What is Bookkeeping?
Bookkeeping is the process of a business recording all of their financial transactions in a set format. Back in the old days, this used to be done using something called a ledger book, but nowadays it is more typically done using spreadsheets or software.
Bookkeeping is not as simple as just listing out all of the income and expenses in your business throughout the year.
The skill in bookkeeping as a small business is to know what expense or income category each transaction belongs to, how to account for the other side of the transaction (something called double entry bookkeeping), and correctly accounting for things like VAT and payroll liabilities.
If that isn’t something that you have experience or expertise in, then you should get an expert to do it for you to avoid costly mistakes.
Reconciling your Bank Account
Bookkeeping should also include the process of reconciling your business bank account. This is especially important for Ltd Companies who have a legal obligation to have a business bank account in the company’s name.
A bank reconciliation matches up each entry you have made in the bookkeeping ledger, against their relevant entry as they come into or go out of the bank account.
Items that have not yet been through the bank account are classified as Debtors and Creditors.
Our expert Accountants reconcile bank accounts every day so know exactly what to look for and how to deal with it. But for a small business this task can be time consuming and overwhelming.