Bookkeeping for a New Business: Your First 90 Days

Good bookkeeping is easier to start on day one than to fix later. This plan covers your first 90 days.

Days 1 to 30: build the foundation

• Open a business bank account and, if you use one, a business credit card. Use them only for business. See separating business and personal money.
• Get your EIN if your business needs one (how to apply).
• Pick an accounting method. IRS Publication 583 explains that you choose a method, such as cash or accrual, to report income and expenses, and you generally stay with it. Many small businesses use the cash method. Ask your preparer which fits you.
• Choose bookkeeping software and connect your business accounts.
• Create a simple category list, such as income, advertising, software, supplies, travel, and professional fees.

Days 31 to 60: build the habit

• Record every transaction at least weekly, and match each one to a receipt or invoice.
• Track owner money separately. Money you put in and money you take out are not income or expenses. Label them as contributions and draws.
• Save supporting records. Publication 583 says you must keep records that support the income, deductions, and credits on your return, such as sales slips, invoices, receipts, and bank statements. See what to scan and keep.

Days 61 to 90: close the books

• Do your first month-end close. Here is a checklist.
• Set aside money for taxes each time you are paid. See quarterly estimated taxes if you are self-employed.
• Put deadlines on a calendar, including state annual reports and sales tax returns if they apply.

Signs you are on track

• Every bank and card statement has been reconciled.
• You can find the receipt for any expense in under a minute.
• You know your profit for last month.

Want help setting this up? Book a call with FlowTex.

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Sources

• IRS: Publication 583, Starting a Business and Keeping Records

This article is general information, not tax or accounting advice. Talk to a qualified professional about your situation.