Simple Bookkeeping

You need three basic “books”:
– a cashbook to record all cash/cheques/bank transfers going in and out of your business
– a purchase ledger, to record details of all the purchases that you make
– a sales ledger to record details of all the sales that you make (if you are a retail outlet, you will obviously not write out individual invoices for each customer, but you will record your daily takings instead).

These “books” can be manual records or spreadsheets.

1) As soon as you make out an invoice, record this in your sales ledger

2) As soon as you receive an invoice, record this in your purchase ledger

3) Record payments received in the sales ledger and cashbook

4) Record payments made out in the purchase ledger and cashbook

5) Chase all your outstanding payments (credit control) from your customers

5) Reconcile your sales and purchase ledger and your bank statements monthly, checking your cashbook against all three.

Even though you have recorded all your invoices and receipts, you still need to keep these “prime” documents as evidence for six years.  Split them into sales and purchases and file them monthly.  To help you find the original documents, you might want to consider numbering them and cross-referencing this number to your sales and purchase ledgers.

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