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What's the Difference Between Gross and Net Profit?
These two terms get used loosely in casual conversation, but they represent very different numbers — and confusing them can lead to a misleading sense of how well your business is actually doing. Gross Profit is your revenue minus the direct cost of delivering your product or service (Cost of Goods Sold, or for service businesses, often direct labor and materials tied to delivering the work). It tells you how much money is left after covering the costs directly tied to the wo
Kristi Smith
2 min read


What Is a General Ledger?
The term "general ledger" comes up often in accounting conversations, and while it sounds like a specific physical thing, it's really more of a concept — the complete record everything else in your books is built from. In plain terms: the general ledger is the master record of every financial transaction your business has ever recorded, organized by account (per your chart of accounts). It's the single source of truth that all of your financial reports — Profit & Loss, Balanc
Kristi Smith
2 min read


How to Track Project Profitability for Service Businesses
Revenue tells you how much money came in. Project profitability tells you whether the work that generated it was actually worth doing. For service-based businesses, this distinction matters enormously — not all clients or projects are equally profitable, even if they all look similar on the surface. 1. Track both revenue and direct costs by project This means tagging not just the invoice amount for a project, but also the labor time, materials, subcontractor costs, and any ot
Kristi Smith
2 min read


How to Set Up Recurring Invoices
For service-based businesses with retainer clients or repeat work, recurring invoices remove a surprising amount of monthly administrative burden — and reduce the chance that an invoice gets forgotten or sent late. Here's how to set them up well. 1. Confirm which clients are truly recurring Recurring invoicing works best for retainer relationships or ongoing service agreements with a consistent amount due each period. Project-based or one-off work is usually better invoiced m
Kristi Smith
2 min read


How to Know If Your Business Is Actually Profitable
A surprising number of business owners genuinely aren't sure whether their business is profitable — not because the information is hidden, but because "profitable" gets confused with related but different ideas like "busy" or "growing." Here's how to actually answer the question. 1. Start with your Net Income, not your revenue A business can have impressive revenue and still lose money once expenses are accounted for. Your Net Income line on the P&L — revenue minus all expens
Kristi Smith
2 min read


What Separates a Bookkeeper From a Financial Partner
Plenty of bookkeepers will enter your transactions accurately and hand you a report at the end of the month. That's the baseline — necessary, but not, in my view, the full job. What separates a true financial partner from a transactional service provider is what happens with that information, not just whether it's accurate. A transactional bookkeeper categorizes your expenses correctly and moves on. A financial partner notices that your software subscription costs have crept
Kristi Smith
1 min read


Why Structure Beats Hustle When It Comes to Your Finances
Small business culture loves to celebrate hustle — the late nights, the constant motion, the willingness to do whatever it takes. I understand the appeal, and I respect the work ethic behind it. But when it comes to your finances specifically, I've watched hustle quietly cause more damage than it prevents. Hustle, applied to bookkeeping, looks like a frantic weekend trying to reconstruct six months of transactions before a tax deadline. It looks like working until midnight tr
Kristi Smith
2 min read


What's the Difference Between a W-2 Employee and a 1099 Contractor?
This distinction matters far more than most business owners realize — misclassifying a worker is one of the most common and most expensive mistakes a service-based business can make. A W-2 employee works under your direction and control: you set their schedule, dictate how the work gets done, often provide their tools and training, and they work exclusively or primarily for your business. As an employer, you withhold income tax, pay payroll taxes, and typically provide certai
Kristi Smith
2 min read


What Is Depreciation and How Does It Affect Your Taxes?
Depreciation is one of those accounting concepts that sounds abstract but has very real, very practical effects on your tax bill — especially for service-based businesses that own equipment, vehicles, or other significant assets. In plain terms: depreciation is the process of spreading the cost of a long-term asset (like a vehicle, equipment, or computer system) across the years it's expected to be useful, rather than deducting the full cost in the year you bought it. A simpl
Kristi Smith
2 min read


How to Budget for Irregular Income
Service-based businesses — especially those billing by project, retainer, or completed job — often deal with income that varies month to month, even when the business itself is healthy and growing. Here's how to budget around that reality instead of being thrown by it. 1. Calculate your average monthly income over a full year, not a single month A single strong or weak month tells you very little. Look at trailing 12-month average income to get a more honest baseline for budg
Kristi Smith
2 min read


