Bookkeeping is the process of recording and organizing every financial transaction of a business. It tracks where money comes from (income) and where it goes (expenses). Accurate bookkeeping builds the foundation for financial reports and legal compliance.

Most business owners have a common problem! While sales and growth numbers are at their fingertips, they often struggle to understand why profits don’t match cash in hand. Any guesses why? The answer often hides in:

• Poor recordkeeping
• Missed reconciliations
• Unorganized accounts

Since many growing D2C companies lack proper knowledge of even basic bookkeeping for small businesses, their financial records often remain disorganized. This not only hides the company’s true financial position but can also lead to compliance issues, tax errors, and legal complications.

Don’t want that? Read this article to learn about bookkeeping basics every small business owner must know in 2025. Additionally, you will also learn how outsourcing bookkeeping can be a preferred route.  

What is Basic Bookkeeping for Small Business?

Small business bookkeeping is the ongoing work of recording every financial event that affects a business. Its purpose is to collect and organize “transaction data” so that you can produce the major financial statements, such as:

• Balance sheet
• Profit and loss statement
• Cash flow statement

Those reports show the business’s financial position and support in decision-making processes. To clear your bookkeeping basics, check out some core steps in bookkeeping in the next section.

How to Bookkeep for a Small Business?

Bookkeeping is a step-by-step process that usually starts with recording the transactions and ends with the preparation of financial statements. Let’s see some core steps involved in bookkeeping for a small business below:

• Step I: Record Transactions: Enter sales, purchases, receipts, and payments in a journal when they occur.

• Step II: Post to Ledgers: Move journal entries into the ledger accounts that make up the chart of accounts.
• Step III: Reconcile: Compare ledger balances to external records (bank statements, supplier invoices) and resolve the differences.
• Step IV: Trial Balance: Add debit and credit balances to check that “total debits equal total credits”.
• Step IV: Adjusting Entries: Make month-end or year-end adjustments (accruals, prepayments, depreciation).
• Step V: Prepare Financial Statements: Use adjusted ledger balances to create the balance sheet, profit and loss, and cash flow statements.
• Step VI: Close Period: Transfer temporary account balances (revenues, expenses) to equity for the next period.

How to Prepare a “Chart of Accounts”?

While learning about bookkeeping basics, you must be aware of a “chart of accounts”. It is a structured list that organizes all accounts (assets, liabilities, income, expenses, and equity) into a 100% clear structure. The major advantage? You can easily:

• Record transactions under the right headings
• Maintain consistency
• Generate accurate financial statements for analysis and reporting.

The main groups of a chart of accounts are mentioned as follows:

How to do Bookkeeping for Small Businesses in 2025?

As a VP, director, or senior manager of a growing D2C company, you must be aware of the bookkeeping basics to carefully manage your revenue. Besides tracking what you earn and what you spend, bookkeeping also keeps you prepared for tax season + financial reviews. 

Follow the steps below to set up a simple bookkeeping system in 2025:

1. Open a Separate Business Bank Account

Your first step is to separate business finances from personal money. Open a bank account only for your business transactions. Now, every sale, purchase, and expense should go through it. 

This keeps your financial records clear and allows you to identify business-related costs for tax deductions. 

Nowadays, most banks offer small business accounts with digital statements, which makes recordkeeping and reconciliation much easier. Most D2C companies earning $5M+ revenue also keep their accounts separate to build credibility and save time during audits or loan applications.

2. Choose the Right Bookkeeping Method

Bookkeeping methods decide how you record transactions. There are two main types:

For most growing consumer brands, double-entry is the preferred option!

3. Select an Accounting Method That Fits Your Business

Accounting methods define when income and expenses are recorded. Again, there are two methods:

Usually, growing D2C  brands that want to understand true profitability and plan future budgets follow accrual accounting. 

4. Record Transactions Regularly and Accurately

Recording transactions consistently is the backbone of bookkeeping! Every sale, purchase, payment, or receipt should be entered promptly. Additionally, you must collect and store invoices, receipts, and bank statements as proof for each transaction. 

