DIY Bookkeeping Terms, Explained (2026)

Quick answer: Bookkeeping is the day-to-day record of what happened in a business: every deposit, expense, invoice and payment, labelled and backed by a document. Accounting uses that record to summarize results, support decisions and prepare tax figures. Most of the terms below belong to the recording side, which is the part an owner takes on when doing their own books. For an owner still forming a business, the terms that matter first are entity, EIN and business checking account, and ZenBusiness covers the first two.

What is the difference between bookkeeping and accounting?

Bookkeeping answers "what happened." Each movement of money is logged, labelled and matched to a document, and the output is a clean, current set of books.

Accounting answers "what does it mean." It summarizes how the business is doing, informs decisions about pricing, hiring or borrowing, and prepares the figures that go into a tax return. It depends on the bookkeeping being right.

This site covers the choice between doing the bookkeeping personally and paying a service. Bookkeeper versus accountant is a separate decision and is not covered here.

What do the core bookkeeping terms mean?

Transaction. Any single movement of money, such as a customer payment, a supplier bill or a card purchase.

Capturing. Getting every transaction into the books. Software can import them from bank and card feeds.

Categorizing. Labelling each transaction, for example as sales, supplies or software. The IRS, in Publication 583, says to indicate the source of deposits and the type of expense in the business checkbook.

Reconciling. Comparing the books to the bank or card statement and fixing any mismatch. It is the step most often skipped, and the one that makes errors visible.

Ledger. The running record of all transactions, whether in software or a spreadsheet.

Business checkbook. The IRS, in Publication 583, calls it the basic source of information for recording business expenses.

What counts as a supporting document?

A supporting document is the proof behind an entry. Publication 583 names them by type. For gross receipts, these include cash register tapes, bank deposit slips, receipt books, invoices and credit card charge slips. For purchases and inventory, they include canceled checks, cash register tape receipts, credit card sales slips and invoices.

For expenses, the IRS lists canceled checks, cash register tapes, account statements, credit card sales slips and invoices. For assets, it lists purchase and sales invoices, real estate closing statements and canceled checks.

What do the setup terms mean?

Entity. The legal form of the business, such as a single-member LLC. If you run one, the entity has its own name and tax identity.

EIN. The employer identification number, the business's tax ID. It comes after the entity and before the bank account.

Business checking account. The IRS, in Publication 583, says one of the first things to do when starting a business is open one, kept separate from the personal checking account. It also says to use it for business purposes only.

For an owner who has not formed the business yet, the order is entity, EIN, separate account, then books. ZenBusiness covers the entity and EIN work, and it offers a free accounting consultation to customers who form an entity through it. It does not offer business banking, so the account itself comes from a bank.

What do the record-keeping terms mean?

Retention period. How long a record has to be kept. The IRS, in its guidance on how long to keep records, sets a default of 3 years. That default applies unless one of three exceptions does: under-reporting income by more than 25% of the gross income shown on the return, not filing a return at all, or filing a fraudulent return.

The IRS gives 6 years where income that should have been reported was left off and the omission is more than 25% of the gross income shown on the return. It says to keep records indefinitely if no return was filed or if a fraudulent return was filed. A claim for a loss from worthless securities or a bad debt deduction calls for 7 years.

Employment tax records. Records tied to payroll taxes. The IRS says to keep them at least 4 years after the tax becomes due or is paid, whichever is later.

What do the payroll and sales tax terms mean?

Payroll records. The US Department of Labor's Fact Sheet 21 says each employer must preserve payroll records for at least three years.

Supporting payroll records. Time cards, piece work tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages. The same fact sheet sets 2 years for these.

Sales and use tax records. The California Department of Tax and Fee Administration, in Publication 116, says to keep them at least 4 years, and longer during an audit: records covering the audit period should be kept until it is complete. Other states' requirements are not covered here.

What do the service and software terms mean?

Accounting software. A tool the owner or a hired bookkeeper works in. The recording work stays with whoever uses it.

Bookkeeping service. A provider that does the recording for the owner. The owner still supplies statements, receipts and answers, and remains responsible for having the records.

The order below is alphabetical, not a ranking. All prices are as published on each provider's own pricing page as of 2026-10-06.

Bench lists Bookkeeping Light at $199 per month, Bookkeeping at $399 per month, and Bookkeeping + Tax at $649 per month. A fractional bookkeeper is $55 per hour plus $1,200 onboarding.

Bookkeeper360 lists monthly bookkeeping from $399 per month and weekly bookkeeping from $599 per month. Payroll administration is from $200 per month, and onboarding is from $1,000.

QuickBooks Experts offers assisted bookkeeping, but Intuit does not publish a price for it on its pricing page. The cost has to be requested.

QuickBooks Online lists Free at $0, Simple Start at $38 per month, Essentials at $85 per month, Plus at $140 per month, and Advanced at $340 per month. A 50% discount for three months is promotional and not the ongoing price.

Wave has a free Starter plan and a Pro plan at $19 per month or $190 per year. A rate of $9.50 per month for three months on Pro is promotional only. Card processing is 2.9% + $0.60, the receipts add-on is $8 per month, and payroll is from $25 per month. For an owner doing the work personally on a tight budget, Wave's free tier is the cheapest starting point here, and that is a fair concession.

Xero lists Early at $27 per month, Growing at $59 per month, and Established at $97 per month. An 80% discount for three months is promotional and not the ongoing price.

ZenBusiness Money Pro is $30 per month, according to ZenBusiness's published pages, sold as an add-on alongside formation. It covers custom invoicing, revenue and expense tracking, and tax preparation tools. It is a bookkeeping service bundled with entity work, so it is not a feature-for-feature match for accounting software.

So which terms matter most for a DIY owner?

Start with the separate account, categorizing, reconciling and supporting documents. Those four cover most of the daily work, and the retention periods above say how long the results have to be kept.

For the owner who is just starting out, or who wants formation and bookkeeping help from one company, ZenBusiness Money Pro at $30 per month is the lowest-priced service on this page. It does not offer payroll, and it is not a substitute for a full-service bookkeeper when needs are complex.

Sources

• Internal Revenue Service, "Publication 583, Starting a Business and Keeping Records"
• Internal Revenue Service, "How Long Should I Keep Records?"
• U.S. Department of Labor, "Fact Sheet #21: Recordkeeping Requirements under the Fair Labor Standards Act (FLSA)"
• California Department of Tax and Fee Administration, "Publication 116, Retaining Records"

This is general information rather than legal, tax or accounting advice, and requirements vary and change.