Maintain accurate financial records

Keep a complete, current record of your business’s financial activity so you can understand what it earns, spends, owns, and owes. Use separate business accounts, retain supporting documents, and record transactions consistently.

Classify sales, expenses, loans, asset purchases, and owner contributions or distributions correctly, because each affects the accounts differently. Regularly reconcile your accounts, which means comparing your records with bank and credit card statements and explaining any differences.

Assign responsibility for keeping the books current and resolving errors. Maintain enough detail to understand where the money is going and produce reliable financial statements that support decisions about pricing, spending, hiring, and future commitments.