Updated October 18, 2026.
Bookkeeping is the routine of recording and organizing a business’s financial transactions. Good records make it easier to explain balances, follow up on unpaid invoices, prepare reports, and give your accountant the information needed for review. This guide introduces the basics for US small businesses; your accounting and tax requirements depend on your circumstances.
Understand the accounting equation
Assets = Liabilities + Equity. Rearranging it gives Equity = Assets − Liabilities. Assets include cash as well as resources such as equipment and receivables. Liabilities are obligations the business owes. Equity is the residual interest after liabilities are deducted from assets. ACCA’s explanation of the accounting equation shows how this relationship supports double-entry bookkeeping.
For example, borrowing $1,000 increases cash and the loan liability by $1,000; it does not create revenue. Double-entry bookkeeping records equal total debits and credits across the affected accounts. “Debit” and “credit” describe entry sides, not universal synonyms for money received and money spent.
Choose a bookkeeping system and an accounting method
Single-entry and double-entry describe how records are maintained. Cash and accrual describe when income and expenses are recognized. These are different choices. A simple single-entry system can suit some small businesses; it is not categorically prohibited for tax recordkeeping.
Cash accounting generally recognizes income when received and expenses when paid. Accrual accounting generally recognizes income when earned and expenses when incurred, subject to applicable rules. Eligibility and changes of method need care. Discuss your circumstances with your accountant rather than switching methods simply to obtain a preferred result. The IRS guide to starting a business and keeping records explains both bookkeeping systems and accounting methods.
Create a repeatable bookkeeping routine
- Keep business transactions distinguishable from personal spending, with dedicated accounts and clear documentation.
- Use a consistent chart of accounts and attach the invoice, receipt, or other evidence behind an entry.
- Review incoming bank transactions; investigate duplicates, missing records, and unclear classifications.
- Reconcile bank and credit-card balances against statements, documenting timing differences and corrections.
- Review unpaid customer invoices and supplier bills, with named owners for follow-up and approvals.
- Give your reviewer a clear list of unresolved items before completing the reporting period.
Keep the supporting records
The IRS recordkeeping guidance explains that your records need to support reported income and deductions. Keep evidence appropriate to the transaction and business purpose. There is no universal rule that every expense under $75 needs no documentation.
Retention depends on the record and circumstances. A blanket three-year deletion schedule is not suitable for every record; employment tax and property records, for example, can have different requirements. Use the IRS retention guidance and your accountant’s advice to establish a schedule before deleting anything.
Decide what to delegate and what to approve
A dedicated bookkeeper in the Philippines can support transaction entry, reconciliation preparation, and organized records under your instructions. Separate these tasks from authority to release payments, change bank details, approve adjustments, or sign returns. Set individual access and a regular review process.
For a heavier transaction workload, distinguish accounts receivable support from accounts payable support. For reporting and review preparation, compare general accounting support. The role should match the work queue, experience needed, and level of supervision you can provide.
Start by documenting one month’s tasks, deadlines, records, and approval points. That gives an in-house or outsourced team a usable routine and helps you identify where extra capacity would make the most difference.