Read our beginner bookkeeping guide to help you get started with your business or personal accounts. Knowing where to start is difficult, but going through the stages will help. Bookkeeping is the processing of transactions that make up the accounts, they include invoices receipts, journals and statements.
There are many reasons why bookkeeping could be helpful to you, including running a small business, charity accounts or personal accounts.
When starting, it is worth taking your time in research. Speak to a bookkeeper or accountant, read articles online and research software or spreadsheets.
Beginner bookkeeping – where to start
Depending on the size of the project you are working on will depend on how you complete your records; there are several different choices:
Excel templates – can be an excellent start to get you up and running. We have some free Excel bookkeeping templates, including a cash book and a budget template. These are suitable for personal or small businesses. All our templates are easy to use, have instructions and examples.
Below is an example of our simple cashbook template.
Accounting book – If you are keeping track of simple accounting, then a book may be the answer. It will include columns for listing detail and analysis of income and expenditure. An analysis book is a manual way of completing the records.
Accounts software – There are lots of different software available, most now are all online, so there is no upfront fee. They range from Wave and Pandle, which are free to QuickBooks, Sage FreshBooks and Xero; all have a monthly fee. Most provide a free trial; look at a few to see which fits in best with your business.
The advantage of a software package is that it will grow with your business, but you may need help getting started. Read our accounting software reviews to help choose the best package.
Do I need a Bookkeeper or Accountant?
I would suggest getting you started to speak to a bookkeeper or accountant; they will recommend the best set-up to record all your information.
If you can complete the bookkeeping yourself, it may be that you require their services at year-end to ensure the records are correct to submit to either Companies House or HMRC.
You may want to use the services of a bookkeeper regularly; this will leave you more time to run your business knowing that the accounts are in safe hands.
Beginner Bookkeeping – Keeping Records
You will need to keep all your transactions for at least 6 years, from sales invoices and purchase receipts to expenses. Many payments are now online, so it is worth printing off, or storing receipts electronically as you spend money.
If you store files electronically, either use the hard disc on the computer, cloud storage or documents uploaded directly to an accounting software package.
Depending on the amount of paperwork depends on the filing system needed. If there are only a few records, then a folder or you may need a lever arch file to keep the sales and purchase separately. You will need a filing system that can either be month by month are alphabetical by supplier and customer.
How often should I complete Accounts? How frequently you complete the accounting records depends on the size of the information you are recording.
A large business will need information daily and will have a team to do the work. A small business may only have a few records and needs to get the figures for the year-end. Most require the information on a weekly or monthly basis.
Accounts each year will have to be submitted to either Companies House for Limited Companies or HMRC if you are self-employed.
Beginner Bookkeeping – Single Entry or Double Entry
A single entry system is a simple record of your income and expenses shown in a book or spreadsheet. The single entry system is used mainly for very small businesses, charities or personal.
Double entry is more complicated and records transactions twice in the system. A couple of examples are that you purchase some stationery; the transactions will post to both the expenses and bank balance. The double entry will produce a Profit and Loss account and Balance sheet, which most businesses will need.
If you use a double entry system it is easier to use accounting software, which will post the double entry. An example is the business issues a sales invoice, the amount will post to both the sales on the profit and loss and the debtors on the balance sheet.
Further information is available on this site to help get you started, take a look at our bookkeeping basics for further details.
Beginner Bookkeeping – Bookkeeping Terms
One of the things that business owners find difficult when starting bookkeeping and accounting are the terms used. Below are a few on the most common terms, but we have a complete list of available.
Balance Sheet – A snapshot of the businesses finances.
Chart of Accounts – These are the codes used in accounting software. They consist of assets, liabilities, equity, sales and expenses.
Profit and Loss – A report to show income and expenditure for a period.
Double Entry – A transaction always has two entries that are equal a debit and credit.
Basic Accounting Equation – The image below shows the basic accounting equation.
Beginner Bookkeeping Conclusion
When starting out the bookkeeping journey; take your time in making the right choices for the business. Look at storage and software options to choose which is best.
If you need assistance speak to an accountant or bookkeeper, they might even save you money in the long run.
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