Bookkeeping Basics
Good bookkeeping is at the centre of all your business’ financial figures. Without it, you will not know how your business is performing, you will not receive accurate reports, and it is more difficult to make business decisions.
Bookkeeping is often seen as basic data entry, but good quality bookkeeping goes far beyond this and can make a huge difference to your business.
How can good bookkeeping help my business?
Every business owner knows that time is a valuable, and limited, resource. When running a business, it is easy to ignore, or push bookkeeping down the list. Whilst this is understandable, it can have significant consequences.
If your bookkeeping is not up-to-date, you may miss invoicing a customer, forget to chase outstanding amounts owed, miss payments to suppliers and incur additional charges, incorrectly claim VAT and generally be unaware of how your business is performing from a financial standpoint.
Good bookkeeping not only helps you keep on top of this, but can help with forecasting, estimating tax bills, reducing accountancy fees and giving you more confidence in running your business.
Bookkeeping software
Whilst some businesses still operate with paper or spreadsheets, the introduction of Making Tax Digital, by HMRC, requires most businesses to use compliant bookkeeping software.
There are a number of software packages available in the UK, with traditional desktop software (where data is only stored on that computer) competing with cloud-based software (where data is stored in ‘the cloud’).
How often should I complete my bookkeeping?
This will depend on the size and complexity of the business. Some businesses will require daily bookkeeping, whilst others can manage with weekly updates.
The more up-to-date your books, the better handle you will have on your business.
Bookkeeping basic tips
Whilst it is not possible to cover everything a bookkeeper should do, hopefully the tasks highlighted below will provide a good starting point on what should be covered on a regular basis.
For anyone interested in learning more about the benefits of cloud bookkeeping software, our website has several free fact sheets which can be found here:
Good bookkeeping is at the centre of all your business’ financial figures. Without it, you will not know how your business is performing, you will not receive accurate reports, and it is more difficult to make business decisions.
Bookkeeping is often seen as basic data entry, but good quality bookkeeping goes far beyond this and can make a huge difference to your business.
How can good bookkeeping help my business?
Every business owner knows that time is a valuable, and limited, resource. When running a business, it is easy to ignore, or push bookkeeping down the list. Whilst this is understandable, it can have significant consequences.
If your bookkeeping is not up-to-date, you may miss invoicing a customer, forget to chase outstanding amounts owed, miss payments to suppliers and incur additional charges, incorrectly claim VAT and generally be unaware of how your business is performing from a financial standpoint.
Good bookkeeping not only helps you keep on top of this, but can help with forecasting, estimating tax bills, reducing accountancy fees and giving you more confidence in running your business.
Bookkeeping software
Whilst some businesses still operate with paper or spreadsheets, the introduction of Making Tax Digital, by HMRC, requires most businesses to use compliant bookkeeping software.
There are a number of software packages available in the UK, with traditional desktop software (where data is only stored on that computer) competing with cloud-based software (where data is stored in ‘the cloud’).
How often should I complete my bookkeeping?
This will depend on the size and complexity of the business. Some businesses will require daily bookkeeping, whilst others can manage with weekly updates.
The more up-to-date your books, the better handle you will have on your business.
Bookkeeping basic tips
Whilst it is not possible to cover everything a bookkeeper should do, hopefully the tasks highlighted below will provide a good starting point on what should be covered on a regular basis.
- Ensure your business bank accounts are regularly updated in your software. This is easier with cloud software and the use of automated bank feeds but knowing your cash position is vital for making key business decisions.
- When posting invoices, include a useful description of what the invoice relates to. This will save your accountant time and allow a better understanding of income and expenses if you need to review historic balances.
- In terms of your nominal/ledger codes, keep it simple. Ideally you want these matched to the income and expense lines per your annual accounts, as this will allow more accurate forecasting – it will also save your accountant time.
- Keep accurate records. It is a legal requirement to keep accounting records for a minimum of six years, but keeping organised records will also reduce the risk of missing invoices.
- Regularly review your ledgers for old balances. This will highlight outstanding amounts owed and avoid unwanted balances being carried forwards indefinitely.
- Keep an up-to-date fixed asset register. All software should have the facility to include your fixed assets. Be consistent with depreciation rates and review regularly for any assets that have been scrapped.
For anyone interested in learning more about the benefits of cloud bookkeeping software, our website has several free fact sheets which can be found here:
