Dentist in Vaughan
Dentist in Vaughan

Bookkeeping for small businesses How to do bookkeeping

bookkeeping for a small business

Certain legislation is in place (or will be in the future) that may affect how you keep financial records. While there are always changes in the way businesses work, the essentials of how to do the books for a small business haven’t changed. Business accounting will certainly help in time, but your priority should be to get on top of your books first. Any form of digitisation will bring you benefits but using dedicated software for your bookkeeping makes it significantly easier, as so much of it can be automated (more on this below). Whether its scribbled notes, financial documents, or receipts, hard copies often get lost or damaged. And you can guarantee the ones that disappear will be the ones you need most.

bookkeeping for a small business

Use your bookkeeping system to examine the liquidity of your business over time and use this to forecast its potential monthly profit and loss position over the coming 12 months. Get to grips with bookkeeping with our guide to setting up a system and using bookkeeping to keep track of cash flow, profit and loss and expenses. Invoicing is a part of doing business, and staying organised will ensure fewer headaches when it comes to your small business accounting.

Does a small business need a bookkeeper and an accountant?

In this article, we’re going to cover bookkeeping basics such as the management of business loans, business finances, financial transactions, income tax and other assets liabilities. Besides recording all income and outgoings, bookkeeping tasks also involve collecting and storing financial information such as receipts, invoices, and bank statements. Your bookkeeping will underpin your accounting, so decide at the start which method you will use. Traditional accounting records income and expenses at the date of the invoice. Cash accounting records them on the date when you actually receive or pay the money. Cash accounting reduces the risk of having to pay tax on money you haven’t yet received, but is only available if your turnover is £83,000 or less.

The following pointers will help you to get started in bookkeeping for your small business. It’s essential to be aware of your company’s seasonal ups and downs and how they’ll affect your ability to spend during those times of increased or decreased revenue. Even the most critical deadlines can be missed when you’re stressed out about taxes. The software is usually designed to be user-friendly and can help reduce bookkeeping mistakes.

Hire an accountant

If you need any further support with payroll, we provide our very own RTI compliant payroll service for Crunch clients, which you can learn more about on our dedicated payroll page. Bad bookkeeping has spelt the end of many a small business in the past, so learn from the mistakes of your peers and get into a bookkeeping routine early. Whether you decide to spend half an hour each day updating and balancing your books, or whether you choose to block out an hour or two at the end of each week, establish a routine and stick to it. High earners need to be aware of the tax implications of earning over £100k, as this directly affects how you manage your finances and maximise your earnings.

You don’t want to be dipping into your own money to pay for company expenses, or vice versa. Even if you have an accountant, they’ll still need you to keep on top of your bookkeeping (such as recording your invoices and expenses) as they simply bookkeeping for startups can’t do their job without knowing your income and outgoings. When you run a small business your financial health will fluctuate – profits go up and sometimes down, costs increase or decrease, and sales are great one month and slow the next.

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