Do you know what good book keeping looks like?
Good bookkeeping is essential for managing the financial aspects of any business or organisation. It involves recording and organising financial transactions accurately and consistently. Here’s what good bookkeeping typically looks like:
Organisation: Good bookkeeping starts with having a well-structured system in place. This includes setting up a chart of accounts that categorises income, expenses, assets, and liabilities in a logical manner.
Accurate Record-Keeping: All financial transactions should be recorded accurately and in a timely manner. This includes invoices, receipts, bills, bank statements, and any other financial documents. The use of accounting software can make this process more efficient and reduce the chances of errors.
Consistency: Bookkeeping should be done consistently, whether it’s daily, weekly, or monthly. Consistency helps ensure that no transactions are missed, and it makes it easier to identify discrepancies or errors.
Reconciliation: Regularly reconcile your financial records with bank and credit card statements. This helps identify any discrepancies and ensures that your records match those of your financial institutions. We recommend our clients have a regular time each week with a coffee, first thing before they get distracted to keep on top of things.
Segregation of Duties: In larger organisations, it’s important to have a separation of duties to prevent fraud or errors. For example, the person who records transactions should not be the same person who authorizes or approves them.
Backup Documentation: Keep copies of all financial documents, such as invoices, receipts, and contracts. This documentation provides evidence of transactions and can be crucial for audits or tax purposes.
Tax Compliance: Ensure that your bookkeeping practices align with tax regulations where your business operates. This includes keeping track of deductible expenses, collecting and remitting sales tax (if applicable), and filing tax returns on time.
Documentation and Notes: Make notes or provide explanations for any unusual or significant transactions. This helps in understanding the context of the financial records, especially if someone else needs to review them.
Regular Audits: Periodically review your books or hire a professional auditor to ensure accuracy and compliance. Regular audits can help catch errors or fraudulent activities.
Scalability: Your bookkeeping system should be able to scale as your business grows. Whether you’re a small startup or a large corporation, your system should accommodate your needs. Most start ups begin with spreadsheets and as the transactions increase move to accounting software such as Sage or Xero.
Training: If you have employees handling bookkeeping tasks, ensure they receive proper training and stay updated on best practices and relevant accounting standards.
Good bookkeeping is about maintaining accurate and organised financial records, following established processes, and ensuring compliance with relevant laws and regulations. It provides a solid foundation for making informed financial decisions and is crucial for the long-term success of any business or organisation. If you are looking for help with your bookkeeping or have a question about the service we provide – get in touch.
Let us manage your bookkeeping so you can manage your business.
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