Glossary · Finance
What is Bookkeeping?
Definition
Bookkeeping is the ongoing practice of recording, categorizing, and organizing every financial transaction your business makes.
Why it matters
Good books show you where money comes from and goes, and make tax time far easier. They are also what lenders and accountants need.
A small bakery that spends 30 minutes weekly categorizing its transactions can answer questions like "Did we make money in October?" For example, it sees $9,800 in sales, $4,100 in ingredients, $2,600 in payroll, and $1,300 in other costs, leaving $1,800. Without records, the owner might guess at a number and be off by thousands.
Keep a separate business bank account, save receipts, and reconcile monthly. Many owners use bookkeeping software and hire an accountant for taxes and advice.
Common mistakes
- !Mixing personal and business spending in the same account.
- !Letting months of transactions pile up before categorizing them.
Frequently asked questions
What is Bookkeeping?
Bookkeeping is the ongoing practice of recording, categorizing, and organizing every financial transaction your business makes.
What mistakes do beginners make with Bookkeeping?
Mixing personal and business spending in the same account. Letting months of transactions pile up before categorizing them.
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