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Small Business Bookkeeping and Accounting

By: Rachel Newcombe - Updated: 17 Oct 2012 | comments*Discuss
Business Small Business Accounting

One major part of running a successful small business is to keep accurate records, so that you’re able to keep a clear check on all your incoming and outgoing finances. You can do your own bookkeeping and accounting, or employ an expert to take charge of it for you, but either way, there are key pieces of information that need to be kept.

Keeping accurate records is not just something you need to do for your own sake – you also need to do it by law. In fact, if you’re self-employed you need to keep all your records for five years and if you have a limited company or partnership, you need to keep the records for six years after the latest date of your tax return.

Records to Keep

Whatever the nature of your business, and however large or small it is, the basic records you need to keep are as follows:

  • Details of all your sales and income.
  • Details of all your expenditure.
  • A list of any petty cash that’s been spent.
  • Details of money taken out for personal use or paid in from your personal accounts.
  • Details of goods used for personal use and payments to the business made for these.

Bookkeeping is a traditional method that’s been used over the years to record information about the finances that have gone in and out of your business. All records were traditionally made by hand, in several specific books (which is where the name stems from), and some companies still handwrite their entries today.

However, the age of the computer has taken some of the handwritten aspect away, as it can be much quicker and more efficient to type the entries into specialist bookkeeping software.

If you’re still recording entries by hand, you’ll need a cash book, sales book and purchase book. With a computer, there are some great software packages available that are easy to use and guide you through where to input all the information. Sometimes the software packages have trials, where you can try the software before you buy, so it’s worth having a look at the different software options available before you plump for one.

All of the information you record about your business finances will not only help your business run more smoothly, but will quicken up the process of filing tax and VAT returns at the end of a year. Whatever method you use, don’t forget to keep back-ups of everything. If your computer crashes unexpectedly, it would be a nightmare to lose it all.

Employing a Bookkeeper or Accountant

If you think it’s too time-consuming to do all the bookkeeping yourself, then it’s perfectly acceptable to employ a bookkeeper to work for you, either on a weekly or monthly basis. It does take off the strain, stress and worry of doing it yourself, especially if financial issues aren’t your forte.

It’s also a good idea to employ an accountant, either instead of or as well as a bookkeeper. You can look for details of both locally, in directories such as the Yellow Pages, through business organisations or via recommendations from other local businesses.

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