Clive Murphy Ltd.

Simple Non-VAT Bookkeeping

This approach is intended for small non-VAT registered businesses. It could be used by a small shop, plumber or builder.

What you need
You will need a computer spreadsheet (example here). If you do not have Microsoft Excel, you can download LibreOffice (a free alternative to Microsoft Office, which includes a spreadsheet) at LibreOffice.

What you do
A computer spreadsheet can have multiple pages (called tabs). In my example, you can see the tabs and switch between them at the bottom of the spreadsheet. Use one tab for your income and another for your expenses. Use the third tab to keep track of invoices you issue and when they are paid.

When you receive a payment, write down the date you received it, who it was from, what it was for, and the amount on the Income Received tab. You may also wish to record how you received the payment (cash, cheque or direct deposit).

The Income-Received Tab

Likewise, when you spend money for business purposes, write down the date you spent it, who you paid, what it was for, and the amount. My example spreadsheet has two halves - one to record how much the payment was and how you made the payment and the other to track the category. The category totals should equal the amount you paid. If you are not sure if something is a business expense or not, record it anyway.

The Expenses-Paid Tab

The third tab helps you keep track of who you've invoiced and for how much. In this way, you can see at a glance who has paid you and who is still outstanding. When you issue an invoice, write down the date, who it was to and how much it was for. When they pay it, record the date they paid and the amount.

The Invoices-Issued Tab

A new spreadsheet should be started for each financial year, so that the column totals (pink figures at the top of each column) end up showing the total spent during the financial year.

Finally, keep copies of all your receipts and invoices. Put them on a clip in date order but be sure to use a clip that won't fall open if you drop it! If for any reason you lose or forget to get a receipt, record the payment anyway. The most important thing is to record every payment you receive and every expense you pay out.

Other Records

It is a good idea to keep a separate business bank account. Make sure you always complete the cheque book stub to show what payments are for, and always use a bank paying-in book to keep a record of bankings. Make sure you keep all your bank statements, cheque book stubs and paying-in books along with your cash book, and all receipts and invoices and at the end of the financial year, give it all to your accountant.

If your vehicle is not particularly expensive to run and you do not have too many business journeys, it may be best to record the mileage of all business journeys (date, where to, and how far it was), as you may be able to claim business motoring at 45p a mile. See my FAQ about motoring expenses. If you can't claim on the mileage basis, or if it isn't practical, just record the journeys for a sample period of a month during each financial year. Record the vehicle mileage at the beginning of the period, then all business journeys during the period, and the vehicle mileage at the end of the period. This is so that the proportion of business to private motoring can be reliably established. Without a mileage log of this type, HMRC could challenge the business motoring expenses claimed.

Unfortunately, following the Samadian case travel between your home and a regular and predictable place of business cannot be claimed as a tax allowable expense.

Free initial consultation with no obligations. Evening appointments available.
To arrange an appointment, you can either email me or call (01752) 822975 between the hours of 9am - 5:30pm Monday to Friday.

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