Bookkeeping: The Basics

Bookkeeping basics

1. What is Bookkeeping?

Bookkeeping is completing your accounts using double entry. There is always a debit and credit meaning your accounts ‘balance.’ For example, if you are an illustrator and send customers framed illustrations in the post. You will need to buy padded envelopes for the delivery, let’s say you bought them from your business bank account – The double entry would be to debit your ‘postage account’ (increase in expenses) and credit your bank account (decrease in assets).

2. Keep Spends Separate

It’s always recommended to keep your spending completely separate. Ensure to open a separate bank account for your business.

3. Accounting System

Choose a system to use – Spreadsheet, Xero or Quickbooks for example. Accounting systems will usually complete the double entry within the system but if using a spreadsheet, you will need to ensure both income and expenditure is recorded separately.

4. Chart of Accounts

These are codes that categorised where the item sits in your accounts. Ink for the printer = printing & stationery = expense.

5. Keep Records

Keep your paperwork for the requested time limit. Depending on whether you are a sole trader or limited company, the time required is different so always check the government website. Either paper or electronically. If HMRC ever wants to view the document, they will expect you be able to produce it.

6. Regular bookkeeping

Complete bookkeeping regularly. – monthly as a minimum.

7. Use the information

Use the information to your advantage. Now you’ve gone to the effort to keep your accounts up to date, use this important to make important business decisions.

Did you find that useful?

Get more like this direct to your inbox by signing up to our newsletter.

Read more of our latest posts

Limited Company

Limited Company Overview

What is a Limited Company? A limited company is a business which is legally  separate from the people that run it. The owners often known as...

Read More

Learn with Lex

Bookkeeping Basics

Learn the very basics of bookkeeping

Bookkeeping Software

Get help with processing your accounts

Business Support

Tips & best practices for running your business
Receive our latest news

Want to hear more from The Lex Approach?

Get more from us direct to your inbox by signing up to our newsletter.