Hi, I’m CPA Maximiliano Mira Salas. Today, we’re diving into a fundamental—but often underestimated—aspect of managing entities in the U.S.: bookkeeping in accordance with U.S. accounting standards.

At FINANCERS, we assist companies, freelancers, and Latin American investors in meeting the technical requirements imposed by the IRS and state regulatory bodies, ensuring their U.S. entities are properly registered, organized, and documented. Maintaining proper bookkeeping not only guarantees compliance, but also provides a reliable foundation for making informed strategic decisions.

📊 What is bookkeeping under U.S. standards?

Bookkeeping is the systematic and chronological recording of all financial transactions of an entity, following the Generally Accepted Accounting Principles (U.S. GAAP).

This accounting system applies to:

LLCs with one or multiple members (whether disregarded entities or taxed as partnerships).
C-Corporations and S-Corporations registered in any U.S. state.
Foreign entities operating in the U.S. through branches, virtual offices, agents, or marketplaces.

👉 Important: Bookkeeping in the U.S. is not just about using accounting software. It requires professional judgment to properly classify income, expenses, depreciation, tax liabilities, and accounts receivable—always backed by documentation and regular reconciliations.

📋 Key technical components of U.S. bookkeeping

Accounting method used:
- Cash basis: Revenues and expenses are recorded when cash is received or paid. Only allowed for certain small or service-based entities.
- Accrual basis: Revenues and expenses are recognized when earned or incurred, regardless of cash movement. Mandatory for most C-Corps.
The Chart of Accounts must accurately reflect IRS-compliant categories: operating income, deductible expenses, depreciation, amortization, dividends, etc.
Monthly closing and bank reconciliation: Required to issue consistent financial statements and support tax filings (Forms 1120, 1065, or Schedule C).
Asset depreciation and amortization under MACRS: The U.S. tax system requires applying specific depreciation schedules based on asset class, useful life, and type of use.
Payroll and withholding records: Any business with employees (including freelancers hired under 1099 contracts) must maintain detailed records of payments, withholdings, and W-2 / 1099 forms.

⚠️ Why is proper bookkeeping critical from day one?

Avoids penalties for underreporting, misstatements, or inconsistencies in tax filings (1040-NR, 1065, 1120, etc.).
Ensures compliance with requirements from the IRS, FinCEN, Franchise Tax Board, and other state agencies.
Facilitates access to business bank accounts, payment processors, and financing options.
Required for entities obligated to issue informational returns to third parties (e.g., 8805, 1042-S, 1099).
Supports potential IRS audits or regulatory reviews regarding the entity’s operational substance.

📌 Legal and accounting disclaimer

This article is for informational purposes only and does not constitute legal or tax advice. Each case should be evaluated individually, taking into account the taxpayer’s country of residence, global assets, and applicable tax treaties. Designing and maintaining an accounting system in the U.S. requires a CPA specialized in U.S. GAAP and both federal and state tax obligations.

At FINANCERS, we provide full-scope accounting services tailored to the needs of entrepreneurs, freelancers, and Latin American businesses operating in the U.S.—from setting up the chart of accounts to preparing tax reports and monthly reconciliations.

CPA Maximiliano Mira Salas
International Tax Advisor | FINANCERS