Accountants always ask for clients bookkeeping records, but what exactly are these bookkeeping records we ask for.
Hopefully this will put you in the picture (well , in the know as I am in the picture!).
Whenever I take on a new client I always ask about their bookkeeping. Are they doing the bookkeeping or do they want us to do the bookkeeping? But sometimes there’s a misunderstanding about what bookkeeping actually is.
In its simplest form it is a list of your self-employed income be it remittances from your agent for any work, student money if you’re a teacher and people pay you, and also your expenditure. Technically you should be raising invoices but I know a lot of people don’t, so it will be a log of cash received or checks received for your students, and any other type of performance income you might have had be it from a profit share, etc., so all those should have some backing paperwork to equal what you have hopefully paid into a separate bank account for your self-employed business.
The actual record is a simple case of keeping a list ideally in Excel of all those income types and the amount and the date, and for the tax year which will be the 6th of April to the 5th of April that is the listing we need for income. You can actually do your accounts to the 31st of March, it doesn’t make any difference.
With expenses or costs you have incurred it is exactly the same thing. You’ll have receipts or purchases you have made, hopefully made out to you, hopefully with values on it and not just a credit card receipt. You need to list those down, again ideally in Excel, categorise what the spend is and then you can file the receipt away.
So in the simplest form it’s two spreadsheets effectively. You can also add in a mileage log for if you are doing any miles on a bicycle or on a motorbike or a car, so if you are using that for your self-employed business that is also part of your bookkeeping records.
In theory, your working from home allowance needs to have some back up. You will need to know how many hours you have worked each month from your home if you’re going to be claiming any costs for home allowance. You’ll also need to keep copies of your utility bills, your rent, your mortgage interest, if you want to claim an actual cost of working from home. The working from home allowance is only available to freelancers on a self-employed basis and not for directors of your own limited company so just be aware of that difference if you do operate through a limited company.
Really they are your bookkeeping records. You should have a record of any capital items you’ve purchased so it could be a new piano, a new instrument. I know a piano is an instrument. It could be ball gowns or clothing for performances that might cost quite a bit of money and you used them over a number of years. You’ll have capital costs listing that you can claim a capital allowance on. That’s subject to a different blog post.
The simplest method of bookkeeping is and excel file showing a list of all your expenses categorised into what it is, a list of all your income, a mileage log and ideally some kind of form of recording of the amount of time you spend in your home on your self-employed business.
A different blog post talks about how you keep these records and we do actually provide a Excel template for people to use when they come on board as clients and if they’re not sure of what they’re keeping.
I do stress having things electronically in Excel. You can keep it in a physical cash book. They still exist. It does increase the cost of your bill from us because we end up having to manually key all that information into Excel in order to be able to work with it.