Bookkeeping Resource Center

Books a CPA would smile at.

Set up your chart of accounts, categorize without overthinking, close monthly, and read your P&L like a pro.

Bookkeeping Basics

What bookkeeping is, who needs an accountant, and which accounting method to pick.

Bookkeeping vs Accounting: What's the Difference?

Bookkeeping is the day-to-day recording of every dollar in and out. Accounting takes those records and produces reports, tax filings, and strategic decisions. Most solo and small service businesses do their own bookkeeping and hire an accountant once a year for taxes.

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Cash vs Accrual Accounting for Service Businesses

Cash basis records revenue when you get paid and expenses when you pay them. Accrual records revenue when you invoice and expenses when you incur them. Most small service businesses can use cash basis. The IRS requires accrual once you carry inventory or exceed $29M average revenue (2024 limit).

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Single vs Double-Entry Bookkeeping (Plain English)

Single-entry tracks one side of every transaction — like a checkbook. Double-entry records each transaction in two accounts (debit + credit), making it impossible to lose track of money. Any business with inventory, loans, or employees should use double-entry. Modern software does it automatically.

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Chart of Accounts & Categorization

Set up a lean chart of accounts and categorize every transaction without overthinking.

Chart of Accounts for a Small Service Business (Template)

A chart of accounts (COA) is the list of buckets every transaction is sorted into. A small service business needs about 25–40 accounts — not 200. Keep it lean so your P&L is actually readable.

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How to Categorize Business Expenses (Without Overthinking It)

Ask three questions for every transaction: (1) Was it tied to a specific job? → COGS. (2) Is it a recurring overhead cost? → Operating Expense. (3) Will it last more than a year and cost over $2,500? → Asset (depreciate). Everything else gets 'Office Supplies' or 'Miscellaneous' — and you move on.

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COGS vs Operating Expenses: Why Trades Owners Mix Them Up

COGS = expenses you wouldn't have if the job didn't happen (materials, subcontractor labor, job-site supplies). Operating expenses = overhead you'd pay even with zero jobs (rent, software, marketing, insurance). Mixing them hides your real margin and breaks your pricing.

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Reconciliation & Closing

Close the books monthly and year-end so reports are trustworthy and CPA fees stay low.

Monthly Bookkeeping Close: 7-Step Checklist

Closing the books monthly takes 60–90 minutes once it's a habit: (1) import all transactions, (2) categorize, (3) reconcile every bank and card account, (4) review AR aging, (5) review AP and unpaid bills, (6) accrue sales tax, (7) lock the period and back up.

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How to Reconcile a Bank Account (Step by Step)

Reconciliation matches every transaction in your books to your bank statement, ending with identical balances on both sides. Do it monthly. Differences come from missing transactions, duplicates, timing of pending charges, or bank fees you forgot to record.

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Year-End Bookkeeping Close: What to Do in January

January year-end close: (1) reconcile every account through Dec 31, (2) issue 1099-NECs by Jan 31, (3) finalize mileage log, (4) count inventory if any, (5) record depreciation, (6) record owner's draws as equity, (7) export P&L + balance sheet for your CPA.

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Reports & Decisions

Read the P&L and balance sheet to make pricing, hiring, and growth decisions.

How to Read a P&L (Profit and Loss Statement) in 5 Minutes

A P&L (profit and loss) statement shows revenue, COGS, gross profit, operating expenses, and net income over a period. Read it top-down: revenue is what you sold, gross profit is what's left after job costs, net income is what's left after overhead. Net income negative = losing money.

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Balance Sheet Basics: Assets, Liabilities, and Equity

Balance sheet = Assets (what you own) − Liabilities (what you owe) = Equity (what's left for the owner). It's a snapshot at a single date, not a period. Lenders, buyers, and the IRS all care about it more than your P&L.

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