bizSimple

The simple way to start a business.

Sunday 7 September

“'Cheap' is short for 'not very good'”

Bookkeeping

By law you must keep a formal written record of the financial activities of your business and you must keep these records for 6 years.

Many smaller businesses get by perfectly adequately with a simple manual system. You need to keep a record of all the money that goes into the business, in terms of sales, capital invested, loans, grants, etc and all the money you spend on the business in terms of running costs and assets (Toolkit 02 explains these terms).

This information should be kept up-to-date so that you know who owes you money, who you owe money to, how much you have in the bank and how much profit you are making. At the end of the year you can either give these records to an accountant to do your tax returns, or you can do them yourself – either way, you must do them when they are due.

If you are VAT registered you will need to do your books at least quarterly anyway, to keep up with your VAT returns.

There is a range of bookkeeping software packages available, or, if you are confident, you can make up your own on an Excel spreadsheet. If you are unsure of what to choose, get some advice from an accountant before you spend any time or money – most accountants have a favourite system that they are happy to recommend.

What ever you do, you must be able to get basic information from your system, as listed above. Without this information you will not know if all your hard work is making you any money!

If you seriously doubt your abilities, or don't have time to keep books, buy in the services of a bookkeeper – even if it's only for 3 hours a month, this will make sure you keep on top of things and could save you a small fortune in accountancy fees at the end of the year!