Frequently Asked Questions.
Accounting, Made Simple for You!
A bookkeeper handles the day-to-day administrative recording of transactions, bank reconciliations, and payroll. An accountant analyzes that data, provides strategic tax advice, and submits year-end statutory accounts.
Financial experts advise doing bookkeeping weekly or monthly. Leaving transactions to pile up until the end of the tax year leads to errors, missed tax deductions, and stressful deadline scrambles.
The industry standards for MTD-compliant cloud software are Xero, QuickBooks, and Sage. FreeAgent is also highly popular and often free if you bank with NatWest, RBS, or Mettle.
Cash basis records income and expenses when cash physically changes hands. Accrual basis records invoices and bills when they are raised or received, regardless of when payment occurs.
Limited companies must use a dedicated business bank account because the company is a separate legal entity. Sole traders are legally permitted to use personal accounts, but separate business accounts are strongly recommended to avoid confusing cash flow and messing up reporting.
You can claim costs that are wholly and exclusively for the purposes of running your business. Common examples include software subscriptions, office rent, utilities, insurance, marketing, and business travel.
Internal reports used to monitor performance and support better decisions.
Recording income/expenses only when cash is received/paid, not when invoiced.
The risk a business cannot meet short-term obligations when they fall due.
Cash generated from day-to-day business operations, excluding investments or financing.
A report showing unpaid invoices grouped by how long they have been outstanding.
Processes to ensure the timely collection of customer payments and minimise overdue invoices.
Managing current assets and liabilities to ensure a business can meet short-term obligations.
Retained earnings are the profits which are kept after paying expenses and dividends, commonly used for company growth.
This is the list of all the balances in your accounts, which is used to check that debits and credits are matching.
Revenue is the income the company generates from services, before deducting expenses.
This is the money owed to a business for goods or services that have been carried out, but not paid for yet.
Depreciation is when assets lose value over time, becoming zero.
This is an accounting method, which ensures the books are always balanced, by recording every transaction in two accounts: a debit, and a credit.
A balance sheet is a financial report that shows a company’s financial position at any given point in time. It gives an overview of the worth of a company’s assets, liabilities, and owner equity.
Equity is the value that shareholders would receive if all of a company’s assets were liquidated and all of its debts were paid off.
Cash flow is the process of money coming in and out of a business, whereas profit is the final amount after deducting business expenses.
Liabilities are what a company owes, which is the opposite to an asset, for example, money, services or goods.
An asset is a resource owned by a company or economic body.
Predicting future cash inflows and outflows toanticipate shortfalls and plan accordingly.
