How do you do double entry bookkeeping

[daisydee43]

Hi

I am self employed but do not earn enough to warrant an accountant. I am using a double entry ledger for bookkeeping but don't understand the credit for every debit - please help

I was interested in your question, Daisy, so I had a look at this: www.dummies.com/how-to/content/the-basics-of-doubleentry-bookkeeping.html. In a sudden flash of comprehension, I understood why my Paypal account looks so complicated!

Not entirely sure I'm ready to start doing this for real, but at least I get the idea now. Hope it helps you, too :)

Hi have had a look - gives good info on purchasing items but what about putting in income and deducting wages?

Well, wages are a purchase so they'd work the same way as the examples. Couldn't figure out the income part myself, so Prof Google provided another 'Aha!' moment
www.clearbooks.co.uk/support/guides/accounting/double-entry-book-keeping-explained-the-golden-rule/

Wages are an "Expense". "Purchases" are items you buy to sell.

The basics of double entry are that there are 2 entries for each transaction. So if you are a shop and buy 20 loaves of bread to sell your stock goes up but your bank balance goes down.

I am only just studying this myself and it can get quite complicated but you don't need all the ledgers depending on your business. For e.g. if you do not turn over enough to pay for VAT then you wouldn't need a VAT account. If you do not sell products on credit then you wouldn't need a sales ledger.

You don't need to understand double entry to complete a tax return if you have a micro business. Create an excel spreadsheet. On one sheet enter all your sales (date/invoice number/amount). On another sheet enter all of your costs/expenses (Date/description/reference to receipt/amount). If you have a lot of expenses then I would set up different headings on your excel spreadsheet such as postage/stock/stationery. Total income less total expense = net profit. There are some exceptions to these general rules but that's what your accountant should sort out for you.