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Limited Company Bookkeeping Basics

Posted on 2 July 2014

The truth is no one starts a business to do the paperwork, and most small business managers just think at the bookkeeping as another boring task that won’t end up in having results in sales. Most people think at the paperwork as just a necessary evil, but keeping a clean and accurate account is actually something you need to be able to stay on top with your new business.

If you started a business, constantly putting off the paperwork and being disorganised is not an option, because this way very soon you will end up being penalised by the HMRC. Here are a few tips that every small business owner may find useful about bookkeeping. In general, you should maintain three sets of records.

1. Cash book

The cash book contains all the payments made into and out of your businesses bank account. If you keep it up to date, you can use it to verify your accounts as a forecasting tool.

2. Sales invoice file

If you use accounting software, it will help you store your invoices, but if you do the bookkeeping manually, always keep a record file and store your invoices in chronological order. Keep the unpaid invoices at the top, this way you can keep your credit control also.

3. Purchase invoice file

A healthy habit would be getting used to make notes on the invoices about when you paid them and how, since this way you will have everything in order. And here are a few important tips that will make your life easier if you just started your business.

Get invoices for everything you buy

If you get used to keep the invoice for everything you buy (you should also print the invoice from online shops) you will have everything in order since the very beginning of your business and you will be prepared whenever there is a VAT or tax investigation. It’s much easier to collect all the paperwork everything in order, then trying to find it if you didn’t kept an order.

Separate business and personal expenses

It might be unusual at the beginning, but if you started a limited company, you have to get used to the fact that the business money is not your own. Remember to always keep separate accounts for business and for personal finances.

Check bank statements

If you check your bank statements every month, you will reduce the risk of fraud or bank mistake, and you will also get the bigger picture about your spending. Make a habit out of spending money smartly.

Do your bookkeeping regularly

It’s always tempting to putt aside the tasks that you don’t like, but if you don’t do your bookkeeping regularly, you are more likely to make mistakes because you are tired. Try to do the bookkeeping first thing in the morning, or in the same day every week, this way it will be easier to get used to it.

Work with an accountant

This is not a domain where you can hire a non-professional just to save money, since it’s about your finances. A professional accountant will save you more then his coast on the long run. If you are having problems and struggling to keep the paperwork up to date, you can always work with a professional to help you on a regular basis.

Tagged in: business and personal expenses Check bank statements Do your bookkeeping regularly Get invoices Work with an accountant