Bookkeeping is simple. It is not easy.
I say that a lot, and I mean both halves of it. After years of doing my own books and helping other people with theirs, I realized the whole thing comes down to four steps that you do over and over. That is the simple part. The nuances, the software decisions, the specific situations that come up in your business, those are the parts that can be hard. But the actual flow of bookkeeping is short enough to hold in your head.
They all start with R. Four of them, plus a bonus fifth.
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Step 1: Record what happened
At the beginning of every bookkeeping cycle, you record what happened. What money came in. What money went out.
That is it. How you do it can vary. Where you do it can vary. Spreadsheet, software, whatever fits how you work. The step itself doesn’t change.
Step 2: Reconcile your books to your statements
At the beginning of every bookkeeping cycle, you record what happened. What money came in. What money went out.
That is it. How you do it can vary. Where you do it can vary. Spreadsheet, software, whatever fits how you work. The step itself doesn’t change.
Step 3: Review what happened
Now you look at what is there. Does anything seem off? Is something missing? Is something in there twice? Is something in the wrong place?
This is where you clean things up. You will often use your reports to do it, which is why this step and the next one work together.
Step 4: Look at your Reports
Once your books are correct, you look at your reports. Your Profit and Loss. Your Balance Sheet, which a lot of people never open.
And then you ask the real questions. How did my business do? Did sales go up the way I expected? Did they go down in a way I didn’t see coming? Are my expenses high overall, or high in one specific category?
This is the part where bookkeeping stops being a chore and starts being information you can use.
Bonus Step 5: Repeat steps 1-4
Then you start over. Record, reconcile, review, reports. Again.
That is bookkeeping in a nutshell.
Why this helps
If you are the kind of person who feels overwhelmed by bookkeeping and avoids it because of that, this can be a good place to start.
Instead of looking at bookkeeping as one enormous thing you are failing at, you can look at the cycle and ask where you actually get stuck. Is recording hard for you? Is reconciling the part you never get to? Is reviewing where you freeze? Is looking at your reports the thing you avoid?
Once you know which step you get stuck on, you can get help right there. That is a much smaller and more answerable question than “I am bad at bookkeeping.”
The cycle strips out the noise. It helps you focus on what is in front of you, what you need to do, and how to finish the loop.
I like making people aware of the ways things can be simpler. This is one of them.
I like making people aware of the ways things can be simpler. If bookkeeping has felt like something you’re failing at, try looking at it as a cycle instead. You are not behind on all of it. You are stuck on one part of it, and that’s a much smaller thing to fix.
If you want help figuring out which part, and building a bookkeeping practice that fits how you actually work, that’s what Calm and Confident Bookkeeping is for. It’s a self-paced program for service-based solopreneurs doing their own books, with one-on-one time built in so you’re not sorting it out alone.
Want to stop dreading your bookkeeping?
