Basic Bookkeeping Tips
Neil Bromage has run his own small business and is a freelance business writer working on a range of newspapers including The Times, Sunday Times, Telegraph and Financial Mail on Sunday. This book is based on a wide range of columns and Q&As written and answered by Neil for Business Link over a number of years. He is based near Preston, Lancs.
Cash: Cash variations are the most common cause of problems in accounts preparation and often lead to higher tax bills. Cash payments should be avoided wherever possible. Where cash is received and paid some form of record must be kept showing the source of each item.
Bank: It’s wise to have separate bank accounts for your business and personal transactions. Always fill in cheque stubs. It only takes a few seconds and you probably won’t remember what was for in six months time. When banking cheques write the name and amount of each cheque on the back of the copy paying-in slip.
Payments to suppliers: Check statements and attach relevant invoices to them. If any invoices are missing, request copies. Try to avoid paying round sum cheques on account (for example, £500 per week) to a supplier. Wherever possible, you should pay exact invoices.
VAT registration: If your annual turnover is likely to be over £58,000 you will have to be VAT registered. If you carry on trading when you should be VAT registered, but do not properly account for VAT, you may be liable for excessive penalties and large sums of VAT.
Use a computer: There are now many excellent software packages suitable for small businesses’ bookkeeping needs, costing from £50 to £250 dependent upon your current and future requirements. They can be very useful.
- Always try to keep up to date with your accounting records.
- Tax returns and payments must dealt with prior to deadlines.
- There is no such person as a ‘casual employee’; all payments to staff have to be declared.
- Keep private and business monies separate.
- Minimise the number of transactions in your business accounts.
- Use a separate credit card for business payments.
- Avoid cash – bank all receipts intact.
- Use accounting software.
- Seek help and advice at an early stage before you get into trouble.