In its simplest form, bookkeeping is just about keeping records of what you have sold and what you have bought so you know how much money you have made in your business and therefore how much tax to pay ...
Knowing what records you need to keep will help you make the right decision on which bookkeeping package is right for you!
Most people run a business to make money, so you need to keep track of how much money you have made and what was bought. Your bookkeeping system, at the very least, should allow you to see what money has come in and will enable you to say what it was for.
The very simplest of businesses do this by looking at their bank account, or taking cash and keeping records. With the need these days to make everything digital then this is why bookkeeping systems have become the usual way to do this.
"But which bookkeeping system is best for you?"
If you are taking money from people as they buy products from you then a receipt book is the simplest paper form, or using a till in a shop. For both products and services, it may be that you need to send an invoice to your customer, and they pay you later, so you may need a simple way to track the invoices sent out and which ones have been paid.
If this is you then a computerised bookkeeping system really is the best way to keep on top of your finances, and I recommend whoever raises your invoices has access to your chosen accounts system and sends out the invoices using the system you choose.
Which system is best for your business really depends on the number of invoices you need to do each month. Are they for products or services? Do you need to keep track of stock? Are you producing monthly invoices for a service which could be auto-generated by your chosen system? It makes sense to automate your bookkeeping as much as you can, or import your invoices if you use a till or a bespoke system for your industry.
There is no such thing though as a completely automated system, as even if your invoices are imported or auto-generated then it will be a more manual system to match the payments correctly to the right invoices. Even if you use a payment solution like Stripe, GoCardless or Square you will still need to keep an eye on what is being imported as these can so easily get into a mess if just left.
"What you buy in order to do your business can be even easier!"
If you are just starting out and you haven't got a system going yet then please keep all the receipts or invoices from everything you purchase and record of how you paid for things too. Did you use the business bank account, pay personally to reclaim later, pay cash or use a business credit card?
Easily identifying what you bought and where from and how you paid is half the battle. I find in choosing an accounts package, it is the sales side and record-keeping which I will always consider first in choosing a system, as most accounts packages will cope with the costs side in a similar way.
But if you have not kept any receipts or even a list in a notebook of what you spent, when you get around to sorting out your records you will miss something you have spent on the business and as a result, pay more tax.
"Keeping good records means you can always catch up on your bookkeeping later if you need to!"
So, if you are confused about your bookkeeping, and maybe sticking your head in the sand about what you need, but you have started your new business and you are building up a nice backlog of records that need to be kept then do get in touch.
I can help you get organised and get the right simple bookkeeping system for you in place, whether that be looking after it yourself, training a member of staff, or recommending in an outsourced bookkeeper.
Until next time ...
ALISON MEAD
Would you like to know more?
If anything I've written in this blog post resonates with you and you'd like to discover more about which bookkeeping software may be right for you, it may be a great idea to give me a call on 01604 217365 and let's see how I can help.
Alison loves bookkeeping and supporting bookkeepers. She has been helping clients to be better bookkeepers in Sage 50 for over 24 years and has been Xero Accredited in accounts and payroll for a number of years too.
She specialises in a very unique hand-holding method of training, helping bookkeepers and business owners to use their accounts software as and when they need support in setting up and producing their invoices, reports and financial information.
Alison combines her role at Silicon Bullet with her Forever Living network marketing businesses and is often to be seen at business networking meetings as she likes to keep busy.
You know what they say: if you want something done well ask a busy person!
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