SIMPLE BOOK KEEPING
Do you dread doing your accounts? If so, read on for our simple guide in book keeping. The first couple of years in business are not all about making a profit – it is about controlling your finances. Bookkeeping is essential to any business because it makes it so much easier to budget. If you organise your income and expenditure it makes it so much easier to review your financials and get an accurate budget otherwise it’s all mainly guesswork. And that budget is very important to help plan for future expenditure.
You should continuously monitor your financial situation. All money that enters and leaves the business should be documented and all receipts and invoices should be filed according to their date. This will help you to complete your tax returns and balance your books at the end of each month. We are often asked how long you need to keep your records for. The law states that businesses must keep financial records and retain them for a minimum of six years.
Whilst you may use a manual book keeping system, more and more businesses are turning to computerised systems especially with Making Tax Digital as keeping paper records of your business won’t meet the requirements of tax legislation which means Making Tax Digital will apply across the board.
BOOK KEEPING MADE SIMPLE
- Keep a record for every sale.
Cash businesses will have till rolls or POS system
Non-cash businesses (customers are allowed to pay after a certain period e.g. 30 days) can use invoices to record a sale
- Your business may have non-sales income such as loan/interest/tax refund
- Use an invoice or a receipt to record every purchase
- Open a business bank account
This enables you to clearly see all transactions in and out of your account on a monthly basis. Match each transaction from the bank statement to the cash book.
- Record cash payments
Use a petty cash box to keep cash purchase receipts in
- Summarise all the information in a cash book
All money that goes into and out of your account will be documented in the cash book and ideally should be updated regularly.
Check out https://www.nibusinessinfo.co.uk/content/record-keeping for a good guide on record keeping
If you would like more information on programmes or on any of the above information call Jennifer or Kerry on 028 9446 7774.