Home Based Business Bookkeeping: A One-Page Checklist
A business run from home keeps the same records as any other business, plus proof of the part of the home it uses. That second part is the only thing that makes it different.
Search for home based business bookkeeping and most of what comes back is about starting a bookkeeping business. This is the other thing: how to keep the books for the business you already run from your spare room.
Here is the whole job as one checklist, eighteen items, sorted by how often each comes round.
A year of records, ready when someone asks for them. Example data.
The short version
Weekly: capture receipts while you still remember what they were for.
Monthly: record, label and read. This is where most of the work is.
Quarterly: check your tax set-aside and your home costs.
Yearly: measure the workspace once and keep the number.
Every week: three things
Do this | Why |
|---|---|
Photograph every business receipt | A statement shows where you paid, not what you bought |
Note the business purpose on anything that could look personal | In April you will not remember |
Log any business mileage | It cannot be rebuilt honestly later, only estimated |
Every month: six things
Do this | Why |
|---|---|
Bring in the statement for every account and card | One place for every transaction |
Give each transaction a category | A list becomes income, expenses and profit |
Mark transfers between your own accounts | They are not income |
Mark credit card payments | The purchases were already counted |
Split bills that are part home, part business | Internet and phone are the usual ones |
Read income, expenses and profit | This is what the rest was for |
The fifth row is the one that belongs to a home business. An office in a rented unit has its own bills. Yours shares them with your household, so each shared bill needs dividing the same way every month.
One bill, two purposes, each part in its own category. Example data.
Every quarter: four things
Do this | Why |
|---|---|
Compare profit to date with your tax set-aside | So the estimated payment is already there |
Total your shared home costs for the quarter | Rent or mortgage interest, utilities, insurance |
Check that the same share was used each month | A share that drifts is hard to defend |
Look at which category grew fastest | It is usually the one to ask about |
Every year: five things
Do this | Why |
|---|---|
Measure the workspace and the whole home, in square feet | Both methods start from this number |
Keep a dated photo of the workspace | It shows the space is used the way you say |
List equipment bought, with dates and receipts | Larger purchases are treated differently from supplies |
Run the year-end reports | Totals by category for the return |
Hand your accountant totals, not a folder | Their time is better spent on advice |
The home office rule, in plain words
The IRS allows a deduction for the business use of part of your home only if that part is used exclusively and on a regular basis for business. Both words matter. A desk in the corner of the living room where the family also eats does not pass the first one.
There are two ways to work it out.
Method | How it works | What to keep |
|---|---|---|
Simplified | $5 per square foot of the space used for business, up to 300 square feet | The measurement, and proof the space is used regularly and only for work |
Regular | The business share of your actual home costs | The measurement, plus the bills themselves for the whole year |
The simplified method tops out at 300 square feet, so the most it can come to is $1,500 a year. A 120 square foot office comes to $600. There is no depreciation to work out under it.
The regular method can come to more, and asks for more records. Which is better for you depends on your home and your costs, and is a question for whoever prepares your return. Either way, the checklist above is what makes both possible.
Three home business mistakes
One account for everything. Every question then starts with an hour of sorting. A separate account that is only ever business turns your statement into half your bookkeeping.
Guessing the share each month. Decide the business share of each shared bill once, write down how you got it, and use it every month.
Measuring in April. Measure once, at the start, and keep the figure where you will find it.
See the whole picture free
When home and business share a roof, they share a balance sheet too. La Soglia, the free membership of the Money Mastery System, holds everything you own and owe in one place, personal and business together, with no bank connection and no card.
The monthly rows of this checklist, the upload, the categories, the splits and the reports, are the paid membership, and Clarity remembers how you sorted something last time.
Bring it to the Collective
How other owners divide their internet bill is exactly the kind of thing the discussion feed is good for. The Money Mastery Collective is open on the free membership.
Questions we hear
What records does a home-based business need to keep?
The same as any business: what came in, what it cost to run, and what it owns, each backed by a statement or receipt. On top of that, the size of the workspace and the home costs it shares.
Can I deduct my home office?
Only if the space is used exclusively and on a regular basis for business. Whether you qualify, and which method suits you, is a question for whoever prepares your return.
What is the simplified home office method?
It is $5 per square foot of the space used for business, up to 300 square feet, so a maximum of $1,500 a year.
Do I need a separate bank account?
A sole proprietor is generally not required to have one. It is still the single thing that saves the most time.
References
The exclusive and regular use requirement and the simplified method figures are from the IRS page Simplified option for home office deduction, updated 2 March 2026, and IRS Publication 587, Business Use of Your Home. Recordkeeping follows IRS Publication 583.
Related guides: How to do your own bookkeeping, step by step · Where does my money go? A simple money tracker.
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A note on what this is
This article is educational. The Money Mastery System is an educational tool, not financial software, and nothing here is legal, tax, investment or financial advice. Home office rules have conditions and exceptions that are not covered here, and tax rules change. For guidance on your own circumstances, please speak with a qualified professional who knows them.
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