When starting a small business, bookkeeping can make or break your financial health. So, it’s good to know how to do it right from the start. This way, you can avoid disorganised financial records and keep track of everything as your business grows.  

This guide will discuss bookkeeping for new business, including: 

  • Why is bookkeeping important? 
  • How does bookkeeping work?
  • How can you get bookkeeping right from the start?

Why is bookkeeping important?

Bookkeeping is the process of recording and reporting all of your financial data and information, including assets, liabilities, and equity. Bookkeeping is an important part of financial accounting, and it’s vital to any small business’s success. 

Businesses need to keep financial records for about six years. So, bookkeeping can help you organise those records in one place and improve your accuracy. You’ll also need to balance your books at the end of each year to asset your earnings and expenses and determine your revenue. This information will be necessary when filing taxes for your business.

As you set up your business, you may have startup costs that put you in debt. Strong bookkeeping can help you track your starting finances to overcome these debts and plan for good business performance. 

Aside from necessary reporting, bookkeeping can help you understand the financial position of your business. It will show your sales performance and cash flow. This will help you budget and manage your small business well from the start.  

How does bookkeeping work?

When considering bookkeeping for new business, you’ll need to know how bookkeeping works. This can help you plan for organised and efficient processes. 

Cash vs accrual

Your bookkeeping will differ if you follow the cash or accrual accounting method. This is because cash accounting recognises transactions when the cash is received. Meanwhile, accrual accounting records earnings and expenses as they happen, even if you haven’t yet received the cash. The method you choose will affect how you record your business transactions.

The general ledger 

A big part of bookkeeping is maintaining your general ledger. Your ledger tracks all your business transactions in regards to assets and liabilities. This means you’ll document the expenses and spending of your business alongside your sales earnings. 


You’ll also need to maintain your cashbook. This tracks your cash flow, or the money coming in and out of your business over a given time. This is different from your general ledger because it is directly involved with cash. Your cashbook can show you if you have a positive or negative cash flow and how much excess cash you have each month. 

Accounts receivable and payable

Sales invoices

For bookkeeping, you’ll also need to create, process, and keep your sales invoices. This will help you maintain a record of everything you sell, including paid and unpaid invoices. This will help you be aware of the money you bring into your business. 

Payment invoices 

You’ll also need to record all of the money you spend for your business, including payments and expenses. These invoices help you understand your debts and how to overcome them. Plus, you can use this to remind yourself when payments or bills are due. 

Your payments and sales will come together with the accounts receivable and payable, which tracks the money you owe, and people owe you.  

How can you get bookkeeping right from the start?

Once you understand how bookkeeping works for new business, you may wonder how to start and maintain clear books. We’ll cover a few tips to help you start off right. 

Keep organised records 

The best way to maintain organised books for your business is to keep every financial record. To do this, try to scan, save, or record all documents and transactions digitally so you don’t have to rely only on physical copies. Also, record sales and expenses as they happen, so you don’t forget to later on. A two-in-one business current account and accounting app like Countingup makes this easy with receipt capture tools and automatic expense categorisation.  

To keep accurate records, consider how you’ll manage bookkeeping. Schedule time into your week to go over your financial records and set reminders to look over everything and ensure it’s in order. This organisation will help you keep track of your payments due and unpaid invoices so you can follow up on the money you earn. 

Separate your business finances from your personal 

Opening a business current account is central to keeping organised when it comes to your finances, saving you a lot of time and stress when it comes to gaining business insights as well as bookkeeping admin. This is just like a regular bank account, except it’s specifically for your business. A business current account can help you separate your business expenses from your personal ones so you can more easily track and record each transaction.  

Create monthly reports

Another great way to stay on top of your bookkeeping is to compile regular reports of your records. This will help you make sure everything is in order and organise your records by date. This way, if you need to find a transaction from a specific month or year, you can locate that report rather than shuffling through all of your records. 

Monthly records can also help you see what money has come in and out of your business that month. If you have a good month, you can look at the records to see what to replicate in the future. You can also use these reports to spot unnecessary expenses to cut down on. 

Learn to analyse the data

Understanding your financial data can help you stay on top of your bookkeeping for new business. If you understand the bookkeeping records and their story, you can better understand when something is off or missing. As a result, you will be better able to manage your business finances. 

Get your bookkeeping on the right track with automating tools

One of the most important ways to organise your bookkeeping from the start is by finding the right bookkeeping or accounting software. It can be difficult to keep organised financial records when you’re busy with your small business. That’s why thousands of business owners use the Countingup app to make their financial admin easier. 

Countingup is the business current account with built-in accounting software that allows you to manage all your financial data in one place. The app is designed to make your business bookkeeping easy, and help you focus your time on doing what you love with features like automatic expense categorisation, invoicing on the go, receipt capture tools, tax estimates, and cash flow insights, you can confidently keep on top of your business finances wherever you are. 

You can also share your bookkeeping with your accountant instantly without worrying about duplication errors, data lags or inaccuracies. Seamless, simple, and straightforward! 

Find out more here.