5 steps to make your book-keeping simple and effective

Updated: Jul 7, 2020


By following these 5 steps you can manage your business cash flows, save time and meet all the requirements of the UK government




1 open a separate business bank account

Open a separate bank account for the business and put all business related transactions through the business bank account. This not only makes the admin much easier by separating business from personal income/expense - it also avoids missing business related transactions. If the authorities do want to inspect your books this will give them confidence you are in control of your business finances - avoiding much time and trouble.

There are many banks to choose from - make sure you research properly to find one that has the features you are looking for - checking reviews is also important - and an auto bank feed to online accounting software should be a feature - see below!


2 use an online accounting software app

Choose an online accounting app to record your business transactions - this is known as book-keeping.

  • Some popular apps are Quickbooks Online and Xero. There are many others….

  • Auto import all transactions from your bank account into the accounting software - most banks allow this - if you are choosing a bank research this option first as it is a very handy feature

  • If not available you can import with a weekly/monthly upload via spreadsheet - this may work for you if you prefer to handle all your accounting admin just once a week/month

Then categorise the imported transactions once a week/month.

  • For example choose goods for resale, travel, sales

  • ask your book-keeper or accountant if you are unsure where to categorise certain expenses - but you can change categories later if any are in the wrong place

Once categorised you can run profit and loss/cash flow statements to check business progress.


3 invoice sales as they are made

  • If you invoice for sales - use the accounting app sales invoice function to raise invoices (from mobile or laptop)

  • Then match the cash receipt from the bank feed to the invoice raised in the system - this allows you to see who has not paid – and chase older invoices for payment!

4 ensure the bank statement agrees to the accounts

  • Make sure the accounting app agrees with the bank statement – once a month - this ensures that all transactions in the bank have flowed through the accounting app - which is important to make sure you've included everything - and to show HMRC if they come asking!

  • Good accounting software will include this function - look for 'bank reconciliation'


5 upload receipts

  • Keep receipts digitally – either on your on-line accounting software app or OneDrive/Dropbox - look for the most cost effective option

  • You can bin paper copies as digital proof is acceptable to HMRC

  • You may need to provide digital receipts to HMRC if there is an enquiry – as such you should make sure all receipts are stored digitally somewhere - and these need to be kept for at least 7 years for a Limited Company and 5 years for the self-employed

  • You do not need to match each receipt to the bank statement for accounting purposes – but HMRC may require you to provide proof of spend if they open an enquiry - unless your accounting app easily stores receipts I recommend having receipts stored by month outside the accounting system - matching them to the bank transactions in the unlikely event of an enquiry being opened - this will save lots of time every month!


other matters to consider

There are some final (non-bank) accounting entries that will be needed to tie out the accounts – some of these additional steps may be necessary and you may want to ask your book-keeper or accountant to assist with these:

  • Opening balances for the business will be needed if you are investing cash/assets

  • If you have employees you will need to make payroll entries from your payroll software

  • If you have inventory you will need to track the stock levels through the accounting software and tie to the physical stock at intervals

  • If you have assets such as laptops or machinery you will need to make a non-bank entry to reduce their value periodically (called depreciation)

At year end your accountant can help you finalise the numbers and submit to Companies House and HMRC.


in summary....

Making use of readily available online accounting software programs will ensure you have full visibility of business cash flows, spend the least possible time on your admin tasks, whilst also ensuring you meet Companies House and HMRC requirements.


Need a hand with implementing some of the above or have some questions specifically for your business, pop me a message!


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