Blog Post

‘Just bookkeeping’ – the fundamentals of bookkeeping

Whether you are using cloud based or desktop software, the fundamentals of bookkeeping are the same.

The fundamentals of bookkeeping

Good financial planning and accounting relies on accurate and timely data. The fundamentals are all about getting your software set up correctly and making your data entry as efficient as possible.

Choosing the right software

There are many different software packages on the market, with a variety of different features and benefits. Making sure your business is using the software that best suits you and your needs is vital in creating an efficient and easy bookkeeping process.

Chart of accounts

Many businesses overlook this key point. Ensuring your nominal codes and enterprises match the layout of your year end accounts saves your accountant time and enables better management reporting.

Opening balances

Another often overlooked process is to ensure adjustments made by your accountant are replicated in your software. There is no point reviewing management reports and forecasting profit or tax levels, if the opening position does not match your year-end accounts.

Bank feeds

A key feature for certain software providers is the ability to automatically import your bank transactions so that there is no need to manually enter them, saving time and keeping your financial position up to date.

Regular invoice entry

Making sure you are regularly entering invoices into your software keeps you on track with payments, avoids penalties, keeps your VAT returns accurate and allows you to produce timely management information.

Detail and accuracy

It may seem an obvious point but including sufficient detail for you and your accountant to know what individual transactions are will save you time down the line. A prime example is whether a transaction is a capital or repair. The difference can have a material impact on the profit and tax position of your business. 

Including regular checks to ensure accuracy of posting, to the correct nominal code, including the correct VAT rate, and other details, will save both time and money for your business.

Conclusion

Bookkeeping isn’t glamorous, and to many it isn’t enjoyable, but it is not an exaggeration to say that the difference between good and bad bookkeeping could cost your business thousands.