Part 5 – Starting Your Accounts & Keeping Them In OrderPosted 07/05/2014 by Rebecca Cannon
Bookkeeping – A Necessary Evil
Being able to handle your books is essential – this is how you keep track of all the money coming in and out of your business. Bookkeeping is also a legal obligation, so whichever way you look at it, you need the know-how. You don’t really need to be a maths wiz to successfully run a small business, all you need is a basic understanding of bookkeeping and finance.
What Bookkeeping Is…
Bookkeeping is essentially keeping track of all the money coming in and out and within your business. You keep chronologically ordered records in account books of all transactions, including debit and credit transactions, and record the value of assets, liabilities, incomes, expenses and sales. If you are VAT-registered, you also need to keep records of VAT.
Why It’s Important
First and foremost, keeping records of your business finances is a legal requirement. But from a business-owner’s point of view, it’s also absolutely crucial for staying in control of your budget and financial happenings, and being able to measure and forecast how you’re doing and how much you can spend – or how much more you need to sell.
How To Do It
The first thing you should do is contact HMRC. Its role is to help people in your position, and it provides all the advice and documentation that you need to start bookkeeping. There are different methods for bookkeeping, so it’s best to read through the info and speak with an HMRC advisor to work out which is going to suit your business best.
Who Can Help
HMRC is always your first stop – as well as the initial advice and documentation, it publishes regular newsletters and tips to help you and has an advice phone line. Take a look at its website, www.hmrc.gov.uk .
Look for books on the subject for more in-depth info. Friends and family with financial knowledge can be a great help, but if your accounts are getting complicated or you’re really struggling, investing in an accountant may be worthwhile. Think about how much value they could add and how much time having an accountant would save you before spending money on one.
Read on… Part 6 ‘Get Insured‘