What is Bookkeeping? A Guide to Starting a Career as a Bookkeeper

what is bookkeeping

So, firstly, a bookkeeper needs to have a firm idea of their job, which is bookkeeping. Secondly, a bookkeeper has to record financial data into a general ledger. Therefore, becoming a bookkeeper can be your first step in creating an accounting career.

what is bookkeeping

Without a reliable way of tracking your turnover, you might end up on the wrong side of HMRC – and you definitely don’t want to end up there. How much time you deem sensible to get all your paperwork in shape is up to you. A quick few minutes every day, or a designated time-slot each week is good practice. Failure to sort it out in a timely fashion could result in you paying more tax than necessary, or even worse, being penalised for missing a deadline. Of course, this advice doesn’t stop many hundreds of thousands of self-employed individuals from submitting their Self Assessment tax returns on deadline day every year, according to HMRC. Think of all the stress and lost custom these folks put themselves through, all the while kicking themselves for failing to start sooner.

What is an accountant?

If you have a bricks-and-mortar business like a shop or restaurant, you may use a cash register as part of your bookkeeping process. A cash register keeps count and reconciles cash transactions and real estate bookkeeping allows you to balance the drawer, which accounts for all transactions on any given day. Single-entry bookkeeping is straightforward — you simply make one entry for each transaction in your books.

We include our own Xero add-on expert to help our clients reduce time, improve efficiency and save costs. Bookkeepers are responsible for providing accurate, up-to-date financial information about a business. Find out what it’s like to be a bookkeeper and see the job roles you’ll be qualified for. We specialise in supporting independent businesses and work with over 78,771 clients.

Single Entry Bookkeeping

As most discover, though, keeping all the finances in check as your business grows is not just a real pain in the neck, it also gets in the way of your actual work. Of course, the other great part of knowing how much you need to pay in taxes is knowing how much you can put in your pocket. Accountancy software can help you get a clear idea of what dividends you can take from your company without falling foul of HMRC’s rules. As Making Tax Digital is extended further rolled out, you’ll need to arrange all your tax accounting online.

Financial reporting is used to make financial decisions, assess financial performance and measure financial risks. Financial ratios are often used in financial reports to compare a company’s financial performance with that of other companies in its industry or for previous periods. Just divert a percentage of every invoice into a savings account when your clients pay and you’re ready to rock on tax payment day. We’ve written an article on how much to put aside when you’re a sole trader.

Simplify your finances with tax return software

The task of a bookkeeper is to maintain all the financial data to avoid accounting errors and keep your business running smoothly. In this article, we’re going to look at six reasons why all businesses need to have their books kept organised. If you are already a high school graduate and looking for job opportunities, you can easily choose a bookkeeping job. As a matter of fact, you can self-train yourself at any stage from various sources.

what is bookkeeping

As mentioned, if you’re registered for VAT, you need to make sure that your accounting software is compatible with the requirements of the government’s Making Tax Digital regime . This means that your VAT records are stored digitally and are sent to HMRC automatically each quarter. The greatest selling point when it comes to online accountancy software is how easy it is to enter and access information about how your company is performing. Of course, your software won’t be able to do it all by itself – you’ll need to keep things up to date, but this usually only requires small, regular efforts from you. HMRC may ask to see receipts, and you’ll be in seriously hot water if you don’t have anything to provide, so make sure you’re keeping evidence of all your business expenses. Bookkeeping is focused on recording the money coming in to and out of your business, usually made up of all your sales or invoices, and everything your business spends money on .


Accounting and bookkeeping software requires each journal entry to post an equal amount of debits and credits. An accurate financial management system is essential for any growing business. Cash-based means that you recognize revenue when you receive cash into your business. Purchases or sales made on credit will not go into your books until cash exchanges hands between your company and the customer . Anytime cash enters or exits your accounts, you will recognize it in the books.

  • The double entry bookkeeping system has been used for centuries and is still the preferred method for many businesses today.
  • As a result, most businesses opt for double entry bookkeeping, which is a more sophisticated system.
  • “Easy to use and value for money. Everything you need to do your tax.”
  • This includes recording transactions such as sales, purchases, payments, and receipts.
  • There are also a number of other considerations you should make before seeking either service.

This method allows you to keep a cash book to track incomings and outgoings. You can perform single-entry bookkeeping yourself, making https://www.world-today-news.com/accountants-tips-for-effective-cash-flow-management-in-the-construction-industry/ it useful for very small businesses. Much of the work that goes into bookkeeping is more administrative than anything else.

They may also perform wider tasks such as invoicing, paying bills, preparing tax returns, monitoring key performance indicators, and providing strategic advice. Accounting and bookkeeping overlap in many ways and you may find that your bookkeeper or accountant will be able to carry out all or some of each. However bookkeeping is how you record and categorise your financial transactions, whereas accounting is putting that financial data to use through analysis, strategy and planning. Bookkeeping includes gathering financial data into a record keeping system and posting transactions to an accounting system. The definition often includes additional tasks to keep your business running smoothly. If you’re handling bookkeeping for your small business, you’ll work on several basic tasks.

  • The money leaving the business is balanced against the resource that they provide.
  • Small businesses can get by without a bookkeeper as every accountant is qualified to perform bookkeeping duties, but it doesn’t work the other way around.
  • Source documents must be accurate and complete to provide an accurate record of a company’s financial activity.
  • Bookkeepers’ require key skills to accurately work with financial data.
  • If you wait until you have time to deal with your bookkeeping, you’ll probably never actually do it.

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