How to actually run your books in Ledgerly

Ledgerly opens with a demo company already trading — nine months of invoices, bills, payments, payroll and a bank feed waiting to be reviewed. Click around in it. Break it. Nothing you do there touches anything real, and you will learn the software faster in ten minutes of poking at a full company than in an hour of reading. When you are ready for your own numbers, go to Settings → Import / export → Start this company over.

01Your first fifteen minutes

Do these five things in order. At the end of it you have a real company file and you have seen every screen you will use weekly.

1. Wipe the demo and name your business. Settings → Import / export → Start this company over, then Settings → Company. The one field that matters most is Entity type — sole proprietor, S corp, C corp or partnership. It decides which tax form Ledgerly maps your accounts to, and changing it later means re-checking every mapping. Get it right now.
2. Turn off what you do not use. Settings → Workspace. If you sell services, switch off Inventory. No employees, switch off Payroll. Every module you disable disappears from the sidebar and from the New menu, and nothing else moves. A service business should be looking at six menu items, not sixteen.
3. Look at your chart of accounts. Chart of accounts. You start with a complete US small-business chart — about seventy accounts, already mapped to tax lines. Do not rebuild it. Rename the two or three that do not match how you talk about your business, add anything genuinely missing, and move on. A bloated chart of accounts is the single most common way small businesses make their own books unreadable.
4. Enter your opening balances. The one job that is genuinely fiddly. Section 4 walks through it. Skip it and every report will be wrong in the same quiet way forever.
5. Take a restore point. The Snapshot button in the top bar. Label it "clean setup". Now you can experiment without fear — you are always one click from here.

02The one idea behind everything

You can use Ledgerly without understanding this. But five minutes here will save you hours of confusion later, because every strange-looking number in accounting software comes from this one rule.

When a customer pays you $1,000, two things happen at once: your bank goes up by $1,000, and the amount they owe you goes down by $1,000. One event, two accounts, equal and opposite. That is double-entry, and it is four hundred years old because it works: if the two sides ever stop matching, you know instantly that something is broken.

In Ledgerly, the things you actually fill in — invoices, bills, payments, pay runs — are called source documents. Each one quietly writes a journal entry behind the scenes. Your reports are not built from your invoices; they are built from those journal entries, and they are recalculated from scratch every single time you open one.

Three consequences worth knowing:

• No report can be stale. There is no saved summary anywhere that could drift out of step with reality. If you change an invoice, the Profit & Loss is already different.
• Every number is clickable. A figure on a report drills into the transactions that made it, and those drill into the document you typed. You are never more than two clicks from "but why is it that number".
• Fix the document, not the journal. If an invoice is wrong, edit the invoice. Ledgerly rewrites its journal entry for you. Manually patching the journal to force a number is how people end up with books that look right and are wrong.

03Setting up your company

Entity type is the important one

Under Settings → Company. This single choice controls which tax form Ledgerly maps to:

The chart of accounts, and the discipline of leaving it alone

Your chart of accounts is the list of buckets your money can sit in. Ledgerly gives you a well-built default. The temptation is to add detail — a separate account for every software subscription, every kind of travel. Resist it.

Each account carries a tax line — the line on your actual tax form where its total belongs. This is the mapping that lets the Tax Center hand your CPA a form-ready summary instead of a pile of transactions. When you add an account, set its tax line at the same time. If you do not, Ledgerly will list it under "accounts with no tax line" in the Tax Center until you do.

Sales tax

Settings → Sales tax. Add a rate for each jurisdiction you collect in. Tax you charge accrues to 2200 Sales Tax Payable — a liability, because it was never your money. When you remit it to the state, record it as an expense paid from your bank and categorize it to that same 2200 account. That clears the liability. Categorizing a sales-tax payment as an expense is one of the most common bookkeeping errors there is, and it overstates your costs and understates what you still owe.

04Opening balances: the one fiddly job

Unless you are starting a business from literally nothing today, you have a history: money in the bank, customers who owe you, bills you have not paid, equipment you bought. Ledgerly needs to know where you stand on day one, or every report will be missing a chunk of your business.

