Bookkeeping allows you to understand the status of your business. At the same time, you need to file your VAT returns, produce your company accounts and submit your tax returns to HMRC.

Accountrivia use the online accountancy software Sage, which automatically connects to bank accounts and payment platforms, making the whole bookkeeping process streamlined.

Bookkeeping is the process of recording and identifying all the financial transactions within your business. It will keep track of all the amounts that your business spends as well as the amounts that your business receives.

As the name suggests, bookkeeping was originally handled using ledgers and books. Every transaction will be recorded in journals, cashbooks, or daybooks; afterward, they will be transferred to a ledger.

With innovation in technology, accountancy software such as Sageis now being used instead of physical books.

Having a precise, well-organised set of books is an excellent start to operating a successful business. The following are the reasons why:

• You will have accurate financial information that you can use for your budgeting and planning decisions.

• You can verify whether the money you made is greater than the money you spent.

• You will know when a cash crunch is about to happen and can take the necessary steps to prevent it by watching when you can anticipate payment from customers and when you should pay suppliers.

• You can accomplish precise tax returns.

• Most likely, you will discover incorrect payments or fraudulent transactions that could cost you money.

• If your financial information is well-organised, then it will be much easier for you to coordinate with other parties such as investors and lenders.

To achieve precise small business bookkeeping, you must do proper recording and reconciliation.

• Record Every Transaction

• Record All Your Sales.

Traditionally, this was accomplished by listing them in a cash book or inputting them into a spreadsheet. But nowadays, business owners can easily download sales data from invoicing software or point-of-sale and store this information in their books.

Record all your transactions.

All purchases that are business-related must be noted. You should also keep the proof of purchase if you have plans to claim that expense as a tax deduction.

Again, all the details can be recorded in a spreadsheet or a book. Or you could automate the task by sending all the debits from your business bank account into your bookkeeping software.

Income and expenses can be recorded differently depending on whether you are using cash or accrual accounting.

Reconciliation of Transactions

Reconciliation is the process of cross-referencing your bank statements against your business books to check whether the balances and transactions match. If they don’t, then you must determine the reasons why. Most often, deposits, bank fees, payments, and interest payments that are not yet recorded in your bank accounts must be accounted for.

Bank reconciliation can be done either monthly, weekly, daily, or less often, depending on how many transactions your business has gone through. However, you might need to reconcile your books before you submit your tax returns.

The quicker you reconcile transactions, the quicker you can discover mistakes and correct them. That is why it is much better if you do it more frequently, or even daily, so the work will not quickly pile up. It is important that you learn how to do bank reconciliation.

Additional small business bookkeeping duties

If you are fulfilling the responsibilities of the bookkeeper for your small business, then you might also be liable for doing the following:

Accounts Payable: This means you will pay bills on time.

Accounts Receivable: This means you will issue invoices and ensure that they are paid.

Payroll: This means you will compute and pay the salaries of your employees.

Whether it’s a new company formation or an established business, if you choose professional bookkeepers, then they can also offer you other services such as assisting you with financial reports such as balance sheets, profit-and-loss, and cash flow reports, or gauging your business performance.

Most small businesses are using online bookkeeping software to quickly accomplish these jobs and, at the same time, minimize the occurrence of human data-entry errors. The software can help you with:

• speeding up bank reconciliation,

• Extracting transaction data directly from banks, invoicing software, and point-of-sale (POS) systems,

• Automatically paying your bills

• It will inform you when sales invoices are paid.

• Send invoice reminders automatically to those who owe you money.

• The ability to produce financial reports
  

• Making Tax Digital compliant will require you to use online software such as Sage for your bookkeeping.

• Using Sage will allow your bank feeds to pull right into your Sage account.

Many of these features are available through Sage’s mobile app.

If you are one of those people who are too busy doing your small business bookkeeping, then you can hire somebody else to do it for you.

You want an accountancy professional to complete your bookkeeping to ensure your accounts are correct and to make sure every transaction is recorded in the most tax-efficient way possible.

We can combine your bookkeeping and accountancy for a more cost-effective and comprehensive approach.