A simple system for recording, checking and understanding your business transactions.
Give every transaction a clear record
Start with the document behind the entry: an invoice, receipt, bank reference or expense claim. Record the date, amount, account and a short description. A clear description helps another person understand the transaction without asking you again.
Keep business and personal spending separate
A separate business bank account makes checking the books easier. If a personal payment is made from the business account, record its nature clearly rather than treating it as an ordinary business expense.
Make review part of the routine
Compare entries with source documents, reconcile the bank account and review outstanding customer and supplier balances. Keep a short list of unresolved items and follow them through.
Try a small exercise
Use a fictional business. Record a capital introduction, a purchase, a sale and a routine expense. Keep the supporting documents in a folder and check that every entry can be traced back to one of them.