Basic bookkeeping skills

You don't need to be an accountant to run a business, but some basic knowledge about money matters and finance goes a long way. Being able to handle your books is essential - this is how you keep track of all the money coming in and out of your business. Bookkeeping is also a legal obligation, so whichever way you look at it, you need the know-how. This guide will help, by looking at:

• What bookkeeping is
• Why it's important
• How to do it
• Who can help

What bookkeeping is

Bookkeeping is essentially keeping track of all the money coming in and out and within your business. You keep chronologically ordered records in account books of all transactions, including debit and credit transactions, and record the value of assets, liabilities, incomes, expenses and sales. If you are VAT-registered, you also need to keep records of VAT.

• Keeping track of all the money coming in and out and within the business
• Keep chronological records in account books
• If you are VAT-registered, you also need to keep track of VAT

Why it's important

First and foremost, keeping records of your business finances is a legal requirement. But from a business-owner's point of view, it's also absolutely crucial for staying in control of your budget and financial happenings, and being able to measure and forecast how you're doing and how much you can spend - or how much more you need to sell.

• Bookkeeping is a legal requirement
• It's crucial for staying in control and understanding your finances

How to do it

The first thing you should do is contact HMRC. Its role is to help people in your position, and it provides all the advice and documentation that you need to start bookkeeping. There are different methods for bookkeeping, so it's best to read through the info and speak with an HMRC advisor to work out which is going to suit your business best.

• Contact HMRC
• Read the info it provides and speak with an advisor to determine the best method for you

Who can help

HMRC is always your first stop - as well as the initial advice and documentation, it publishes regular newsletters and tips to help you and has an advice phone line. Take a look at its website, www.hmrc.gov.uk, too. Look for books on the subject for more in-depth info. Friends and family with financial knowledge can be a great help, but if your accounts are getting complicated or you're really struggling, investing in an accountant may be worthwhile. Think about how much value they could add and how much time having an accountant would save you before spending money on one.

• HMRC is your first stop
• Read up in books and ask friends and family
• Consider an accountant but think about how much value they would add before spending

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