How to do basic bookkeeping

posted by 2 months ago in Guide
How to do basic bookkeeping

Invoices, receipts and bank balances can all mount up when you’re running a small business. Instead of allowing them to form a nasty pile in your in-tray it’s well worth mastering the basics of bookkeeping.

Follow these 5 tips to avoid the headache that accompanies an out-of-control pile of paperwork…

1. Take the time

Bookkeeping may not be an enjoyable part of your day but, to keep on top of your cashflow, it’s a necessary task so suck it up and set aside a regular slot.

2. Get the correct equipment

The essentials are:

  • Plastic punched pockets
  • A set of dividers (labelled for each month)
  • A file

3. Start filing

Group your paperwork month by month. A useful guide to arranging your file (front to back) is:

  • Business bank statements
  • Invoices sent out
  • Bills (e.g. telephone or energy)
  • Loose receipts

4. Go digital

Create a spreadsheet to keep track of your accounts and to copy transactions from your bank statements. You will need to include:

  • Date
  • Payee
  • Amount (one for expenses and one for income)
  • Don’t forget to add Net, VAT and Gross columns if you are VAT registered

5. Do the maths

Check the monthly beginning bank balance plus the income, less the expenses to give you the bank balance at the end of the month.