Holden Associates Blog

Okay, I know this is the least favorite part of running your own business, having to keep ‘the books’, but I feel at this early stage in the new Holden Associates blog it is very important that I cover this.

I cannot overstate enough how important, boring and dull maybe, but nonetheless it is important that you understand that you have to keep proper records, not only for the tax and vat man, but also for yourself, yes for you, how else are you going to know who you owe, who owes you, or if your actually making or worse losing money in your business.

Look on your books as your very own window on the health and well being of your business.

Okay lecture over, now you know why you need to keep books so lets look at how you go about it.

There are a variety of ways to keep records, from nothing (not recommended), then there is manual and next you have countless software packages, all varying in price.

Nothing at all

Worth a mention I guess - DO NOT USE THIS METHOD! There, mention over.

Manual records

If you have decided that pen and paper is your preferred choice then it would be easiest if your records are maintained on what is called a ‘receipts and payments basis’.

You will record who you pay, and who pays you when the transaction takes place, and if you are vat registered your vat will be accounted for at this time also.

You can of course run your vat on what is called an ‘invoice basis’. This method involves you claiming vat back on expenditure and paying vat on sales when the invoices are raised, irrespective of when payment is made. This would mean you need an extra couple of books for this alone, and can lead to making the whole issue far more complex.

Manual records are great if you run a small business with little real need for tracking a significant number of transactions, but once your business starts to grow getting the right information from a set of manual records will prove time consuming, and time is something you may not have a lot of.

Computerised records

This is my preferred choice; using the right package for your needs and with suitable training and support of course.

This method allows you to keep your records in either the ‘receipts and payments basis’ or the ‘invoice basis’ as mentioned above, but which ever method you opt for it will not become a messy and complex affair because the software system will deal with everything for you behind the scenes.

Computerised systems now fall into two very different camps, the first are those that sit on your computer, and as such you need to take responsibility for ensuring you back your data up on a regular basis. Also, when you buy such a system the up front costs can be expensive.

Some such systems are Sage, TAS, Clearlybusiness, and VT transaction.

Next is the new generation of SaaS (Software as a Service) offerings, these operate in much the same way those that sit on your computer do, except you use them over an internet connection . They come with the distinct advantages that backing up of data is dealt with for you, you pay a low monthly cost (note: winweb is free for one user) and not an up front cost, you can access your records from anywhere in the world as long as you have access to the internet and your accountant can also log in and see what is going on financially in your business in real time.

Some of these providers are Winweb, Twinfield, Liberty Accounts, FreeAgent Central and KashFlow.

You also need to decide who will keep your records, will this be you or your spouse? Keeping your books can be very time consuming, don’t under estimate this. 

Some people will use their accountants and other will use bookkeepers, worth a blatant plug here, we use professionally qualified and experienced bookkeepers. If you are going to use a bookkeeper, the first port of call should be a Professional Bookkeeping Institute.

Which ever method you decide you are going to use please take professional advice first, it may save you a lot of time and effort and maybe money to.