What Is Bookkeeping?

Bookkeeping is the day-to-day process of recording every dollar that moves through your business so you, the IRS, and your CPA all see the same numbers.

What a bookkeeper actually does

  • Categorizes bank and credit-card transactions.
  • Reconciles every account against the bank statement.
  • Tracks accounts receivable and payable.
  • Closes the books each month and produces a P&L and balance sheet.
  • Hands clean books to your CPA at year-end.

Bookkeeping vs accounting

Bookkeeping records and organizes the data; accounting interprets it and makes decisions. You need both, but accounting is impossible until bookkeeping is clean.

Next steps

Read cash vs accrual next, or jump to chart of accounts. Behind already? See catch-up bookkeeping.