How to Process Payroll Correctly the First Time
Payroll mistakes are expensive — both in real dollars (penalties, corrections) and in trust with your team. Here's how to set it up right from the start. 1. Classify workers correctly before you pay anyone The single most consequential decision is whether someone is a W-2 employee or a 1099 contractor. Misclassifying a worker can trigger back taxes, penalties, and legal exposure. This decision is based on factors like how much control you have over their schedule and work met
Kristi Smith
2 min read


How to Read a Balance Sheet as a Non-Finance Person
If the Profit & Loss statement tells you how your business performed over a period of time, the Balance Sheet tells you where your business stands at a single moment — what it owns, what it owes, and what's actually left over. Here's how to read one without a finance background. 1. Understand the three sections A Balance Sheet is built from three categories: Assets (what you own), Liabilities (what you owe), and Equity (what's left over after liabilities are subtracted from a
Kristi Smith
2 min read


What I Learned Moving Between Corporate Leadership and Small Business Bookkeeping
For a long stretch of my career, I lived in two financial worlds at once — running my own bookkeeping practice while also serving in corporate leadership roles, including VP of Sales & Business Development and General Manager of a fully remote law firm. People sometimes ask how those two things fit together. The honest answer is that they sharpened each other in ways I didn't expect. In corporate leadership, I sat in rooms where financial reports drove real decisions — should
Kristi Smith
2 min read


Why I Built My Business Around Boundaries, Not Burnout
Early in my career, "available" was treated as a virtue. Answer the email at 9pm. Take the call on vacation. Be the person who's always reachable, because that's what dedication looks like — or so the story goes. I spent enough years inside that model, in corporate leadership roles, to know exactly how it ends: not with better work, but with depleted people quietly doing worse work while looking busier doing it. When I built Ledger Bookkeeping Co into what it is today, I made
Kristi Smith
2 min read


What's the Difference Between an Expense and an Asset?
This distinction trips up a lot of business owners, and getting it wrong can actually affect your taxes and your financial reports in meaningful ways. An expense is a cost that's used up in the normal course of running your business within a relatively short period — typically the period in which it's incurred. Office supplies, rent, software subscriptions, and advertising are all classic expenses: you pay for them, and their value is consumed right away. An asset is somethin
Kristi Smith
2 min read


What Is the Matching Principle in Accounting?
The matching principle is one of those foundational accounting concepts that quietly shapes how your financial statements are built — even if you've never heard the term before. In plain terms: the matching principle says that expenses should be recorded in the same period as the revenue they helped generate — not necessarily the period when the cash was actually paid. A simple example: if you pay a contractor in November to build a product you don't sell until January, the m
Kristi Smith
2 min read


How to Manage Multiple Business Bank Accounts Without Confusion
Multiple accounts can be a genuinely useful tool for managing cash flow — but without a clear system, they quickly become a source of confusion instead of clarity. Here's how to keep it organized. 1. Give every account a clear, specific purpose A common and effective structure: one operating account for day-to-day income and expenses, one savings/reserve account for taxes or emergencies, and possibly a third for a specific purpose like payroll. Avoid opening accounts without
Kristi Smith
2 min read


How to Prepare Your Books for a Loan Application
Lenders want to see a clear, accurate financial picture before they'll extend credit — and disorganized books are one of the most common reasons loan applications stall or get denied. Here's how to get ready. 1. Make sure your books are current, not just accurate A lender typically wants to see recent financials — often the last 2-3 years plus year-to-date. If your books are accurate but six months behind, that gap alone can hold up an application. 2. Reconcile everything bef
Kristi Smith
2 min read


How to Choose the Right QuickBooks Plan for Your Business
QuickBooks Online offers several tiers, and picking the wrong one means either overpaying for features you don't use or hitting frustrating limitations down the road. Here's how to think through the choice. Simple Start is built for solo operators with straightforward needs — basic income and expense tracking, simple invoicing, and one user. If you're a sole proprietor with no employees and minimal complexity, this tier likely covers you. Essentials adds multiple users, bill
Kristi Smith
1 min read


Why Most "Urgent" Bookkeeping Requests Aren't Actually Urgent
I want to gently challenge something I hear often: "I need this right away, it's urgent." In my experience, the vast majority of requests framed this way aren't actually urgent in the way they feel in the moment — they're overdue, which feels the same emotionally but requires a very different fix. Urgent means something with a hard deadline that genuinely can't move — a loan closing tomorrow, a legal filing with a fixed date. Overdue means something that should have been hand
Kristi Smith
1 min read
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