Bookkeeping

What is bookkeeping?

Bookkeeping is the process of recording all financial transactions your business makes. Every invoice you send, payment you receive, expense you pay, and transfer you make gets recorded. These records form the foundation for all your financial reports, tax filings, and business decisions.

Good bookkeeping is like keeping a detailed diary of your business's money—where it came from and where it went.

What bookkeeping involves

Day-to-day bookkeeping tasks include:

• Recording income — Logging invoices sent and payments received
• Tracking expenses — Categorizing and recording all business spending
• Reconciling accounts — Matching your records to bank statements
• Managing accounts receivable — Tracking who owes you money
• Managing accounts payable — Tracking what you owe others

Bookkeeping vs. accounting

Bookkeeping is recording transactions. Accounting is analyzing those records to produce reports and insights. Many small business owners handle their own bookkeeping using software, then work with an accountant for tax preparation and strategic financial advice.