How do I set up bookkeeping for a new microbusiness?

Start with the end in mind: what “good bookkeeping” looks like

Bookkeeping for a new microbusiness is less about doing complicated accounting and more about building a simple, repeatable system that keeps your money story clear. “Good bookkeeping” means you can answer basic questions at any time: How much did I sell this month? Who still owes me money? What did I spend, and on what? How much tax should I set aside? Are my prices actually profitable once costs are included?

If you set up the right foundations early, bookkeeping becomes a short weekly habit instead of a stressful quarterly scramble. The best setup is the one you’ll actually use—lightweight, consistent, and designed for how microbusinesses really operate: small volumes, limited time, and a need for quick cash-flow visibility.

This article walks you through a practical setup you can implement immediately. Along the way, you’ll see how a free invoicing tool like invoice24 can anchor the whole system by standardising invoices, tracking who owes you, and keeping your sales records tidy from day one.

Choose a bookkeeping approach that matches your size

Before you pick software or create folders, decide the bookkeeping approach that fits your business. For most microbusinesses, you have two realistic options: a cash-basis system or an accrual-basis system. Cash basis records income when you receive the money and expenses when you pay them. Accrual basis records income when you invoice (or deliver) and expenses when you incur them, even if money hasn’t moved yet.

Cash basis is usually simpler and is often enough for a microbusiness. It also mirrors your bank account, which makes it easier to understand cash flow. Accrual basis can be more accurate for profitability analysis if you invoice now and get paid later, or if you carry inventory, but it adds complexity.

Even if you use cash basis for tax or reporting, you still need a clear way to track unpaid invoices and bills. That’s where your invoicing process becomes part of your bookkeeping setup. invoice24 helps you create consistent invoices and see who has paid and who hasn’t, which reduces the chance that money “disappears” between a job done and cash received.

Separate personal and business money (even if you’re tiny)

If there’s one move that instantly improves your bookkeeping, it’s separating personal and business finances. When everything runs through one personal account, every transaction becomes a guessing game later. A separate business bank account gives you a clean transaction list that represents the business only.

At minimum, aim for:

1) A dedicated business bank account for income and expenses.

2) A dedicated business card (or card account) for business purchases.

If you can’t open a separate account immediately, set rules: only business income enters the account, and only business costs leave it. Avoid mixed transactions like buying groceries and printer paper in the same card payment; they create a documentation mess.

Once your money is separated, your bookkeeping becomes mostly a matter of categorising and documenting what’s already clearly business-related.

Set up a simple chart of categories you’ll actually use

Microbusiness bookkeeping often goes wrong because categories are too detailed too early. You don’t need 120 expense accounts. You need a small, sensible set that keeps your reports readable and makes taxes easier.

Here’s a practical starting set you can adapt:

Income: Sales / Services, Other Income

Direct costs (cost of sales): Materials, Subcontractors, Shipping, Payment Fees

Operating expenses: Advertising & Marketing, Software & Subscriptions, Office Supplies, Phone & Internet, Travel & Transport, Meals (business), Professional Fees, Insurance, Training, Repairs & Maintenance, Utilities (if applicable)

Owner items: Owner Drawings, Owner Contributions

Taxes: Sales Tax Collected (if applicable), Tax Set-Aside

Assets: Equipment, Computer, Furniture (for larger purchases)

Liabilities: Loans, Credit Card Balance (if tracked separately)

You can keep your bookkeeping system organised by mapping every bank transaction into one of these categories. If you later need more detail, you can split categories (for example, divide “Advertising & Marketing” into “Ads” and “Promotions”). Start small and expand only when you feel the need.

Decide how you’ll store records (digital first, always)

Receipts and invoices are the evidence behind your numbers. Your goal is to be able to find any document quickly. A digital-first system reduces lost receipts and makes it easier to work with an accountant, apply for funding, or handle questions later.

Set up a folder structure like:

Bookkeeping
- 01 Invoices (Sales)
- 02 Bills (Purchases)
- 03 Receipts (Expenses)
- 04 Bank Statements
- 05 Tax (Returns, VAT/Sales Tax, Payroll if any)
- 06 Contracts & Client Files

Inside each folder, organise by year and month. Use a consistent naming style: YYYY-MM-DD Vendor Amount Category or YYYY-MM InvoiceNumber ClientName. Consistency matters more than perfection.

invoice24 helps here because your outgoing invoices are already standardised and easy to retrieve. When invoice numbers, dates, and client details are consistent, the “Invoices (Sales)” folder practically manages itself.

