Keeping an accurate record of your financial transactions is a critical part of running your business. We often see businesses getting themselves in trouble by not keeping on top of their Bookkeeping. Just Simply Organised have years of experience and are often asked to help businesses clean-up their records so they are on a stronger and more compliant footing going forward.
What is Bookkeeping?
This crucial function allows you to understand how your business is performing by simply monitoring money coming in and money going out of your business.
Just Simply Organised ensures there are accurate records of all your income and costs. This then allows you to understand if your business is making adequate money and producing profit.
The information is also required to complete Self Assessment Tax and VAT returns.
Accounting software packages (such as Xero or Sage) are used to perform the tasks needed and Just Simply Organised are chosen partners and experts on using these software packages.
What are the differences between Bookkeeping and Accounting?
We often see Bookkeeping and Accounting being referred to as the same function. However, this is not quite right. There are overlaps in some ways but both are separate professions.
Without good Bookkeeping it is difficult to be fully confident on all aspects of your accounts.
Bookkeeping is a daily process and records the transactions and assigns them to the correct financial category. The accountant can then analyse and use this information to prepare the final accounts as needed.
Bookkeeping software for small businesses
If you use Just Simply Organised’s services, we can help set you up with the latest software at a low monthly cost.
It is also possible to scan documents which saves having to present mounds of paper. This is all part of the Just Simply Organised service. Once scanned we can then correctly categorise and ensure all transactions are recorded for costs and sales.
Equally if you are a business owner who is more comfortable keeping paper records then we do still offer the drop-in or postal service which means you can leave your records with us at our office and we will enter onto the systems for you. A lot of clients prefer this as a traditional service. We do believe the future will be different in that scanning documents is better for you as a business owner as it saves you time in the long run and less paper is better for the environment.
The industry is moving forward with new technology. We need to be prepared in the long run not just to move away from paper based work but with Making Tax Digital for Income Tax Self Assessment (MTD for ITSA) coming into play soon we need to front run these developments and embrace the new ways of entering and sending our financial information to HMRC. You can read about MTD for ITSA on our website at www.justsimplyorganised.co.uk.
Can I do my own Bookkeeping?
Of course, it is possible to do your own in-house Bookkeeping. However, we would encourage you to focus on what you are good at i.e. running your business and then paying the experts to deal with your Bookkeeping.
We are often asked why do businesses need Bookkeepers. The answer is simple in that if you are not qualified or do not have the time to spend on this critical function then you should leave Just Simply Organised to take care of this for you.
We can perform the task a lot quicker given our experience and it is a false economy to do this yourself when you could be earning money and making sales.
If you choose to do your own Bookkeeping you would need to do the following work in advance. We would urge you to get advice on these aspects well in advance as choosing the right software and method is critical. The last thing you want to do is change your decision later down the line as this requires a considerable amount of rework and loses focus on your own business:
- Select and understand which accounting method to use
- Understand what records you need to keep, store and maintain
- Ensure you have the right software (Just Simply Organised have cloud based software which is fully resilient and backed up)
- Train yourself and / or employees to ensure you are compliant with HMRC procedures and register as needed
- Keep an audit trail
- Keep in touch with all due dates to avoid fines
- Do the task accurately to avoid investigations
It is not a legal requirement for people who decide to do their own books to have a qualification. However, Just Simply Organised use only qualified staff as we believe adequate training and oversight is really critical.
Various organisations exist but the main Bookkeeping qualification is via the Association of Accounting Technicians. This course takes a number of years to complete but ensures full competency once qualified. This course combined with thorough training and oversight sets Just Simply Organised apart from the rest.
Double-entry Bookkeeping
Every transaction has two equal and opposite elements. The easiest way to explain this is when you make a sale then you increase cash in the bank but you reduce the stock levels at the same time.
Bookkeepers maintain this information and summarise into what is known as a general ledger. The “GL” is summarised into various categories which allow the transactions to be reported. Minimal categories would be:
- Assets
- Liabilities
- Capital Introduced
- Owners’ equity/shareholding
- Income
- Expenses
- Drawings
- Gains
- Losses
Cash basis accounting versus Traditional methods
If you are going to do your own bookkeeping then you must choose which method to use in order to record and capture your transactions.
Cash basis accounting means you only need to declare income or expenses when it comes into your business or leaves your business.
Whereas Traditional accounting involves recording income and expenses according to the actual date you invoiced or were billed.
There are rules around which businesses can use which method and these are listed on the gov.uk website.
Just Simply Organised are here to help so please email us at info@justsimplyorganised.co.uk or call us on 01892 770612
