How to set up bookkeeping for a service business

The phases

1. Phase 1

   Set up software and accounts

   Week 1-2

   QuickBooks Online is industry standard for service businesses. Choose tier matching business size: - Simple Start ($30/month): solo operator, basic features - Essentials ($60/month): adds bill management, multi-user, time tracking - Plus ($90/month): adds inventory, project profitability, budget. Most service operators settle here. - Advanced ($200/month): for operations approaching $5M+ revenue

   Connect business bank account for automatic transaction import. Set up rules to auto-categorize routine transactions (gas, supplier payments, etc.).

   Connect Stripe or other payment processor to pull customer payment data automatically. Reconciliation between FSM platform invoicing and QuickBooks payment records is critical.

   Set up chart of accounts for service business: revenue accounts (service revenue, product revenue, plan revenue), cost of goods sold (parts, materials, subcontractors), operating expenses (vehicle, insurance, marketing, software), payroll accounts.

   Checkpoints

   • QuickBooks Online subscribed
   • Bank accounts connected
   • Payment processor connected
   • Chart of accounts configured

2. Phase 2

   Establish ongoing maintenance discipline

   Ongoing weekly

   Weekly tasks (1-2 hours): - Categorize new bank transactions - Reconcile FSM platform invoicing vs QuickBooks payment records - Process any vendor bills received - Run AR aging report; follow up on overdue invoices

   Monthly tasks (2-4 hours): - Reconcile all bank accounts - Review P&L and balance sheet for unusual items - Pay vendor bills on schedule - Process payroll (if not handled separately)

   Quarterly tasks (3-5 hours): - Quarterly tax filings (federal estimated, state) - Review profitability by service type - Track key metrics: revenue growth, gross margin, expense trends - Year-to-date vs year-ago comparison

   Document the routine in a checklist. Consistent execution is more important than sophistication.

   Checkpoints

   • Weekly maintenance routine established
   • Monthly reconciliation cycle
   • Quarterly review process

3. Phase 3

   When to bring in professional help

   When triggered

   Bookkeeper vs CPA: bookkeeper handles ongoing transaction processing and basic financials ($300-$800/month for small service business). CPA handles tax preparation, complex accounting questions, business advisory ($1,500-$5,000/year for tax prep alone).

   When to hire a bookkeeper: when bookkeeping is taking 8+ hours per week of owner time, when transactions are getting backlogged, when categorization errors are appearing, when financial visibility is suffering. Typically operations above $500K revenue benefit from dedicated bookkeeping.

   When to hire a CPA: tax preparation should be CPA-handled from year 1 of any meaningful revenue. Strategic tax planning (entity structure, retirement plans, estate planning) requires CPA involvement.

   Software-augmented bookkeeping: services like Bench, Pilot, or local CPAs offering monthly bookkeeping packages provide professional-quality bookkeeping at $300-$1,000/month. Often better value than hiring solo bookkeeper for small operations.

   Checkpoints

   • CPA engaged for tax preparation
   • Decision framework for bookkeeper vs DIY