What is bookkeeping?

Bookkeeping is a term used to describe the process whereby a record is kept of transactions which have taken place within a business. Such as, income received and money spent. Maintaining a record of business transactions is beneficial for many reasons:

1. To comply with the legal requirement companies have to keep accurate records.

2. You can easily see how much money you are owed and how much money you owe.

3. Your records indicate how well the business is doing and show areas where money could be saved.In addition, HMRC may want to check that the corporation tax return and accounts submitted for your company is accurate. To do this, HMRC may ask to see the records from which your corporation tax return is based. If you cannot provide these records you may have to pay a penalty.

Business records must be kept for at least 6 years.

How do I do my own bookkeeping?

If you are doing your own bookkeeping you do need to ensure that you are accurate with the data you input and keep evidence of the income and expenditure, for example sales invoices, purchase invoices and receipts. This is important as HMRC can choose people at random to investigate and if you are chosen, they will expect to see this paperwork. We highly recommend that you do not leave all of your bookkeeping until the last minute. It is understandable that, at the end of a long day at work, the thought of sitting down and inputting the day’s figures is unappealing to say the least.

However, day’s, week’s or even month’s of data entry will not take more than a few hours. Whereas sifting through twelve months worth of old paperwork will be extremely time consuming, tedious and confusing, especially if you’re under pressure from the deadlines.

Bookkeeping can be done using various formats. The most common tool used by small businesses is either a spreadsheet or a software package such as QUICK BOOKS, XERO , SAGE. The spreadsheet needs to include details of income and expenditure along with details of any assets that have been acquired and liabilities that have been incurred.

We can provide our clients with spreadsheets if they keep relatively basic records or can recommend useful software packages if they keep more detailed records. In addition, we offer ongoing support so if you have any queries along the way we are always here to help.