Your first year of bookkeeping: the five records that actually matter

Bookkeeping in year one is mostly about not creating a mess you have to untangle later. Five records, one setup decision, and a habit.

The setup decision: a separate bank account

Do this before anything else. One account that receives all business income and pays all business expenses, and from which you pay yourself into your personal account.

It costs nothing meaningful and it solves a large share of the problems that come later: what was a business expense, what did I actually earn, how do I prove any of it, and — if you ever form an LLC — whether the liability protection holds at all.

Reconstructing a year of mixed personal and business transactions in April is genuinely miserable, and everyone who has done it once does not do it twice.

The five records

1. Income, gross, by source

What you earned before anyone took anything, per platform. Gross rather than what landed, because the fees are themselves deductible and because you cannot see whether a platform or an agency is worth it if you only ever record the net.

2. Expenses, with the business purpose

Date, amount, vendor, category, and one line on why it was a business expense. That last field takes three seconds and is the entire difference between a defensible deduction and a guess.

3. Chargebacks and refunds

Money that came back out. Almost nobody records these, which means almost everybody overstates their income for the year and pays tax on money they never kept.

4. What you set aside for tax

Running total, separate from everything else, so you always know whether you are ahead or behind. Work out the percentage once and then just watch the number.

5. Anything you paid a person

Chatters, editors, VAs. Who, how much, when, and whether you have their tax details. In the US, over the threshold you owe them a 1099-NEC in January — and collecting a W-9 after the fact is much harder than collecting it with the first payment.

What you can ignore in year one

Double-entry accounting. Accrual versus cash basis. Formal financial statements. Chart-of-accounts theory. None of it earns its keep at this stage, and reading about it is a very effective way to avoid doing the five things above.

The habit

Once a week, ten minutes. Add the week's income, add the week's expenses, move the tax percentage across. Weekly is the right cadence because you can still remember what a transaction was for; monthly you cannot, and quarterly you are doing archaeology.

When to get an accountant

Sooner than most people do. If you are earning meaningfully, you are probably past the point where doing it alone saves money — a good accountant usually finds more than they cost, particularly in the deductions creators habitually miss.

Bring them clean records and an honest description of what you do. They have seen stranger, they are not there to judge it, and the quality of what you hand over determines almost entirely how useful they can be.