Bookkeeping

Bookkeeping is the day-to-day recording of sales, purchases, money received and money paid. It provides the evidence behind your accounts and tax returns. Reliable records also make it easier to see what customers owe, what suppliers need to be paid and which transactions need an explanation.

Howarths supports businesses using cloud accounting software, including Xero and QuickBooks. We can help maintain records, review an existing process or work through incomplete information. The aim is a set of figures that agrees with the supporting documents, not simply a bank feed with every transaction assigned somewhere.

• Records sales invoices, purchase bills, expenses and receipts in the appropriate accounts.
• Reconciles bank and credit-card balances against statements, investigating differences.
• Checks customer and supplier balances so payments and invoices are not duplicated or left unmatched.
• Reviews transfers, loans, owner contributions and withdrawals rather than treating them all as income or costs.
• Maintains the records needed for VAT returns and year-end accounts.
• Identifies missing paperwork and unusual entries that need further information.

Reconciliation checks that the balance in the accounting records agrees with the bank statement. An imported transaction does not automatically mean the books are correct. Duplicate feeds, missing entries, transfers between accounts and payments matched to the wrong invoice can all distort the figures.

For example, a transfer from your savings account to your business current account is not normally a sale. Recording it as income can overstate turnover. Likewise, paying a supplier invoice should settle the existing bill, not create a second expense. Reconciliation is where those differences are investigated.

Bookkeeping maintains the underlying transactions. Accounts organise and adjust those records to explain financial performance and position. Tax returns use the relevant figures and tax adjustments to report liabilities to HMRC. The same transaction may have a different accounting and tax treatment, so accurate recording is only the first step.

Good bookkeeping reduces the need to reconstruct a year from bank statements at the last minute. It also gives an accountant the information needed to review stock, assets, borrowing and amounts owed. See our limited company accounts service for the next stage of company reporting.

Keep sales invoices, supplier bills, expense receipts and statements for each business bank or credit-card account. Explain payments without obvious descriptions, cash transactions, loans and money introduced by the owner. Provide payroll reports where there are employees and details of equipment or stock where relevant.

A receipt or invoice gives context that a bank feed may not: who supplied the item, what was purchased, the transaction date and any VAT. Keeping that evidence with the entry is more useful than relying on memory months later. Personal items should be identified, including private use of otherwise business-related spending.

Yes. Cloud systems can support invoice entry, receipt capture, bank feeds and reporting. The process still needs review: automatic suggestions are not a guarantee of correct VAT or expense treatment. We can look at how transactions are entered, what supporting documents are retained and which checks are needed.

Access and responsibilities should be agreed so that a transaction is not entered twice by different people. If you already maintain part of the records, tell us what you do and where you need help. A sensible division of work is more important than changing software for its own sake.

We can review the available records and discuss how to bring them into order. Start by identifying the period involved, every account used and any missing invoices or statements. Opening balances matter: a new set of records should agree with the previous accounts rather than begin with unexplained totals.

A backlog may affect VAT, payroll or earlier tax returns. Those areas need to be checked separately; cleaning up current records does not automatically correct submissions already made. We can explain where further information or a correction is needed.

For a limited company, HMRC's general rule is six years from the end of the company financial year concerned, with longer retention in certain circumstances. Self-employed people normally keep records for at least five years after the 31 January filing date for the relevant tax year. Different documents and open enquiries can require longer retention.

Do not discard records simply because a return has been submitted. They may still be needed to explain the figures, respond to HMRC or support a later transaction. Record retention is part of the process, not just a year-end task.

VAT-registered businesses need records supporting the correct VAT treatment and, unless exempt, Making Tax Digital compliance. Sole traders and landlords within Making Tax Digital for Income Tax need compatible digital records for their reporting. The requirements differ; being set up for one does not automatically establish compliance with the other.

Our VAT returns guidance and Making Tax Digital guidance explain the separate requirements.

Guidance reviewed on 5 October 2026. Record requirements should be checked for your business and reporting obligations.

• HMRC: company accounting records and retention
• HMRC: business records if you are self-employed
• HMRC: VAT record keeping