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How to do bookkeeping for a small business

Bookkeeping means recording every sale, payment and expense, putting each one in the right category, and checking your records against your bank statements. Accounting software connects to your bank, pulls in transactions, helps you categorize them and produces the reports your accountant needs. Capturing receipts is part of the job too, whether your accounting tool handles it or a separate expense tool does.

By Bill Belcamino · Page updated September 23, 2026 · Our methodologyResearched and fact-checked by the HelpCompare team

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Bottom line up frontby Bill Belcamino, founder of HelpCompare

Editorial assessment

Bottom line up front: Which accounting software fits a small business doing its own books?

Xero fits when several people touch the books, since its $27/mo plan has no per-user fees; QuickBooks Simple Start ($38/mo) includes 1 login, and FreshBooks Lite ($23/mo) covers 5 billable clients.

FreshBooks adds $11/month for each extra team member, and QuickBooks' free plan is thin: 1 user, 2 invoices a month and 1 bank connection. If you're moving from spreadsheets or another system, don't try to re-import years of old transactions. Start the new system at the beginning of a financial year, or at least a quarter, and enter opening balances from your accountant's closing figures, because a clean start ties out to the bank on day one while a messy import leaves errors you'll chase at tax time. Keep the old system read-only for lookups, and once each month is reconciled, have your accountant close that period so nobody edits it by accident.

My read of the verified data on this page, checked against vendor sources on September 23, 2026. Disagree or spot an error? Tell Bill

How to do the bookkeeping and track expenses, step by step

Open a separate business bank account and card so business and personal spending never mix.
Connect those accounts to your accounting software so transactions come in automatically.
Set up your expense and income categories with your accountant so they match the reports you will need.
Capture each receipt when you spend, not at month end, and attach it to the transaction.
Categorize new transactions on a fixed schedule, such as every week.
Reconcile each account against its bank statement every month, then review your profit and loss report.

Why it matters

QuickBooks' 2024 survey found businesses spend 25 hours a week on manual data entry/reconciliation. Source

The software this job takes

Which categories a job needs is Editorial assessment; the tools, prices and dates are Verified data.

Prices are each vendor’s published entry plan, recorded from its own pricing page and dated. The example column prices a team of 10: only per-user prices are multiplied; flat and per-account prices are shown as published. Change the team size in the finder.

You need this

Small Business Accounting Software

Accounting software sends invoices, records payments and expenses, and keeps the books your accountant needs.

Tool	Entry price (as published)	Billing unit	Example: team of 10	Free plan	Verified
QuickBooks	From $38/mo	Per account per month (Simple Start)	$38/moFlat per account per month (Simple Start); includes 1 login, so more logins need a higher plan or extra users	YesYes — 1 user, 2 invoices/month, 1 bank connection	Sep 12, 2026Vendor pricing
Xero	From $27/mo	Per account per month, no per-user fees	$27/moFlat per account per month, no per-user fees	NoNo permanent free plan — free trial available	Oct 1, 2026Vendor pricing
FreshBooks	$23/mo (Lite, 5 billable clients)	Per account per month; extra team members $11/month each	$23/moFlat per account per month; extra team members $11/month each	NoNo free plan — 30-day free trial, no card required	Sep 18, 2026Vendor pricing

Compare all Accounting Software pricing →Head to head:Xero vs FreshBooks QuickBooks vs Xero QuickBooks vs FreshBooks6 switching guides Build a decision brief for these →

Not covered on HelpCompare yet

This job usually also needs expense management / receipt capture. We don’t track that category yet, so we have no verified prices to show for it. We would rather say so than guess. The guidance on this page still covers what to look for.

What to look for

Editorial assessment

Bank and card feeds Check that the tool connects to your bank and card providers. Imported transactions save retyping and make reconciling quicker.
Receipt capture See whether you can photograph a receipt and attach it to its transaction, or whether you will need a separate expense tool for that.
Rules for repeat transactions Rules that categorize the same recurring expense the same way every time cut down the weekly sorting.
Access for your accountant Your accountant or bookkeeper should be able to log in with their own access instead of you exporting files for them.
The reports you will use Check that profit and loss, balance sheet and spending-by-category reports are included on the plan you are looking at.
Plan limits Check how the plan is billed and what it caps, such as users or connected accounts, before you move your records into it.

Common mistakes to avoid

Mixing personal and business money Personal spending in the business account makes every transaction a judgment call and makes your books harder to trust.
Letting receipts pile up Receipts found months later are hard to match, and missing ones can leave expenses you cannot back up.
Skipping reconciliation Books that are never checked against the bank drift out of step, and the errors surface at tax time when they are hardest to fix.
Switching systems mid-year without a plan Moving to new accounting software partway through a year can split your records. Agree on a switch-over date with your accountant and check what history the new tool can import.

What to settle before you buy

Who does the day-to-day categorizing, and who reviews it?
Does your accountant or bookkeeper prefer a particular accounting system?
Which bank accounts, cards and payment processors must connect?
How will receipts be captured, and by whom, including staff who spend on the business?
Do you need to see income and costs by project, location or client?
How much history do you need to bring over from spreadsheets or an old system?

Ready to take it to whoever signs off?Turn your shortlist into a one-page decision brief with verified prices, or price the whole job for your team size.

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Frequently asked questions

How do I do bookkeeping for a small business?

Record every sale and expense, put each one in a category, keep the receipts, and check your records against your bank statements each month. Bank feeds in accounting software take much of the retyping out of the recording. The table above compares the 3 accounting tools we track (QuickBooks, Xero and FreshBooks).

How do I keep track of expenses and income?

Run all business money through one business account, connect it to accounting software and categorize each transaction as it comes in. Photograph receipts when you spend so every expense has a record behind it.

What should I look for when switching accounting software?

Check that the new tool connects to your bank, produces the reports your accountant uses and can import your existing records. Agree on a switch-over date with your accountant so a year's books are not split across systems. The table above shows each tool's verified entry price and billing unit.

Do I still need an accountant if I use bookkeeping software?

Software records and reports your transactions, but it does not decide how they should be treated for tax. An accountant can review your books and handle year-end work, so ask one what applies where you operate.

How we built this page

We start from the job, not the product. The phrasings people search for this job (for example “how to do bookkeeping for small business”) come from our research into how small and mid-size teams describe it. Which software categories the job takes is our editorial judgment. Every tool, entry price, billing unit and date comes from HelpCompare’s open dataset, recorded from each vendor’s own pricing page; nothing is estimated, and where a vendor publishes no price we say so. We take no affiliate commissions and publish no scores of our own. See our methodology or download the data from Open Data.

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How to do bookkeeping for a small business

Bottom line up front: Which accounting software fits a small business doing its own books?

How to do the bookkeeping and track expenses, step by step

The software this job takes

Small Business Accounting Software

Not covered on HelpCompare yet

What to look for

Common mistakes to avoid

What to settle before you buy

Frequently asked questions

How do I do bookkeeping for a small business?

How do I keep track of expenses and income?

What should I look for when switching accounting software?

Do I still need an accountant if I use bookkeeping software?

How we built this page

More jobs in Money

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