Easy Bookkeeping Step 2: Maintaining a Cashbook

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Once you have your business receipts and invoices in order (see Step 1 Record keeping http://bizcovering.com/investing/easy-bookkeeping-step-1-record-keeping/) the next step is to record and analyse them in a cashbook.  This can either mean a physical cashbook or a spreadsheet.  Using a spreadsheet is a much easier way to revise and cross check your entries. It is worth checking with your accountant (if you use one) that your spreadsheet is compatible with theirs as you don’t want to pay to have all your entries retyped by their staff. 

The basic aim of cashbook recording is to list out all income and expenditure, net of VAT if applicable, into the different categories so that an annual set of accounts can be prepared. 

Here are my basic tips for starting and maintaining a simple spreadsheet based cashbook:

PURCHASES

  1. Decide upon the basic expenditure headings applicable to your business eg. Supplies, wages, rent, utilities, petrol/diesel, accountancy/professional fees, repairs etc. 

  2. For every purchase acquire a receipt/invoice and assign each of these a sequential number (ref no.).

  3. In your spreadsheet list each purchase:

    • column A the receipt/invoice date;

    • column B the supplier name;

    • column C the ref.no;

    • column D the gross (amount including any VAT) amount;

    • column E the VAT if any (if you not VAT registered ignore this column);

    • use as many columns as necessary to analyze out the net amount, see categories in 1. above.

  4. When you settle the invoice make a note on the relevant row of the payment date and how it was settled eg. by cheque or card.  Do not enter payments made from petty cash, these should be analysed in a separate petty cash account.

  5. On a regular basis check off all payments to your bank statements.  For each payment note on the row the date it cleared your bank.

SALES

  1. For every sales invoice raised assign it a sequential number.

  2. In your spreadsheet list each sales invoice:

    • column A the invoice date;

    • column B the customer name;

    • column C the sequential number reference;

    • column D the gross (amount including any VAT) amount;

    • column E the VAT if any (if you not VAT registered ignore this column);

    • use as many columns as necessary to analyze out invoice into your relevant sales activities.

  3. Against each invoice note down the date that the invoice was settled eg. cheque received and the date that it cleared your bank account.  For cheques banked near the year end it is worth noting the date the cheques were banked.

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