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Wimbledon Office: 020 8946 1212

Bookkeeping 101: Basic Bookkeeping For a Small Business

To ensure your finances make sense, bookkeeping is a vital part of small business operations. As a fairly new venture, you may decide to manage your own bookkeeping, however, as your business grows, you might find yourself in need of some assistance.

In this article, we outline the basic components of bookkeeping for small businesses, from what’s involved to what to do if you no longer have the capacity to manage the task alone.

What is Bookkeeping For a Small Business?

Bookkeeping involves recording and organising all of the financial transactions made by a business, keeping track of what is being spent and received.

Once upon a time, these tasks were completed using books and ledgers, hence the name ‘bookkeeping’.

How Does Bookkeeping Differ From Accounting?

In short, bookkeeping involves the recording of financial data, while accounting delves into the interpretation and analysis of that data.

It’s crucial to recognise that effective accounting can not take place without the foundations laid by efficient bookkeeping practices.

Enhancing the understanding and capabilities of accountants to conduct thorough analysis and deliver insights for strategic decision-making, bookkeeping is an incredibly important task that should not be overlooked.

Why is Bookkeeping Important For Small Businesses?

Designed to ensure operations run smoothly, bookkeeping enables small businesses to:

  • Organise Information More Efficiently
    Bookkeeping involves taking financial data and organising it for easy comprehension and analysis.
  • Improve Budgeting
    By understanding cash flow patterns, businesses can strategically allocate resources to new ventures, fostering growth opportunities.
  • Make Informed Decisions
    With well-maintained books, entrepreneurs gain an accurate insight into their business’s financial health, allowing them to make informed decisions regarding operations and expansion.
  • Monitor Profitability
    Maximising profitability is a fundamental goal for any business. Effective bookkeeping provides a means to track progress and profits, enabling businesses to optimise their financial outcomes.

How to Manage Small Business Bookkeeping: The Basics

Many small businesses will manage the following tasks internally:

  • Data entry – The transfer of physical documents or printed information into an electronic database, data entry is a crucial task for small businesses. With the rise of online banking, this process has become much simpler.
  • Bank reconciliation – Humans aren’t perfect, and sometimes errors do slip through the net. Many small businesses will handle their own bank reconciliation, aided by apps that can streamline the process.
  • Accounts receivable – Many businesses issue invoices that require tracking. Generating and sending invoices is fairly simple if you have the right templates and processes.
  • Accounts payable – When a business deals with a limited number of suppliers and maintains healthy cash reserves, bill payments are usually manageable. In case of cash flow challenges, professionals can offer assistance.

How Much Time Do Small Business Owners Spend on Bookkeeping?

According to Accounting Today, 40% of small business owners consider bookkeeping their least favourite task, despite spending approximately 3% of their time on it.

At Hartley Fowler, we understand the challenges entrepreneurs face when it comes to managing their finances. That’s why we’re proud to offer specialised accounting and bookkeeping services, designed to save you valuable time and effort.

While many small business owners are happy to take on the straightforward tasks listed above, there will be some jobs even the most seasoned entrepreneurs need help with. These include:

Tax Returns
Complex tax returns require expert knowledge to navigate effectively. Our team can not only assist with filing your tax returns, but also explore opportunities to minimise your tax liabilities.

Deciphering Financial Jargon
An experienced bookkeeper can interpret financial reports for you, detailing what they mean for you and your business.

As your business grows, managing payroll can become increasingly complex. Professionals can handle the payroll process, ensuring accuracy and compliance, while alleviating your workload.

Our accountants in Brighton and Wimbledon are pleased to provide a range of bookkeeping services, including:

  • A fully-computerised bookkeeping solution, suitable for clients in any industry and of any size.
  • Flexibility in scheduling and the extent of our involvement in your financial affairs.
  • A VAT specialist, dedicated to preparing your monthly or quarterly VAT returns and filing them online.
  • Assistance with European trade, including EC Sales Lists or Intrastat Returns.

Need Help With Basic Bookkeeping For a Small Business? Choose Hartley Fowler

Navigating small business bookkeeping can be daunting, particularly for those new to the world of finance. If you find yourself struggling to manage your growing business’s financial records, don’t panic. Our seasoned team of accountants is here to offer the assistance you need. With unrivalled expertise and support, we provide a much-needed helping hand to alleviate the burdens of bookkeeping and ensure the smooth financial management of your business.

To find out more about our bookkeeping services for business owners, please get in touch.

Bookkeeping services – Wimbledon office: 020 8946 1212
Bookkeeping services – Brighton office: 01273 202311

Alternatively, book a free consultation with one of our trusted bookkeeping experts.