Book Keeping Book keeping is not just for tax purposes, as a lot of small business owners seem to think. It is a vital part of a business, if you wish to be successful. As in any walk of life, information is critical and financial information is the key to good business decisions. Good financial information will only be available if your accounts are regularly updated and current. You may need the assistance of a book-keeper or accountant and this decision will be based on the size and complexity of your business coupled to the volume of business transactions. As a minimum you need to maintain the following books of accounts: Cash Book for recording receipts and payments of the business Petty Cash Book outlining full records of payments made and cash received Sales Book for recording cash & credit sales of the business ­ to whom they were made and the VAT element of each one. Purchase Book to record cash and credit purchases and the VAT element of each one. Wages/Salaries Book to detail all wages and salaries paid to employees and the tax deductions made in respect of each employee. Cheque Journal to record all cheque payments made analysed under various headings Financing Your Business An entrepreneur setting up a business will in all probability require sources of finance other than that personally available. For small business the most likely source is a bank or a Credit Union and may provide cash in a variety of forms but will usually seek security to protect it¹s own investments. Banks may provide an overdraft under which borrowing may fluctuate which is intended to provide working capital to aid cash flow. Interest is paid on the overdraft but exceeding the agreed limit can be costly. You should remember an overdraft is repayable ³on demand² by the bank. Capital expenditure can be catered for by means of a term loan. This is one where a specified amount is made available to the business for a specified period of time, and is repaid by fixed instalments usually monthly or quarterly. The main difference between an overdraft and term loan is that a term loan cannot call in any of the repayments before the due dates agreed except in the case of default. Remember an overdraft can be called in at any time by the bank even though the borrower is complying with the agreed credit terms. Interest on term loans can be fixed or variable but an overdraft will generally be subject to a variable interest rate. A borrower will incur extra costs for arranging the loan and in relation to the loan itself and provide security. Before approaching a lending institute you will need to be in a position to answer the following questions: • How much do you need? • How much can you invest in the business? • What other support is available to you? You should have investigated the various forms of grants and financial supports available to small business. You are in a better position to obtain bank support if you have other forms of investment coupled with your own money. Always remember, a bank or state agency, will want to see a reasonable personal investment in a business of the promoter hasn¹t sufficient confidence to invest in his own business then it is unreasonable to expect another organisation to invest it¹s funds whether as a grant or a loan. There are various sources of finance available and you should consider those that are more appropriate to your business. In this respect it is advisable to seek professional assistance. Another form of investment is called equity finance and is that money invested by the promoter and/or others in return for shares in the business. Ordinary share equity doesn't carry any interest or costs but it spreads the ownership of the business, possibly control and division of profits. Equity may be taken by yourself, family, friends or other outside interests. To set up share equity you will need professional advice and assistance. Other forms of finance are business overdraft generally used for working capital requirements, term loans, generally used for working capital requirements, term loans, generally used for financing fixed assets or medium - term working capital. Leases are frequently used to finance equipment purchase and can be a very efficient means of finance. They are usually employed to finance the cost of vehicles, equipment, fixtures and fittings. Loan finance is another form used for high amounts of borrowing such as fixed assets or property.