What is bookkeeping?

Bookkeeping is the recording of financial transactions and other information related to the business on a day-to-day basis. It is a vital part of every business.

Bookkeeping records collate information and provide business owners with vital reports on progress and growth. It also calculates tax liabilities the business has and will have in the future.

There are several standard methods of bookkeeping, such as the single-entry bookkeeping system and the double-entry bookkeeping system.

Single-entry bookkeeping uses only income and expense accounts, recorded primarily in a revenue and expense journal. Single-entry bookkeeping is adequate for many small businesses.

In the double-entry accounting system, at least two accounting entries are required to record each financial transaction. These entries may occur in asset, liability, equity, expense, or revenue accounts. Every transaction involves a debit entry in one account and a credit entry in another account. This serves as a kind of error-detection system: if, at any point, the sum of debits does not equal the corresponding sum of credits, then an error has occurred.

Common financial transactions and tasks that are involved in bookkeeping include:

  • Billing for goods sold or services provided to clients
  • Recording receipts from customers
  • Verifying and recording invoices from suppliers
  • Paying suppliers
  • Sales tax and VAT Management
  • Processing employees’ pay and the related governmental reports
  • Monitoring individual accounts receivable
  • Recording depreciationand other adjusting entries
  • Stock management
  • Costing & budgeting
  • Providing financial reports

Correct bookkeeping gives companies a reliable measure of their performance. It also provides information on general strategic decisions and a benchmark for its revenue and income goals.

Accurate bookkeeping is also crucial to external users, which include investors and financial institutions that need access to reliable information to make better investment or lending decisions, or the government.

You can learn double-entry bookkeeping and maintain your own books. But not all business owners have time or aptitude to learn tax and VAT rules and how to apply these to each transaction which goes through their business. This is where a qualified bookkeeper can make a huge difference. Bookkeepers can be employed by the business to oversee the financial side and provide crucial information to the owners and managers. They can also be hired on contract basis for a few hours per week or month to keep things in good order.

Will you spend your Friday evening working through your paperwork and reading HMRC website?

Maybe it’s time to search for a bookkeeper…


What does a bookkeeper do?

What is a Bookkeeper?

A bookkeeper is a trained and qualified professional who records financial transactions and produces financial records for the businesses.

Bookkeepers deal with tax returns on your behalf. They enter all the relevant data into accounting software and deal with a whole set of tasks outside data inputting and accounts reconciliation.

Bookkeepers have an in-depth understanding and experience with accounting software. This enables them to produce various reports such as profit and loss, gross profit and net profit margin percentages, specific expenditure tracking and more.

What does a Bookkeeper do?

A bookkeeper will usually perform the following tasks on a regular basis:

  • Use specialised bookkeeping software to record financial transactions
  • Record bank, cash and cheque transactions
  • Record sales and purchase invoices and allocate them to the correct account
  • Ensure bank accounts are reconciled
  • Calculate VAT due and file the returns with HMRC
  • Process payroll and submit RTI returns to HMRC
  • Calculate pension contributions and submit to pension provider
  • Produce reports, such as profit & loss, balance sheet, accounts payable and accounts receivable
  • Check figures, postings, and reports for accuracy

The records a bookkeeper works with include:

  • Expenditure – money spent
  • Income – money received
  • Accounts payable – invoices to be paid
  • Accounts receivable – what customers owe the business
  • Profit and loss – a report that shows the business’ financial health

A bookkeeper is often responsible for some or all of the business’ accounts, known as the general ledger. They record all transactions and post debits and credits. They also produce financial statements and other reports for managers and business owners. Bookkeepers can manage banking and supplier payments. In addition, they may handle payroll, make purchases, prepare sales invoices, and keep track of overdue accounts (credit control).

Do I need a Bookkeeper?

Bookkeeping is a vital part of every business. Get it right from the start and it will provide you with valuable information to make informed business decisions and, of course, peace of mind that your records are accurate. While bookkeeping can be done by the business owner or their partner, accountants do recommend that a qualified bookkeeper is engaged to ensure the quality and accuracy of financial records. Putting your records together is a time consuming task – your time is better spend working on the business.

Ready to hire a bookkeeper? Our expert bookkeepers are here to help and free up your time for the things that matter to you most.