Bookkeeping is simply the recording of your day to day business transactions into ledgers. It is the building block for preparing your year-end accounts, vat return and tax return. No matter what type of business you are running it is absolutely imperative this is kept up to date and is accurate.
What are the benefits of keeping on top of this? Well it makes life much easier when it comes to preparing your VAT return (for those who are VAT registered). Also, you will know how much you owe to suppliers and HM Revenue and Customs. More importantly you will know how much each customer owes you so you can chase them for it (if necessary). Not receiving monies owed from all your customers means a reduction in cash flow which can harm your business if lots of customers don’t pay you. Keeping on top of your bookkeeping will allow you to see your gross profit and also to see where you are overspending so that corrective action may be taken if required. For instance, are you spending more than you should on telephone bills or gas and electricity bills? Perhaps you need to borrow money from the bank, and they want to see the accounts before they will grant you a loan or overdraft. Or you may wish to attract potential investors into the business who will want to see the books. How can you provide this information if your bookkeeping is months out of date?
One of the most important tasks within any bookkeeping system is Bank Reconciliation. It is very important this is done on a monthly basis and not left until your books and invoices are given to your Accountant at the year end. A monthly bank reconciliation allows you to see your true bank balance and whether or not you have enough cash to meet your business commitments as they fall due. Not knowing your true bank balance could lead to overspending, going overdrawn and incurring hefty bank charges.
Important reports produced by any good bookkeeping system are monthly or quarterly management accounts. These allow you to see how your business is performing on a regular basis, (not just on a yearly basis). Corrective action may then be taken if necessary, to get your business back on track. Other reports any good bookkeeping system should be capable of producing are aged debtors and creditors reports and reports relating to stock valuation.
What packages do I need to do my bookkeeping?
So, what packages do you need to do your bookkeeping? There are several computerised bookkeeping packages available on the market. Having tried and tested most, we think that XERO is probably the best all-rounder and best value-for-money. We provide XERO support, XERO training, and the majority of our customers use this system.
For more information about our accountancy services, bookkeeping services or XERO services, call us on Sheffield 0114 345 0960 or Nottingham 0115 882 0356