Bookkeeping is the recording of financial transactions or to put it another way financial data input. Transactions include sales, purchases, income from non-sales sources (e.g. bank interest) and payments by an individual or organization during the course of their business. Ensuring that data input is correct from day one will ensure that the reporting you get out of your accounting package at the end of the day is meaningful.

But aside from complying with the law, why should it be such an important aspect of running a business?

Because it is only by reviewing past performance that you can review your costs to pare them down; review your sales to understand your profit margins and from which sales lines/ departments/ areas you make most of your profit and thus start to properly forecast your cash flow.

Consistent review of key figures in your business – break-even point; gross profit etc will ensure you stay on track and understand where you need to make changes in order to drive your business forward.

Here are our top tips for making life easier

1 Spend time upfront working out how you want to review your business performance – if for instance you sell products, would it be useful to view them by sector or by product type, by area or by all three? Do you need to link cost price to selling price so you can consistently work out your margins. If you provide services can you link staff time spent on specific clients to the sales lines you are operating through timesheet functionality? Most accounting packages will let you do this but you need to set them up to report the way you want them to first.

2 Make sure you reconcile the bank – regularly – at least on a monthly basis. (We would advocate a weekly basis and for some of our clients we even reconcile on a daily basis - but then we enjoy looking at figures!) This ensures that you stand some chance of remembering what the entries are for on your bank statement and can allocate them to the correct nominal code. It also means that you can easily run off monthly accounts to review the success of your business.

3 Save time by invoicing directly from your accounting package – this means that there is no duplication of input; invoices can’t be “mislaid” and most accounting packages have a credit control function where you can set statements ready to run to remind your customers to pay you!

4 Set up recurring transactions where you can – why waste time on a monthly basis? Spend some time upfront to make life easier in the long-term.

5 Lock down accounting periods once you are happy they are correct – particularly as regards VAT quarters. And when you check your VAT return make sure that your VAT sales figure is 20% of your turnover sales figure if you are a standard VAT business.

6 Narrative, narrative, narrative! And meaningful narrative! Use electronic payments where you can so that you don’t have to look up cheque stubs. If you do use cheques annotate them clearly so you know what the payments were for and don’t have to wrack your brain trying to remember.

7 Understand why you as the business owner are doing the bookkeeping. If it is purely down to cost you could be making a false economy. Ensuring it is done regularly and often at a commensurate cost is a far better situation than missing out on free time at the weekend and not having relevant business reporting at your fingertips.

Need assistance with your bookkeeping? Contact Paper Mountain Solutions on 0844 826 0579 and ask to speak to Paul, or contact him on This e-mail address is being protected from spambots. You need JavaScript enabled to view it '; document.write( '' ); document.write( addy_text69908 ); document.write( '<\/a>' ); //-->\n This e-mail address is being protected from spambots. You need JavaScript enabled to view it