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

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.

Excel 2000 Book-Keeping


Once you set it up choose 'save as' and then the original can be used for the next year.

Cash Businesses

If, like a shop, you sell, or buy, for cash, the principles are much the same

If you take cash from sales and spend it (e.g. on wages) it is easy to lose track of what is going on and the Tax Office and VAT are always more suspicious of cash

Keep you till rolls ö enter them like invoices in your books

Pay the exact amount of the days takings into the bank and record it on the paying in stub and your books

If you use the money in the till for a purchase, put a receipt into the till immediately, mark it and enter it into your books

Bank Statements

Every month match your cash book and bank statement with each other ö both balances should be the same

Match each entry on both and tick them off

Enter standing orders, interest and charges in the cash book and tick them off

Calculate the adjusted bank balance ö taking into account cheques that have not cleared

Reconcileā the bank statement and write down the adjusted balance

Add total sales and total paid for each month and use them to produce your end of year Profit and Loss