Bookkeeping isn’t the most exciting topic — and it’s probably not the reason you chose to start a business. But it’s vital to monitoring your startup’s health and claiming tax deductions. Here’s what new business owners should know about bookkeeping.
💻 How I wrote this article
I interviewed three bookkeepers in August 2025 about best practices for startups.
- Brendan Morgan (CPA), owner of Pathfinder Accounting & Tax in Marion, Illinois.
- Jackie Rockwell, co-founder of the online bookkeeper collective Brass Jacks in Corvallis, Oregon.
- Tatiana Tsoir (CPA, MBA, USTCP), CEO of Linza Advisors in Mount Kisco, New York.
Their expertise informed this list, as did my own experience writing about accounting and running a small business.
Note: In May 2026, I confirmed all the information and advice on this page remained accurate.
1. Subscribe to accounting software
Many new businesses start with spreadsheets to handle their books. But if you’re a full-time startup owner, you should invest in accounting software. It can save you time and help you keep more detailed (and accurate) records.
All three experts I spoke with used some version of QuickBooks when I interviewed them. As the industry standard, it can meet most small businesses’ accounting needs.
That being said, it’s not perfect. (No accounting software is.) Online commenters commonly complain about frequent price hikes and customer support. See our picks for the best QuickBooks alternatives to weigh other products’ pros and cons.
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2. Hire a CPA and a bookkeeper
Most startup owners should find an accountant to file their taxes and a bookkeeper to manage their books. In some cases, that’ll be the same person or same firm.
For example, Morgan handles both bookkeeping and taxes for his clients. He says it’s one of his selling points, because it guarantees his clients’ books will be “optimized for taxes.” The categories you use to organize expenses should correspond with specific types of deductions. This paper trail, so to speak, helps you accurately calculate how much you should write off.
In other words, outsourcing your bookkeeping and taxes to the same firm isn’t just convenient. It can help ensure your books are aligned with the tax deductions you plan to take too.
3. Understand the difference between the two
Even if you hire the same firm to handle your bookkeeping and taxes, it’s important to understand how bookkeepers’ and accountants’ jobs differ. That way, you know whom to consult if there’s an issue.
Rockwell says business owners often assume their CPAs will catch bookkeeping mistakes. But she adds a CPA’s job isn’t to drill into your books — it’s mainly to file your taxes.
This is where you come in. If you think you or your bookkeeper made an error, don’t assume your CPA will correct it at the end of the year. Try to take a more proactive role and ask your bookkeeper for additional information.
4. Have your bookkeeper set up your chart of accounts
Typically, your accounting software will set you up with a universal chart of accounts. This basic setup isn’t sufficient for most startups, according to Morgan. Usually, he goes in and alters it. This may involve deleting unnecessary accounts or adding industry-specific ones.
5. Keep your business and personal finances separate
If you mix business and personal finances, you won’t be able to accurately gauge how your startup is performing. It can make business tax deductions messy too.
A good start is opening a business checking account and applying for a business credit card. Use these solely for business expenses.
Then, connect those accounts to your accounting software’s bank feed. That way, your business-related transactions will sync automatically.
6. Take photos of all receipts
If you plan on deducting an expense, you should probably have a receipt for it.
Morgan suggests scanning your paper receipts with your accounting app at least once per week. That way, you won’t fall behind. This is much more preferable — and organized — than the old receipts-in-a-shoebox method.
Most accounting software comes with a mobile app. You can use it to photograph expense receipts and automatically sync them to your account. This keeps your bookkeeper in the loop too.
7. Double-check your bank feeds
Bank feeds make bookkeeping more convenient, but they’re not foolproof. Rockwell says lots of QuickBooks Online users, for example, use the software’s bank feed but forget to close the loop. You — or your bookkeeper — still need to categorize those transactions. Then, you must match them to ones you’ve entered into your accounting software.
Rockwell adds that automatic bank feeds may record transactions twice too. Especially if you’re using a payments integration. This is something to keep an eye out for.
8. Regularly check key reports
Even if you’ve outsourced all of your bookkeeping tasks, you should check your profit and loss statement and balance sheet regularly. The former summarizes your startup’s revenue and expenses over time. The latter shows your startup’s assets, equity and liabilities.
Tsoir suggests comparing numbers week-over-week. If something doesn’t look right, she wants her clients to speak up.
“I want you to be curious, to ask me questions,” she says. “Let's take a look at your numbers, and I want to make sure that you understand exactly what you're looking at.”
If you’re not sure where to start, try setting up a monthly or weekly meeting with your CPA or experienced bookkeeper to help you interpret the numbers.
9. Know your tax forms and deadlines
Bookkeeping and filing taxes go hand in hand. And not much feels worse than realizing you missed a deadline or need to rush to meet one. That’s why it’s important to know what tax forms your startup needs to file and when.
You might know which federal income tax returns you need to file — but what about the other forms? For instance, Morgan says it’s easy for startups to forget to distribute W-9s to vendors and contractors. You don’t need to file W-9s with the IRS, which is why they’re easy to miss. But they provide your startup with the information it needs to file 1099s at the end of the year.
Here are more details on what else to expect according to your startup’s structure:
Explore our small-business tax guide for beginners for more info on filing for the first time.
Get a FREE review of your books
NerdWallet Small Business helps you get your business in shape for taxes, loans, and growth. Stop worrying about accounting and speak with a real, human expert from our partner, Xendoo.
