Before I tell you what you need to know when it comes to bookkeeping let me start by saying I am not a qualified bookkeeper nor do I plan to become one however, I am confident in what I know to help give you a starting point but if you can I would highly suggest hiring a bookkeeper or even an accountant as this is one of the most important things you will ever need to do in your business to keep track of your earnings, expenses, and of course those taxes.
Right, now I have the boring bit out of the way let’s get into why you are here!
Bookkeeping is a way to track the money that comes in and out of your business preventing the guesswork and allowing you to make accurate decisions when deciding if you can afford an expense and knowing hands down what your finances are looking like within minutes and do not forget knowing if you are earning your ideal income or making a loss.
You will need to have an organised system in place, as bookkeeping is all about being organised which leads me to my first task for you.
Get Organised by buying yourself an organisation folder and do not worry this can be added to your expenses just ensure to keep the receipt. You will want one folder for the current year and separate it into 12 months and for every month this will be where you will keep all your receipts and documents to complete your tax forms at the end of the tax year and lastly, you will want another folder to keep the previous years in order just in case the taxman asks to see them. Trust me you are better to be the organised person and not the person crying at the end of the year surrounded by receipts with no clue where to start.
Next, you need to keep your business finances separate from your personal finances as this will make it easier to know what your business is earning to what you actually have as an income! I highly suggest you open up your business account and go from there, when it comes to business bank accounts there are many out there to choose from but I would suggest looking into Starling bank, the biggest reason is they are free to open and use and it is as simple as 1,2,3. If you are a limited company you will be able to open your account straight away however, there is one extra step if you are a sole trader and that is you will need to open a personal account first before you can open a sole trader account but this is a small price to pay and if your stuck with what you can do with your personal account then why not use it to save your tax money in, ready for when you need it. Starling does also offer many benefits which some are free and some are paid monthly fees to use but this will give you the tools you need for your bookkeeping if you need it.
Now you have a way to store your finances and receive your income, you now need to decide if you are a paper and pen kinda girl or if you need technology to help keep you on track and I have a solution for you either way!
- The first solution for the paper and pen people out there is to get a notepad to keep a record alternatively, I have designed a book to keep track of not just your finances but everything business-related in our charge your worth workbook planner available on amazon.
- The second solution for you high-tech people is to use something like QuickBooks which is a great way to track as you go and store all your receipts digitally. They can even help you with your HMRC self-assessment, just bare in mind this is a paid-for service however you will be able to add this to your expenses as well and your stress levels will be reduced as you will not be doing all of it on your own.
So we have gone through organisation, separating your finances and keeping track of all your income and expenses the last thing to do is on you and that is to keep track. Ideally, you do not want to leave this to the last minute where you are left mindblown trying to get 6 months to years worth of finances together plus this is not smart if you want to be top of the game and know exactly what you are earning so instead try and find some quiet time at the end of the day and add in all the new income and expenses and then file your receipts into the correct section for that month, after all once this is done you are done for that date and if worst comes to the worst then once a week will be better than once a year!
These are 3 steps to simple bookkeeping and if you need something a little more in-depth then I would highly suggest you speak to a bookkeeper or an accountant, but just these 3 simple steps helped me stay on track and send off my tax returns on time and correct but most importantly I now know what I earn each year and can create my future goals on these bases to increase my earning potential.
Let me know if bookkeeping is your favorite thing to do?
Until the next post, have a great day.
Chandra.
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Sidenote: Some links may be affiliate links, meaning I will earn a small commission from them however this is at no extra cost or effort to you 🙂
