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Bookkeeping for Small Businesses

BookkeepingBookkeeping sounds like a lot of work, and many business owners would rather not do it at all. Unfortunately, it is a crucial part of your business. Aside from complying with the regulations, it is how you know if your business is doing well or if you are in big trouble.

This is why you need bookkeeping services to keep on top of things. Let Accountancy & Tax Advisers Ltd enlighten you on the basics of bookkeeping.

Keep Financial Records

You need to keep proper financial records to avoid penalties from the government, and to prepare for any tax investigation. You also need it to keep track of the financial health of your business. No matter what kind of business you have, you will need three things.

Cash book – This is a record of the money you put in and take out of your business bank accounts. You need to keep them updated. You can use your cash book to make forecasts about your business.

Sales invoice – These are a record of all your sales, paid or not. You can organise your sales invoices in accounts paid and accounts receivable so you know what you should have, and who owes you.

Purchase invoice – These are a record of everything you have bought for the business, paid or not. It is important to get an invoice or a receipt for everything. You also need to keep them in chronological order and to note which ones still have to be paid. Separate your business and personal expenses, and make sure you file each one as they happen. This can make it easier for you to find them later on.

Separate Personal from Business

Many small business owners tend to mix up their personal and business finances. This can make it hard for you to keep track of your business health and makes it easier in the event of a tax enquiry to support your case when arguing a decision, due to the tax man not being able to see all of your personal affairs alongside your business expenses. The best thing to do is to have separate bank and credit card accounts for your personal and business use. If you use your personal account to pay for a business expense, make sure you get a receipt so you can reimburse yourself.

Perform Regular Bookkeeping

The worse thing for a business owner to do is to allow bookkeeping chores to pile up. It is a sure way of making mistakes, and it just makes a chore seem all the harder. Make a point of making entries as soon as possible and keep your records updated. If you find it impossible to do this yourself, hire a qualified bookkeeper or accountant to do it for you.

It would be a mistake to set aside your bookkeeping tasks. They are crucial to your business. If there is one thing you cannot skimp on, it is recording your financial records.