A guide to bookkeeping

Bookkeeping is the process of recording and tracking financial transactions in a business. It is essential business admin, but it can be tough to know what tasks you need to do and how often you need to do them.

Our guide to bookkeeping explains basic bookkeeping tasks that every small business owner or independent contractor needs to know. Keep reading for a simple introduction to bookkeeping for businesses looking to manage their accounts.

Daily tasks

Some bookkeeping tasks require frequent updating and monitoring. Regular tasks such as these will need to be visited daily to maintain business and keep accurate track of financial transactions.

Daily bookkeeping tasks include:

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Check bank account balance

It is essential that the dedicated bookkeeper know how much money is in the business account to predict budgets and cash flow. Checking the bank account balance every day also helps to stay on top of invoices being paid and when you can make payments to suppliers.

Prepare and send invoices

A bookkeeper should send invoices to a client promptly after a job is complete to get paid. Preparing and sending out invoices the same day as job completion ensures you do not forget to send and invoice. In general, the faster an invoice is sent, the faster payment is received.

Open and read mail and emails

Businesses should always stay on top of mail and emails to ensure no bills, invoices, or queries are missed. Opening and reading post and emails each day will help to maintain a reasonable amount of admin, ensure no missed opportunities, and reduce fines for late payments.

Record and file receipts

When a customer pays an invoice, you should record and file the payment in the accounting records. If this is not completed on the day of payment, you may incorrectly chase an invoice and have an inaccurate cash flow balance.

Weekly tasks

Other tasks do not need to be carried out so often. Many bookkeeping tasks are only required to be visited on a weekly basis.

Weekly bookkeeping tasks include:

Send invoice reminders

Not every customer will pay their invoice straight away so it is important to send out invoice payment reminders to ensure you get paid on time. It is important to receive an invoice by the date it is due to manage your cash flow effectively and efficiently.

Pay suppliers

It is also crucial that you pay your outstanding invoices on time too. This is important as you do not want to upset or damage your relationship with a supplier. Invoices can be paid by weekly direct debits. Any queries about an invoice should also be raised as soon as possible.

Deposit cash and cheques (update petty cash)

Each week you will need to record all cash and cheque payments in a cash book detailing all cash transactions and then deposit them into the bank. While at the bank, it is also a good opportunity to update the petty cash system if your business purchases miscellaneous items with cash. Withdraw cash as and when you need to top up and record the transaction.

Monthly tasks

Some bookkeeping tasks are carried out monthly to ensure streamlined business processes and positive financial status.

Monthly bookkeeping tasks include:

Prepare payroll

If employees are paid monthly, you must prepare payroll each month. Employee details may need updating and payroll may need to be amended so it is important this task is revisited each month. Payslips will be handed to employees. If you are self-employed or a business owner, remember to pay yourself too.

Reconcile accounts

Account reconciliation ensures all payments and transactions have been sent to and landed in the correct accounts. Bank accounts, credit cards, and business savings should all be viewed and reconciled regularly for smooth cash flow.

Update tracking sheets

When it comes to producing reports, an updated tracking and expense sheet will allow for accurate calculations. Once a month, ensure all tracking sheets, on an Excel spreadsheet or similar software, are up to date and easy to extract data from.

Annual tasks

There are some bookkeeping tasks that are only required to be completed once a year. These tasks tend to be tax submissions, reports, and account summaries.

Annual bookkeeping tasks include:

Speak with an accountant

Speaking with an accountant doesn’t need to happen often, however from time to time, or once a year, you may benefit from a chat with an accounting specialist to maximise your profits and ensure all accounts are in check.

Our team at React Accounting can maintain and manage all types of accounts with a range of accounting services. No job is too big or too small, if you’re in need of some professional advice or have an important accounting question, we are at hand to help.

Submit annual accounts

At the end of each year, you will be required to submit a full set of your accounts. If you are a limited company, these go to companies house, and if you are self-employed, you will submit them to HMRC.

Prepare profit, loss, and balance reports

For your own benefit, you may wish to prepare and view profit, loss, and balance reports to fully understand your business’s financial situation. Use this information to rebalance, improve, and maintain your financial transactions in the new year.

At React Accountancy, we provide a range of accounting expertise and knowledge to support small businesses. Our experienced team manages everything from VAT solutions to payroll, bookkeeping, and taxation to help free up your schedule.

We provide our services across ManchesterStockportLondonBirminghamCardiffBristolGlasgowLeedsNottinghamLeicesterEdinburghSheffieldBradfordCoventryLiverpool and Belfast.

If you are in need of an accountant, get in touch with us today.

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We believe in working with our clients to make accountancy services easy. Get year-end accounts, CT600 corporation tax, payroll, bookkeeping and management accounts made easy.