We’re approaching the end of the third quarter, and with the approach of the end of the year, often comes the realization that financial organization has been pushed to the back burner… again. Usually, this leads to some frantic internet searching to determine how to approach that stack of business receipts and bank statements and organize your small business finances. 

We’re here to help demystify the basics of keeping your small business financial books orderly. We’re going to leave managing your business and other sound financial habits for another day to avoid writing a dissertation. 

Establish Separate Business & Personal Bank Accounts

Having what we call commingled funds (business and personal money mixed together) frequently creates confusion when business owners try to go back and review transactions. It’s also one of the simplest items to fix to organize your small business finances. 

Ask any bookkeeper or accountant, and they will strongly recommend all businesses have separate business bank accounts for all the business activities. For new business owners, this seems like a hassle. Especially if you frequently “pay yourself” from your business account into your personal account. It feels like an unnecessary extra step.  However, having a business bank account allows you to quickly identify business income and expenses and organize your small business finances. This becomes incredibly handy if you have business expenses from common vendors you also purchase from personally… looking at you, Target… 

Getting a business checking account is now easier than ever. Many banks can handle the entire process online and have free checking. Regional banks and credit unions often offer better rates and an opportunity to create relationships within your community. 

Track & Automate 

Now that you have a fancy new business account and possibly even a business credit card, the next step is tracking all your transactions… I know this is the part that made you put it off in the first place. 

The good news is that you don’t have to do it all by hand or be a savvy spreadsheet user. You can. But you don’t have to be to organize your small business finances. There is an umpteen number of free and paid accounting software programs that will take the guesswork out of 80% of your bookkeeping. Popular brands include QuickBooks, FreshBooks, Xero, and Zoho. PCMag does an excellent job of summarizing each tool’s pros and cons and gives a general idea of the ideal user. 

Most (if not all) of the bookkeeping and accounting software programs out there allow you to sync your bank accounts to import your transactions for you. (YAY!!!) AI has come a long way, and QuickBooks, for example, will suggest where it thinks your transactions should be classified. This saves you a ton of time, making transaction classification more of a review process than a decision tree. 

Apps – Additional Automation

To create additional ease and convenience, we live in the age of apps. Want to send an invoice and get paid while on the go? There is an app for that. AND it probably syncs to your bookkeeping software even if it isn’t their app. 

Have a receipt that you want to keep? Snap a quick photo from a record-keeping or bookkeeping app. Boom. Done. 

Drive for work? … You guessed it. There is an app for that… and if you’re lucky, it’s a feature within your bookkeeping software (somewhere). 

Android apps and iOS apps for the tools give you access to your finances anywhere that you have wireless connectivity. (pcmag.com)  

The more you automate, the less you forget, and the more robust your financial records are overall. This process protects your business if it is ever audited, creates additional opportunities for tax deductions, and makes it more likely you’ll remember to record those cash expenses paid out.

Analyze Regularly

Depending on how many transactions you have each month and how forgetful you are, be sure to schedule regular time to analyze all that tracking and automation. Go now. Put it on the calendar, and you’ll stay on top of organizing your small business finances.

AI gets smarter every day (THANKS ALEXA!), but it still has trouble classifying your favorite vendor’s transactions with a bunch of gobblygook hanging off the end.  You know the ones. Those pesky descriptions cut off half the name and end in 37 bazillion numbers? Some human intervention is still required to ensure it ends up classified correctly. 

Make an event out of reviewing your books and records and organizing your small business finances. If you only have a handful of transactions and regular income, you likely remember the ins and outs of what happened. Once a month might be sufficient to keep up on where your money is. If you have 100s of transactions a DAY and have to keep tabs on contractors, vendors, and send multiple invoices throughout the month… consider checking in once a week or hiring professional help… professional bookkeeping help… not therapy.


With accounting software comes the ability to generate reports and financial statements. This reporting function is key to staying organized and helping you make better business decisions based on sound financial information.

Financial Statements represent a formal record of the financial activities of an entity. These are written reports that quantify the financial strength, performance, and liquidity of a company. Financial Statements reflect the financial effects of business transactions and events on the entity. (accounting-simplified.com)

Let’s walk through a high-level overview of reports that help you make better decisions:

  • Profit and Loss Statement, aka Income Statement: Shows if the business is making a profit or losing money. Essential to estimate your taxes each quarter.
  • Balance Sheet: Shows the assets, liabilities, and owner’s equity in the business. Sounds simple, but often the location of DIY errors. A balance sheet shows a snapshot of the business’s financial health and it’s liquidity (ability to pay for stuff).
  • Cash Flow Statement: Handy report, which shows the sources and uses of cash over time. Due to how assets are classified and broken down, it’s helpful to review a cash flow statement with a bookkeeper or accountant to ensure it’s been reconciled and accurately reflects data.
  • Accounts Receivable Aging Summary: Bonus – Invaluable information for any business that sends invoices. This report shows which invoices haven’t been paid and how long they’ve been outstanding. 

Financial Statements and all the related reports available from accounting software are interconnected. They vary in complexity and presentation, but they all rely on the “garbage in, garbage out” assumption. In order to rely on the information on the reports, adequate time needs to be devoted to the details regularly. 

Sum it Up

  • Establish Separate Bank Accounts
  • Track & Automate
  • Analyze Regularly

Indeed, there is no one-size-fits-all solution to organizing your business’s financial documents. Total revenue, payment processing, and the number of business transactions each month determine where you go from here. Accountants love to throw around the phrase “It Depends” because it genuinely does depend on a business structure and complexity, whether we recommend a full-service bookkeeper, in-house accountant, or give a small business owner “the green light” doing it themselves. 

Without a doubt, business financial health starts with organizing your financial records. Success is directly correlated to understanding a business’s financial state. At Tax Time CPAs, we firmly believe financial statements shouldn’t be a mystery. Our business reviews highlight key performance indicators to improve our client’s understanding of their financial health to make knowledgeable business decisions.

Contact us today to start down the road to financial health and organize your small business finances.