Book-Keeping

Book-Keeping

What Is Book-Keeping?

Book-keeping is maintaining records of the financial transactions of a business including details of income and expenditure, bank statements, invoices and other paperwork required for accounting purposes. It allows you to check your performance against your budget, monitor your cash-flow and be properly prepared for VAT and tax payments. It can also help identify theft and unnecessary wastage.

Simple day-to-day book-keeping includes recording your income and expenditure into a cash book (which can be a paper or computer system), checking your cash and keeping your paperwork, like bank statements, invoices, delivery notes and till rolls in an orderly manner.

Who Should Do It?

Book-keeping is such an important task that it shouldn’t be passed on entirely to someone else, simply to be forgotten about by you. It is something that you need to be involved in at some level. This may mean doing all the paperwork yourself or having the routine work done by someone else, but keeping a close eye on the overall situation. The important thing is to know how your business is performing. The more involved in book-keeping you are, the better informed you will be about your business.

Unfortunately, doing the paperwork is often regarded as the least exciting part of running your business, and it is easy for your book-keeping to fall behind as you focus on more interesting tasks. It is vital that you adopt a routine that enables you to keep up to date. It is better to do your book-keeping on a ‘little and often’ basis, than leaving the paperwork to mount up (making it even more daunting to deal with).

Some people feel intimidated by book-keeping, believing that to do it they have to be proficient at mathematics. This is not the case. Using a calculator to add and subtract is about as difficult as it gets! Being organised and disciplined is more important than having mathematic ability.

Doesn’t My Accountant Do My Book-Keeping?

A qualified accountant is a highly skilled professional and their fees reflect this. Your accountant’s bill will be based on the amount of time they spend dealing with your affairs, so asking your accountant to deal with the routine paperwork for your business is not generally cost effective. Your accountant’s time is put to better use on more complex tasks such as VAT, taxation and year-end accounts.

Well-kept books and organised paperwork enable you to present your accountant with clear information, which reduces the amount of time they have to spend preparing your accounts. This should result in lower accountant’s fees.

Legal Requirements

Not only is keeping proper records beneficial to you, it is also a legal requirement, with penalties of up to £ 3,000 for failing to do so. Depending on the legal structure of your business, you must keep your business record for between 5 and 6 years.

Book-Keeping Systems

It is best to talk to your accountant to get their advice on setting up your book-keeping system. They will have a good knowledge of each type of system and can advise you how they would like your records presented. Systems can include simple cash books like Simplex, Everite and Collins or more sophisticated computer software such as Sage, QuickBooks and Clearlybookkeeping. You are advised to keep your system simple, and a basic cash book may be perfectly adequate for your needs, rather than the more intricate accounting software that has many features you may not require. However, if you are more confident in your book-keeping and computing abilities, software packages can save time and can present data in a variety of ways that may be useful to you.

Using A Book-Keeping Service

A popular method used by many people in the licensed trade is to use a book-keeping service. The best of these are backed by qualified accountants. The book-keeper provides the licensee with weekly record sheets onto which they record daily income and expenditure details. Receipts and paid invoices are attached to this document and sent to the book-keeper on a weekly basis. The sheets allow a carbon copy to be retained by the licensee.

Dependent on the level of service that the licensee pays for, the bookkeeper will calculate VAT and prepare VAT returns, provide monthly or quarterly management accounts (see below) and offer cost control advice. The basic service costs around £ 25 per week. Although you are likely to still need an accountant to prepare your year-end accounts and deal with your taxation, a book-keeper provides a useful service. When considering using a book-keeper it is worth checking whether:

• The service is something you need.
• You really need someone else to do the work.
• You will lose touch with an important part of your business.
• The benefits outweigh the costs.
• The book-keeper is suitably qualified and experienced.