Pick a start date — the first day of a month, ideally the first day of your financial year. Then:

1. Get the numbers. Your bank balance on that date (from the statement, not the app — statements are the record). Your last balance sheet, if you have one. A list of unpaid customer invoices and unpaid supplier bills.
2. Post one journal entry for the balance sheet. Journal entries → New journal entry, dated the day before your start date. Debit each asset, credit each liability, and let 3000 Owner / Shareholder Capital take whatever is needed to make the two sides equal. The running Debits / Credits / Difference readout at the bottom will not let you post until it says "balanced".
3. Enter unpaid customer invoices individually. Not as one lump. Enter each real invoice with its real date and its real due date. This is the only way A/R aging can tell you who is ninety days late — and chasing that list is usually worth more than everything else in this manual combined.
4. Enter unpaid supplier bills the same way. Same reasoning, in reverse.
5. Check it. Open Reports → Balance Sheet as at your start date and compare it to whatever you were working from before. It should match. Then take a snapshot labelled "opening balances verified".

05The rhythm to work to

Bookkeeping goes wrong when it becomes a once-a-year panic. It is genuinely easy when it is a habit. This is the whole job:

The Dashboard's Needs your attention panel is your to-do list. It runs the same checks a bookkeeper would: money sitting uncategorized, a trial balance that does not tie, overdue invoices, inventory that has drifted from the ledger, 1099 vendors missing a taxpayer ID. When that panel says "Books look clean", they are.

06Money coming in

The chain is Customer → (Estimate) → Invoice → Payment. Each link records something different, and the mistake most people make is skipping straight to "money arrived", which loses you the ability to chase anyone.

Customers

Set default terms per customer and Ledgerly fills in the due date on every invoice automatically. Open any customer to see their card: open balance, lifetime billed, and average days to pay. That last one is the most useful number on the screen. A customer on Net 30 who reliably pays in 47 days is not a payment problem, they are a pricing problem — you are lending them money for seventeen days, every time, for free.

Estimates

A quote. It touches nothing in your accounts — no revenue, no receivable — because nothing has happened yet. When it is accepted, hit → Invoice and it becomes a real invoice with the lines carried over.

Invoices

The moment you raise an invoice, you have earned revenue and someone owes you money. Both post immediately, whether or not you get paid — that is accrual accounting, and it is why your Profit & Loss can show a good month while your bank account looks thin.

• Save as draft keeps it out of your books entirely until you send it. Use it for anything you are not sure about.
• Picking a product or service on a line fills in the description, price and income account for you, and — if it is a stocked item — handles the cost of goods sold silently in the background.
• Void, never delete. Voiding removes the invoice's effect on every report but keeps the record and the number. A gap in your invoice numbering is the first thing an auditor asks about.

Receiving payment

Always record a payment against the invoice, using Receive payment — never as a plain bank deposit. Money that arrives without being applied to an invoice leaves the invoice sitting on your overdue list forever while your revenue quietly doubles.

• Partial payments — type the actual amount. The invoice goes to "Partially paid" and keeps the remainder on the aging report.
• Card and Stripe fees — put the fee in the fee box. Ledgerly banks the net, clears the invoice in full, and books the fee as an expense. Your bank line will then match to the penny, which is the entire point.
• Deposit to — if several payments arrive and your bank shows them as one lump, send them to Undeposited Funds, then use Bank deposit to group them into a single line that matches your statement exactly.

07Money going out

There are two ways money leaves, and choosing correctly between them takes one second and saves a lot of confusion.

Never do both for the same purchase. That is a double-counted cost, and it is the most common reason a Profit & Loss looks worse than the business actually is.

Receipts

Attach the image to the expense. Expenses → Capture receipt lets you photograph it on a phone or drop it in on a desktop. The file is stored inside your company file — it is never uploaded anywhere. Ledgerly deliberately does not guess the amount off the image: a misread total that quietly posts is worse than typing four characters.

Vendors and the 1099 flag

If you pay a contractor, a freelancer, an attorney, or any unincorporated service provider $600 or more in a calendar year, you must file a 1099-NEC for them by January 31.

08Banking and reconciling

This is where most of your bookkeeping time goes, and where Ledgerly does most of the work for you. The loop is: import → match or categorize → reconcile.

Importing

Download a CSV from your bank — every bank offers this, usually as "export" or "download transactions" in the statements area. Then Banking → Import CSV.

Ledgerly finds the date, description and amount columns itself, handles banks that use separate Debit and Credit columns, skips anything already imported so overlapping date ranges do no harm, and takes a restore point before it touches anything.

