No, You Are Not Doing Bookkeeping Right !

Yes, I know you know what bookkeeping is and perhaps you as business owner do it yourself. basically it is...

• Recording and categorising transactions using double-entry system (credits and debits)

• Applying Accounting Standards such as UK GAAP (FRS 102)

• Reconciling your accounts with different sources of data & information 

• Generating Financial Statements to assess your business performance 

But, are you sure you or your accountant is doing it right? Did you know that if you take a bank loan you need to apply Section 11 of FRS 102 in the UK, or if you rent office space or some asset like computer, printer or software, you need to apply Section 20 of FRS 102 in the UK.

Perhaps you promise your customers a guarantee for your products or services if they fail, in such case you need to apply Section 21 of FRS 102 in the UK.

What if you don't apply them, well in such case you are not complying with the Law since you need to apply accounting standards to record your transactions.

Does that has tax implications. Yep! if you dont apply those accounting standards, then you are calculating your profits incorrectly and hence your tax liability is incorrect as well which can lead to penalties and more payments to tax authorities.

And if you offer refunds or returns to your customers in case they are not happy with them, then you might need to record a "refund liability" and not "revenue" for those items or services ! You will need to apply Section 23 of FRS 102 in the UK.

Hopefully either you or your accountant is doing it right...