// Set up and maintain bookkeeping for solopreneur. Track income/expenses, manage invoices, reconcile accounts, generate reports. Software, chart of accounts, categorization. Not professional. Trigger: bookkeeping, accounting, track expenses.
| name | bookkeeping-basics |
| description | Set up and maintain bookkeeping for solopreneur. Track income/expenses, manage invoices, reconcile accounts, generate reports. Software, chart of accounts, categorization. Not professional. Trigger: bookkeeping, accounting, track expenses. |
Bookkeeping tracks where money comes from and where it goes. Most solopreneurs hate bookkeeping, so they avoid it — then face chaos at tax time or when applying for loans. This playbook gives you a simple system: minimal time, maximum clarity. Disclaimer: This is educational content, not professional accounting advice. Consult a CPA for complex situations.
Don't use spreadsheets. Use accounting software. It automates most of the work and keeps you compliant.
Software comparison:
| Software | Best For | Pricing | Learning Curve | Features |
|---|---|---|---|---|
| Wave | Freelancers, very small businesses | Free (pay for payments/payroll) | Easy | Basic invoicing, expense tracking, reports |
| QuickBooks Online | Most solopreneurs, scaling businesses | $15-50/month | Medium | Full accounting, invoicing, tax reports, integrations |
| FreshBooks | Service businesses, invoicing-heavy | $17-55/month | Easy | Invoicing, time tracking, expense tracking |
| Xero | International businesses, contractors | $13-70/month | Medium | Full accounting, multi-currency, payroll |
Selection guide:
Recommendation: Start with Wave (free). Upgrade to QuickBooks when you hit $50K revenue or need more features.
A chart of accounts is a list of categories for organizing income and expenses. Most software comes with defaults — use them unless you have a specific reason to customize.
Basic chart of accounts (solopreneur):
Rule: Don't over-categorize. 10-15 categories max. Too many creates confusion. Too few makes tax prep hard.
Every dollar in and every dollar out must be recorded. No exceptions.
Income tracking:
Expense tracking:
Receipt rules (IRS):
Bank/credit card reconciliation (monthly): Reconciliation = matching your accounting software records to your actual bank statements.
How to reconcile (15-30 min/month):
Why this matters: Catches errors, fraud, or missed transactions. If software balance ≠ bank balance, something's wrong.
NEVER mix business and personal money. It's the #1 bookkeeping mistake.
Why separation matters:
How to separate:
If you accidentally pay a personal expense from business account:
Your accounting software generates these automatically. You should review them monthly.
Shows: Revenue - Expenses = Profit (or Loss)
What it tells you: Are you making money? Which expense categories are highest?
Example:
Revenue: $10,000
Expenses:
Marketing: $2,000
Software: $500
Contractor: $3,000
Other: $1,000
Total Expenses: $6,500
Net Profit: $3,500
How to use it:
Shows: Assets = Liabilities + Equity
What it tells you: What you own (assets), what you owe (liabilities), and what's left over (equity/net worth).
Most solopreneurs can ignore this unless applying for a loan or raising funding.
Shows: Cash in - Cash out = Net cash flow
What it tells you: Are you running out of cash? (even profitable businesses can have cash flow problems if customers pay late)
How to use it:
Good bookkeeping makes tax prep fast and cheap. Bad bookkeeping means expensive CPA hours or IRS penalties.
Tax prep checklist (do this all year, not just at tax time):
Common deductible expenses (U.S.):
Non-deductible (can't write off):
Rule: When in doubt, ask your CPA. Don't guess on deductions.
Consistency prevents end-of-year chaos. Do these tasks monthly:
Monthly bookkeeping checklist:
Time required: 30 min if your bookkeeping is current. 3 hours if you've been ignoring it.
Rule: Do this monthly. Don't wait until tax season.
DIY bookkeeping works if:
Hire a bookkeeper if:
Cost: Virtual bookkeeper = $200-500/month. Worth it if it saves you 5+ hours/month.
Hire a CPA (tax accountant) if:
Cost: CPA = $500-2,000/year for tax prep. More if you need year-round advice.
Rule: DIY bookkeeping is fine. DIY taxes past $50K revenue is risky. Hire a CPA.
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