Money
Bookkeeping for small business: the plain-English guide
Bookkeeping has a reputation for being boring and complicated. It is neither, if you do it as a small habit rather than a once-a-year panic. Here is what it really is.
What bookkeeping actually means
Bookkeeping is just keeping a record of the money coming into and going out of your business. That is it. Every sale, every expense, with a date and a note. Do that consistently and everything else (knowing your profit, filing tax, making decisions) becomes easy.
What you need to record
- Income: every sale or payment, when it came in and from whom.
- Expenses: every cost, when it went out and what for. Keep the receipt.
- Invoices: what you have sent, and whether it is paid.
That is the core. You do not need double-entry accounting to run a small business well; you need these three things kept up to date.
The one habit that saves you
The people who dread bookkeeping are the ones who let it pile up. The people who do not are the ones who log things as they happen, or set aside ten minutes a week. A little and often beats a giant catch-up every time.
Why it is worth the ten minutes
Good records tell you three things you cannot run a business without:
- Your real profit, not just what is in the bank.
- Your cash flow, so you see problems coming.
- A clean set of numbers for tax time, so filing is quick.
If you make your own products, Notch turns bookkeeping into that ten-minute habit. If you resell, Turnover does. Log sales and costs and see the profit on every item worked out for you; Pro adds the P&L month by month.
Related: allowable expenses when you’re self-employed and how to write an invoice.
General guidance, not accounting advice. For anything complex, speak to an accountant.