Our bookkeeping guide will help your small business with everyday accounting tasks. Getting your accounts right is an important part of running any company. It can be hard finding the right information on how to complete tasks.
We will guide you through from starting your business, to raising invoices, stock control, VAT, petty cash and year end accounts.
Bookkeeping Guide – Getting Started
The first decision to make is, how you are going to complete your bookkeeping. There are several choices the first is to get someone to do it all for you, this is the most expensive option. If you are self-employed, you could do it all yourself and submit the self-assessment tax return. The last option is to complete most of the work and get a bookkeeper or accountant to prepare the final figures.
If you are planning to use someone to do the transactions for you, it is worth having an initial meeting to discuss the requirements. They can suggest the best way of completing the work. It can either be done using Excel spreadsheets or accounting packages.
Accounting packages will vary in cost and are payable on a monthly basis. There are a few free options, but not are all suitable and have the tools to complete successfully the reports required.
Below are some of the main elements of the accounts and a brief explanation.
Profit and Loss Account
The Profit and Loss account is made up of income and expenditure. The balance of income, less expenses is you profit or loss for any given period. At year-end, a report will be required for the whole year. A business may need one produced more frequently for internal records.
Income is from your sales of goods or services to your customers. You may be dealing business to business or directly with the end user. All bank, Paypal, cash and any other forms of income will need to be recorded. If you raise an invoice for a customer, this may also be posted as income for your business.
Expenditure is anything that you pay out on your business. It can be to purchase goods for resale or general expenses including utilities, postage, advertising, rent, software, and travel.
In the Balance Sheet, all your assets and Liabilities are posted. It will show the position of the company at any given date. All assets will equal the liabilities plus/minus owners equity.
An asset is something that the business owns. A
few examples are a bank account, petty cash, stock, computers, machinery, accounts receivable and prepayments.
Liability is anything that the business owes: examples are suppliers, loans, money owing to inland revenue.
This is the term used for money introduced into the business and any profit and loss that has been recorded.
Bookkeeping Guide – Keeping Records
It does not matter whether you are registered at Companies House or Self-employed all records must be kept, including copies of invoices, bills, receipts and bank statements. It is good practice to keep them filled in alphabetical order and then by date.