Before you record a single transaction, you need to decide where and how you'll be recording everything. Your first choice is between manual and digital. Bookkeeping Services in Cleveland.
For Smallest Businesses/Side Hustles (Manual): If you have very few transactions (e.g., less than 10-15 per month), you can use a simple spreadsheet (like Excel or Google Sheets). This allows you to track dates, descriptions, amounts, and categories.
For Most Businesses (Digital): You should immediately choose and set up a cloud-based accounting software (e.g., QuickBooks Online, Xero, or FreshBooks). This is the best first step because:
It automates data entry (connecting to your bank).
It instantly applies the rules of Double-Entry Bookkeeping (which is the required foundation for all proper accounting).
It generates your key financial reports (like the Balance Sheet and Income Statement) automatically.
2. 🏦 Set Up Your Financial Infrastructure
Once you have your software (or spreadsheet) ready, your very next task is to ensure you have a clear distinction between your business and personal finances. This is crucial for legal, tax, and accuracy reasons.
Open a Dedicated Bank Account: Stop using your personal bank account for business. Open a separate business bank and credit card account immediately. This is the single most important action for simplifying your bookkeeping.
Initial Entry: Record the starting point of your business finances.
If you're starting fresh, record any money you put into the business account as an Owner’s Equity contribution.
If you're migrating from a previous system, record the current balances of all your business bank accounts, loans, and other assets as the initial entries (the "opening balances") in your new software.
By first choosing a solid system and then ensuring your business finances are entirely separated from your personal ones, you lay the groundwork for everything that follows, including managing accounts payable, invoicing, and running payroll.
