There are a few different accounting methods that you can implement when you are a new entrepreneur. Your business size will determine which method you should utilize. If you are a small startup with minimal revenue and expenses, doing your bookkeeping in an excel spreadsheet would be sufficient. You would have to manually record each transaction to generate your income and expense totals. Manual bookkeeping can save you the costs associated with purchasing a software, but it can also be time consuming depending on your level of expertise. An excel spreadsheet would also be good if you report your income on a Schedule C instead of filing a separate business return. Sole proprietors and single-member LLCs often report income on a Schedule C, leading to no balance sheet being required, just an income statement.
However, if you are expecting business growth or are planning on filing a business return, you might want to consider investing in a software. There are many different accounting software programs on the market, meeting different needs. For example, if you are in the construction or manufacturing industry, you should look into a software that tracks inventory. Common software programs include QuickBooks, Wave and FreshBooks. QuickBooks gives you the ability to start with a lower software package and upgrade as you go, saving you costs along the way. All basic software programs will give you the ability to complete monthly bank reconciliations, create valuable reports and track business growth.