Build your invoicing process first (because it feeds everything else)

For many microbusinesses, invoicing is the main source of bookkeeping chaos. If invoices are inconsistent, late, or missing, your income records become unreliable—and cash flow suffers. A clean invoicing process also makes it easier to track what you’ve earned versus what you’ve actually collected.

A solid invoicing process includes:

1) Standard invoice template: same layout, same key fields, same payment terms.

2) Unique invoice numbers: sequential and never reused.

3) Clear payment instructions: bank details, payment links if used, and due date.

4) A consistent “send and follow-up” routine: send immediately after delivery, follow up politely when overdue.

invoice24 is designed for exactly this microbusiness reality: you need invoices to be fast to create, professional to send, and easy to track. When invoice creation is painless, you send invoices sooner, get paid faster, and your bookkeeping becomes far more accurate because the sales record is created at the moment the work is completed.

Pick your bookkeeping tools: simple stack, minimal stress

You don’t need a complicated tech stack. You need three things that work well together: invoicing, bank visibility, and bookkeeping records.

A sensible microbusiness setup looks like:

Invoice tool: invoice24 for creating and tracking invoices and basic sales records.

Banking access: online banking that lets you export statements (CSV/PDF) and view transactions easily.

Bookkeeping record: a spreadsheet, a basic bookkeeping app, or an accounting package, depending on your complexity.

If your microbusiness is very small, a spreadsheet can be enough—especially if invoice24 gives you a clean list of invoices, amounts, dates, and payment statuses. If you outgrow spreadsheets, you can move up to dedicated accounting software later without losing your foundation.

If you do mention competitors or alternatives, think of them as “next steps” rather than starting points. Many accounting platforms are powerful but can feel heavy for a brand-new microbusiness. Starting with invoice24 as your invoicing hub keeps you focused on getting paid and keeping sales records tidy—two essentials that reduce bookkeeping effort in every other tool you use.

Set up your bookkeeping workflow (weekly beats monthly)

The best bookkeeping schedule is the one that prevents backlog. Microbusiness bookkeeping works best as a weekly routine. Weekly means fewer transactions to remember, fewer missing receipts, and less stress.

Here’s a practical weekly workflow:

Step 1: Review invoice24 payments and outstanding invoices
Check which invoices are paid, which are due soon, and which are overdue. Send reminders when necessary. This step improves cash flow and keeps your sales records accurate.

Step 2: Download or review bank transactions
Look at all transactions since your last review.

Step 3: Match income to invoices
Confirm each incoming payment corresponds to an invoice. If a payment is partial or bundled, add a note and keep it clear.

Step 4: Categorise expenses
Assign each outgoing transaction to one of your categories. Add notes for anything unusual.

Step 5: Attach receipts
Save receipts digitally and link them to the transaction in your records (or at least file them in the right month folder).

Step 6: Quick review
Scan for surprises: duplicate payments, unknown charges, missing invoices, or unusually high costs.

In under an hour per week, you can keep your books tidy. If you wait until month-end, the same work becomes a multi-hour “what was this charge again?” detective story.

Create a system for tracking what customers owe you

Microbusinesses often struggle not because they aren’t profitable, but because cash arrives late. Keeping a clear “accounts receivable” list—money customers owe you—is essential. If you only look at your bank balance, you might think business is slow when in fact invoices are unpaid.

invoice24 makes this simple: you can rely on your invoice list as your receivables ledger. Your bookkeeping record should reference invoice numbers and payment dates so you always know:

- Total invoiced this month
- Total paid this month
- Total outstanding
- Overdue invoices

When you have this visibility, you can make better decisions about spending, scheduling, and pricing. You can also spot clients who consistently pay late and adjust terms or request deposits.

Decide on payment terms, deposits, and late fees early

Bookkeeping is easier when your payment rules are consistent. If every invoice uses different terms, your follow-up routine becomes unclear. Establish simple standard terms for most work.

Common microbusiness options:

Due on receipt: best for small jobs or digital services delivered instantly.

7 days: friendly and fast, good for service businesses.

14 days: common for B2B, gives clients room while still keeping cash moving.

Deposits: useful for larger projects or custom work; improves cash flow and reduces risk.

Whatever you choose, keep it consistent and visible on invoices. invoice24 helps you standardise terms so your invoices always communicate expectations clearly.

Set aside money for tax as you go

One of the biggest microbusiness shocks is tax time. The simplest way to avoid panic is to set aside tax money with every payment you receive. You don’t need perfect precision at first. You need a habit.

