Bookkeeping for Start Ups
As a start-up business, it is absolutely vital that you get into the swing of accurate bookkeeping. In this article, we are going to look at a few of the reasons as to why and a few of the ways in which you can do it.
On a legal level, you have to keep accurate financial records. You also have to keep them for six years. If you do not do so and you are asked to undergo an inspection by HMRC, you will be in big trouble. It is also important that you keep accurate financial records for your own benefit. They will enable you to see how well your business is performing. Accurate financial records will also allow you to make decisions about the way in which to take your business far easier.
Bookkeeping is vital because you will be able to see where your business is losing money and where it is making money. This will allow you to cut back costs in certain areas and increase them in others. If you do not have a decent bookkeeping system in place, you will be costing your business money.
Thankfully, accurate bookkeeping does not take all that much effort. The simplest method is to have a spreadsheet which showcases your income and outgoings. You will want this spreadsheet to show cash flow, debts, and costs. It is important that it is kept up to date. It is not the most effective solution for companies, particularly larger ones, but it is a good starting point. You could set up your own spreadsheet quite easily, however, if you lack the knowledge, you can always head online, where you will find a plethora of templates that you can download and input your own information.
The most important component of your books will be the cashbook. This will detail all of the money coming in and leaving the business. You may also wish to have a sales ledger which tells you what you are still owed and where your money is coming from. A purchase ledger will highlight what you are paying out and what your business currently owns. If you keep all of this information, producing the final accounts at the end of the year should be easy.
It is important that you keep the receipts of any expenses you have paid out. Keep these in a file somewhere as there is a small chance that HMRC may ask to inspect them at some point. In addition to this, try and make as many purchases as possible on your business credit or debit card. This will enable you to keep accurate records about your expenditure and it will be far easier to insert this information into your bookkeeping system.
You will, most likely, be dedicating a good few hours each and every week to bookkeeping. If things are become a little bit too tough for you to handle, you can always opt to hire a bookkeeper for your company.
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About Javeed Baig
Javeed Baig is a senior accountant and managing director of Gower Accountancy, a Leicester based accountants who provide their services to a range of sectors from doctors and dentists to the motor trade and website developers. They have built a great reputation on their high quality personal and professional service.