Why Bookkeeping Matters for Service-Based Businesses
When running a service business, you manage your finances just like you do in real life—money comes in, and money goes out. The difference? You need to track each step accurately in a bookkeeping app like QuickBooks.
Think of it like this:
- You invoice a customer.
- The customer pays the invoice.
- You deposit the money into your business bank account.
With bookkeeping apps, you do all of this digitally; no trips to the bank required. The only extra step? Categorizing transactions correctly so your records stay clean and organized.
📌 Knower Tip: A good bookkeeping system helps you stay compliant, apply for grants and loans, and estimate taxes efficiently.
Step 1: Invoice the Customer
No matter how you get paid; cash, check, or card, always issue an invoice. This creates a paper trail, keeps your books in order, and helps with tax deductions.
Best Invoice Tools for Service Businesses
- WaveApps (Ideal for startups): Free invoicing software, but paid features like payment processing come at an extra cost.
- QuickBooks Online (Great for scaling): You’ll need QuickBooks Payments to accept credit cards or bank transfers.
📌 Knower Tip: If you accept digital payments (Square, PayPal, or Shopify), make sure your invoicing app integrates with them to avoid manual data entry.
Step 2: Use a Bookkeeping or Accounting App
If you’re running a business, you need an accounting app period! Tracking income and expenses helps you:
- Monitor cash flow and profitability
- Apply for grants and loans with accurate financials
- Identify spending habits and predict income trends
- Estimate taxes and implement tax strategies
Recommended Accounting Software for Service Businesses
WaveApps: Free but requires manual uploads for some features. Great for startups on a budget.
QuickBooks Online: More automation and reporting features, perfect for growing businesses. Essentials package is a good starting point.
Step 3: Open a Business Bank Account
If you haven’t opened a business bank account yet, stop what you’re doing and make that’s your next step.
Why You Need a Business Bank Account
- Keeps business and personal finances separate (important for tax deductions)
- Makes tax filing easier with clean records
- Builds credibility when applying for business loans and grants
- Protects personal assets in case of legal issues
📌 Knower Tip: Some banks offer free business checking accounts, compare options to avoid unnecessary fees.
Final Thoughts + Free Resource
Bookkeeping for a service business doesn’t have to be overwhelming. By following these steps, invoicing customers, using an accounting app, and keeping business finances separate, you’ll set yourself up for success.
Want an easy way to stay on top of your finances? Download my Free Bookkeeping Checklist to make sure you’re tracking everything correctly.
Need help setting up QuickBooks? Book a QuickBooks Setup Session with me today!