date this week and at the end of the month.

If you don’t feel comfortable with doing all of these bookkeeping tasks yourself, at least now you know what exactly you can outsource to a Virtual Assistant or qualified bookkeeper.

Start small and work these accounting to-dos into your regular business admin tasks.

You’ll be surprised how just keeping tabs on your money will really help increase your cash flow and your bottom line.

The more you know about your finances, the better decisions you’ll make and ultimately be more successful.

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  • Comment Author image blank
    Rashida Joyce
    Great article. I would also recommend using a mobile app to save your receipts. There are so many good free ones on there. And many bookkeeping software offer their own app. You can make it a happy to snap a picture of your receipt as soon as you get it and upload it. This way there is no pile of receipts growing anywhere.
    • Comment Author image blank
      Absolutely! Now if I could only get my husband to use bookkeeping software to upload the receipts he uses for purchases, then we'd really be organized. HA!
  • Comment Author image blank
    Emilie Burke
    I really love WaveApps because it's free and does so many of these things for me! Their app makes it so easy to take a picture of receipts while on the go! The only thing I haven't figure out how to automate is setting aside money for quarterly taxes, but every time I get paid, I right away move 30% of it to my tax-specific bank account. Hopefully, I'll figure out a way to automate that soon!
  • Comment Author image blank
    Thanks Carrie, really helpful article and broken down into simple steps. I particularly like keeping track of the work you do weekly as I find having only monthly spreadsheets is a bit overwhelming.
  • Comment Author image blank
    Carrie - this is just what I have been looking for! On my quest to streamline and take control of the bookkeeping part of my business (instead of going through the bad-sweat-tax-crunch), I had questions about just what sort of tasks should be done on a regular basis. This list is perfect--thank you so much!
  • Comment Author image blank
    Tess Wicks
    Love this post, Carrie! So interesting that you use two accounting/bookkeeping programs. I've heard really good things about GoDaddy's bookkeeping. Why don't you use them for invoicing, income and client data? I've been keeping my books in a spreadsheet because I'm a nerd like that, but I know I would save SO MUCH MORE TIME if I just finally started a relationship with a bookkeeping software. ...But really secretly love doing it manually :)
  • Comment Author image blank
    So true! More and more many small businesses are starting to use is online accounting software. These applications make the process of calculating revenue, cash flow, and payroll easy and accurate. The company's financial information will be secure, and you can access it from anywhere with the correct security code. Simply put, online accounting software is a great investment for any small business!