How it Works?

What is bookkeeping?

Bookkeeping involves the process of recording, analyzing and interpreting the financial transactions of a business or individual. The discipline of bookkeeping accounts for a large proportion of the accounting process.

A bookkeeper’s duty is to set up financial statements so that a CPA’s can easily perform legal and tax management in a timely manner.

How Online Bookkeeping Services Work

Online bookkeeping services connect you with real bookkeepers via a secure, online account. The software and setup provided will generally automate a lot of the legwork involved in sending your financial data to your bookkeeping team. At tax time, an online bookkeeping service may also give you a year-end financial package, which contains all of the financial statements your CPA will need to file your small business tax return.

For example, when you sign up to CyberBooks, you’re paired with a team of professional bookkeepers who gather your data and turn it into tax-ready financial statements each month. You can download your financial statements and message your bookkeeping team with questions via the And simple visual reports inside your CyberBooks Quickbooks account help you track and monitor your business’s financial performance.

And when it comes to the actual work of bookkeeping with CyberBooks here’s what the process looks like:

Entering the transactions from your (bank, credit card, PayPal, etc.).

Set up accounting systems and software properly.

Categorizing your earning and spending transaction.

Entering the journal entries In accordance with generally accepted accounting standards in the United States.

Bank Reconciliations month by month.

Ensure they are up to speed with legislative requirements and management reports.

Prepare financial statements (Balance sheet, Income Statement, Trial balance, etc.) monthly and annually.

That means you have Tax-Ready Financial Statements so you can file your taxes with your CPA or we can connect you with our recommended CPA.

Step 1: Separate your business and personal expenses

First thing’s first—to track your business finances effectively, it’s important to permanently separate them from your personal finances.

Why? Liability—if you’re running a corporation or limited liability entity and there isn’t sufficient distance between your personal and business finances, there’s a chance that you could be held personally liable for any debts incurred by your business.

Plus, you’ll want to pull your hair out when it’s time to reconcile bank statements, and you have to try to remember if that restaurant expense was with a client or not.

Step 2: Choose a bookkeeping system

QuickBooks Online

QuickBooks has long been the industry leader in accounting software. The QuickBooks Online product lives in the cloud so businesses and their bookkeeper can stay connected.

Connects to your entire business

Since it’s hosted in the cloud, QuickBooks Online syncs with your online bank account and other cloud software.

Instead of devoting time to tedious data entry, you can focus more on running your business. Your general ledger in QuickBooks Online is always accurate and current so you can have financial peace of mind.

Online invoicing and payments

With QuickBooks Online, you can format invoices to have the look and feel you want. You can also include your business’s logo and colors.

When your customer gets billed, they can pay you online, directly through the invoice. The funds are automatically deposited in your bank account and your accounting records are automatically updated.


Accounting reports come in handy for taxes, applying for financing and simply understanding how your business is doing.

With QuickBooks Online, you can generate Profit and Loss Statement (P&L), balance sheet and dozens of other reports with a single click. You can also customize reports to highlight information that’s important to your business.

Expense tracking

The most successful business owners know exactly how and why their money is spent.

When you work with (CYBERBOOKS), we’ll set you up with expense tracking software that connects with QuickBooks Online so your payables are always accurate and current.


Step 3: Choose an accounting method—Cash or Accrual

It’s important to choose either a cash or accrual accounting method before you start your books.

If you’re using cash accounting, you only record transactions when money has exchanged hands. So if you billed a customer today, those dollars wouldn’t enter your ledger until the customer paid you.

Using the accrual accounting method, you would record the income when you bill the customer, rather than waiting for them to pay you. So at the end of the tax year, you’ve recorded all income that you earned during that year, even if you haven’t collected it yet.

Same goes for deductions. You deduct them when you’re billed, not when you pay. If your company has inventory, in most cases you’ll be expected to use the accrual method.

Step 4: Categorize your transactions

Every transaction you make needs to be categorized when it’s entered in your books. This helps your bookkeeper catch more deductions, and will make your life easier if you get audited.

Six months later, an unmarked receipt for lunch at a restaurant might not mean much to you. Was it a client lunch? Did you treat your employees after a successful quarter?

The way you categorize transactions will depend on your business and industry. Generally speaking, your transactions fall into five account types—assets, liabilities, equity, revenue, and expenses. Individual line items are then broken down into subcategories called accounts. In our ice cream shop example, some accounts in your ledger might be “revenue-ice cream sales”, “expenses-ice cream ingredients”, etc.

The actual work of categorizing will depend on your bookkeeping solution. If you’re doing it all yourself, you could make a note on each receipt. If you’re using an online bookkeeping service like CyberBooks, you’ll just have a conversation with your bookkeeper, and they’ll take it from there.

If you’re going to be doing your own bookkeeping, it’s worth talking to a pro when you set up your system, to make sure the accounts you create align with your industry standards and CPA expectations.

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