The Basics of Keeping Proper Business Records

I work with many micro businesses and many struggle to understand the basics of keeping proper business records.

The first thing to remember is to keep all business and personal expenses separate.

The second is record every business transaction.

For sales that means either issue an invoice or receipt every time you accept money. The exception to this would be if you are using a cash till and then the till will record ( Via its Z reading) the amount of money taken each day.

For business expenses that means a receipt for everything you buy.

File them in date order.

The next step is to record all these transactions in a book or a spread sheet or if you are really brave a computer package. Do not use a computer package until you are very comfortable with manual bookkeeping.

The simplest thing to do is use a hard back book.
On the left hand page list the money coming in and on the right hand page the money going out.

For every entry put the date, what it is and the amount.

Generally accountants and the tax man group expenses into categories such as;

• Materials
• Stock
• Rent/Rate
• Wages
• Telephone
• Printing, Postage and Stationary
• Insurance
• Motor Expenses
• Professional Fees
• Subscriptions
• Repairs and Maintenance
• Plant and Equipment

So on that right hand page divide it into columns for each type of expense. Now every business is different and will have a different mix of expenses so only use those heading you need.

This only scratches the surface of recording your business expenses but if you can do this you will be way ahead of many micro businesses