Match versus Add — the distinction that matters

Rules — teach it once

Categorize a transaction, then press Rule. From then on, anything whose description contains that text is categorized automatically. Build eight or ten rules for your recurring costs — rent, utilities, hosting, fuel, subscriptions — and the weekly review collapses from twenty minutes to two. Accept all rule matches then clears them in one click.

Deposits are treated more carefully on purpose: money coming in is never auto-categorized unless a rule you wrote says so, because guessing there is what double-counts revenue against an invoice you already raised.

Reconciling

Once a month, with your statement in front of you: Banking → Reconcile. Enter the statement's ending date and ending balance, then tick off each line that appears on the statement. The Difference figure counts down as you go. When it reaches zero, finish.

Ledgerly will not let you finish while a difference remains, and that is deliberate — a reconciliation that is "close enough" proves nothing at all.

When it will not come to zero

• Off by a round number — a whole transaction is missing, or entered twice. Look for that exact amount.
• Off by twice a number on the list — something has the wrong sign; a payment entered as a deposit.
• Off by an amount divisible by 9 — transposed digits, $54 typed as $45. A genuinely old accountant's trick, and it works.
• Off by a small odd amount — usually a bank fee or interest on the statement that you have not entered yet. Add it, then carry on.

09Products and inventory

Turn on the Inventory module only if you hold physical stock you resell. Service businesses should leave it off.

Every product or service you sell can be set up as an item, which saves typing and keeps your reporting consistent. Only tick Track quantity on hand for things you physically stock.

How costing works

Ledgerly uses weighted average cost. Buy 10 widgets at $5 and later 10 at $7, and all 20 are carried at $6 each. When you sell one, $6 moves out of Inventory on your balance sheet and into Cost of Goods Sold on your P&L, automatically, with no journal entry from you.

The clever part: costs are replayed from your source documents in date order every time something changes. Enter a purchase invoice late, backdated, and Ledgerly recalculates every sale that came after it and corrects the cost of goods sold on each one. Most accounting software leaves you to discover that discrepancy at year end.

Adjusting stock

Breakage, theft, a physical count that disagrees with the system — use Products & inventory → Adjust stock. It posts a real journal entry, so your loss shows up in your P&L where you can see it. Never fix a quantity by editing the item record; that changes the number on screen and leaves your ledger saying something different.

Set a reorder point on each item and the inventory page warns you before you run out. The margin column is worth a slow read once a quarter: it is common to find a bestseller that is barely profitable and a quiet product carrying the business.

10Payroll

Setting up an employee

Take the W-4 details straight off the employee's actual Form W-4: filing status from Step 1c, the dependants credit from Step 3, other deductions from Step 4b, and extra withholding from Step 4c. Ledgerly uses the annualized percentage method from Publication 15-T, which is the same method a payroll bureau uses.

What a pay run does

Enter gross pay per person; everything else calculates. You see federal withholding, Social Security, Medicare and the additional Medicare surtax, state withholding, net pay, and — the number owners routinely forget — total employer cost, which is the wage plus the employer's half of FICA plus FUTA and SUTA. An employee on $60,000 costs you closer to $65,000.

Posting a pay run books the wage expense, the employer tax expense, every withholding as a liability, and the net pay leaving your bank. No journal entries required.

Paying the taxes over

The money you withheld is not yours — it sits in the payroll liability accounts until you remit it. The Payroll page shows the running total. When you make the deposit, record it as an expense paid from your bank and categorize it to those liability accounts, not to an expense account. The wage expense was already recorded on the pay run; booking the deposit as an expense too would count the same cost twice.

11Foreign currency

Switch on Multi-Currency and each customer and vendor can have their own currency. Invoice them in theirs; your books stay in yours.

You set the exchange rates yourself under Settings → Currencies. Nothing calls an external service, which means your reported figures never change because someone else's data feed moved overnight. Update rates when it matters to you — monthly is plenty for most businesses.

When a foreign invoice is settled at a different rate from the one it was raised at, the difference is a real gain or loss and Ledgerly books it to 8500 Realized Exchange Gain / Loss automatically. You do not have to think about it, and you should not try to force the numbers — that difference is genuine money you made or lost on currency movement.

