How I do my accounts - a possibly helpful, possibly patronising, blogpost

I've been told this might be useful, so I'll have a go at writing it. It might not work in any way at all, because you can't see me waving my hands around and pointing at things on the screen.

Basically, keeping track of your business expenditure isn't only necessary for your self-assessment, it's also vital so you know if you're making a profit month on month. You don't need to get a fancy accounting programme, and if you're just starting out, you don't need an accountant yet.

I use a spreadsheet in Open Office, which is a free version of Office. Each page of the spreadsheet is a month, which I split into outgoings at the top, and incomings at the bottom. I always put outgoings as a 'minus' amount, and incomings as a 'plus' amount.

This screenshot, I hasten to add, does not involve real figures. It's just to give you a flavour of what sort of things get entered.

Then there are two columns for cash/cheque etc, and what I bought or sold. Then there are two more columns for 'cash' and 'bank account' – 'Cash' in this instance includes stuff I pay for with my own personal account as well as physical cash taken in the shop.

I use the functions to add everything up for me. There is a total for everything going out in both cash and bank columns, and a total for everything coming in in whatever form. 

I also add up all the cash transactions to get a running cash total, and all the bank account transactions so I know how much should be in the business account. This lets me see how much cash should be in the money tin, and in my bank account, which is extremely important.

The best thing about having it set up like this for a whole month is that I can have the same outgoings I know I have every month copied over to a new sheet at the start of every month, and the functions automatically let me know how much turnover I need to make. The functions also calculate every time I log in how much profit or loss I'm making, and allows me to plan how I'll make more turnover.

Each month I then have two figures – one IN and one OUT. I can work out from that how much profit or loss I've made. If it's better than last month, I'm happy. Self-assessment forms only ask for 2 figures – how much you've spent, and how much you've taken. So as long as you have those two figures at the end of the tax year, you'll be golden. Luckily because I use this method, I have the 12 figures at the end of March already, and can just add them up and put them into the self-assessment form.

Obviously, this all depends on keeping track of everything. Luckily as the spreadsheet is on the computer and most of my transactions are online, I just put the amount into the spreadsheet straight away. Anything done offline, like the cheque for postage or cash purchases, I try and remember to put it in the next time I'm online. I guess if you're not as OCD as I am, you could probably just save up your receipts, and enter them all in once a week, or even once a month, but then you miss out on seeing how your profit and loss is going for that month.

So - was that helpful? Or am I teaching people to suck eggs?