Bookkeeping is the consistent entry of financial transactions throughout the life of a business.

Accounting reports show you the financial position of your business over a period of time. They are a useful source of information for business owners to help you see where you’re making and spending money.

“Cash flow” is a term that refers to how cash moves in and out of your business and your bank account. Cash inflows are your sources of income, and cash outflows are your business expenses. Cash flow insights give you a clear picture of the current state of your business. It helps you see how long you can maintain your business, based on the typical patterns of bringing in and spending money.

A profit and loss statement is a legal requirement for limited companies, and for sole traders earning over £50,000 a year. A profit and loss statement not only keeps track of your income and outgoings, but also helps see how the business is performing.

A balance sheet is a financial statement that summarises a company’s assets, liabilities, and owner’s equity at a specific point in time. It’s also known as a statement of financial position

Self Assessment is a system that HMRC uses to collect Income Tax from: sole traders, people with more than 1 source of income, company directors who take dividends, anyone earning more than £100k/year

Details of the year’s earnings from 6 April-5 April need to be submitted to HMRC by 31 January in the following year. The tax is due in two instalments: 31 January (in arrears) and 31 July (in advance)

You must register if either:

• your total taxable turnover for the last 12 months goes over £90,000 (the  VAT  threshold)
• you expect your taxable turnover to go over £90,000 in the next 30 days

You must also register (regardless of taxable turnover) if all of the following are true:

• you’re based outside the UK
• your business is based outside the UK
• you supply any goods or services to the UK (or expect to in the next 30 days)

The allowable expenses you can claim under Self Assessment must be for business use only and they vary depending on the business you’re in. , check out the list of allowable expenses on HMRC’s website or speak to an accountant.

Sole traders should use accounting software to keep track of their finances and comply with legal requirements, for VAT Tax Compliance, error reduction, record keeping, debtor/creditor managments, payroll, CIS and better financial planning

Spreadsheets may have limited capability, but some solo traders may also use them to keep track of their trades. Spreadsheets are ideal for people who wish to issue their own invoices and enter data themselves.

A bookkeeper can help a business owner manage day-to-day finances. These experts monitor cash flow from different accounts, bills and invoices and can organise your books to improve money management.