Chances are you’ve heard of bookkeeping before, you probably know it’s to do with accounts. You might even already be doing it yourself! However it’s more likely your “bookkeeping” is the box full of receipts and invoices sitting in the corner waiting for you. Growing dusty and unloved until you eventually look at it or hand it over to your accounting. Look familiar?
The Oxford English dictionary defines bookkeeping as “The activity or occupation of keeping the financial records of a business” I suppose that technically means if you’re not throwing all your records away then you’re already winning at bookkeeping – well done!
How you do your bookkeeping is normally down to you and your business model, but it will always consist of invoices and receipts – money coming in and money going out. It is important for your business to know how much money it has coming in, and maybe more importantly what it’s being spent on. If you don’t know this on a regular basis you will be less informed about the financial decisions you make, for example, if a product or service is being sold at a price that covers its costs.
You can go and spend lots of money on an all singing all dancing accounts package but the chances are you’re not at that stage. It may appear a little crude but often the most effective method is one of the simplistic, the trusty spread sheet.
Before we talk about spreadsheets I would recommend getting your receipts in order. Tackling them first and putting them in order is vital, especially if your accounts look more like the picture above. It may seem like a daunting task but the following steps should make it slightly easier.
If you have more than one year to sort start off by dividing them in to piles of years. Don’t be concerned with months or matching up credit card slips with receipts. I like to put a few baskets on the desk and just drop them in. Obviously if you have less than one year worth skip this step and go straight on to Step 2.
Layout 12 envelopes / plastic wallets / post it notes (or whatever works for you) and label them January through to December.
Pick up your first basket of receipts and start distributing them between the months. At this point it’s worth smoothing them out if they are crumpled but again, at this stage don’t try and match up and receipts to credit card slips or split invoices from.
• Once you have sorted all through your year take one month and separate the invoices from the receipts and put to them to once side. Now match up and credit card slips with receipts if you need to.
• Place all your receipts into a folder / envelope / plastic wallet and make sure it’s labelled in a way you can easily tell the month and year. Do the same with your invoices.
• Repeat with the other 11 months and once complete give yourself a pat on the back.
The above method is a bit tongue in cheek, but one of the reasons it is often avoided is because its looks like such a daunting job. If you break it down into manageable chunks and don’t over complicate it in the early stages it is a lot quicker and achievable.
If however you are still put off Mount Receiptmore then get in touch!