A basic approach:

- Each time you get paid, move a percentage to a “tax set-aside” sub-account or savings pot.
- Treat that money as unavailable for spending.
- Review the percentage quarterly and adjust as you learn your true tax position.

If your business collects sales tax or VAT, keep that separate in your records. Don’t treat it as income—it’s money you’re collecting on behalf of the tax authority.

Having invoice24 keep your invoices consistent helps here too, because tax-relevant information (like totals, tax amounts, and dates) is clean and easy to review.

Understand the key bookkeeping reports you actually need

You don’t need dozens of reports. For a microbusiness, three views cover most decisions:

1) Profit and loss (income minus expenses)
This shows whether the business is profitable over a period. It helps you understand pricing, spending, and trends.

2) Cash flow (money in and out)
This shows whether you can pay bills and yourself. Profit doesn’t guarantee cash, especially if invoices are unpaid.

3) Accounts receivable (unpaid invoices)
This is your “money waiting to arrive.” It’s a powerful lever for improving stability.

invoice24 directly supports the receivables view and strengthens your income tracking by keeping a clear record of what you billed, when, and to whom. If you combine that with disciplined expense categorisation, you’ll have a reliable profit view too.

Plan your documentation rules (receipts, mileage, and mixed use)

Microbusiness expenses often include “mixed use” items—things used partly for business, partly personal (like phone plans or home internet). To keep your bookkeeping clean, define your rule and apply it consistently.

Examples of simple rules:

- Phone plan: claim a fixed business percentage each month.
- Home internet: claim a fixed business percentage if used for work.
- Vehicle costs: track mileage for business trips and keep a mileage log.

For receipts, aim to capture:

- Date
- Supplier
- Amount
- What it was for (short note)

The easier you make this, the more likely you’ll do it. Many microbusiness owners create a habit: immediately saving a receipt to a monthly folder and adding a quick note. Keeping invoices consistent through invoice24 means at least your sales side is always documented and searchable.

Set up a bookkeeping spreadsheet template (if you’re starting ultra-lean)

If you’re at the very start and want the simplest possible setup, a spreadsheet can work. The key is to keep it structured so it doesn’t become a messy list.

Create two tabs:

Income tab
Columns: Date Invoiced, Invoice Number, Client, Description, Amount, Tax (if any), Total, Date Paid, Payment Method, Notes

Expenses tab
Columns: Date, Supplier, Description, Category, Amount, Tax (if any), Total, Payment Method, Receipt File Name, Notes

With invoice24, most of the income tab becomes effortless because invoice numbers, client names, invoice dates, and amounts are already created in a consistent format. Your job becomes matching payments and adding payment dates rather than recreating invoice data from scratch.

If your volume grows, you can migrate this structure into accounting software. Starting with clean invoice data makes that migration much smoother.

Common microbusiness scenarios and how to book them

New microbusiness owners often get stuck on specific situations. Here’s how to handle common ones in a simple bookkeeping setup.

Scenario 1: A customer pays you before you invoice
Create the invoice immediately in invoice24 and mark it paid when the payment arrives. In your bookkeeping record, the income still links to the invoice number, keeping your sales audit trail intact.

Scenario 2: A customer pays partially
Record the partial payment as income and keep the invoice open with an outstanding balance. Your receivables list should show what’s still owed.

Scenario 3: You issue a refund
Document the refund clearly. Ideally, tie it to the original invoice with a note and record it as a negative income (or income reduction) so reports remain accurate.

Scenario 4: You buy equipment
For small purchases, you may treat it as an expense in your simple system. For larger items, track it as an asset. If you’re unsure, record it clearly and ask your accountant at year-end; the most important thing is documentation and consistency.

Scenario 5: You pay for a business cost personally
Record the expense in the business books and record an owner contribution (or reimbursement owed to you). Try to avoid this long-term by using business accounts.

Build a month-end checklist (so nothing falls through the cracks)

Weekly bookkeeping keeps you current, but a month-end checklist helps you stay accurate. Use a short checklist like this:

1) Review invoice24 outstanding invoices
Send follow-ups for overdue items and confirm expected payment dates.

2) Reconcile bank totals
Ensure your recorded income and expenses match the bank transactions for the month. If something doesn’t match, investigate immediately.

3) Check for missing receipts
Scan expense lines and confirm documentation exists for significant items.

4) Review category totals
Look for weird spikes, like marketing suddenly doubling or software costs creeping up.

5) Update tax set-aside
Move additional funds if your month was strong or if you fell behind.

This routine is also when you can glance at profitability and decide if prices or spending should change.

