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A beginner's guide to small business bookkeeping

Learning how to manage your accounts is crucial for your business to thrive.

6 min read

Ok, so you’ve started your own business, and you’ve got a Mettle account, now what? 

A fundamental part of running your business is keeping your books up-to-date. Learning how to manage your accounts is crucial for a business to thrive. So here’s a beginner’s guide to bookkeeping put together by Dead Simple Accounting. 

Let's start with the basics...

What is bookkeeping?

Bookkeeping is the recording of all financial transactions in your business. It’s keeping track of all the ins and outs into the bank, as well as what’s owed to your business and what’s owed by your business. 

Years ago, a bookkeeper would keep a record of these transactions in books and ledgers – hence the name. 

Now, there’s some fantastic software and online banking options out there that make bookkeeping straightforward. 

Here are just a few ways good bookkeeping can help your business:

  • Keep track of daily transactions coming in and out of the bank

  • Send sales invoices to customers and chase overdue invoices

  • Handle bills and make sure that they’re paid on time and recorded

  • Keep an eye on cash flow

  • Prepare the books for an accountant to review 

See what's coming in and going out of your Mettle account.

Why is bookkeeping important and do I really need to do it? 

It’s super important to keep accurate records for your business. 

The main reasons why you need to keep your records up to date: 

  1. You’ll know straight away if you’re making a profit (if you’re making more money than you’re spending)

  2. Keep track of who owes you what and when they should pay

  3. Know who to chase for money and when. Being proactive in keeping the cash coming in is key to keeping your business afloat

  4. Be more aware of upcoming bills from suppliers

  5. You’ll be ready to prepare your tax returns far in advance of any deadlines, and know how much to keep aside

Can I do the bookkeeping myself?

Yes, you can. It’s honestly not that time consuming if you’re disciplined and you do it regularly. 

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What is the best bookkeeping software? 

We use Xero at Dead Simple Accounting because it works perfectly for our business. 

A lot of our clients use Xero, Quickbooks or FreeAgent – all three are great and pretty cheap too. 

In fact, you can start a free trial with any of them and see which one you like best before committing. There are plenty of other options that are free too.

What’s the difference between a bookkeeper and an accountant?

Bookkeepers keep track of day-to-day transactions. Whereas accountants can help you see the bigger picture. For example, if the business is profitable, where the business should be in 12 months, and give accurate tax estimates. 

But keep in mind that experienced bookkeepers and accountants can provide other services as well, like preparing helpful financial reports. 

  1. A Profit and Loss statement (which itemises all the ins and outs of your business)

  2. A Balance Sheet (which gives you a snapshot of how much the business owns, is owed and owes other people)

  3. A Cash Flow report (which shows where the cash that comes in, ends up) 

As your business grows, you might find value in getting an accountant to help with more demanding tasks like running payroll, preparing VAT returns, and filing tax returns. 

After all, if it’s not your strong point, or if you put off these important bits, it’s better that you get the right professional help and support. 

Some dos and don’ts

Bookkeeping might not be the most glamorous part of running your business, but now that we’ve established why it’s important to do it, let’s summarise some key points 


  • Keep a record of all your invoices (see HMRC guidance on what to include here)

  • Keep hold of all your expenses and costs – this includes keeping receipts. Digital is the best option here

  • Check your bank balance regularly and make sure you’re ready for any large bills 

  • Track of who still owes you money

  • Have a separate bank account for your business. Things can get incredibly muddled if there are lots of personal transactions going in and out


  • Keep a shoebox full of receipts. This will stop you feeling in control and you might quickly lose track of how much you’re spending

  • Put off paying bills to suppliers, your taxes, your employees. Paying anything late can have a big impact on those relationships, and can affect your credit score too

  • Put off bookkeeping. Little and often is much easier than doing a whole year in one go

  • Use your business bank account for personal shopping, booking holidays, paying back friends etc.

How can I keep my accountant happy? 

Not all accountants are grumpy, dull and belittle you for asking questions for not understanding taxes.

We pride ourselves on never talking corporate jargon, and keeping things simple for our clients. 

A sure fire way to keep your accountant happy is to keep a separate record of your personal and business transactions and ideally have a digital record of all your business receipts and invoices. That way they can collaborate more easily. 

When your bookkeeping is up-to-date, your accountant can also give you helpful and proactive advice. Rather than sorting through items that don’t reconcile, they can help you plan for the future, advise on ways to save money and reduce costs – and find ways to reduce the dreaded tax bill. 

Tips on being organised financially: 

  • Keep a file for each trading year or each tax year 

  • Divide the file into categories: sales invoices, receipts, bank statements, tax documents 

  • Digital is best. There are plenty of free and secure cloud storage solutions such as Dropbox or Google Drive. Try and keep a digital record of all the above

  • Keep a reminder in your diary to look at bookkeeping. If you sit down with no distractions, you’ll be able to keep everything up-to-date each month

Remember to keep it up

You’re forming a habit, and this can take time. You might miss a week or a month – and that’s ok. But do try and get back to regularly keeping on top of the books.

There’s plenty more help available on the Dead Simple Accounting website.

Who is Dead Simple Accounting?  

We’re expert accountants for small businesses, freelancers, contractors and digital nomads. 

We’re ready with Making Tax Digital and our fees are all listed on our website. 

We can help with: 

  • Tax returns (self assessment) 

  • Bookkeeping 

  • Year-end accounts and Corporation Tax returns

  • Payroll 

  • Forecasting

  • Mortgages

  • VAT returns

  • Applications to set up a limited company 

Get in touch

Email us at or call us on 0330 22 11 026 

Visit our website

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