GP’s and Locum Doctors, like other small businesses, require adequate accounting records to remain compliant with the Companies Act 2006, which enforces the need to maintain a record of day-to-day income and expenditure, as well as company assets and liabilities.
Therefore, it is essential to understand what pieces of information need to be recorded and to create systems that capture and maintain this data.
We have noted some basic bookkeeping terms that are useful to understand and can help you keep track of your business finances. This consistent capture of your company financials can help to keep you adherent to the law and make it easier to calculate the financial health of your business. Here are 4 useful bookkeeping terms and metrics to keep track of:
You will need to keep track of money going in and out of your company on a regular basis – this list is known as the cashbook. This can be a simple spreadsheet that outlines your incoming and outgoing cash as well as some further details about the transactions such as transaction values, descriptions, dates, references numbers and accounting codes. Supporting documents for these transactions are also important. It may be useful to list expenses paid with physical cash on a separate spreadsheet to help keep track of any petty cash used in the business.
It is important to note that in most circumstances, incorporated businesses will need to use accruals accounting, meaning cashbook entries are acknowledged when they arise as opposed to when they are paid. This applies to income and expenditure.
Keeping track of your expenses regularly will help ensure you are able to claim back everything you are entitled to. Software and phone applications can be useful here by allowing you to capture this information as soon as you pay for expenses, meaning you aren’t trying to keep track of receipts for long periods of time.
Bank Reconciliation Statement
A bank reconciliation statement is another useful item to help towards your bookkeeping efforts. As there may be time differences, income and expenditure from the business bank account and perhaps additional unexpected charges, it is useful to check bank statements against the cashbook. This can be achieved by creating a bank reconciliation statement, which can be a simple spreadsheet matching items listed in the cashbook to the business bank account. Petty cash can also be reconciled, as it is easy to forget about small amounts of cash that have been spent.
Assets and Liabilities
It is useful to keep track of the assets and liabilities to help with the end of year financial statements. This can include physical assets, such as company-owned computers and specialist equipment, as well as assets such as outstanding income owed by patients or clients.
There are other pieces of information that can be useful to keep track of on a regular basis that will ultimately help compile your end of year statements. However, it is best to seek expert advice to ensure you are capturing all useful information for your particular medical practice.
What is available to help with bookkeeping tasks?
Moving into legally enforceable obligations related to your company may sound daunting but there is an abundance of help available.
There are numerous software packages available that can help you organise your financial metrics and record your bookkeeping data. Some of this software has accompanying mobile apps that further help you capture incoming and outgoing costs, which can hopefully help make the bookkeeping process much easier. HMRC also provides free information to help you understand the legal requirements related to your business financials along with workshops to ensure you can fulfil your responsibilities.
In addition to the mentioned resources, you may wish to have a bookkeeper carry out your bookkeeping services and have them assessed throughout the year by professional accountants for additional peace of mind. Your accountant can also advise on your businesses specific needs.
As part of our all-inclusive accountancy package, you’ll receive your own dedicated accountant and 24/7 access to online bookkeeping software, FreeAgent. Contact our team to learn how we can help you by 0330 024 0406or email firstname.lastname@example.org.