Bookkeeping is simply keeping an accurate record of the money moving through your business. Do it well and you always know where you stand, stay ready for tax, and can make decisions on facts. Neglect it and small problems become expensive surprises. Here are the basics every small business owner should know.
What is bookkeeping?
Bookkeeping is the day-to-day recording of your financial transactions — sales, purchases, expenses and payments — in an organised way. It is the raw data that everything else, from tax to decisions, is built on.
Bookkeeping vs accounting
Bookkeeping is recording the transactions; accounting is interpreting them — producing statements, analysing performance and advising. Good bookkeeping is the foundation; without accurate records, accounting has nothing solid to work with.
Key bookkeeping tasks
- Record every transaction promptly and accurately.
- Categorise each one using your chart of accounts.
- Reconcile your records against the bank so they agree.
- Track what you are owed and what you owe.
- Produce reports — at least a regular profit and loss.
Single vs double entry
You can keep books single-entry (a simple log) or, better, double-entry, which records both sides of each transaction and keeps the books balanced. Any business with stock or credit should use double-entry.
Cash vs accrual
You also choose when to record things — see cash vs accrual accounting. The method affects how your profit reads month to month.
Bookkeeping tips
- Separate business and personal money — the single biggest cleanliness win.
- Do it regularly, not in a year-end panic.
- Keep receipts and records for tax.
- Use software so records are captured as you trade.
Bookkeeping that happens as you sell
RushFlow records your sales, purchases and expenses as they happen and keeps the books balanced automatically — so bookkeeping is largely done by the time you would otherwise start it.