How to Set Up Bookkeeping in 60 Minutes

Set up basic bookkeeping for your business in one hour with chart of accounts, software setup, and transaction categorization.

1. Choose and configure accounting software. Pick cloud-based software with bank feeds and tax reporting. Set your fiscal year, business entity type, and tax basis (cash vs. accrual). Connect your primary business checking account and credit cards within the software's banking section.
2. Build your chart of accounts. Start with the software's default chart for your business type. Add 5-10 expense accounts specific to your operations (marketing, software, contractors). Keep revenue accounts simple—most businesses need 1-3 categories maximum.
3. Set up transaction rules and categories. Create automatic categorization rules for recurring transactions like rent, utilities, and subscription services. Set rules to split transactions when needed (meals with both food and tip components). This eliminates 60-80% of manual categorization work.
4. Establish your monthly close process. Schedule 2 hours monthly to reconcile bank accounts, categorize remaining transactions, and review P&L. Run a quick ratio check: gross margin should stay within 5% month-over-month unless you've changed pricing or suppliers.
5. Configure backup and reporting. Set up automatic data backup through your software provider. Generate monthly P&L and balance sheet reports. Export to PDF and save locally—software companies can disappear or change terms.