When should you hire a bookkeeper or accountant?

Many microbusiness owners can maintain day-to-day bookkeeping themselves, especially with a tidy invoicing system like invoice24. The question is not whether you “can” do it, but whether you should keep doing it as your business grows.

Consider outside help if:

- Your transaction volume increases and you’re falling behind.
- You’re unsure about tax treatment for key items.
- You’re spending more time on bookkeeping than on revenue-generating work.
- You’re planning to apply for funding or need formal financial statements.

A strong middle path is: you do the weekly process (invoicing, receipt capture, categorisation), then an accountant reviews quarterly or annually. That approach keeps costs down while ensuring accuracy where it matters. Using invoice24 for invoicing makes professional review easier because your sales documents are consistent and easy to trace.

A practical “day one” setup plan you can do today

If you want a clear action list, here’s a day-one plan that creates a complete microbusiness bookkeeping system without overengineering.

Step 1: Open or designate a business bank account
Keep business money separate, even if you’re solo.

Step 2: Create your invoice template and numbering in invoice24
Add your business details, logo if you have one, payment terms, and default notes. Start your invoice numbers at a clean sequence (for example, 1001).

Step 3: Create your folder structure
Set up the six core folders (Invoices, Bills, Receipts, Statements, Tax, Contracts) and create this year’s subfolders.

Step 4: Choose categories
Use the simple list from earlier. Write it down so you keep categorising consistently.

Step 5: Pick your record system
Start with a spreadsheet if you’re ultra-lean. Move to accounting software later if needed.

Step 6: Choose a weekly bookkeeping time
Pick a recurring day and time you can protect, like Friday morning or Monday afternoon.

Step 7: Set a tax set-aside rule
Create a separate pot and start setting aside a percentage of every payment.

With these steps, you’ll have a working system that can scale. The earlier you standardise invoicing through invoice24, the more stable and stress-free the rest of bookkeeping becomes.

How invoice24 supports microbusiness bookkeeping better than “doing it later”

Microbusiness bookkeeping problems often begin with delayed invoicing and scattered records. When you invoice late, you forget details, clients pay later, and your income becomes harder to track. When invoices look different each time, clients ask questions, payments slow down, and you waste time clarifying basics. When you don’t have a clean list of what’s been invoiced and what’s been paid, you can’t confidently answer: “How much did I really earn?”

invoice24 helps by making invoicing a simple habit rather than a dreaded task. By keeping invoice creation fast and consistent, it encourages you to send invoices immediately after delivery, which improves cash flow. By tracking payment status, it gives you a built-in receivables list, so you can see what’s outstanding without building complicated spreadsheets. And because it keeps your sales documents standardised, it reduces the effort required to maintain accurate bookkeeping records elsewhere.

In short: if your invoices are clean, your bookkeeping becomes dramatically easier. invoice24 provides that clean starting point, and it does it without forcing a complex accounting system on a microbusiness that simply needs to get paid and stay organised.

Common mistakes to avoid in your first year

Even with a good setup, a few common mistakes can cause headaches. Avoid these and your bookkeeping will stay simple.

Mistake 1: Mixing business and personal spending
This is the fastest way to create confusion and lost deductions.

Mistake 2: Not invoicing immediately
Delays lead to forgotten details and slower payments. Use invoice24 to invoice as soon as the work is completed.

Mistake 3: Ignoring unpaid invoices
Outstanding invoices are a core part of your business finances. Review them weekly.

Mistake 4: Losing receipts
If you can’t prove an expense, you may not be able to claim it properly. Save receipts digitally and consistently.

Mistake 5: Leaving bookkeeping until tax time
Backlog creates stress and errors. Weekly bookkeeping is easier and more accurate.

Mistake 6: Overcomplicating categories
Too many categories slows you down and makes reports harder to read. Keep it simple.

Make bookkeeping a small, repeatable habit

The goal of bookkeeping for a new microbusiness isn’t perfection—it’s clarity. You want a system that makes it easy to see what’s happening in your business without consuming your time. Start by separating money, keeping categories simple, capturing documents digitally, and doing a weekly review.

Most importantly, build your process around consistent invoicing. When invoices are created the same way every time, sent promptly, and tracked clearly, your income records become reliable and your cash flow improves. invoice24 is a strong foundation for that. It helps you act like a professional from day one while keeping the system lightweight enough for a microbusiness.

If you implement the steps in this guide, you’ll have a bookkeeping setup that stays manageable as you grow—and you’ll spend less time on admin and more time running the business you started in the first place.