Business is about selling products and services to customers. How we measure our business success is through keeping records of our sales and working out business profit and many other things to look at.
Let us start with accounting for sales in your accounts and what should be included in a sale invoice to be sent to your customers. There are some of the basic records you need to maintain for your business or your limited company.
Every time you make a sale, you should produce an invoice or receipt, even if you are selling for cash. The Invoices should be in sequential number and filed accordingly and be kept for couple of years.
You must then transfer the information on from the sale invoice to your accounting system. The following information should be recorded for accounting purposes.
1. The date of the invoice,
2. The name of the customer.
3. The invoice reference number.
4. The amount of the sale, including VAT
5. The amount of the VAT element
6. The amount of the sale excluding VAT, net sale.
You do not have to breakdown your sale amounts into the VAT element and net amount if your business is not VAT registered.
And also the date of payments received from your customers and method of payments whether by cash or bank transfer or by cheque. For VAT registered companies and businesses giving credit terms to their customers, it may be ideal to maintain list of customers that have not yet paid up and use this list as a checklist to ensure you are collecting cash from your customers when the invoice fall due.
Getting your accounting books and records right from the beginning is crucial not only this will avoid having to spend considerable time to correct the data at the year end but also provide great help to your auditors for auditing your accounts at year end. Companies are not required to have their accounts audited if their business assets are less than 3.26 million or annual sales are below £6.5 million. However, it is still a good practice to maintain the records that could meet the audit requirements.
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