Single entry bookkeeping is an essential part of accounting for all micro businesses and freelancers. In this free tutorial we’ll explain how you record your income, expenses, sales invoices and travel costs when running your own business. If you’re using Zervant to do it, all your single entry bookkeeping will automatically be taken care of for you. (Please note that Zervant accounts created after 1st March 2017 will not offer any form of bookkeeping or expense management.)
If you haven’t yet got an account you can create one here.
Why Use Single-Entry Accounting?
When running your own business in the UK, there are certain key financial records you need to get to grips with, namely a balance sheet and your profit and loss account. You can find more information about what they are here.
They’re important because they allow you to do your accounting using single entry bookkeeping – an accounting method where you only record financial transactions once (as opposed to the more complicated double-entry bookkeeping method).
It’s also nice and straightforward because your bookkeeping is based on cash accounting, which means is that you make a record of any business income or expenses on the day they actually take place. The other, more advanced, option would be accrual accounting.
But single entry bookkeeping and cash accounting are great for getting started!
The main sorts of financial records you need to keep as a micro business are sales income, expenses, taxes, and any cash or bank transactions. Let’s take a look at how to do this.
Recording Invoices in Your Accounts
Using cash accounting means that you record invoices in your accounts on the day that you receive the money, not the date they’re created on or the date they’re due. A prime example here is a late paying client – don’t log anything until they pay their invoice.
All of this is dead simple if you use Zervant. How, you ask?
For starters the systems records all your financial transactions in your accounts on the day they occur. Sales invoices are registered on the day you get paid for them, once the money is physically in your bank account.
So when you mark an invoice as paid, it’s automatically switched from the list of outstanding invoices and recorded straight in your sales account. You’ll have complete and instant visibility of what’s been paid, and what needs chasing.
Recording Business Expenses in Your Accounts
With single entry bookkeeping, using cash accounting, you’ll also need to record all your business expenses on the day you pay them i.e. once the money has gone from your account.
To record a new expense in Zervant click on the Accounting tab showing at the top of your screen, then the Income tab. Click on the green “new expense” button.
Fill in all the necessary information as follows:
- Expense number: A unique number used to identify the expense. Zervant will automatically suggests a number for you, based on the last number used.
- Date: Enter the date you paid the expense.
- Paid from: This refers to the expense category. Choose from the pre-defined list, or add a new one if needed. This category will then be used in your financial and accounting reports. Which is why selecting the right category for your expenses will make it easier to fill in your tax return form.
- Paid: Total amount paid including value added tax (VAT).
- VAT %: The VAT percentage paid on the expense (find our more about how to work that out here).
- Paid VAT: The total amount VAT will be automatically calculated for your, but it can be altered if needed.
- VAT deductible: VAT on expenses is usually deductible. If it isn’t, make sure you uncheck this box.
- Supplier: The seller you purchased the product or service from.
- Description: Your own description of the expense (handy for reference later on).
- Attachment: You can upload an electronic copy of the receipt (image file or PDF), which will then be stored in Zervant if you need to access it.
Recording Income in Your Accounts
You might need to record income that doesn’t come from sales invoices, such as cash payments or insurance claims. You can add them by clicking the green “new income” button next to the expense one. Much of the information is as above, but there are a few extra fields too:
- Type: Set the type of income or create a new category.
- Payment received: The date you received the payment.
- Payment method: The payment method used.
- Payer: The name of the person/ company that made the payment.
What Reports Do You Need for Single Entry Accounting?
By adding all your company’s income and expenses, Zervant will then automatically generate all the figures you need for single-entry accounting. You can print your accounting reports or save them on your computer, ready as and when needed.
All your daily transactions, and the flow of money in and out of your business, will be kept up-to-date. There’s really no need for you to do any additional bookkeeping. There’s also several other reporting features for monitoring your business’ financial health.
The report that organises financial transactions by income and expense category will make it easy for you to fill in your own tax returns, as it shows a complete summary of all your income and expense categories for the whole financial year.
As a picture is worth a thousand words, we’ve included a screenshot of this report:
With the income and expense report (as shown in the feature image of this post) you get a clear, concise overview of your company’s income, outgoings and profit on a monthly basis.
You can also use Zervant to generate a report showing sales by customer, so that you know what money comes from where:
Why About Debits and Credits?
Zervant creates all the reports that you need for single entry accounting. If you need to anything more complicated, involving credits, debits and double entry accounting, you can print or download all the above reports and send them to your accountant.
Why Not Invoice the Easy Way?
Use Zervant to create and send an unlimited number of invoices, for free! There’s no catches or hidden fees. Click below to get started.