Book-keeping Fears

Not_Another_Username

I have set up a small business. It's so small you wouldn't see it unless you used a powerful microscope.

I am terrified when it comes to book-keeping and always have been. I am more than proficient in what I am doing in my little business, but I collapse in a heap when I start to think about keeping receipts and entering them into the books, etc. Sweat pours off my brow and I need medication to calm me down (only a slight exaggeration of the facts ).

I have looked at ultra-basic free book-keeping software and barely got as far as entering the name of my business, let alone understanding the virtues of Profit and Loss Forecasting. I have used Simplex D books in the past and even they had me scratching my head, such that a family member had to look after my accounts. My numerical skills are below zero!

I have used accountants in the past but I would rather go down the self-assessment route this time.

I know I just need to keep simple records of the money which comes in and the money which goes out, invoicing and little more. But is there any painfully-simple (suitable for total dummies) software or other time-saving method I would benefit from when it comes to self-assessment.

I don't know if you upload a spreadsheet to HMRC at the end of the financial year. I have no idea how this works.

I am not a natural worrier, but this freaks me out. I am trying to prepare myself as much as I can in advance as I know I won't sleep at night if I get this wrong.

Thanks for any tips.

paddyrg

Is your business a limited company or not?

jcloth

I still use manual single entry book keeping for our small business. I bought sage and tried to learn it but that was a waste of a lot of money. They just don't put it in lay men's terms (hope I have spelt that ok) I've hunted on line and tried lots of free programs but they ask you to put in opening balances etc and that's when I get stuck. I am still using manual and at the end of the month when bank statement comes have to do reconciliation thingy. Our new accountant is ok with the way I do it but I would love to find an easier way just like you.

Savvy_Sue

If the business is as small as you say, then an Excel spreadsheet should do the job - or if you don't have Office already then Libre Office is a free equivalent. There are lots of tutorials online.

You won't need to send it to HMRC.

You need several columns, something like:

Date of transaction
Date it appears on the bank statement
What it was - invoice you've raised, cheque you've written, payment into your bank account

This is where you might think it's getting complicated, but you now need at least three columns:

In
Out
Balance

If you start with a balance of zero, in the balance column on the line below that, you need a formula which takes the balance you started with before this transaction, PLUS anything in the IN column, LESS anything in the OUT column. That's your new balance.

When you can manage that, you can get cleverer, but it will do for a start.

Mistral001

I think the OP's worries are no different than those that have occupied many business people throughout the centuries.


The key, I think, is to just do it. There is no way of avoiding it. To some bookkeeping is like going to the dentist (I probably am one of those). There are no quick fixes unless you are willing to pay for a part time bookkeeper. Software packages promise a lot but unless you are willing to put in the effort to learn how they work, then they often take up more time than they are worth. Spreadsheets can save you time (I use them a lot), but if you do not like them, there is no law that says that you have to use them as they do not always save you time.

Goldiegirl

Maybe it'd be worth going on a book keeping course

I did a course at the local adult education, for manual book keeping - no computers, just pen, paper and a calculator.


Once you've got those basics, it'd hopefully give you the foundation to understand accounting, and the confidence to keep your own records

Pennywise

I train a lot of our new clients how to do the book-keeping and nearly everyone is surprised at just how simple it can be. It's just a matter of stripping out the unnecessary bits and sticking to the core data that matters.

We find a lot of people have been put off after either buying horribly complicated expensive software such as the horrible Sage, or trying to muddle through with a home made spreadsheet. No need these days as there is some really good free desktop software or some very cheap online software, which are stripped down, easy to use systems.

The key is good "housekeeping" even before you touch your book-keeping systems. That's simple things like writing on each bill how and when it was paid, keeping all invoices and bank statements organised and filed in any form of sensible order. Remembering to write on your cheque stubs and paying in slips. Remember "garbage in, garbage out" - your book-keeping will be messy and wrong if you aren't organised with the core data which for every transaction is:-

*who - who did you sell to or buy from
*when - when did you sell or buy it
*when paid - when did you pay for it or when did the customer pay you
*how paid - how was it paid, i.e. by cash, current account, credit card
*nature - what was it for, i.e. money from sale, money from self, purchase of goods, motor expenses, stationery, personal drawings etc.

You can't make any progress without those five bits of data for every transaction. Only when you have that properly organised can you move on to things like bank reconciliations, etc.

In my training sessions, I spend more time on the basic administration and housekeeping training than I do on the actual data entry. Get the admin organised and streamlined and the book-keeping becomes a doddle!

You don't need to learn "proper" book-keeping at all especially if your business is simple - it's more likely to confuse you if you start learning about debits and credits, ledgers, and double entry. All that is done behind the scenes in modern book-keeping software - it's only the old dinosaurs like Sage that are still bogged down in old fashioned ideas such as closing down accounting periods, debits and credits - completely over the top and overly complicated for the typical small/new business start up.

martindow

I agree with the idea of keeping it simple. I would also advise that you keep up with it and don't let piles of paperwork build up when it can become daunting.

The other advantage of noting everything down as you go is that you include little items such as odd bits of mileage that are difficult to remember a few months later. These small items can add up to a tidy sum and it is essential to include them to be sure you are operating on a sensible profit margin.

Mistral001

Thinking about the fear factor that the OP mentioned. Some people are daunted because they do not do their book keeping perfectly. But I think the most important process, is record-keeping as you go along . Even though a few professional bookkeepers might gasp at the thought, throwing receipts and copies of issued invoices with scribbled-on notes into a box in no particular order should not be ruled out. It is amazing how little time it takes to sort those pieces of paper out at the end of the month or even the end of the year. At least you have the knowledge that they are there and you have all the relevant information available to you.

Pennywise

Mistral001 wrote: »

Thinking about the fear factor that the OP mentioned. Some people are daunted because they do not do their book keeping perfectly. But I think the most important process, is record-keeping as you go along . Even though a few professional bookkeepers might gasp at the thought, throwing receipts and copies of issued invoices with scribbled-on notes into a box in no particular order should not be ruled out. It is amazing how little time it takes to sort those pieces of paper out at the end of the month or even the end of the year. At least you have the knowledge that they are there and you have all the relevant information available to you.

Exactly my point - it comes back to organisation and housekeeping. That doesn't mean perfect filing in numeric order in lever arch files - that's nice but not essential. What's more important is having everything you're going to need in one place. I regularly tell my tradesmen clients to get a Quality Street or Heroes tin and put it in their van, and then put all their paperwork in it - not pleasing to look at, but at least everything is then in one place, not getting washed in the jeans, not falling out of the van into a puddle, etc. Same at home, I tell people to put all post in the same place, whether it's a desk drawer, box in a corner, filing tray, or whatever - doesn't matter where as long as you're consistent and put it all somewhere. When the time comes, you're not wasting your time rushing around trying to find bits of paper that may be anywhere - it's all there, just needs sorting into date order and you're ready to go! Simples!

Not_Another_Username

Sorry for the late reply. Just no free time at the moment.

Thank you for your replies. I will digest and answer in more detail soon.