Here on The Life Hub blog we’re commonly asked about that tiresome bane of the freelance existence: book-keeping. There’s no doubt it can be a daunting task, especially if it’s something you’re new to and don’t fully understand. So we grabbed Lauren Monks from My Accountant Friend and asked her to put together a few dos and don’ts for people who are newbies when it comes to this kind of thing – people, like us, who would rather run a mile than get the books out.
What is book-keeping?
Before she gives us her tips, however, it’s probably worth covering off a few top-line book-keeping pointers. Firstly, the main purpose of ‘keeping’ your company ‘books is simply to makes sure they’re ready for the accountants and whenever anyone needs to check.
The key points that you’re looking to record in your ‘books’ are your sales (income) and costs (expenses). If you are VAT registered, then you must keep records of your VAT calculations and returns, and if you’re paying staff, you must keep records of the PAYE deductions.
Naturally, there are easier, more modern ways to keep all of this in order than in literal books. My Accountant Friend is the online accountant with a human voice, meaning that you can keep everything you need ordered in the dashboard, and remain safe in the knowledge that there’s always the same person on the end of the phone should you need assistance. Check out the video below for more info.
Book-keeping do’s and don’ts
keep records of your income – your invoices, why you received that particular income, who you received it from, how much it was for, when it was received.
Do keep records of your expenses – your receipts: what you purchased, when you purchased it, and how much it was for.
Do download you bank statements each month and save them electronically.
Do check you bank balance regularly and ensure that it matches your own records. If it doesn’t reconcile accurately, you have most probably missed something from your book-keeping records. Go back and take another look.
Do use online cloud accounting software where you can store your records electronically (sorry – we couldn’t resist!) My Accountant Friend offers an all-encompassing accounting package which includes access to a live dashboard at no additional charge, and even comes with an iOS app that can read and log your receipts.
On the other hand…
Don’t keep bags of receipts piling up – you will never feel organised, and you will have no idea of how much you are spending.
Don’t keep paper records. As we said earlier, it’s better to save your invoices and copies of receipts electronically. Once you have scanned or saved the documents, you can get rid of the paper version.
Don’t put off completing your book-keeping. Keep on top of this regularly and it will become a small task you can complete in an hour every month.
If you have any further questions about book-keeping or accountancy for freelancers, startups or independent contractors, feel free to drop us a line via our contacts page anytime you like.