How to Do Your Own Bookkeeping Properly (2026)

Quick answer: To set up bookkeeping for a new LLC, work in this order: form the entity and get the EIN, open a separate business checking account, choose a method for recording transactions, set up categories, and then build a routine of capturing, categorizing, reconciling and filing documents. The IRS, in Publication 583, calls opening a business checking account one of the first things to do when starting a business. For an owner who has not formed the LLC yet, ZenBusiness covers the entity and EIN steps, which come before any ledger.

Step 1: What has to happen before any bookkeeping starts?

Books need something to record, and that starts with the business being a distinct entity with its own tax ID. If you run a single-member LLC that is already formed and has an EIN, skip ahead. If the LLC is still on paper only, formation and the EIN come first.

This is where ZenBusiness belongs honestly: it handles formation and the EIN, and it offers a free accounting consultation to customers who form an entity through it. It does not offer business banking, so the account in the next step comes from a bank.

The reason to do this first is practical. Every later step, from the bank account to the tax filing, hangs off the entity's name and number.

Step 2: How should the business account be set up?

Open a business checking account before the first sale or expense. The IRS, in Publication 583, says one of the first things to do when starting a business is open a business checking account, and to keep it separate from the personal checking account.

The same publication says to use the business account for business purposes only. It also says to indicate the source of deposits and the type of expense in the checkbook, which it calls the basic source of information for recording business expenses.

If personal and business money have already mixed, stop adding to the mess. Move business activity to the new account now, and sort the old transactions separately rather than letting them contaminate the new books. This is one place where a one-time cleanup by a professional can save hours.

Step 3: What should be used to record transactions?

For most small LLCs the choice is between accounting software and a bookkeeping service. The order below is alphabetical, not a ranking, and 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. It suits an owner who wants the recording handed off.

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. It suits an LLC with employees.

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. It is software, so the work stays with the owner.

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. It is software for the owner or a hired bookkeeper to work in.

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. It does not include payroll.

Step 4: How should categories be set up?

Categories are the labels that turn a list of transactions into usable records. Keep them few and plain: sales, supplies, software, advertising, travel, fees and owner draws or contributions are typical starting points.

Consistency matters more than detail. A category used the same way every month makes the end-of-year summary quick, while a long list used inconsistently creates cleanup work.

How an LLC is taxed affects which categories matter. For example, an LLC taxed as an S corporation raises questions about owner pay and payroll that go beyond this guide. That is not covered here, and it is a good moment to ask a tax professional.

Step 5: What does the regular routine look like?

A routine turns setup into a habit. Four tasks cover most of it.

Capture. Make sure every deposit and expense reaches the books. Software can import them from bank and card feeds.

Categorize. Label each transaction, noting the source of deposits and the type of expense, as the IRS advises in Publication 583.

Reconcile. Compare the books to the bank or card statement and fix any mismatch. This is the step most often skipped, and it is the one that exposes errors.

File documents. Keep the paper or digital backup for each entry. Publication 583 names the supporting documents: for gross receipts, items such as bank deposit slips, receipt books, invoices and credit card charge slips; for purchases, canceled checks and invoices; for expenses, account statements and credit card sales slips; and for assets, purchase and sales invoices and canceled checks.

A weekly session is easier than a monthly one, because fewer transactions have piled up and memory is fresher.

Step 6: How long do the records have to be kept?

Setting up the books also means setting up an archive. 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 exceptions change the period. 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 should be kept at least 4 years after the tax becomes due or is paid, whichever is later.

Step 7: What extra records apply with employees or sales tax?

If the LLC hires, the rules grow. The US Department of Labor's Fact Sheet 21 says employers must preserve payroll records for at least three years. Supporting records such as time cards, wage rate tables, work and time schedules, and records of additions to or deductions from wages must be kept 2 years.

State sales tax adds another layer. The California Department of Tax and Fee Administration, in Publication 116, says sales and use tax records should be kept 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.

Payroll and sales tax are the usual points where a service saves real time or catches a real error. If either applies, it is worth pricing one.

When is doing it yourself the right call?

For a new LLC with few transactions and no employees, doing the books personally is realistic. The tasks are routine, free or low-cost software handles most of the sorting, and a weekly session keeps things current.

The balance tips toward paying someone when the books fall behind, when payroll or sales tax arrives, or when the owner's time is worth more than the fee. For an owner who wants formation and bookkeeping help from one company, ZenBusiness Money Pro at $30 per month is the lowest-priced service on this page, though 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.