Most bookkeeping messes are not caused by bad math. They are caused by a business that started taking money before anyone decided where the records would live. The first month is the cheapest moment you will ever have to set this up, because there is nothing to untangle yet.
This checklist is organized by week. It assumes a sole proprietorship, LLC, or S corporation with a handful of accounts, which covers most new businesses. Work through it in order, and by day 30 you will have books your accountant can file from.
Week 1: Separate the money and settle the paperwork
Get an EIN from the IRS if you do not have one; it is free, takes minutes online, and you will need it for a business bank account, payroll, and most vendor applications. Then open a dedicated business checking account and, if you want one, a business credit card. From this point on, every business dollar moves through those accounts and nothing personal does. This single habit removes the most common cleanup job in bookkeeping, which is sorting a year of mixed personal and business charges.
If you sell taxable goods or services, register with your state for a sales tax permit before the first sale, not after. Collecting tax without a permit is a problem, and collecting none on taxable sales is a bigger one. Finally, ask your accountant two questions now rather than at tax time: which accounting method you will use (most new businesses qualify for the cash method, which records income when received and expenses when paid), and whether your entity choice fits the income you expect. Both decisions shape how the books are kept from the first entry.
Week 2: Build the system
Choose your software. QuickBooks Online, Xero, and similar tools all do the job for a small business; what matters is that bank feeds connect reliably and your accountant can log in. Then build a chart of accounts sized to your business. The default list in most software has far more accounts than you need, and unused accounts invite miscategorization. Aim for a short list that mirrors how you think about the business: a few income accounts, cost of goods sold if you sell products or run jobs, and operating expenses grouped the way you will actually review them.
Connect the bank feeds and set your start date. Money you put into the business is an owner contribution, an equity account, never income. Costs you paid before opening, such as licenses, a website, or equipment, are startup costs and belong in the books even if you paid personally; your accountant can generally deduct up to $5,000 of startup costs in the first year with the remainder spread over 15 years, but only if they are recorded. Equipment over your capitalization threshold goes on the balance sheet as a fixed asset rather than straight to expense.
Decide where receipts go. The system that works is the one that takes ten seconds: photograph the receipt at the counter into an app or a shared folder, and let the bookkeeping match it later. A shoebox is a plan to lose the deduction.
Week 3: Money in, money out, and the people you pay
Set up an invoice template with your payment terms printed on it and send invoices from the bookkeeping software rather than a word processor, so each one creates a receivable you can track. When a customer pays, apply the payment to the invoice and match the bank deposit to it; adding the deposit as new income double-counts the sale. If you take card payments, record the gross sale as revenue and the processor fee as an expense rather than booking the net deposit, so revenue and fees both show their true size. Sales tax you collect is a liability, not income, and payments to the state reduce that liability.
If you will have employees, set up a payroll provider before the first payday so withholding, deposits, and filings start correctly; retroactive payroll is expensive to fix. For contractors, collect a Form W-9 before you send the first payment and track what you pay each one. For payments made in 2026, the Form 1099-NEC reporting threshold is generally $2,000, up from $600 in prior years, so confirm with your accountant who needs a form in January. Chasing W-9s a year later from people who have moved on is a job nobody enjoys.
Week 4 and every month after: The close
Pick a date within the first week of the following month and reconcile every bank and credit card account to its statement. Categorize what the feed brought in, review open invoices and unpaid bills, move a percentage of profit to a tax savings account for quarterly estimated payments, and then look at the P&L and Balance Sheet for anything that surprises you. Once the month is closed, leave it closed. Numbers that keep moving cannot be trusted for pricing, hiring, or tax planning.
That monthly close is the whole service at Evolv Bookkeeping: $199 per month flat, every account reconciled, transactions categorized, and your P&L and Balance Sheet delivered by day 2 of the following month, with 1099 prep for your contractors at year end. If the business has already been running for a while and the books never got started, catch-up is $199 for each month behind, finished within 2 days and guaranteed in writing. No contracts, cancel anytime, and you can get an instant quote from our homepage.