Definition
The day-to-day recording of financial transactions (invoices, payments, expenses) that feeds accounting and tax preparation. Distinct from accounting, which interprets those records, and from tax filing, which is a licensed function. Bookkeeping is the raw ledger every other financial decision is built on, which is why it has to stay current rather than be reconstructed later.
What it looks like in practice
An auto detailer runs a mobile setup: two vans, a part-time helper, and forty-odd jobs a month. Every job produces a receipt somewhere: card payments in the app, cash from a driveway ceramic coating, a supply run for pads and compound, fuel, the insurance premium. Bookkeeping is the habit of putting each of those into the right bucket the week it happens: revenue by job, materials, vehicle costs, payroll. Do that and by the fifth of each month the owner can see that mobile jobs earn more per hour than shop work. Skip it and February is a shoebox.
Why it matters
Bookkeeping is usually the first job an owner hands off, because it's essential, endlessly time-consuming, and easy to fall behind on while actually running the business. The cost of slipping shows up late: a scramble at tax time, deductions nobody remembered to claim, and no honest read on whether a given service line makes money. There's a real tradeoff in doing it yourself; you learn your own numbers, but you learn them at eleven at night. Current books are also what make the rest of it work; you can't manage cash flow off records that stop three months ago.