5 Vital Bookkeeping Basics for Every New Business Owner
Why is bookkeeping important?
For a small and medium sized business owner, the mere idea of having to maintain the records, month after month, can be quite daunting. Let’s be honest; nobody does bookkeeping because he enjoys it, unless he is a professional, of course. Ignoring accounting altogether isn’t an option either. You do not want to appear disorganised when Her Majesty’s Revenue & Customs (HMRC) department calls for records related to your business operations.
Bookkeeping and accounting are important for any business from two perspectives:
- Maintain a neat and a detailed record of your cash flow – both inward and outward
- File tax returns on time, to avoid unnecessary tussles with the tax authorities.
Tips for effective bookkeeping
You may come across numerous recommendations when it comes to effective bookkeeping. Find the ones that are applicable to your business and discard the rest.
At the outset, bookkeeping basics constitute the following:
- Maintain a cashbook- Make sure you enter every single penny spent and earned in this register. Make separate heads for recurring expenses. This can go a long way in streamlining your business in the long run.
- Sales and Purchase invoice file – Most professionals engaged with bookkeeping service recommend keeping a separate sales and purchase invoice file in chronological order. Getting your invoice basics right can make it so much easier to keep track of your accounts.
- Do not mix your personal and business expenses: Even if you are running a small business, it is highly recommended to maintain a separate account for your business. Make sure you make separate entries if you draw from your business savings to meet personal expenses.
- Do not put aside bookkeeping – Yes, it may seem boring and unnecessary to maintain numbers on a book religiously, but in the long run, it is going to save you a whole lot of time and money. As your business grows, you may even consider hiring a professional company offering small business accounting and bookkeeping services.
- Hire a company offering bookkeeping services for new business owners – If you find maintaining your accounts and invoices difficult and time-consuming, which you most certainly will once your business starts growing, you should definitely consider hiring a professional bookkeeping agency. Not only can they help in keeping your books in order, they may even improve your chances of saving more money.
So how do you find one?
There are quite a lot of individuals and companies in the UK that offer reliable and professional bookkeeping services. No matter whether you are searching for a bookkeeping service in London or a bookkeeping service in Glasgow. The basic methodology to go about it remains the same. Either go with personal recommendations from people whom you trust or use the internet to make a list of service providers and then close-in on the perfect one. You may also try an online based bookkeeping service provider, this is time and cost efficient approach for keeping your paperwork up to date. Last but not least – consider bookkeeping basics when starting a new business!