As a business owner you will need to ensure that your accounting books and records are kept up-to date regularly. At least monthly would be advisable for most small businesses.
As long as your records are accurate and up-to date, it does not matter how you choose to manage them. It is, however, best to keep it simple and do what is most comfortable for you. If you dread doing your bookkeeping every month you will put it off and never actually get round to doing it.
There are a number of different options that you can choose from, but the decision is up to you.
Computerised bookkeeping software
There are many bookkeeping software packages on the market, the most common being Sage and Quickbooks. These are computerised double entry systems, which not only record your sales and expenditure but also keeps account of who owes you money and who you owe money to.
When maintained correctly and regularly these systems can be an excellent tool to keep track of all of your business activities, right down to stock control. However some small businesses find them over complicated and time consuming to use. If your activities are straight forward, an alternative method of record keeping may be more appropriate.
Nowadays, there are also many online software packages, for which you pay monthly. These systems enable you to access your accounting information 24 hours a day, anywhere in the world.
Spread sheets are a good option for those businesses that do not require a full blown double entry system and are adequate for most small businesses that have relatively straight forward transactions.
You will however have to keep a separate log of your debtors and creditors, to ensure that you stay on top of your cash flow.
If you prefer to avoid using a computer, a manual cash book can be a good option for small businesses with simple financial information. This option can be time consuming, as regular transactions will have to be entered every time they occur rather than having a recurring entry set up on a computerised package.
If you hate doing your bookkeeping regularly or you simply do not have time, outsourcing to a local bookkeeper can be a very cost effective option. Not only will they keep your records accurate and regularly updated, it may also save you money on year end accountancy fees. This is because the accountant can place some reliance on the competence of your bookkeeper. This gives the accountant more time to give you tax planning and general business advice.
Online Accountants portal
At Trinity accountants we offer our clients access to our online portal. This is where you can create your sales invoices, enter your expenses and keep track of your finances. As your accountants we will then, depending on your accountancy package, prepare your VAT returns every quarter, review your expenses and give you live remuneration advice, ensuring that you withdraw your cash in the most tax efficient way. Our portal is web based so can be accessed 24/7 from anywhere in the world!
General bookkeeping tips
Whichever method of bookkeeping you decide to implement, the key is to keep doing it regularly.
Here are a few key tips to make sure you produce accurate financial records:
- Ensure you enter the dates of the invoice correctly. It is essential that transactions are recorded in the correct VAT period and claims are not made too soon
- Ensure when invoicing a customer that you use the correct customer name (this saves problems later in case of query or dispute)
- Ensure invoice references are entered onto your accounting system to enable traceability
- Ensure a brief narrative from invoices, (both sales and purchases), are entered onto the accounting system to assist in the review of postings and to save time referring back to original documentation
- Ensure you correctly record VAT on relevant transactions
- Be careful with VAT claims on motor expenses (ensure you are in line with company vehicle rules)
- Remember there are restricted claims for VAT on travel and entertaining
- Ensure you analyse business costs on the accounting system accurately, according to type, in order to provide useful analysis of where the money in your business is spent
- Ensure you reconcile your bank and cash accounts every month
- Review customer and supplier accounts each month to confirm that amounts shown as outstanding are accurate and have not already been paid
- Ensure you complete a simple month end procedure and review the business performance
- Ensure you reconcile your VAT account every quarter to your VAT return
- Ensure you reconcile your PAYE and NIC every month and pay the correct amount over to HMRC to avoid interest and penalties.
If you would like to discuss your business accounts and record keeping with one of our accountants, please do not hesitate to contact us using the below details.