Bookkeeping is a term used to describe the process whereby a record is kept of transactions which have taken place within a business, such as income earned and expenditure incurred.
Maintaining a good record of your business transactions is beneficial for many reasons:
To comply with the legal requirement that companies have
So the company’s profit and cash position are more transparent
Amounts owed from customers and to suppliers are more visible
In addition, HMRC may want to check your company’s accounts and tax return for inaccuracies. If you cannot provide accurate records, there can be large penalties to pay.
Your business records should be kept for at least 6 years.
How to complete your own bookkeeping
If you’re completing your own bookkeeping you should ensure the data you’re inputting is accurate. You must also keep evidence to back up your entries, such as invoices, receipts and bank statements (these documents can be kept electronically).
If your company is chosen by HMRC for investigation, they will expect you to have kept this documentation to back up your figures.
We highly recommend that you do not leave all of your bookkeeping work until the last minute, as entering transactions weeks or even months after they have occurred can make it much more difficult.
Software can also help automate certain aspects of your bookkeeping through bank feeds, recurring transactions and automated payment reminders.
Our clients have free use of our cloud bookkeeping software Pandle. Quick and easy to use, yet comprehensive in its capabilities. We designed Pandle from the ground up to cater specifically for UK small businesses like yours.