Bookkeeping is the recording of financial transactions by an individual or organization.
The financial transactions include purchases and sales, receipts and payments.
A bookkeeper is responsible for ensuring the day to day transactions are recorded properly.
A bookkeeper should not be confused with an accountant.
An accountant is a provider of accounting: the measurement, disclosure and provision of financial information that enables decisions to be made about allocation of resources. An accountant can provide advice, a bookkeeper cannot.
By employing a bookkeeper you can save time on doing this task yourself and save money as the information provided to your accountant will already be in order, taking them less time to go through.
When you start a business the main focus is on promoting that business as without sales there is no business. However, maintaining your finances or doing your books is an essential part of being self employed and ignoring them will lead to complications later.
This task can seem quite daunting if you don’t know where to start but if you maintain your income and expenditure records from day one you shouldn’t run into any problems. You don’t need a sophiscated accounting package to maintain your records, a manual process will do but at the least a spreadsheet will make record keeping easier.
If you intent to use an accountant or a bookkeeper it is probably best to check with them what system they prefer, some of them may even offer a free spreadsheet to help you start.
If you stay on top of paperwork and not let it slip to weeks or months the job will not seem to big.
Make sure you claim for all costs incurred ‘wholly and exclusively for business use’, don’t forget to include all the business mileage you do as well. If you use your home as your office you can claim a proportion of your utilities and even a proportion of your rent or mortgage interest.
If you’re in any doubt about what you can claim speak to your accountant.
Once you have calculated how much profit you have made (income less costs) you then need to budget for tax and national insurance costs. If you save 25-30% of your profit as you go you will easily be able to afford your tax and national insurance bill. Open a separate saving account and put the money in there each month.
If you’re still not sure about maintaining your finances give me a call to arrange a free consultation.