Record-Keeping Basics: Keep it Simple!

When you are starting a new business, creating and maintaining business records separate from personal records is essential and fundamental to helping you analyze your business’ performance. The key to this practice is to keep it simple. Here are 4 steps to help you maintain separate records for your business:

1 – Maintain a Weekly Activity Folder

Establish an exclusive folder to hold weekly business invoices/income receipts and bills/expenses paid. Label the folder “Weekly Business Income & Expense Receipts”. (This folder can be online or hard-copy but take care not to duplicate or omit if you mix and match systems).

2 – Allocate a Weekly Bookkeeping Day

Designate one day per week, typically the day after your busiest business day, to go through the “Weekly Business Income and Expense Receipts” folder.

Enter each income and expense item into your chosen business financial record-keeping system. You can use an Excel or Google Sheets workbook, a simple bookkeeping app like Wave, or QuickBooks if you have stronger bookkeeping skills.

Limit the number of categories and choose basic category names to keep it simple. For income items, simply categorize these in your financials in the “Income” category. For expense items, the following categories could include “Supplies”, “Insurance”, “Postage and shipping”, “Rent” “IT”, “Internet charge”, etc.

You should always have the original receipt to reference in case you need to locate more detail on the expense/income item in the future.

3 – File Your Records Regularly

After the weekly invoices/receipts have been recorded in your bookkeeping system, file each receipt/invoice into its respective folder. Label the individual folders within it with short descriptions that are comparable or corresponding to the categories of your business financial statements, such: Income/invoices, Supplies, Insurance, Postage and shipping, License fees, etc.

4 – Close Out Each Month

After completing 4 weeks of the above three steps, you will have one month’s income and expense activity recorded in your business financial statements. Sum that month’s activity and “close” the month.

Closing the month means that you don’t make any changes to that month either now or in the future. If you learn that you incorrectly recorded something for a closed month or you refund a customer for something you collected in a prior month, correct it in the existing month you learned of the error. Do not go back and change the month the error occurred. This will save you from chasing history and remembering whether or not you already made the change in the prior month.

Keep It Simple

The fundamental strategy for keeping business records separate from personal records is to create simple processes and perform them weekly. By keeping it simple, you will be far more likely to stay up to date with your finances. Maintaining separate business records is key to managing your business profitability.


#startingabusiness #bookkeepingbasics #financialplanning #smallbusiness