Accounting Setup for New LLCs
Set up your accounting correctly from day one. Learn about chart of accounts, bookkeeping basics, and financial tracking for international founders.
Key Takeaways
- Why proper accounting matters
- Accounting basics for LLCs
- Accounting software options
- Chart of accounts basics
- Separating personal and business
Why proper accounting matters
Establishing accounting systems at formation supports regulatory reporting, tax compliance, and financial oversight. It protects your liability shield, simplifies tax filing, and gives you visibility into your business performance.
Accounting basics for LLCs
- Open dedicated business bank account
- Choose and set up accounting software
- Create chart of accounts appropriate for your business
- Establish receipt and expense tracking system
- Set up invoicing process
- Document owner contributions and distributions
Companies are expected to maintain accurate financial records reflecting business activity, ownership transactions, and operating expenses.
Accounting software options
Many companies adopt accounting platforms to standardize recordkeeping and reporting.
| Software | Best For | Price Range |
|---|---|---|
| Wave | Startups, free basic accounting | Free |
| QuickBooks Online | Small businesses, US focus | From $38/mo |
| Xero | International businesses | Approx. $25-90/mo |
| FreshBooks | Service businesses, invoicing | Approx. $23-70/mo |
Chart of accounts basics
Your chart of accounts is the list of categories for tracking income, expenses, assets, and liabilities. Most accounting software provides templates, but customize for your business type.
- Revenue: Sales, services, recurring subscriptions
- Expenses: Software, contractors, marketing, legal
- Assets: Bank accounts, equipment, receivables
- Liabilities: Credit cards, loans, payables
- Equity: Owner contributions, retained earnings, distributions
Separating personal and business
Mixing personal and business finances can 'pierce the corporate veil' and expose you to personal liability. Always use your business account for business expenses only.
Monthly bookkeeping routine
- Categorize all transactions in your accounting software
- Reconcile bank accounts monthly
- Review outstanding invoices and follow up
- Document any owner contributions or distributions
- Save receipts for expenses over $75 (or all for best practice)
- Retain supporting documentation for revenues, contracts, and payments to demonstrate source-of-funds transparency
Common mistakes to avoid
- Using personal accounts for business transactions
- Not keeping receipts for business expenses
- Ignoring bookkeeping until tax time
- Not documenting owner transactions
- Choosing accounting software that doesn't fit your needs
Ready to start your US company?
If you want, EasyBrise can handle formation, EIN, and compliance end-to-end.
Related guides
Continue learning with recommended next steps in Taxes.