Guide how to do simple bookkeeping
This is a guide how to do simple bookkeeping for small self-employed business (sole trader or partnership) in United Kingdom and Northern Ireland. It is based on cash basis accounting.
You will find here more information about Cash Basis Accounting.
We have created handy template which will save you time with bookkeeping. But you can follow this guide without buying our template, just follow those basics how to prepare your sales, expenses and profit and loss account. This basic bookkeeping will help you to prepare your tax return in the end.
You can buy and download the template here. The price for the template is €9.
The video below is showing overview of bookkeeping template.
6 steps to prepare your bookkeeping yourself
1. Step – Business information
Input all the basic information about your business. This information is used in other tables in our spreadsheet.
2. Step – Income/Sales
Take all your income invoices/receipts and sort them into date order. Then take the first invoice and start to fill in sales table with the date, amount and client name. Take next invoice and fill in next row the same way as the first invoice. Continue with all invoices you have for that year.
At the bottom of the table is total cell. There is a formula which will calculate amount of all invoices recorded. That number is your total gross sales (or your turnover) for a year.
How to insert more rows
Table is set up for 50 invoices. If you need more rows, then highlight row where you want to add a new row in the table with pressing left mouse button. Once highlighted, press right mouse button and from the menu choose Insert row and a blank row will be inserted in the table.
3. Step – Expenses
Take all your expense’s invoices and receipts and sort them in date order. Start to record them with Date and Amount.
Business use in %
If the cost was partly used privately for example telephone cost, input how much of the cost was used for business in percentage range 1% – 100%. For example one half of the telephone cost is 50%. If it is purely business cost, input 100%. Then in Business Use Total cell is a formula which will calculate business amount based on the business percentage you filled in.
Type of Expense
Type of Expense is a category of expenses which you will find in your tax return, for example Cost of goods, Car, van and travel etc.
If your total gross income for the year is less than £90,000, you don’t need to use these categories, because HM Revenue don’t require them in your tax return. You can use Other allowable business expenses category for everything and in your self-employment tax return, you will input your total expenses into the Total allowable expenses box.
Note/Purpose
In Note cell you can write details for what is that receipt for (a purpose of buying goods or services), for example stationary, tools, courier cost etc.
Take the next invoice and record it in the next row the same way, you recorded the first invoice. Continue with all invoices you have for that year.
At the bottom of the table is a Total cell. There is a formula which will calculate amount of all invoices recorded. The Business Use Total Total number is your total expenses for a year.
4. Step – Flat rate expenses
Simplified expenses are a way of calculating some of your business expenses using flat rates instead of working out your actual business costs.
You do not have to use simplified expenses. You can decide if it suits your business.
You claim other equipment you buy to keep and use in your business as a normal allowable business expense in the Step 3 – Expenses table.
You can use flat rates for:
- business costs for cars, goods vehicles and motorcycles,
- working from home,
- living in your business premises.
You will find more information about Flat rates expenses in our Cash Basis Accounting article.
5. Step – Capital Allowances
Capital allowances for cash basis accounting are available only for cars. You claim other equipment you buy to keep and use in your business as a normal allowable business expense in the Step 3 – Expenses table.
You can claim one of the following:
- the full value of the new electric car as 100% first-year allowances,
- 18% of the car’s value (main rate allowances),
- 6% of the car’s value (special rate allowances).
Which rate you can claim depends on when you bought the car and its CO2 emissions.
| Cars | 100% first-year allowances | Main rate allowances | Special rate allowances |
| Cars bought from April 2021 | New and unused, CO2 emissions are 0g/km (or car is electric) | Second hand electric car New or second hand, CO2 emissions are 50g/km or less | New or second hand, CO2 emissions are over 50g/km |
| Cars bought between April 2018 and April 2021 | New and unused, CO2 emissions are 50g/km or less (or car is electric) | Second hand electric car New or second hand, CO2 emissions are 110g/km or less | New or second hand, CO2 emissions are over 110g/km |
| Cars bought between April 2015 and April 2018 | New and unused, CO2 emissions are 75g/km or less (or car is electric) | Second hand electric car New or second hand, CO2 emissions are 130g/km or less | New or second hand, CO2 emissions are over 130g/km |
| Cars bought between April 2013 and April 2015 | New and unused, CO2 emissions are 95g/km or less (or car is electric) | Second hand electric car New or second hand, CO2 emissions are 130g/km or less | New or second hand, CO2 emissions are over 130g/km |
| Cars bought between April 2009 and April 2013 | New and unused, CO2 emissions are 110g/km or less (or car is electric) | Second hand electric car New or second hand, CO2 emissions are 160g/km or less | New or second hand, CO2 emissions are over 160g/km |
| Cars bought before April 2009 | – | If your car was registered before 1 March 2001 | If your car does not have an emissions figure |
Check your car’s CO2 emissions.
6. Step – Profit and Loss Account
Most information in Profit and Loss Account table pop up automatically from previous tables. You only need to fill in section at the bottom of the page, Prepared by. Don’t forget to sign off, if it is for bank or other institution.
