Bookkeeping: Staying on Top of Your Records

Record keeping is vital for your business finances. Without accurate records, you won’t know your true financial position, can’t plan, and are likely to have to scrabble around at the last minute to comply with the law. Despite the importance, bookkeeping is something many small business owners squeeze in late at night or leave until the tax return deadline looms. I know from experience.

In the UK, you must keep accurate financial records for at least six years (https://www.gov.uk/keeping-your-pay-tax-records). This includes all sales and purchase invoices, receipts, bank statements, VAT records if registered, and payroll information. It’s best to keep records going back 12 years because if the tax inspector thinks there’s anything dodgy going on with your figures, they can ask to see records going back longer than the 6 years.

Making Tax Digital (https://www.gov.uk/making-tax-digital) is coming to your business even if it hasn’t already. VAT-registered businesses must keep digital records now and submit returns using compatible software. Even if you don’t have to comply with the rules yet, you will soon. and digital bookkeeping tools can save hours and cut down on errors. QuickBooks, Xero, Sage and Freeagent are the leading brands.


• Set aside a regular time each week to update your records and don’t leave it to pile up.
• Reconcile bank transactions promptly so you always know your cash position.
• Keep personal and business finances separate with a dedicated business bank account.
• Scan and store receipts digitally so they’re easy to find and safe from loss.
• Track the people who owe you money and chase up payment as soon as they are overdue.

If the thought of all of this has cold sweat running down your spine you’re not alone. That’s why there are people you can hire to do it all for you even if you can’t afford a full time finance person. Hire a part-time bookkeeper. They can take care of the day-to-day while you focus on running and growing your business. The cost is often far less than the fines, stress, and missed opportunities that come from disorganised finances. It takes a lot longer and will probably work out more expensive if you just dump a shoe box full of receipts on an accountant’s desk.

Good bookkeeping isn’t just about compliance. It’s about giving you the insight and control you need to make better business decisions. Knowing exactly where you stand can help you spot problems before they become crises and you might be pleasantly surprised to discover your business is in a better financial position than you thought and you can afford to invest. If you can afford to have an accountant so much the better but the bookkeeper doing the books so they’re in a well organized state to hand over to the accountant may mean you can use the accountant to give you valuable strategic business advice most accountants are keen to deliver.