Bookkeeping, in general terms, is simply the recording and storing of your business transactions – what you’re earning (income) and what you’re spending (expenses).
You have to keep records of all your business transactions, as well as proof that they are accurate, for example, invoices and receipts so that when you do your tax return, you pay the right amount of tax.
You can either do this using a spreadsheet or accounting software like QuickBooks or Zero. Personally, I prefer using QuickBooks because it gives me more control.
WHAT DO I NEED TO DO?
You simply add all of your income and expenses on to your accounting software.
The basic info you will need to include for both income and expenses is:
• Date of invoice/bill
• Date of payment
• Name of your client/the name of the person or company you paid
• Description of service or product
• Amount received or paid
You will also need to keep copies of proof of these transactions, such as invoices, receipts, travel tickets, bills and bank/credit card statements, for both your income and your expenses.
You can either keep physical copies of them in a file, or scan them and store them on your computer, which is what I do to save space.
HOW OFTEN SHOULD YOU UPDATE YOUR BOOKKEEPING RECORDS?
It’s so important to update your bookkeeping records (or “books”) on a regular basis, to avoid falling behind and having to spend ages getting up to speed.
That’s not to say that you can’t create a schedule that works for you!
Decide whether you’d prefer to update your books frequently for short periods of time, or if you’d prefer to set aside a bigger chunk of time less often to do this.
I update most of my clients books on a weekly basis. This helps there be less of a build-up of transactions and receipts to deal with.