Bookkeeping for a one-truck business

Good books show whether the business is improving and what needs to change, and they back up every number on the tax return. For a small business starting out, a single-entry system is simple and practical. It records income and expenses through a daily summary of cash received and a monthly summary of money in and out.

What you need

• A business checking account, separate from your personal one
• A folder or box for each year, divided by type of income and expense
• A notebook, a spreadsheet or bookkeeping software

Steps

1. 1

   Open a business checking account

   Keep it separate from your personal account. Deposit every day's receipts into it, and pay business expenses from it so each one is documented.

   60 min

2. 2

   Note the source of every deposit

   Mark each deposit as business income, personal money or a loan, and keep a copy of every deposit slip.

   5 min

3. 3

   Pay yourself by check or transfer

   Write checks to yourself only when taking money out for personal use, and avoid checks made out to cash. If you have to use cash for a business expense, keep the receipt.

   5 min

4. 4

   Keep every supporting document

   Sales slips, paid bills, invoices, receipts, deposit slips and canceled checks all back up the entries in the books. File them by year and by type.

   10 min

5. 5

   Record income and expenses as they happen

   Recording each day is best. Note the job or the customer for each receipt.

   10 min

6. 6

   Reconcile the account every month

   When the statement arrives, check that it, the checkbook and the books agree. Add any bank charges you missed, and allow for deposits and checks that hadn't cleared by the statement date.

   30 min

7. 7

   Keep a record for each piece of equipment

   For the truck and each major tool, note when and how you got it, what you paid, any improvements, and later when and for how much you sold it.

   15 min

A petty cash fund covers small payments without a check. Fill out a slip for each payment and attach it to the receipt as proof. A double-entry system of journals and ledgers tracks assets, debts and net worth as well as income and expenses.