12Projects and budgets

Projects

Tag any invoice line or bill line to a project and the Projects page shows income, costs, profit and margin per job. If you quote work — building, agency, consulting, installation — this is how you find out which jobs actually made money, as opposed to which ones felt busy.

The discipline is simple and it is the whole trick: tag the costs as they happen. Reconstructing which subcontractor invoice belonged to which job, four months later, is not a thing anyone does successfully.

Budgets

Set a monthly figure per account, then read Reports → Budget vs Actual. Variances are shown as favourable or unfavourable rather than plus and minus, because being under budget on revenue and under budget on costs are opposite kinds of news.

13Reading your reports

Every report shares the same controls: a date range with quick presets, Print, and CSV. Every figure drills down. Here is what each one is actually for.

The three that matter most

Profit & Loss

Revenue, minus cost of goods sold, gives gross profit — what is left of a sale before overheads. Minus operating expenses gives net income. Every line shows as a percentage of revenue, which is the part to actually watch: absolute numbers grow with the business, but a gross margin sliding from 62% to 54% is a genuine problem showing up early, and it is invisible if you only look at dollars.

Balance Sheet

A photograph on one date. Assets equal liabilities plus equity, always. Ledgerly prints a green tick when they do. The banner is not decoration — if it ever says otherwise, stop and read section 19.

Statement of Cash Flows

Reconciles profit to actual cash, and it is the report that explains the thing that panics business owners: a profitable month with less money in the bank. Usually the answer is on this report in one line — customers took longer to pay, or you bought stock, or you paid down a loan. None of those are expenses, so none of them touch your P&L, but every one of them takes cash.

The operational ones

• A/R Aging — who owes you and how late. Your weekly call list.
• A/P Aging — what you owe and when. Plan payments from this, not from a pile of envelopes.
• Sales by Customer / Item / Project — where revenue comes from. Nearly every business is more concentrated than the owner believes.
• Expenses by Vendor / Category — where it goes. Run it annually and you will cancel something.
• Inventory Valuation — quantity, cost, value and margin per product.
• Budget vs Actual — plan against reality.

The ones your accountant will ask for

• Trial Balance — every account with a balance, debits and credits, proving they tie. Usually the first thing a CPA requests.
• General Ledger — every transaction in one account with a running balance. Where you go to answer "what on earth is in that number".
• Tax Line Summary — your P&L rearranged into your actual tax form's line numbers.
• Audit Log — every change made in the file, newest first.
• Consolidated P&L — all your companies side by side.

14The monthly close

An hour, once a month. Do this and your year end is a non-event; skip it and January is a fortnight of archaeology.

• Import and clear the bank feed. Nothing left in For Review.
• Reconcile every bank and credit card account to the statement. Difference zero, no exceptions.
• Empty the holding accounts. Uncategorized Expense and Ask My Accountant should both be zero. The Dashboard tells you if they are not.
• Check Undeposited Funds. A balance here means payments you recorded never got grouped into a deposit.
• Chase the A/R aging. Everything past 60 days gets a phone call.
• Review the A/P aging and schedule what is due.
• Count your stock if you hold inventory, and post an adjustment for any difference.
• Read the P&L against last month. Anything that moved more than about 20%, click into and understand.
• Confirm the Balance Sheet balances and that nothing looks absurd — a negative bank balance, a receivable from a customer who paid.
• Take a labelled snapshot, and download a full backup once a quarter.

The same checklist lives inside the app at Settings → Close the books, generated live from your actual data.

Locking a period

Once you have filed on a set of numbers, lock them. Set Closed through to the period end date and Ledgerly refuses to post, edit or delete anything on or before it. This is what stops a stray backdated entry silently changing a return you already filed — which is a real and surprisingly common problem, and an unpleasant conversation with your accountant.

15Tax time

The Tax center is the year-end hub. It shows your profit, your deductible expenses mapped to real form lines, your 1099 obligations, the sales tax you are holding, and a filing calendar with the deadlines that apply to your entity type.

The CPA packet

Download CPA packet produces one file containing the Profit & Loss, the Balance Sheet, the full tax-line mapping, the 1099 list and the Trial Balance. Send that instead of a login and a shrug, and you will get a smaller bill, because you have done the part they would otherwise charge you for.

What Ledgerly does and does not do here

It organizes, categorizes, maps to form lines and reports. It does not file returns, and it is not tax advice. Your CPA signs; you sign.

