Bookkeeping essentials for Sole Traders in Ireland

You’ve set up your sole trader business but are not entirely sure what you need to do to keep your books & records in order.  The first step is to ensure you have a bookkeeping process in place. 

What is Bookkeeping?

Bookkeeping is the process of recording & organising all the financial records related to your business. 

Financial records include:

  • Payroll documents (payslips, gross-to-net reports)
  • Any purchases made by the business, with their invoices
  • Bank statements 
  • Stock reports
  • Sales invoices you issued to your customers
  • Loan statements
  • Insurance documents
  • Lease agreements

As a rule of thumb, any document which supports or validates money in or money out of your business is considered to be a “financial record” and in line with the legal requirement to maintain proper books of account, these records should be organised and retained on file (for a period of at least 6 years).

What is the difference between Bookkeeping and Accounting?

Bookkeeping is different to accounting.  Bookkeeping is the recording & organisation of financial information, and forms the basis of your sole trader accounts, which in turn forms the basis of your annual tax return.  Whereas accounting is the review, analysis and reporting on the financial information to ensure businesses remain compliant with accounting & tax rules, and to help businesses make better decisions by interpreting their financial information.

Should I manually prepare my books or use a software?

  • There are two broad options for how you choose to do your bookkeeping: digital or paper.
    A physical book, excel workbooks, or cloud accounting software are all options for your bookkeeping system. The choice will be dependant on your business. If you receive a lot of invoices an accounting software package may be of more benefit than an excel workbook.

    In this day of technology it can be easier to have a digital copy – it will mean information is easier to retrieve if needs be, you will be able to run reports on your information at the click of a button and it will also help to keep down any accounting costs (if you are outsourcing these). If the information is given in a neat and easy to retrieve fashion, it will significantly reduce the time spent by your accountant, and will therefore save you on fees in the end.

    If you are receiving paper invoices you may wish to keep a hard copy but scan a copy into your digital process. Many of the cloud accounting software packages now use smart technology that will automatically “read” any invoices that you scan into it – thus saving you time on manual data entry.

7 Tips for Good Bookkeeping

1. Keep your business and personal bank accounts separate.

When you set up your business, set up a business account.  This will ensure you can easily see any tax detectable you have and allow your business to build up it’s own credit rating. 

2. Automate what you can.

If you use a cloud accounting software you will easily be able to see the numbers you need.  You can sync your business bank account to your software and have up-to-date information. This will save you untold minutes and headaches.

3. Check on your bookkeeping regularly.

Ideally you would set up a schedule time or day in the week/two weeks to see where your books are.  This will enable you to keep up with any money owed to you or by you.  You will keep any unpaid fees down as a result.  You can also chase up any unpaid invoices quickly. 

4. Keep a record of your business expenses.

The tax laws in Ireland change often and if you have these recorded you or your accountant can easily determine what you can use as a tax deduction or not. 

5. Monitor your employees time with time tracking software.

Cloud based time tracking software allows your employees to clock in and out on their smart phones, tablet, or laptops easily and hassle free.   There are softwares for just about any industry, it will enable you to easily keep track of overtime, or flexible working hours.  This makes payroll a doddle!

6. Stay aware of tax deadlines.

If you set up alerts for the tax deadlines you won’t be caught unaware and will know when you have the bill ready to exit your account. 

7. Ask!

If you ask your accountant or a financial planner for help you will have access to a trove of information. At SCK group we can guide you on how to use the cloud accounting software and will provide an instruction tutorial when you first set up.  We can also help if you need to customise the software to better suit your needs. We are more than happy to help you with any business queries you have, you only need to be an expert in your field!

And finally..

Good Bookkeeping will enable you to have an excellent idea of where your business is vs the budget.  You can easily see where you are owed or owing money.  

Therefore it is really important for every business – small and large – to have an up-to-date bookkeeping process.  The easiest way is to achieve this is to have a process or routine you do every week or month to keep your records in order.  

You can do this yourself or outsource it & we will be glad to help you should you have any questions.