Simple bookkeeping
Keep business money separate, record every sale and cost, and do a 30-minute monthly check that tells you your real profit and why it differs from the cash in the account.
RULE ONE
A separate account for the business
Open one account or card used only for the business. Every sale goes in there; every business cost is paid from there. When you want money for yourself, you transfer it to your personal account. That's it. Now the business account tells the story of the business and nothing else.
It doesn't need to be special. Many people start with a second ordinary bank account or card. Whether you need a formal business account is one of those local rules to check.
One card for everything vs two
Mixed
Groceries, rent, fabric, a courier, a customer's payment, a friend paying you back. At month end the balance moved, but you can't say why, and finding last spring's business costs means scrolling through everything.
Separate
The business account shows only sales, business costs and your transfers to yourself. Profit, cash and costs are visible at a glance, and records for any local tax or permit are easy to pull together.
Check yourself
Sepideh sells knitted scarves and uses one card for everything: her salary, rent, groceries and all the business money. This month the card balance went up by 400. What can she conclude about the business?
- It made a profit of 400 this month
- It made at least 400, since some of the costs on the card were personal, not business
- Very little, because the balance mixes everything
- It lost money, because personal costs are always higher
Show the answer
Very little, because the balance mixes everything
Right. The 400 is her salary minus rent and groceries plus or minus the business. The business could have made 900 or lost 200; the balance can't tell her. A separate account can.
RULE TWO
Record every sale and every cost
Each line needs only five things: date, what it was, amount, in or out, and a category (materials, packaging, delivery, fees, ads, equipment). Record on the day, while you remember. Keep a photo of every receipt or payment message. The small cash costs matter most, because they're the ones memory drops.
'12 Mar · 3 m of wool · 45 · out · materials'. Ten seconds. A notebook, a spreadsheet or a simple app all work; use the one you'll still be using in month six.
Farhad's candle business, one month
Sales 2,000
Materials (wax, wicks, jars) 800
Packaging 100
Delivery 200
Marketplace fees 100
Page ads 100
---------------------------------------
Total costs 1,300
Profit = 2,000 - 1,300
Margin = 700 / 2,000Profit 700, margin 35%Grouping costs shows where the money goes: materials are 800 of 1,300, about 62% of all costs. That's the line to look at first if margin needs to rise.
Check yourself
Last month Golnaz's records show sales of 1,500. Costs: materials 600, delivery 150, marketplace fees 75, ads 75. What was her profit margin?
- 50%, from sales minus materials and delivery
- 60%, because costs are 900 out of 1,500
- 45%, because the ads were optional
- 40%: profit 600 on sales of 1,500
Show the answer
40%: profit 600 on sales of 1,500
Yes. Costs = 600 + 150 + 75 + 75 = 900. Profit = 1,500 − 900 = 600. Margin = 600 ÷ 1,500 = 40%.
PROFIT IS NOT CASH
Why the account doesn't match the profit
As lesson 6 showed, profit and cash move at different times. Your records can show a good profit while the account barely rises, because money went to stock for next month, a customer hasn't paid yet, or you paid yourself. None of these is a mistake. The monthly check is where you explain the gap, line by line, so a real problem can't hide inside it.
If you can't explain the difference, something is missing from your records: usually an unrecorded cash cost or a payment you forgot to chase.
The monthly check, in 30 minutes
- Match records to the account
Go through the bank statement line by line. Anything missing from your records? Add it now.
- Add up sales and costs by category
Sales − costs = profit. Profit ÷ sales = margin. Write both down.
- Explain the cash
Start from profit. Subtract stock bought ahead, money customers still owe you and what you paid yourself. It should roughly match how much the account went up or down.
- Compare, then decide one thing
Look at last month. Which cost grew? Which product sold best? Choose one change for next month and write it down.
Check yourself
Hamid's records show a profit of 800 this month, but his business account only went up by 200. His records must be wrong.
Show the answer
False
Not necessarily. Say he bought 300 of stock for next month, a customer still owes him 100, and he transferred 200 to himself: 800 − 300 − 100 − 200 = 200. The records are fine. They're only wrong if he can't explain the gap this way.
Check yourself
Farhad is sorting his card payments. Business cost or personal?
- Glass jars for next week's candles
- Dinner out with his family
- Courier fee for three customer orders
- A birthday present for his sister
- The marketplace's monthly seller fee
- New running shoes
Show the answer
Business cost: Glass jars for next week's candles, Courier fee for three customer orders, The marketplace's monthly seller fee
Personal: Dinner out with his family, A birthday present for his sister, New running shoes
Keep it simple enough to keep doing
- A notebook, a spreadsheet or a basic app are all fine. The tool matters less than recording on the day.
- Put a weekly 20-minute slot in your calendar to catch up, and a monthly one for the check.
- Keep receipt photos in one folder per month.
- As the business grows, a bookkeeper or accountant is worth asking, especially before your first tax deadline.
Check yourself
Match each problem to the habit that prevents it
Show the answer
- You can't tell if the business made money → A separate business account
- Small cash purchases keep going missing → Record on the day and photograph receipts
- Profit looks fine but the account is nearly empty → A monthly check that explains cash vs profit
- You take money out whenever you need it → A fixed transfer to yourself on a fixed day
Lesson recap
- Keep one account only for the business, and pay yourself by transfer.
- Record every sale and cost on the day: date, what, amount, in or out, category.
- Profit = sales − costs; margin = profit ÷ sales. Leave nothing out.
- Profit and cash differ; the monthly check explains the gap and ends with one decision.
- Local tax and registration rules differ: check them, and ask a professional when it matters.