Book-Keeping - What Do I Need To Know? (2004-02-01)
- It is a legal requirement to keep accounting records of business activities. Ideally your books of account should record every transaction of receipts and payments. Whether made by cash, cheque, credit card or any other method.
- Q: What form should my accounting records take ?
A: There is no one approved method but ideally the records you keep should be simple and you should be able to follow a transaction through its various stages. Each transaction should have a unique reference, be dated and have a brief description and the amount clearly stated. - Q: Can I use a computer ?
A: Most businesses will use a computer for part of their record keeping and the amount the computer is used will depend on the skills of the operator. A simple spread sheet can be effective and this can grow into an integrated accounting and costing system. - Q: What will an accountant cost? Do I really need one?
A: Accountants fees will be generally based on the time that the work takes and the level of skill needed to do the work. If you work with your accountant and present the accounting records in a form that reduces his work it should cost less. Many accountants offer special packages for start ups so talk to them. - Q: What is profit ?
A: Profit should be the amount of surplus income you make over and above the costs you incur. Profit is not necessarily the same as cash flow which in some ways is more important. - Q: What is Cash flow ?
A: Cashflow is the lifeblood of business and refers to the flow of cash in and out of a business. Cash comes in when you make a cash sale or when a customer pays his invoice. Cash goes out when you pay a bill or buy an item or service for cash. Cash refers to Cheque and Bank payments and receipts.
REMEMBER IT IS BETTER TO GET IT RIGHT FROM THE START. IF IN DOUBT ASK FOR ADVICE IT CAN BE COSTLY IF YOU GET IT WRONG!
Print this page