Doing this weekly prevents gaps or forgotten entries. Today, many tools such as QuickBooks, FreshBooks, and Gusto can automate this process by:

• Linking your bank account 

and

• Categorizing entries automatically. 

Alternatively, if you don’t have the dedicated staff for this purpose, you can outsource bookkeeping to leading accounting companies in the USA, such as Atidiv. We have 16+ years of experience and maintain 100% bookkeeping accuracy. Book a free consultation to learn more. 

Bookkeeping Small Business Trends in 2025!

Bookkeeping has moved beyond manual spreadsheets. In 2025, most D2C companies and consumer brands operating in multiple regions, like the US, UK, and Australia, will use cloud-based and automated tools to manage accounts. 

These systems record transactions, store documents, and prepare reports with minimal manual effort. To know about the latest trends, check out the table below:

Don’t Have Expert Bookkeeping Staff? Why Not Outsource it to Atidiv in 2025?

Studies show that about 37% of U.S. businesses plan to outsource accounting functions by the end of 2025. Additionally, around 70% of small and medium businesses have already outsourced some portion of their accounting needs! 

If you are also searching for bookkeeping partners, Atidiv offers a complete package of financial services, from basic bookkeeping to advanced financial planning. 

This is What Atidiv Offers!

• Comprehensive Bookkeeping Services: Atidiv takes care of all your bookkeeping tasks. Our expert team ensures your financial records are always up-to-date and accurate. 

• Managing daily transactions: We track your business’s income and expenses, and handle accounts receivable (money owed to you) and accounts payable (money you owe).
• Monthly reconciliations: We match your business’s financial records with bank and credit card statements to ensure everything aligns.
• Preparation of financial statements: We generate reports such as balance sheets and profit and loss statements.
  

Additionally, if you’re just starting or want to improve how your business handles finances, Atidiv can help in setting up or improving your financial processes. Our experts can design custom financial systems and even integrate them with your existing tools. 

We are a Team of 390,000+ Chartered Accountants and CPAs

At Atidiv, we have 16+ years of experience in providing finance and accounting services. Our expert team maintains a 95% client retention rate, which shows that our clients are satisfied with our services. 

Atidiv’s bookkeeping services start at only $15 per hour! To get more information, book a free consultation call with us. 

Bookkeeping Basics FAQs

1. While doing bookkeeping for small businesses, what common errors should I avoid?

Most bookkeepers make the following mistakes, which must be avoided:

• Failing to record supporting documents.
• Missing or late reconciliations.
• Mixing personal and business transactions.
• Incorrect cut-off of month-end transactions.
• Not making accruals for known liabilities.

2. What is the process of bank reconciliation?

Bank reconciliation is the process of comparing your business’s cash records with the transactions shown on the bank statement. The objective? It is to ensure that both balances match. 

Please note that differences may occur due to timing issues, such as outstanding checks not yet cleared or deposits still being processed. In reconciliation, any missing or incorrect entries are identified and corrected.

3. How does the accrual basis differ from the cash basis?

In the accrual system, you record income when earned and expenses when incurred, regardless of cash movement. This shows performance for the period when the activity happened. 

On the other hand, in the cash system, you record income and expenses only when cash changes hands. Usually, most growing D2C companies prepare internal management accounts on an accrual basis and track cash flows separately.

4. What are some month-end and year-end tasks related to bookkeeping basics?

Your bookkeeping team should:

• Post all transactions and adjustments.
• Reconcile bank and control accounts.
• Review accruals and prepayments.
• Calculate depreciation and amortization.
• Prepare and review the trial balance.

Lastly, they should produce financial statements and even archive supporting documents in case of an audit.

5. What are the main financial statements?

In bookkeeping for small businesses, three primary financial statements are prepared. These are:

1. Balance Sheet: It is a snapshot of assets, liabilities, and equity as of a particular date (say March 31st).
2. Profit and Loss (Income) Statement: It shows revenues and expenses over a period. The balancing figure represents the net profit or loss.
3. Cash Flow Statement: It reconciles opening and closing cash by showing cash from operating, investing, and financing activities.