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Business Records

Record Keeping

Your basic records or ‘source documents’, show details of all money coming in or going out of your business – money you’ve received or expect to receive, and money you’ve paid or expect to pay. Your source documents contain all the information you need to put into a bookkeeping system.

Income Records


Invoices are a good way of recording your sales and keeping track of the money coming into your business. When you sell goods you can issue the buyer with an invoice. There are no special requirements for what a normal invoice should show, as long as it can help prove that a transaction took place.

A normal invoice will show:

  • the seller’s name
  • the purchaser’s name
  • the purchase date
  • the amount paid or to be paid
  • a description of the goods or services being sold.

Receipt Book

If you make lots of small cash sales to non regular customers a simple way of recording your sales can be to keep a receipt book that details the date of the sale, type of goods sold and the price paid and any discount allowed.

Cash register tape

If your business makes a large number of cash sales then you do not need to record the name of each customer in a cashbook or issue an invoice for every sale. If you make a lot of sales every day, then you can use a cash register and keep the cash register tape as a record of your sales. If you use a cash register tape you need to record all your sales on the tape. You should keep the tapes in daily order and store them with your other sales records. The amount you deposit as cash sales in your cashbook should equal the total on your cash tape and other sales records you keep.

Another way is to record all your sales in a simple day book. You should total up the sales at the end of every day and rule off the book for the start of the next working day.

Expense records

You need to keep records of all your expenses for income tax purposes.

Invoices for purchases

If you buy business goods or services on credit, you will usually be sent an invoice requesting payment. Make sure you keep your invoices for purchases.

Try and separate invoices that you have paid from those that you have not yet paid. Once an invoice has been paid you should record the cheque number on the invoice if you paid by cheque or mark it as paid and store it with your monthly bank statements. Try and keep your records in date order – this will make your end of month balancing easier.

Receipts for purchases

You should also keep a copy of all receipts for cash purchases.

How to record your daily sales and other receipts in a cash book

If you only have a few transactions a day then it is more practical to record every invoice and receipt directly into the cash receipts book.

Use the following steps to record receipts.

Step 1
If you have done a reconciliation of daily sales, transfer the amount from item 8 on the reconciliation of daily sales form to the ‘Total receipts’ column in your cash receipts

Step 2
If you have sold capital items, or have received a refund from a supplier, make a note of it in the appropriate column.

Step 3
The money you actually have to bank should match the money your records show that you should have available to bank. If you have less or more money than your records show, record the difference and the reason for this. The amount actually deposited in your bank account should be recorded in the ‘Bankings’ column.

Step 4
Every month add up each column in the cash receipts book and record the amount in the ‘Total’ row at the bottom of the form. Transfer the total of the ‘Bankings’ column to the bank reconciliation statement (see below).

How to record payments in a cashbook

Purchases are usually made in cash or by cheque. In some cases, purchases may be provided on credit. The following steps show how to record payments made by cash, cheque or another method in a cash payments book. If the purchase or expense is made on credit or is to be paid at a later date, file the invoice by due date for payment in your files. As you pay for purchases, follow these steps:

Step 1
If you are paying in cash and you use a cash register, take the exact amount of cash from the register and pay the supplier or worker. Put the receipt, or a note with details and the amount paid, in the cash register, or paying by cheque, pay the supplier or worker and note the cheque number on the invoice. Record the date, name of the payee, description of the purchase and the amount of the cheque on the cheque butt.

Step 2
If you are using a cash register or day book, at the end of the day record details of cash payments from the register on the reconciliation of daily sales form under ‘Cash payments from cash register or day book’.

Step 3
If you are using the reconciliation of daily sales, transfer cash payments to the ‘Total payments’ column in the cash payments book.
Don’t include any credit for returned goods, as you record this in the cash receipts book, or not using a reconciliation of daily sales - record amounts of any cheques, cash payments or electronic transactions made from your business bank account in the ‘Total payments’ column in the cash payments book.

If you make any cash purchases or payments from other sources (e.g., a private account) you should also record these in the ‘Total payments’ column.

Write down how the amount was paid (eg by cash or cheque), in the ‘Payment type’ column. If you paid by cheque, simply record the cheque number.

Step 4
Record the amount of any cash or cheque payments in the column for that type of expense (for example, ‘Materials/stock’ or ‘Motor vehicle’) in the cash payments book.
If the payment is for more than one type of purchase, record each portion in its separate column.

Step 5
At the end of the month add up each column in the cash payments book and record the total in the ‘Total’ row at the bottom of the form. Transfer the total from the ‘Total payments’ column to the bank reconciliation statement (see below regarding bank reconciliations).

Once you have transferred the information from your invoices, statements and other transaction documents to your cashbooks, you need to file them – remember, it is a legal requirement that you keep these records for seven years.

Reconciling your cashbook with your bank statement

You should reconcile your bank statement and your cashbooks on a regular basis (at least monthly).

Reconciling is simply matching the amounts of money you have noted down in your cashbook as paid or received against the transactions recorded in your bank account

Before you start make sure that you have all your bank statements for the period you are trying to reconcile. Your cashbooks should show all the amounts you’ve actually received and payments you’ve actually made. However, there may be some extra transactions that only show up on the bank statements such as: bank fees or interest charges, or direct debits (payments) and direct credits (receipts).

Doing a regular bank reconciliation will allow you to: take into account any extra transactions your bank puts through your account, and check and record any errors or omissions.

Doing regular bank reconciliations will reduce the time it takes you or your accountant to prepare your income tax return and other financial statements.

Four steps for reconciling your bank statements

Step 1
Take a pencil and put a tick beside each entry in the cashbooks and bank statement that appears in both records. If there are any differences between the two in relation to particular entries you will need to work out which is correct.

Step 2
Add any additional entries that appear in the bank statement (such as bank fees or interest charges) to your cashbook. Your cashbooks should now contain details of every transaction for the period.

Step 3
There may still be some entries that appear in your cashbook but not your bank statement. These will be things like a cheque that you have given to someone that they have not yet banked (or is still in the banking process). Sometimes it can take several months for a cheque to be presented. Other transactions might be money that you received on the last day of the month but did not bank it until the following day - it will appear until the next month’s statement.

Step 4
To reconcile:
record the closing balance as on the bank statement, add any outstanding deposits, deduct any outstanding cheques, and calculate the closing cash book balance (this figure should agree with your cashbook).