Core bookkeeping skills
Bookkeeping is essential for businesses that want to remain financially healthy and growth-ready. The skills below are valuable for bookkeepers, business owners, and anyone looking for more clarity, control, and confidence in their financial records.
1. Understanding double-entry bookkeeping
Double-entry bookkeeping records each transaction in at least two accounts—one as a debit, the other as a credit. The double-entry bookkeeping method relies on a foundational equation — assets = liabilities + equity — to maintain accuracy and catch discrepancies before they become costly mistakes.
To get started: Take a basic accounting course (online or in person), and practice by recording sample transactions using spreadsheets or beginner-friendly apps.
2. Familiarity with GAAP (Generally Accepted Accounting Principles)
GAAP is a widely accepted set of accounting principles that provide consistency in how financial information is recorded and reported. Following the GAAP accounting framework helps ensure your statements are accurate, comparable, and transparent. In some cases, such as when a business is seeking an investor or preparing for audits, reporting that’s organized in a GAAP-compliant way may be required by law, lenders, or regulatory agencies.
To get started: Explore free resources from professional organizations such as the Financial Accounting Standards Board (FASB), which sets GAAP standards, or the American Institute of Certified Public Accountants (AICPA). You can also review GAAP accounting fundamentals to build your understanding.
3. Chart of Accounts setup and management
The chart of accounts (COA) is an organized list of account names and numbers used to categorize all transactions in the general accounting ledger. Most COAs include four key categories: assets, liabilities, income, and expenses. A well-structured COA is essential for generating precise financial statements and reports by ensuring that important information isn’t lost in generic categories.
To get started: Study the chart of accounts templates across different industries to understand how they vary. Use small business accounting software like QuickBooks to explore built-in categories and practice setting up sample COAs. To sharpen your skills, try organizing transactions into the correct accounts and comparing your structure to industry best practices or sample setups.
4. Accounts payable and receivable tracking
Managing what the business owes (accounts payable) and what’s owed to the business (accounts receivable) is central to cash flow health. Failing to track them can lead to missed payments, late fees, or lost revenue opportunities.
To get started: Explore software modules or courses focused on accounts receivable and payable processes. Try creating practice invoices and entering sample bills to get comfortable tracking the full cycle.
5. Bank reconciliation
Bank reconciliation means comparing internal records with bank statements to catch missed, duplicate, or incorrect transactions. Doing this regularly helps detect errors early, reduce the risk of fraud, and keep a business’s financial reports accurate and reliable.
To get started: Select one business bank account and download a sample or real bank statement. Practice matching transactions manually first to understand the process, then try using accounting software like QuickBooks to see how automation works. Even if you plan to use software, it’s important to understand how to do it manually so you spot anything that looks off. A step-by-step bank reconciliation guide can help walk you through the basics.
6. Journal entry proficiency
Journal entries are essential to accurate bookkeeping. They're used for non-routine items like corrections, accruals, depreciation, and other adjustments that don’t flow in automatically. Knowing when and how to post manual entries keeps your records accurate, consistent, and tax-ready, especially when automation isn’t enough.
To get started: Review examples of accounting journal entries, then practice entering both standard and correcting entries in your accounting software.
7. Expense categorization
Accurately coding and categorizing expenses is a fundamental bookkeeping skill. It helps clarify where money is going, supports budgeting efforts, and ensures that tax deductions are properly recorded. Clean, consistent categorization also improves the accuracy of financial reports.
To get started: Research recommended expense categories for your type of business (e.g., service-based, product-based, freelance). Practice by sorting sample receipts or bank transactions, and review IRS guidelines (or your local tax authority’s rules) on what may count as a tax deduction.
8. Payroll management
Bookkeepers are often responsible for handling payroll tasks like tracking hours, calculating gross pay, and withholding taxes. Errors can lead to costly penalties, compliance issues, and unhappy employees.
To get started: Use payroll guides from trusted sources like the IRS or your state’s labor department. Review sample payroll runs to see how each step works. Consider using payroll services and tools that provide guided setup and built-in compliance features.
9. Basic tax compliance knowledge
Bookkeepers need a working knowledge of tax obligations that apply to businesses, including sales tax, payroll tax, income tax, and 1099 filing. They play a key role in keeping records accurate and ensuring everything is filed on time.
To get started: Attend webinars, follow news updates from tax authorities, and explore the compliance features built into accounting software to track filing requirements and due dates.
10. Depreciation calculating and tracking
Depreciation allows businesses to spread the cost of long-term assets over time. Bookkeepers often track these schedules and record depreciation accurately for reporting and tax purposes.
To get started: Practice using depreciation calculators and set up depreciation schedules in your books. Consult with an accountant about which depreciation methods apply in different situations.
