Worse, if documents go missing, then you could end up facing a fine for late filing.ДЇor purchase invoices (i.e. Otherwise youвЂ™ll be paying your bookkeeper for the time taken chasing down and sorting these documents, when itвЂ™s easy to do yourself. Make sure all bank statements and invoices (purchase and sales) are present and correct, and in date order. Or, donвЂ™t waste your bookkeeperвЂ™s time and your money. File bank statements and invoices in order YouвЂ™ll need receipts to substantiate your claims from HMRC, so keep them stored somewhere safe and organised in different business categories.Д«e sure to keep business expenses separate from personal ones, so you can easily identify which ones can be claimed against profit to reduce tax. You can claim tax back from lots of business expensesВ to reduce your overheads. This is called credit control, and the aim is to keep your cash flow healthy. Take note of any late payers and consider not working with them if they keep missing payments. Never make late payments (especially to HMRC) and give your clients a payment deadline so you can chase them effectively. Cash accounting reduces the risk of having to pay tax on money you havenвЂ™t yet received, but is only available if your turnover is ВЈ83,000 or less.

Cash accounting records them on the date when you actually receive or pay the money. Traditional accounting records income and expenses at the date of the invoice. Your bookkeeping will underpin your accounting, so decide at the start which method you will use. Use your books to track every payment and make it clear when they were made or received so you can easily find them if you need to refer to them later. The following pointers will help you to get started in bookkeeping for your small business. Keeping accurate books is important for financial reporting, and vital if your business faces an audit. These are usually the minimum records (вЂbooksвЂ™) youвЂ™ll keep вЂ“ there will probably be more. Purchase invoice вЂ“ this records what youвЂ™ve bought (including services) and how youвЂ™ve paid for each purchase. Sales invoice вЂ“ this records what youвЂ™ve sold, including both paid and unpaid invoices. Managing payroll to pay your staff and HMRC correctlyД«ookkeeping tracks payments in and out of the business using three financial records:Д¬ashbook вЂ“ this records your cash flow (everything moving in and out of your businessвЂ™s account).Claiming back tax for your business (e.g.Ensuring your business pays the right amount of tax.Chasing payments from clients and customers.Bookkeeping is the process of recording and reporting financial information, while accounting is the process of using such data to establish the businessвЂ™s financial position and make decisions about how the finances are managed.Д«ookkeeping = the recording and reporting of financial informationДЄccounting = analysing the financial information and creating a financial strategy WhatвЂ™s involved in bookkeeping?Д«ookkeeping is managing the day-to-day finances of a business. In fact, bookkeeping is a small but vital part of the overall accounting function. WhatвЂ™s the difference between bookkeeping and accounting?Д«ookkeeping and accounting are often confused.

Whether you plan to handle the role yourself or get someone in to help, this quick introduction will help you understand the essentials of bookkeeping and why itвЂ™s so important for a successful business. Initially the bookkeeperВ may be you, but as your business grows you may find you no longer have the time to spare. Bookkeeping for a small business is a vital role if you want your finances to make sense.

Bookkeeping business