All incoming and outgoing payments and other financial transactions need to be recorded throughout the year. These records should be retained for at least six years from the end of your accounting period. When recording income, you will need to differentiate between your fees and your expenses (or other ‘recharged’ items). You will also need to keep a record of income from other sources, such as bank/building society interest. Records of outgoings need to be categorised according to type. Examples of some categories you might need to consider are:
post and courier costs;
parking and subsistence;
telephone and internet;
accountancy and professional fees;
Many small business owners opt to do their own bookkeeping, with or without the help of a computer software package. If you opt for a software package, choose one that fits your legal status (company or sole trader), uses English rather than accountancy-speak and easily produces reports. Increasingly cloud based products are proving popular as you, an accountant and book-keeper all have access. Check out ‘Quickbooks online’ for an example of this approach.