Bookkeeping for small businesses
Bookkeeping is the process of recording (data entry) and reconciling (comparing transactions against bank statements) all business transactions so you have an accurate, up-to-date view of your business financials.
Accurately recording your business transactions helps to ensure that you claim all allowable tax-deductible expenses in Ireland when you file a tax return, ensures that you satisfy all accounting and compliance requirements with Revenue, and ensures that you have reliable financial information for planning and budgeting decisions.
In this guide, we’ll explain the important bookkeeping terms and duties, how you can save time and money by automating your bookkeeping, and how to decide if you need to outsource online bookkeeping services.
What is the difference between bookkeeping and accounting?
Bookkeeping involves keeping track of your financial records
Bookkeeping is the process of recording business transactions, such as invoices, bank statements, and receipts, and entering that information into a database. The documents collected are then used to calculate the business’ tax returns and financial statements. We recommend using cloud accounting software, like Xero, to manage your finances online.
Sole Traders and Limited Companies need to do regular bookkeeping so you can file accurate tax returns and financial statements.
Accounting involves reporting, interpreting, and analysing the finances of your business
Accounting is more complicated and technical than bookkeeping. Many of our clients do bookkeeping in-house or use online bookkeeping software but outsource their accounting requirements. A professional accountant helps to ensure that your Revenue and Companies Registration Office deadlines, such as the annual return filing date, are being looked after.
Accountants may oversee your bookkeeping. They make sure the records are maintained correctly but they don’t usually carry out any data entry. Your accountant will prepare technical accounting duties like preparing profit and loss accounts, balance sheets and filing your tax returns.
Bookkeeping terms to know
This is the process of comparing your sales and expenses against your bank account. This ensures that the correct amounts are coming in and out. It’s used as a verification check.
Any outstanding payments to your suppliers are categorised as your ‘accounts payable’. If you have a supplier or vendor that you haven’t paid yet, they will need to be organised and managed to ensure they are paid on time.
This is the money that is owed to the business. This occurs when your business provides goods or services, but payment is not due until a later stage. If you don’t offer any goods or services on credit or you are a business to consumer (B2C) business, you may not come across this term.
Why do you need books and records?
Businesses and individuals must keep a record of any paperwork used for calculating taxes. This includes bank statements, invoices, and receipts received during the year, i.e. any money received or paid out by the business.
You need to maintain these books and records so you can calculate your tax liability each year. Similarly, if you have an accountant, they will need all your books and records to prepare your financial statements.
A complete business record should contain details explaining transactions and have the correct invoice/receipt for each transaction.
We have the expertise and experience in-house to help you with online bookkeeping services. Most of our clients work with Xero and we have helped with Xero conversion from physical books and other software, making running a successful business more efficient, smooth, and secure.
Types of documents needed for bookkeeping
- Sales and purchase invoices/receipts
- Bank and Visa statements
- Payslips and wage sheets
- Stock / ecommerce / Point Of Sale (POS) reports
- Verification records for assets such as property, machinery or vehicles
- Cash books and receipts
Storing your documents
In general, all books, records, and documents relevant to your business need to be kept for six years. Revenue has extensive powers to inspect your records and it is an offence if you or your employees fail to co-operate with Revenue in relation to the inspection of your records.
For peace of mind that your records are secure and always up to date – start using online accounting software for easy data management.
Automate your bookkeeping
We recommend doing your bookkeeping online, which means moving away from Google Drive or Dropbox as a data management tool and using cloud-based software that is specifically designed for managing small business financials.
Automating your bookkeeping with Xero is the easiest and most efficient way to maintain control of your cash flow. Any data that you enter into Xero will be transformed into practical insights that will help you make better business decisions and help you to plan for growth.
Benefits of using an automated bookkeeping system
Saves hours of admin time a week
Make better business decisions
Increase your cash flow visibility
We love using Xero online accounting software because it is easy to set up, easy to use and it has a very user-friendly interface, making it a great software to use.
Our internal Accounts Team uses Xero so we have personal experience with the software and happily recommend them to all startups and small businesses in Ireland.
We have helped many of our clients with Xero conversion from different software and set up on Xero in just a couple of hours.
How to do bookkeeping
When you’re just starting out and working out the cost of setting up a limited company in Ireland, you might be wondering if it’s possible to do your own bookkeeping.
You may only have a few transactions per week, and keeping track of these may not take a lot of time, so it is possible to do it yourself and it could save you spending on bookkeeping fees. You can also follow these bookkeeping tips for businesses to help make bookkeeping more manageable.
However, if your bookkeeping is not done correctly when it comes to doing your tax returns, this could incur additional costs from your accountant or increase the risk of incorrect calculations when filing your tax returns.
Find out if we are a fit for you
By leveraging software, you can streamline your business and save valuable time, while also increasing accuracy and providing you with powerful features to make informed business decisions.
If you want to hand your bookkeeping over to professionals, Accountant Online offers online bookkeeping services for small businesses and Startups in Ireland. All of our bookkeepers and accounting teams are certified Xero advisors so we have the knowledge and experience in-house to help your business move to the cloud.
Kiera leads the Bookkeeping, VAT, and Payroll Teams at Accountant Online. Kiera has worked in the financial services industry for over 18 years. She is passionate about helping businesses to get their finances in order so they can get back to what’s important: running your business. Kiera holds a part-qualified accountant qualification from ACCA.