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Business and finance

What is bookkeeping?

In short

Bookkeeping is the day-to-day recording of a business's money: every sale, purchase, payment and receipt, kept complete and accurate and checked against the bank. A bookkeeper keeps these records during the year, and the National Careers Service lists processing invoices, matching bank statements to the records and preparing VAT returns among the daily tasks.

What bookkeeping is

Bookkeeping is the daily recording of a business's money: what it sold, what it bought, who owes it money and who it owes. The records have to be complete and accurate so that the owner knows where the business stands and the accountant has what they need to prepare the accounts.

Almost all bookkeeping rests on one method, double entry.

What a bookkeeper does day to day

The National Careers Service lists these among a bookkeeper's day-to-day tasks, and says you need to be able to use a computer and the main software packages confidently:

  • processing purchase and sales invoices
  • making sure bank statements match the income and payment records
  • preparing VAT returns

Bookkeeper or accountant?

A bookkeeper keeps the records during the year. An accountant usually works from those records to prepare year-end accounts and tax returns and to advise the business. The National Careers Service says that with experience and training a bookkeeper could become an accounting technician, and that a degree could lead to qualifying as an accountant. Our guide to bookkeeper vs accountant sets out the difference in full.

Where bookkeepers work

Bookkeepers work in-house for one business, in accountancy practices, or for themselves with several small-business clients. If you offer bookkeeping services as a business, GOV.UK says you must not trade without being registered for money laundering supervision, either with a professional body or with HMRC. Our guide on how to become a bookkeeper in the UK covers the routes into work, pay and the steps for going self-employed.

How to learn bookkeeping

Lift College teaches the full method in its online bookkeeping course, the Level 2 Bookkeeping Course: six units from the accounting equation to the trial balance and bookkeeping software, 90 guided learning hours, with a named UK tutor marking every assignment and no exams. It is a Lift College certificate course, not a regulated qualification. Enrol on the Level 2 Bookkeeping Course.

If you only want to understand and keep your own business records, Bookkeeping Basics is an accredited CPD short course of 6 modules that takes about 6 hours, paid once. Get Bookkeeping Basics, an accredited CPD course. Both are listed on the business and finance hub.

Questions

What is a bookkeeper?
A bookkeeper is the person who records a business's sales, purchases, payments and receipts and keeps those records accurate and up to date. They may work in-house for one business, in an accountancy practice, or for themselves with several small-business clients.
What does bookkeeping involve?
Recording invoices and credit notes in the sales and purchase ledgers, recording money in and out in the cash book and matching it to the bank statement, recording VAT, and checking that the ledgers agree in a trial balance. The National Careers Service also lists preparing VAT returns.
What is bookkeeping for a small business?
It is keeping a complete, accurate record of what the business sold, what it bought, who owes it money and who it owes, so the owner knows where the business stands and the accountant has what they need. Once you can post a month of transactions, reconcile the bank and extract a trial balance, you can keep the books for most small businesses.
Can a bookkeeper do tax returns?
A bookkeeper often prepares VAT returns, which the National Careers Service lists as a day-to-day task. Year-end accounts and tax returns are usually prepared by an accountant working from the bookkeeper's records.

Related pages

Sources

Business and finance: all courses and guides