Keeping records

Keeping records of your accounts has to be done. This is to keep track of what you spend and what you make. Fortunately, for small businesses, the accounting records should be quite simple. Basically you need to show money coming into the business and money going out of the business, also any petty cash that you might keep on the premises.

If you have not done so already, open a business bank account. You can apply for an account at any of the major banks.

A Simple Book-keeping System
To keep a record of your accounts you will need cash, petty cash, sales, purchases and VAT record.

1 Cash Book
You will need to keep a cashbook to show cash payments you receive and make. You can also use this to make a record of your petty cash. Your cash book should have the following under the Cash Receipts

date you received the payment
invoice number
name of customer who made payment
amount
amount paid into the bank Under the cash payments:
date you made payment
cheque number
reference number you put on supplier's invoice on receipt
name of person or business who has been paid
amount
amount cashed from bank for petty cash (every day items such as stamps)
amount cashed from bank for petty cash purposes

2 Petty Cash
For petty cash items you should record the date the cash was spent and how much it was and what it was for. A petty cash voucher book and petty cash box would be useful for this. When you take cash from the petty cash box, put the voucher in the box. Get a receipt for whatever you buy, however small. Put the receipt in your petty cash box plus any change. At least once a week, complete the petty cash book. Decide how much petty cash you want available, for example £25 and keep it topped up, for example each month. It saves you time using cheques or your own money.

3 Sales
An invoice should be produced for every sale you make or a receipt for cash. The sales invoice should have the following information on them:

business contact details
name, address of the business owners if they trade under a different name
company registration number if a limited company
VAT registration number if applicable
date
details of product or service supplied
who they are supplied to
job number

The invoices should be numbered and filed in numerical order. Keep a separate file for paid and unpaid invoice, also keep a copy of the invoice you give or send out. Record each sale made, the record should have the following information:

date of invoice
name of customer
number of invoice
amount of sale including VAT

If you are registered for VAT, include

amount of VAT
amount of sale, excluding VAT

4 Purchases
For every invoice that comes in for goods or services, which you have bought or a receipt for items you pay cash for, this should be numbered and filed in numerical order. The purchase record should include:

date invoice received
name of supplier
invoice paid or not (tick if paid)
number you put on invoice
amount of invoice, including VAT
If you are registered for VAT, include:
amount of VAT
amount of invoice, excluding VAT

5 VAT
As a business, you can only be charged VAT by another business if it is VAT registered. A VAT registered company must show its nine-digit VAT registration number on its stationery, particularly on its invoices and receipts. A VAT registered company can claim back the VAT it has paid on business expenses. You are required to keep separate VAT accounts if you are registered for VAT. This should show for each month the amount of sales, including VAT, the VAT charged, and the amount of purchases, including VAT and the amount of VAT paid.

There are a number of accounting systems for sale that will help you keep your records.