Running a business:
Basic accounting procedures
You need to keep you accounting records for some time, and as a general rule we generally recommend seven years. The guide below provides more detailed guidance.
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Accounting records should be maintained in a clear and ordered way. In particular:
- each sales invoice should be given a meaningful reference number. The numbers should be consecutive and the invoices filed in reference number order;
- you should give each purchase invoice a meaningful reference number and file them in a logical order;
- accounting records should be cross referenced, eg sales invoices could be referenced to the sales order and the date of the customer receipt
- each page of your cash book and day books should have a sub-total, with totals provided at the end of each month;
Your accounting records will be much more meaningful to you, and enable you to control the business better, if you regularly (monthly or quarterly depending on the size of your business) reconcile and analyse the information yourself (or get an accountant to do it for you).
As a minimum, you should aim to balance your bank account, purchase ledger and sales control account.
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- How to balance your bank account
- How to balance your purchase ledger
- How to balance your sales control account
You may well find it easier to maintain your records using a computerised accounting package. This will save you having to add up columns of figures, and will make reconciliations easier.
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Within Accounting systems…Within Running a business
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