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Bookkeeping made SIMPLE!

I have a secret; bookkeeping can be simple. If you break it down into bite-size pieces it is much more manageable. Bookkeeping has four simple steps. 1. Accepting transactions, 2. Reconcile your accounts, 3. Review reports, 4. Set goals. In this blog, I will cover those four steps in an easy-to-follow manner.

Bookkeeping has four simple steps are as follows:

1. Accept transactions, meaning go into your bookkeeping software and accept the recent transactions, ideally done on a weekly basis. If unable to do it weekly, monthly, or quarterly is better than end-of-year bookkeeping.

Need help with what categories to use? I have a list of categories that you can use. See below:

  • Advertising

  • Business Insurance

  • Commissions and Fees

  • Contract Labor*

  • Depreciation of Assets

  • Interest

  • Job Supplies

  • Mortgage for Office, storage, and or manufacturing center

  • Legal and Professional Services

  • Office Supplies

  • Rent or Lease of Office, storage, and or manufacturing center

  • Rent or Lease of Vehicles, Machinery, and Equipment

  • Repairs and Maintenance

  • Taxes and Licenses

  • Travel for business

  • Utilities

2. Reconcile bank accounts and credit cards. This means taking your bank statements and matching the end-of-period balance with what you have in your bookkeeping software.

This is as simple as taking your bank statement and going line by line and making sure everything has been accounted for. Sometimes this step can be very quick. Other times, it may take a little bit of effort. If you get stuck, it is okay to take a break. I often have to step away from working and come back with a clear mind.

3. Review financial reports. Usually, the Profit and Loss, Balance Sheet, and Cash Flows Statement.

These are the three most important reports in your business. Make sure you review them! It is important to also do some ratios. Look at what is your biggest expenses and see if there is a way to cut back or find a way to make it more streamlined. Make sure you are charging enough to your customers. I know it is hard to raise prices but you need to Sometimes raise prices to stay in business. You also deserve to make money. You are doing all the hard work.

Profit and Loss (P&L): Income- Cost of Goods Sold=Gross Profit-Operating Expenses=Net Income

Common Income Sources:

  • Sales of Products

  • Income from Services

  • Contract work

  • Interest Income

  • Credit Card Rewards

  • Rent Income (Subleasing your office space)

Cost of Goods Sold: The cost of goods that you purchased at wholesale with the intention to upsell at retail.

Minus all your business expenses see above for a list of common business expenses.

Balance Sheet: Assets = Liabilities and Equity


  • Current Assets is your business checking account, cash on hand, inventory, supplies, temporary investments, accounts receivable (invoices due to you)

  • Business Property, plant, and Equipment

  • Intangible assets such as goodwill, and trade names


  • Short-term liabilities such as business loans, business credit cards, accounts payable (money you owe to vendors), wages payable, interest payable, and taxes payable

  • Long-term liabilities such as Notes or bonds payable


  • Common Stocks

  • Retained Earnings- Money left in the business to sustain it

  • Owners’ Equity- Money you pay yourself

Statement of Cash Flows:

Operating Activities

+/- Inventing Activities

+/- Financing Activities

=Net increase in cash

+ Cash at the beginning of the period

=Cash at the end of the period (The reports Profit and Loss and the balance sheet make the Cash Flows Report!)

Operating Activities:

  • Net Income/Loss from P&L

  • Short-Term Liabilities from Balance Sheet

Investing Activities: Business Property, plant, and Equipment from the Balance Sheet

Financing Activities: Long-Term Liabilities from Balance Sheet

4. Set realistic financial goals. This means, comparing previous months and making goals for your business. This may include canceling subscriptions, hiring new contractors or employees, increasing sales, cutting down on expenses, cancelation of subscriptions, hiring new contractors or employees, increasing sales, cutting down on expenses, etc. Create a budget you can stick to. Follow the tips below regarding creating your budget:

  • Who is your Target Market? Make sure you are marketing to your target market!

  • Go through your subscriptions and find those you are not using anymore and cancel those subscriptions!

  • Make sure your prices for your services and or goods are fair for both you and your clients!

  • Include your team!

  • Understand the risks you are taking on each project.

  • Don’t go into debt without thinking about the risks involved

  • Overestimate your expenses

  • Pay attention to your sales cycle

  • Remember time is valuable too!

  • Revisit your budget often!

It is important that you make plans. Think of what you can improve on. What will you need in the future? Maybe you have a goal to add a new product or expand your office space. Those goals will cost money so you need to make sure your plan a budget to meet those goals!

Remember, bookkeeping does not have to be complex. It can be as simple as 1, 2, 3, 4. The four steps are 1. Accepting transactions, 2. Reconcile your accounts, 3. Review reports, 4. Set goals. Now that you know the steps, I would love for you to have an easy-to-use checklist so that you can feel accomplished as you complete your bookkeeping weekly! Download your free bookkeeping checklist today!

Are you still thinking you need some support with Bookkeeping? I offer a 6-month course that goes over in detail all the steps of bookkeeping and how to do it completely and accurately. You can also buy the whole package and do it all at once if you would rather spend more time learning it quickly. Either way, it is a great course for those who need some extra support and learning about bookkeeping. It is called Bookkeeping Essentials. It teaches you everything you will need to know to be able to do your bookkeeping in any software. It does show some lessons in QuickBooks Online but those can all be applied to any bookkeeping software. All lessons include a workbook and a video that you can follow along and learn how to do your bookkeeping.

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