Set up a basic record-keeping system
Digital financial records
A digitised record-keeping system can save you a great deal of time. It will allow you to add, delete, amend and share your data easily and will recalculate your running totals for you.
From 6 April 2024, cash basis will become the default method of accounting, You must opt out if you want to use traditional accounting or cannot use cash basis accounting. See cash basis changes from the 2024 to 2025 tax year.
Computerising your accounts can also have wider business benefits. It will allow you to file government returns, such as VAT and Self Assessment tax returns, online as well as potentially enhancing your business' ability to communicate online with customers for applications such as e-invoicing.
You may also need to keep digital financial records as a legal requirement, for example, if your business is VAT-registered you must keep digital records as part of Making Tax Digital for VAT. See keeping VAT records.
Choosing a software package
You can either use your computer's standard spreadsheet package or you can buy an accounting software package. Accounting sotware packages have been developed to meet the needs of most small businesses. Most software will require payment but there may be some free versions available. Find commercial software suppliers of record-keeping applications.
More advanced accounting packages are sold in 'modules', with each one handling an aspect of financial management. Most businesses buy at least three modules (sales, purchase and nominal ledger).
Remember if you are using an accountant, your software packages should be compatible.