Top 10 Bookkeeping Tips For You

Top 10 Bookkeeping Tips For You

It never fails to amaze me how so many small businesses fail to recognise the real importance of keeping accurate financial records. It is a legal requirement!!

You must update the information regularly – penalties have been introduced for not taking reasonable care with records and tax returns, so you need to keep accurate records. It also helps when obtaining finance and preparing tax returns.

Here’s my Top 10 Tips of how to make lighter work of the bookkeeping:

1. Make sure you obtain or provide an invoice or receipt for every business transaction. If you’re VAT registered, make sure it is a valid VAT invoice or receipt.

2. Get organised. Keep all of your invoices, receipts and bank statements in tidy order. It doesn’t have to be expensive! A simple filing system will do the job. We provide our clients with our own ‘File-It’ folder and there is a section for each type of document and this works very well. Simple.

3. Staple! Many till receipts, such as fuel receipts, are two-part and produce two pieces of paper. It’s a good idea to staple these together so that they don’t get lost. Keep delivery notes and the respective invoices together too.

4. Invest in bookkeeping software that suits the needs of your business. There are many options on the market so have a look around and select what is best for you. The size of your business, business type and whether VAT registered or not will have an impact on your purchase. Software isn’t necessarily expensive and there are some great options available.

5. Training. Make sure you have an idea of what you’re doing. If you’re using software, make sure you understand how to use it and process your bookkeeping entries correctly otherwise you will end up in a mess. Seek help from your accountant, especially when it comes to entering higher value items such as computers.

6. Post all your bookkeeping transactions on a regular basis – little and often is easier than catching up every 6 months and it will make life easier at the end of your financial year. You’ll always have an accurate financial picture of your business throughout the year too, rather than just at the end of the year.

7. When paying an invoice, make sure you make a note of how and when it was paid on the invoice including date, amount and cheque number if applicable. It is important that you can easily trace back how expenses have been paid. If paying by cheque, make sure you enter all the details of the payment onto the cheque book counterfoil too.

8. Keep a clear record of any transactions that cannot be wholly charged to the business because there is also an element of personal use too. Keep a note of this as you should be able to reclaim the business element.

9. Keep business and personal transactions separate. It is advisable to open a separate business account for the business. Many banks offer free business banking for small businesses and this is certainly worth looking into.

10. Reconcile your bank account to ensure all of your bank entries have also been recorded into the accounts.

11. Yes, I know this is No. 11 but it is very important. Make sure you keep your records for at least 6 years in case HMRC need to inspect them for any reason in the future.

As a business owner, keeping on top of the books may not necessarily be the best use of your time. If this is the case, you should ensure that you seek professional bookkeeping support. Keep your records in good order and filed neatly – the less work to be done by the bookeeper, the less money it will cost you!

Finally, HMRC offer some good advice on their website about record keeping and is most definitely worth reading.