Keep track of your cashflow

Why you need bookkeeping

Make bookkeeping work for you

You might not have heard the term bookkeeping before, but you’ll definitely need to know about it when you’re running a business. We'll help you to learn more about keeping your books and why it’s key in business.

It's not accounting


The activity of keeping records and organising your business's financial data on a day-to-day basis. It provides a way to keep track of what your business receives and spends. It’s more transactional.

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The process of taking the financial data collated in bookkeeping to prepare reports, give you insights into your business and provide information for assessment by HMRC.

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How to do your bookkeeping

There’s three important tasks in bookkeeping for your business. While income is key to the success of a business, you’d be surprised how many people underestimate how important it is to record and claim your business expenses.

1. Record your expenses

Reflect on the key expenses for your business and how you manage and record them. Every business purchase you make should be noted. You should also hold onto the receipt or proof of purchase, if you plan to claim that expense as a tax deduction.

Top tip

If you’ve already gone through our learning on cost structure, you can review how income is being recorded through your bookkeeping processes.

Start-up expenses

When you gets started, you’re likely to have more expenses than income for a while.

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Bills and operating expenses

Generally varied cost of sales and more fixed day-to-day expenses or wages or professionally fees.

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Out of pocket expenses

Stuff like travel, meals and accommodation.

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2. Record your income

Think about the income that comes into the business and how you manage and record this. Also known as your sales figures, you can often get the info downloaded directly from point of sale or invoicing software. Invoices are the most often used method of recording sales or income.

Top tip

If you’ve already completed the revenue streams module, review and reflect on how any income is being recorded through your bookkeeping processes.


Invoices are the most often used method of recording sales or income. Invoicing records the detail of the sale, sets out payment expectations and monitors your progress in getting paid.

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Alternative sales recording

Not all sales are recorded through invoicing. If you run a shop, or take payments online, then you’ll often record them through a platform like Shopify or Wix. But you still need to count them!

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Other income

You may receive income from other sources, like grants, or loans, or funding from investors, so you’ll need to record all of these sources of income too.

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What to include on an invoice

  • Business terms and conditions
  • Payment terms like the due date for payment
  • Payment details such as payment method

3. Reconciling

Cross checking expenses with your bank records. It’s a vital part of the bookkeeping process, balancing out what your records say you’ve earned and spent, against what your bank transactions are showing you’ve earned and spent. And, if you’re investigated by HMRC, they’ll review whether your books are accurately reconciled.

More ways to build your business

Keen to carry on building the best financial foundation for your business?