What is bookkeeping?
Bookkeeping is the records you keep of any financial transactions in your business. These records include any transactions or purchases your business has made.
Bookkeeping is often mentioned when people talk about accounting and compliance obligations. Bookkeeping is a business tool that should be maintained alongside the accounts of your business. To do your bookkeeping correctly can help you to grow your business.
In this guide, we help you understand what is involved in bookkeeping and explain how you can keep good books and records.
What's the difference between accounting and bookkeeping?
Bookkeeping involves keeping track of your business’ financial records.
Accounting involves reporting, interpreting and analyzing the finances in your business and taking action.
Why do you need books and records?
Businesses and individuals must keep a record of any paperwork used for calculating taxes. This paperwork includes bank statements, invoices and receipts that you receive throughout the year. In other words, this is a record of all sales and purchases, any money received and paid out by the business.
These books and records need to be maintained so you can calculate your tax liability each year. If you have an accountant, they will need all your books and records before they can prepare your financial statements.
A complete business record should contain relevant details to explain transaction. This includes having the correct invoice or receipt for each transaction.
Check out our top 5 bookkeeping tips for more tips on how to keep your books and records.
What is good bookkeeping?
By having a good bookkeeping system, you can see how your business is actually performing versus your budget. You can also see any outstanding expenses and what your cash balance is. So, it is very important for the running of your business that your bookkeeping is kept up to date, noting all income and expenses and the date of payment.
You can keep a physical or digital copy of your books, records, and invoices.
The best way to know how to keep your records is to look at how you receive invoices.
For example, if your clients give you paper invoices then you should keep the invoices in paper form.
If you use accounting software, you should also keep a physical or digital copy of invoices in case Revenue asks to see copies.
You should make it a priority to update your records. The best way to keep your books in check is to create a routine. In other words, make sure you update your records regularly. This could be once a week or once a month, whatever suits you.
Lastly, you should keep you records in Ireland and these should be written in either English or Irish.
What records should I keep?
- Sales and purchase invoices/receipts
- Bank and Visa statements
- Payslips and wage sheets
- Stock reports
- Nominal ledgers
- Physical accounting books
Revenue recommend that you keep your books and records for a minimum of 6 years.
To keep your books and records for a shorter period, you must receive written confirmation from Revenue. This is only allowed for specific circumstances.
Bookkeeping can be a very time-consuming task if you’re not properly trained. Many of our clients ask us to take care of their bookkeeping so they have time to focus on running their business. If you would like a quote of our bookkeeping services, our Client Services Team are happy to talk you through the services we offer.
You can keep your records online
Good bookkeeping can be anything from a regularly updated Excel spreadsheet to an online accounting software.
Choosing whether to use Excel, physical books or online accounting software will depend on you and your business.
For example, if you have a high number of invoices online accounting software will benefit you. Or, if you have very little invoices Excel might be perfect for your business.
You should also check out our recommendations for popular accountancy software when making your decision.
If you would prefer to hand your bookkeeping over to professionals, Accountant Online offer bookkeeping services.
Our bookkeeping services are available for a monthly hourlyrate of €50 + VAT.
Get in touch with our Client Services Team today. We can help you decide the services you need. Call us on +353 1 905 9364 or email us at firstname.lastname@example.org.