Yes, you can, If you run a small business, there is no reason you cannot handle your own bookkeeping, provided you understand what you are recording and keep up with it.
The important thing is not having a complicated system. It is knowing what happened in the business and making sure the records show it correctly.
A sale came in. An expense was paid. A supplier was paid. A customer still owes money. These are the things your bookkeeping needs to capture. Understanding how these activities become organised records is also explained in our guide on How Business Transactions Become Records.
Once you understand that, bookkeeping becomes much less intimidating.
What Does Doing Your Own Bookkeeping Actually Involve?
Doing your own bookkeeping simply means keeping your business records up to date yourself. Varying from business to business, this can include having records of the following:
- Sales and other income
- Business expenses
- Purchases and payments
- Customer invoices
- Supplier invoices
- Receipts
- Bank transactions
- Other money coming into or going out of the business
You may also need to maintain journals, ledgers and other records depending on how your business operates and the requirements that apply to you.
The exact records will vary from one business to another. What matters is that you have a reliable record of what has happened.
Think about it this way. If you look at your business records six months from now, could you work out where the money came from, where it went, and what each transaction was for?
If the answer is yes, your bookkeeping is doing its job.
Can a Small Business Owner Really Do Their Own Bookkeeping?
For many small businesses, yes. If your business has a manageable number of transactions and you are prepared to spend some time learning the basics, you can do a lot of the bookkeeping yourself.
You don’t need to become an accountant. You do need to understand the difference between the transactions you are recording.
Take a simple example. Your business buys $500 of office supplies. Before entering anything, you should know what you bought, who you bought it from, when you bought it, how you paid for it, and where the transaction belongs in your records.
You should also have the invoice or receipt to support the purchase. That may sound simple, but this is really what bookkeeping is about: Understanding what happened and recording it correctly.
How to Do Your Own Bookkeeping
If you’re learning how to do your own bookkeeping, don’t try to learn everything at once. Start with the day-to-day transactions in your business.
1. Keep Business and Personal Money Separate
This is a good place to start. If business purchases, customer payments, and personal spending are all mixed in one account, bookkeeping becomes harder than it needs to be.
A separate business bank account makes it much easier to see which transactions belong to the business and which don’t. It also means you spend less time trying to work out what a particular payment was for.
2. Don’t Let Transactions Pile Up
One of the easiest bookkeeping habits to get into is putting it off. You tell yourself you’ll enter everything at the end of the month. Then the month gets busy. Then another month goes by.
Before long, you’re looking at a long list of bank transactions and trying to remember what you bought three months ago. It is much easier to keep up with bookkeeping as you go.
You might record transactions every day, once a week, or at another regular interval that works for your business. The main thing is not to let the records fall too far behind.
3. Keep Your Invoices and Receipts
Don’t just record the amount and move on. Keep the document that explains the transaction. That might be a customer invoice, supplier invoice, receipt, bank record, or payment confirmation.
For example, if you have an expense of $250 in your records, you should be able to look at your documents and work out what that $250 was for. Keeping these documents organised from the beginning is much easier than trying to find them later.
4. Learn What Each Transaction Means
This is probably the most important part of learning bookkeeping. Not every payment into the bank is sales income. Not every payment out of the bank is simply an expense. Understanding the difference is an important part of tracking business income and expenses correctly.
A business owner might put their own money into the business. A customer might pay an old invoice. The business might receive a loan. You might buy equipment that needs to be treated differently from everyday supplies. The bank statement will show you that money moved.
Your bookkeeping needs to explain why it moved. That is why understanding the transaction matters before you record it.
5. Understand Journals and Ledgers
You will come across journals and ledgers as you learn more about bookkeeping. To understand how bookkeeping fits into wider accounting processes, you can also read our guide on Bookkeeping vs Accounting: What’s the Difference?
A journal is used to record transactions, while a ledger brings transactions together under particular accounts.
You don’t need to make this more complicated than it is. The basic idea is that individual transactions are recorded and then organised so you can see what has happened in different areas of the business.
Over time, those individual entries build the business records.
6. Check Your Records Against the Bank
Don’t assume that because a transaction has been entered, everything is correct. Compare your bookkeeping records with your bank activity.
You may find that a transaction was missed, entered twice, entered for the wrong amount, or recorded under the wrong date. You may also notice bank charges or other transactions that weren’t included in your records.
Checking the two against each other regularly gives you a chance to find these problems before they become bigger problems.
7. Take a Look at the Records as a Whole
Bookkeeping isn’t finished just because all the transactions have been entered. Every now and then, step back and look at the records.
Ask yourself:
- Have all the sales been recorded?
- Are the main business expenses there?
- Is anything missing?
- Are there transactions you don’t recognise?
- Do the bank records agree with your books?
- Do any amounts look unusual?
You don’t need to be an accountant to notice that something doesn’t look right. Sometimes simply looking at your own records regularly will raise a question that needs to be checked.
What Do You Need to Start?
You don’t need an expensive setup to begin. You need a way to record your transactions, your business bank records, your invoices and receipts, and somewhere to keep everything organised.
That could be accounting software, a spreadsheet, or another bookkeeping system. The tool is only part of it.
A good system should make it easier to see what has happened in the business rather than making the process harder. More importantly, you need to understand the basics of bookkeeping and make time for it regularly.
Is Doing Your Own Bookkeeping Worth It?
For some business owners, it can be. But the benefit isn’t just about saving the cost of paying someone else to enter transactions. There is something useful about knowing your own numbers.
When you record the sales yourself, you see what customers are paying you. When you record the expenses, you see where the money is going. When you check the bank against your records, you start to understand how the day-to-day activity of the business fits together.
That understanding can be valuable, even if you eventually decide to have someone else handle the bookkeeping.
Final Thoughts
Learning how to do your own bookkeeping doesn’t have to start with complicated accounting terms. Start with what actually happens in your business.
Record those transactions. Keep the documents that support them. Check your records regularly. And when you’re unsure about a transaction, don’t simply put it somewhere and move on. Stop and understand what actually happened first. That’s the foundation of good bookkeeping.
As your business grows, you may decide to bring in a bookkeeper or accountant. But having a basic understanding of your own records will still be useful. After all, it’s your business, and you should understand what is happening in it.