Book-keeping Basic Tips
Reasons for keeping books
Legal Requirement - under the new system of self assessment, the keeping of books is a must and it's illegal not to.
Control of Business - It's almost impossible to know whether you are winning or losing, have to pay bills, people owe you money, etc if you don't keep books
Cheaper Accounts - well presented books will reduce accountants bills but check with them that the method you intend to use is the best for both of you - often they may have a system that they prefer or software they can download to your computer to use.
If you Sell the Business books are necessary to indicate the value and worth of the business
Finance - If you require loans or finance you will need to show books
VAT / PAYE - records need to be kept for inspection
Methods for keeping books
Patented System - such as Simplex, Everite, Collins, etc. usually 52 weeks plus Profit and Loss Account as summary
Analysis Book - Can be adapted to own requirements
Double Entry System - Involves Ledger Cards and works on the same system as computerised accounts
Computerised Systems - a wide variety available such as Sage, MYOB, DO$H, etc a download of a free, single user book-keeping system is available through http://atlantic-coast.com/downloads/3451.zip
Your Own Method - using a note book or folder. Just ensure that al incoming go on the Left side of the book and all outgoings are entered on the Right side of the book.
General Rules for Book-keeping
Don't use pencil - use pen, pencils rouse suspicion if you are inspected by the Tax Office
Don't use Tippex - for the same reason
Update Books regularly ö once a week or even once per day if necessary, otherwise it all becomes too much
Enter in book when paid - remember you are deemed to have made the profit when it is in the book
Keep all Bank Statements
VAT Registered Businesses
If your business is registered for VAT you will need to make some changes
You must issue VAT invoices and account for VAT in a separate column
You must have an invoice for all purchases and account for the VAT in a separate column
If an invoice is amended issue a new one and write Cancelledā on the old one
If you issue a credit note give the note a number, like an invoice, and file it in Sales Paid
Example of Simple Computerised System
For a very simple business dealing only with invoices and cheque / debit card payments a system such as Microsoft Money may suffice, alternatively you could download this simple excel spreadsheet to keep monthly records in. Page 1 is a month by month book-keeping spreadsheet - click on to sheet 2 and you will find it keeps a running total of your sales, cost of sales, gross profit and net profit and also the profit margins.