Going self employed - bookkeeping help

froggy_girl128

Am going to be going self employed
Am wanting to do my own books - i dont think i will be in profit for a while as will be reinvesting earnings into computers/printers/phones etc.

Can someone point me in the right direction about bookkeeping and what needs to be listed

Thanks

richt71

My accountant asked me to keep an updated excel spreadsheet each month. It simply has each date of the month (ie 1 to 31st) down left then is split into 2 sections - incoming and outgoing (expenses). I simply enter any amount I recieved or paid and where from/to against the date. End of each month I print it off and place the money sheet in an envelope with any expense receipts. Not sure if this helps you?

froggy_girl128

Thats brilliant - thats just what i needed to know

WHA

froggy_girl128 wrote: »

Am going to be going self employed
Am wanting to do my own books - i dont think i will be in profit for a while as will be reinvesting earnings into computers/printers/phones etc.

Can someone point me in the right direction about bookkeeping and what needs to be listed

Thanks

First rule is good "housekeeping" - make sure that you keep all paperwork, i.e. invoices, receipts, orders, bank statements, credit card statements, etc. Get yourself a filing system sorted straight away and file things neatly and in order. That way, whatever book-keeping you do, you can always go back to the source documents months or years later if necessary.

As for book-keeping, at its simplest level, you need a list of all income and a list of all payments, giving transaction date, name of payer/payee, amount, how it was paid (i.e. cash, business bank, personal bank, credit card), and what it was for (i.e. purchases for resale, rent, postage, stationery, travelling, equipment, drawings, etc etc).

I would strongly recommend that you use a proper book-keeping software package rather than a spreadsheet. A good free one is www.vtsoftware.co.uk - they have a free basic cash book where you can enter your in's and out's, which is upgradeable for invoice generation, supplier and customer balance control, etc,. later on if you need it.

May I just mention that even though you don't think you'll make a profit because you are ploughing money back in, it is still possible (and likely) you'll have a taxable profit, even if you draw nothing out personally. The purchase of stocks for resale, items of equipment, and other supplies expected to last more than the current year are NOT fully tax deductible expenses. You only get relief for goods for resale when they are sold, you get capital allowances to claim the cost over several years for equipment, and if you have supplies that are going to last say 2 years, you claim half each year. Also, you are taxed on sales or work done in the tax year, not the amount received, so if you are owed money by customers, that is added to your taxable profits even though you havn't seen their money in that year. These are about the most common mistake made by new business start-ups -- you are not taxed on what you take out nor money in the bank, you are taxed on the "taxable profit" as derived under the long established accounting and tax rules - very different results - something to be aware of and watch out for.

SANDYLODGE

Hi WHA

I have just set up self employed as a tree surgeon and I am trying to get to grips with keeping the books too!
I have got an accounts book which I am recording everything in and most of it is pretty straight forward as it is broken down into the different categories for me e.g. insurance, stationary etc.

There are a couple of things which I'm not sure where to write down though. The first is petrol and oil for the chainsaw, there's a space for vehicle fuel but that's obviously different.
The second thing is a book that I've bought for information about different trees etc. I'll be using it just for work but I'm not sure where to put it in the accounts.

Thanks for any help.

longforgotten

SANDYLODGE, you say that your accounts book has different categories........ well

If you have a heading called 'miscellaneous expenses' or 'sundries' put your tree books in there

As for your chainsaw oil etc , do you have any spare headings ? You could do with one for 'purchasing small tools and maintenance of equipment'. Just cross out a heading you are not likely to use and re-name it. Make sure you use that same column for tools etc from one page to another throughout the year

Hope this helps

SANDYLODGE

Thanks longforgotten
I'll just create a new heading like you sugested. Just wanted to check that there wasn't somewhere else obviuse I should be putting it. I didn't know what sundries were for a start.

longforgotten

SANDYLODGE

Sundries are any business expenses that you cannot allocate anywhere else ha,ha. 'Sundries' is also a heading that the Inland Revenue tend to pick on if a business ever has an enquiry as it can include allsorts.

Just make sure that whatever you put in there is a genuine business expense and you'll be fine.