Year-end checklist

• All twelve months reconciled.
• Every 1099 vendor has a taxpayer ID on file, and the report has been run.
• No accounts left unmapped in the Tax Center.
• Stock counted and adjusted.
• Owner draws and personal spending correctly separated from business expenses.
• Loan balances agreed to the lender's year-end statement.
• CPA packet downloaded and sent.
• Books closed through year end once the return is filed.
• Full backup downloaded and stored somewhere that is not this computer.

16Backups and undo

Your data lives in your browser on this machine. Nothing is uploaded anywhere, which is good for privacy and means the backup discipline is yours.

Restore points

Unlimited, on every tier, permanently. Ledgerly takes one automatically before anything risky — a CSV import, a bulk change, closing the books, restoring another snapshot — and you can take one any time with the Snapshot button. Restoring is itself reversible, because it snapshots your current state first.

Take one before anything you are unsure about. It costs a second, and it converts "I think I have broken my books" into an inconvenience.

Full backups

Settings → Backups & restore → Download full backup gives you a JSON file containing every company you have. Restore points protect you from mistakes; this protects you from a lost laptop. Do it monthly, and keep it somewhere that is not the laptop.

Getting your data out

Everything exports to plain CSV — chart of accounts, journal, invoices, customers, vendors, every report. No proprietary format, no export fee. If you ever leave, you leave with your data.

17Running several companies

Click the company name at the top of the sidebar to switch, or to add one. Each company keeps its own chart of accounts, its own customers, its own everything. Set a parent company on a subsidiary and both appear on Reports → Consolidated P&L.

18Working fast

Three habits that compound: set default terms per customer so due dates fill themselves; set up items for anything you sell more than twice; build bank rules for every recurring cost in your first month. Together they remove most of the typing from the job permanently.

19When a number looks wrong

Work down this list. It is ordered by how often each thing is actually the cause.

My profit looks too high

• Bank deposits added as income when they were already recorded as invoice payments — double-counted revenue. By far the most common cause. Check Banking → Categorized for deposits that should have been matched.
• A bill entered and then the payment also entered as a separate expense.
• A loan or an owner contribution categorized as income. Neither is revenue; both belong on the balance sheet.

My profit looks too low

• Owner draws booked as an expense. Money you take out is not a business cost — it is equity, and it belongs in account 3100.
• A sales-tax remittance categorized as an expense instead of clearing the 2200 liability.
• Buying inventory booked straight to an expense account instead of the Inventory asset. Stock is an asset until it sells.
• Invoices still sitting as drafts, so the revenue was never recorded at all.

My bank balance in Ledgerly does not match the bank

This is what reconciliation is for. Reconcile to the last statement, and the difference will point straight at what is missing. Do not adjust the balance by hand — that hides the error instead of finding it, and the error is still there next month.

An invoice shows unpaid but I know they paid

The payment was recorded as a deposit rather than applied to the invoice. Find it in Banking → Categorized, press Undo, then record it properly with Receive payment and match the bank line.

The balance sheet says it does not balance

This should be impossible — Ledgerly refuses to post an entry whose two sides do not match. If you ever see it, download a full backup immediately, then restore the most recent snapshot from before the problem appeared. Do not keep working in a file that reports this.

Inventory value does not match the ledger

Press Recost on the inventory page. It replays every purchase and sale in date order and rebuilds the cost of goods sold on every affected invoice.

20What it does not do

Being straight about this is more useful than a longer feature list. Each of these needs a server and a paid contract with a third party, so they are honestly out of scope for software that runs entirely on your own machine:

• Live bank feeds. You import CSV. Automatic daily feeds need a banking data provider such as Plaid.
• Taking card payments on an invoice. Needs a merchant account with Stripe or similar.
• Reading the amount off a receipt photo. Images attach and store perfectly; the reading needs a vision API.
• Electronically filing payroll taxes and 1099s. Ledgerly calculates and reports them correctly; transmitting to the IRS requires an authorized e-file provider.
• Multiple users, or an accountant login. Needs authentication and a shared database. Today, share the CPA packet or a full backup instead.

Everything else — the double-entry engine, inventory costing, multi-currency, payroll calculation, the full report set, multi-entity, backup and restore — is real and running.

21Questions people ask