20 Jul What is bookkeeping?
What is Bookkeeping?
Bookkeeping is the process that involves keeping proper financial records for your business transactions – otherwise known as one of the biggest headaches to business owners!
Who came up with the bright idea of bookkeeping?
Benedetto Cotrugli is the true inventor of double-entry bookkeeping, although the Italian monk Luca Pacioli is often credited for the invention.
Our all inclusive bookkeeping service was designed to take away all of the stresses faced by so many, for an affordable monthly fee! So although you may be cursing at Benedetto Cotrugli for his invention, you don’t need to worry with ours!
Traditionally the records of each business sale or purchase transaction would have been written into large books, called ledgers, which is where the term comes from. It’s still possible to keep paper records but it’s far easier and efficient to use bookkeeping software such as Xero.
All businesses need to maintain good bookkeeping records – it’s the law. This applies to limited companies, partnerships and sole traders. Proper financial record keeping will enable you to manage your business more effectively, not to mention the legal requirement to keep your business’ financial records for a minimum of 6 years.
Do I really need to keep bookkeeping records?
Yes! All businesses need to keep accurate records of their financial transactions. It is a legal requirement and keeping good financial records will also tell you a great deal about how your business is performing.
The good news is that with the use of todays’s technology, bookkeeping doesn’t have to be a chore!
By maintaining good bookkeeing records you should easily be able to determine the following:
- how much money you are making
- how much and where you are incurring your biggest costs
- whether your business is making a profit or a loss
- how much cash you have in the bank
- who owes you money, and if you owe any
- when you can pay your bills
- if you’re getting near the VAT threshold and need to register for VAT
- figures that will be included in your tax returns
- information you need to report to any investors or shareholders
- how efficiently you are running your business and whether you need to make any changes to improve its performance
If you’re experiencing any of the following, then your books aren’t doing what they should be and you will undoubtedly benefit from some bookkeeping support!
- you’ve lost track of what you’re spending and what you’re earning
- your receipts have been buried in the shoe box for so long you’ve forgotten what they’re for!
- your cash flow is suffering because you’re taking too much time to issue invoices
- you have no idea how much money is still outstanding from your customers
- you have a backlog of paperwork
- paperwork is taking up too much of your time
- you struggle getting the right figures for your tax return or VAT returns
- you just don’t like doing the paperwork and have better ways to spend your time
I don’t know where to start!
Feeling overwhelmed by maintaining the books is normal. Business owners who don’t have the time, the skills, the inclination or the right staff to ‘do the paperwork’ should consider appointing a professional bookkeeper. If your paperwork is in a mess and you don’t have a clear picture of your financial position, you should definitely get some help pretty quickly! Bookkeeping and accounting services are easy and practical to outsource if you don’t want the hassle yourself.
What our bookkeeping services does…
Your books should show details of all the money coming into and out of your business and split accordingly into sales revenue and expenditure.
Using cloud based software, we will record your sales invoices and receipts. Each transaction will be recorded with the date, amount, VAT (if applicable), the name of the supplier or customer. Purchases and expenses will be allocated to an expense category that helps to analyse the business costs such as rent, stock, insurance etc.
Managing the Bank Balance
Each month we check that the amount of money in your business bank account is correct and agrees to the transactions recorded in the accounts for the business. From the previous month’s bank balance, we will add all the sales income for the new month and deduct all of the payments that have been made. The total should then equal the amount in the business bank account. If the bank balance does not reconcile with the information in the accounts then we’ll work with you to work out where the error is and rectify it.
Our flexible bookkeeping service includes all of the following:
Maintaining your sales ledger(the goods/services you’ve sold)
– properly log each transaction
– create and send sales invoices and credit notes
– create and send customer statements
– chase unpaid invoices
Maintaining your purchase ledger (the goods/services that you’ve purchased)
– properly log each transaction
– record and file purchase invoices and credit notes
– record petty cash and employee expenses claims
– check supplier accounts and prepare payments at the appropriate time
Other aspects
– Reconcile your business bank account
– Prepare your Vat returns
– Prepare your management reporting and accounts (so you know how your business is performing)
– Prepare your annual business accounts
– Payroll services
The benefits of using a professional bookkeeping service:
– saves you time, enabling you focus on the core activities of the business
– help you avoid mistakes
– give you peace of mind knowing your paperwork is being done properly
– give you accurate and up to date information on your business performance
– speed up the completion of your VAT returns, annual accounts and tax returns
– help you avoid late filing penalties with HMRC and Companies House
– provide you with a reliable and confidential service
As well as the bookkeeping, we can also produce your annual business accounts and relevant tax returns to ensure that you meet all of the statutory deadlines and most importantly that all available tax reliefs are claimed and you pay only what is necessary!