| Accounting software is used by accountants to enter | | | | discretion of the small business owner additional |
| many complex financial transactions into the financial | | | | information was required from the bookkeeping |
| books of account and is almost invariably based upon | | | | records to indicate the totals of the different types of |
| double entry bookkeeping principles. A major | | | | products and services then additional columns could be |
| advantage to those companies and the finance staff | | | | incorporated to enter the net sales figures in these |
| is the extent to which financial information contained in | | | | columns. |
| the database can be queried for financial control | | | | There it is then, a simple list of sales invoices to satisfy |
| purposes. | | | | the sales accounting requirements for a small business |
| An accountant needs to not only ensure the financial | | | | where a balance sheet is not required. |
| records are accurate but also retrieve any part of the | | | | On the expenditure side of the business the |
| accounting records to answer accounting questions on | | | | bookkeeping can also be a simple list of the purchase |
| the accounts, provide a legal basis for the transactions | | | | invoices and receipts showing the amount spent. The |
| and report the financial statements at regular periodic | | | | list should also produce an audit trail by showing the |
| intervals. | | | | date of the purchase invoice, name of the supplier, |
| The small business has different accounting needs | | | | purchase invoice for identification purposes and the |
| which are better described as bookkeeping than | | | | total amount spent. |
| accounting. For non limited companies that do not need | | | | Usually tax returns are the main purpose of producing |
| to produce a balance sheet then a simple income and | | | | small business accounts and invariably some analysis |
| expenditure account can be produced much simpler | | | | is required to show what the expenses have been |
| using single entry bookkeeping principles. | | | | spent on. That is not difficult to achieve and as with |
| Less financial control is often required from small | | | | the sales accounting the owner manager can add |
| business accounting software as the bookkeeper is | | | | additional standard columns to the bookkeeping |
| often the owner manager who already has an intimate | | | | spreadsheet. |
| knowledge of each transaction. Books are still required | | | | The expenditure analysis columns do not need to be a |
| for tax purposes and a solid requirement of preparing | | | | different column for each type of expenditure. It is |
| a set of financial books for tax purposes is that each | | | | better to set up and group the analysis columns in |
| entry is supported by third party evidence. | | | | general headings which can accommodate all the |
| Examples of third party evidence would be sales | | | | expenses. |
| invoices, purchases invoices and bank statements. | | | | Such columns may include stock, other direct costs, |
| Financial transactions where no receipt exists can still | | | | premises costs, general administrative costs, transport |
| be entered in the business books although all | | | | and delivery costs, repairs and maintenance, travelling |
| transactions not carrying third party evidence could | | | | and hotel costs, motor costs, bank and legal costs and |
| subsequently be disallowed for tax purposes and | | | | other expenses. It is better not to enter too many |
| certainly would be if the amounts entered indicated | | | | items under a general heading of other expenses as |
| unusual income or expenditure. | | | | this is more likely to be investigated as the type of |
| Producing an income and expenditure statement using | | | | expense has not been precisely identified. |
| single entry bookkeeping is little more than making two | | | | One important column to also include is for asset |
| lists of financial transactions. Those lists being one of | | | | purchases as fixed assets usually have different tax |
| sales income received from sales invoices or receipts | | | | rules applying to the claim of the expense against tax |
| issued to customers and the other of purchase | | | | and should be separated from other expenditure. |
| expenditure being from purchase invoices received | | | | Having set up two bookkeeping spreadsheets the task |
| from suppliers. | | | | is then to produce the income and expenditure |
| To record sales income it would not normally be | | | | account by collecting the totals of each of the analysis |
| sufficient to simply add up the total of the invoices as | | | | columns. The sales total is the sales turnover from |
| such a summation does not leave an audit trail of the | | | | which is deducted the totals of each of the |
| items which have been included. A written list of sales | | | | expenditure classification totals with the result being the |
| invoices does provide an audit trail. | | | | net profit and loss of the business. |
| Sales accounting for a small business accounting | | | | Where stock is bought and sold a further adjustment |
| purposes can be either a manual list of the sales | | | | may be required to account for the difference |
| invoices or by using a spreadsheet package a list can | | | | between opening and closing stock. This is done by |
| be made on a bookkeeping spreadsheet. Using a | | | | taking a physical stock check and valuing the stock at |
| spreadsheet for the bookkeeping has advantages as | | | | the start and end of the financial period. |
| simple formula can be used to add up the column | | | | On the income and expenditure account adjust the |
| totals. | | | | stock purchases figure by adding the value of the |
| The essential information to enter for a sales invoice | | | | opening stock and deducting the value of the closing |
| would be the date of the sale, name of the customer, | | | | stock. The result is not the stock purchases total as |
| sales invoice number if applicable and optional a brief | | | | shown in the bookkeeping spreadsheets but the cost |
| description of the item sold. In the next column would | | | | of the goods which have been sold to produce the |
| be the total sales invoice amount. If items like value | | | | sales turnover being reported. |
| added tax are required to be accounted for then an | | | | Simple bookkeeping for a small business accounting |
| additional column would be required to accommodate | | | | purposes can be two lists of sales and purchases |
| the vat or sales tax accounting. | | | | supported with sales invoices and purchases invoices. |
| A further small complication might be if at the | | | | |