Insights | Accounting, Book Keeping, Q&A, Questions, Small Business, Stretford

5 Tips How To Simplify Book Keeping For Small Businesses

For small businesses book keeping is an essential yet necessary task that needs to be undertaken on a regular basis. 

Below we explore five tips on how you can simplify and improve your book-keeping routine.

1. Separate your Business and Personal Finances

Remember to keep the two separate. When your business expenses are mixed in with your personal transactions, this can sometimes cause genuine business transactions to be incorrectly classified. Keeping it simple and maintaining a separate bank account for business avoids any confusion. A good method is to keep one bank account for personal transactions and a second bank account for business only transactions.

2. Document and Keep a Record

How hard would it be to try and remember every transaction that took place 12-18 months ago? Extremely hard if not exceedingly difficult, right? 

We recommend documenting and logging transactions as you go along. Remember it is your business expenses that need recording and logging. Once you are comfortable recording transactions you can then progress to categorising.

As time passes you will become faster and more efficient at recording business transactions.

3. Keep A Record of Cash Payments

It is not always possible to pay by card and where you have used your hard-earned cash to pay for business expenses it is easy to lose track of the payments. There are several ways to manage cash payments, the old manual system can be employed. Record the cash expense in a Receipt Book.

If you prefer a more modern approach, you could keep track and record your cash expenses using a Cloud-Based package which you can employ using a laptop or even a mobile-app version. Furthermore, such packages allow you to upload the receipt thereby reducing paperwork and the possibility of losing a receipt.

4. Make Book-Keeping Routine

Trying to complete your book-keeping all at once close to year-end can be a very daunting task, if juggling your business day to day and the family at the same were not enough. Trying to also complete the year-end books could lead to expensive errors. Undertaking the task of completing the year-end book-keeping should be routinized and completed on a regular basis.

Some clients choose to complete the books at the beginning of a month as this is when they are at their quietest. 

5. Choose The Right Book-Keeping Software

The type of book-keeping software will depend on your requirements and what you want to achieve from the software:

Some software providers offer distinctive features that may or may not be useful to you, here are some examples: 

• Raising an estimate or quote
• Ability to convert the estimate into an invoice (saving time)
• Viewing suppliers that the business owes money to 
• View customers who owe money
• Upload company logo

In short, a new or existing business can get by with software that does the following.

Cashbook, Ledger, Bank Reconciliation, Accounts Receivable and Accounts Payable.

Some software packages, such as QuickBooks, Sage or FreeAgent are specifically made for business owners who just want to focus on invoicing their customers and tracking expenses and who give access to the accounts to their professional bookkeeper or accountant to process the complicated accounting transactions every month. 

A point to note is that there is not a best software package or an option that fits all, it takes an experienced accountant who has used all packages to hand pick the package that meets your needs.

Although Making Tax Digital for Income Tax has been delayed, it’s never too early to prepare. Our experienced accountants in Manchester can help you get ready with the right software, practical advice, and ongoing support, so you’re fully prepared when the new rules take effect. Call Accounting Solutions Manchester today on 0161 879 7175 for a free, no-obligation consultation.