- What is book-keeping?
- What does book-keeping consist of?
- Do I have to keep accounts?
- Can I obtain help with my book-keeping?
- What does an auditor do?
- What is the value of book-keeping?
- What counts as a financial transaction?
- What methods of accounting are used?
- How do they work?
- Can I use Microsoft Excel for my book-keeping?
1. What is book-keeping?
Book-keeping is a system of organising and handling financial (business) transactions in a company. This involves keeping receipts, invoices and other documents, then registering and reporting them in a chronological (time-based) and systematic (account-based) way.
2. What does book-keeping consist of?
Book-keeping comprises supporting vouchers, a day book and general ledger, profit and loss accounts, balance sheets and annual accounts (or in certain cases an annual report).
3. Do I have to keep accounts?
Yes! All entrepreneurs are obliged to maintain accounting records. This applies regardless of the type of company and scope of the business.
4. Can I obtain help with my book-keeping?
You can choose whether to use help with your book-keeping. However, as owner of the company you have ultimate responsibility for correct management of the bookkeeping.
5. What does an auditor do?
'Auditor' is not a protected title. However, 'approved public accountant' and 'authorised public accountant' are protected. People who hold these titles have undergone special training and passed examinations. Limited companies and economic associations are in obliged to appoint an approved or authorised public accountant when the business starts, if they are of a certain size. Small firms and partnerships are not subject to any auditor requirements. Read more information at the website of Swedish Companies Registration Office.
The auditor examines the year's accounting records and the board's performance of its assignments before the annual accounts/annual report. The auditor may not examine the daily accounting records.
6. What is the value of book-keeping?
Book-keeping benefits you and other interested parties. It helps you as a business owner to keep track of your finances. It also makes it easy for external parties to assess the potential in your company when you apply for financing or approach cooperation partners or new suppliers.
7. What counts as a financial transaction?
Financial transactions in your company may be payments in and out of cash, bank and other accounts, changes in receivables and liabilities, transfers between accounts, decisions about year-end appropriations and your own deposits and withdrawals. In other words, anything which changes the size and/or composition of the company's assets.
Each financial transaction in your company becomes a voucher in your book-keeping. The term 'voucher' is associated with the verb 'to vouch for', which means to endorse or support the truth of something. And that is exactly what a voucher is - supporting documentary evidence of a financial transaction.
8. What methods of accounting are used?
The method of accounting is the way you account for business transactions in your company. There are two methods - the cash method of accounting and the invoice (or accrual) method of accounting.
9. How do they work?
Under the invoice method of accounting, you register incoming invoices as trade payables and outgoing invoices as trade receivables in the day book when received and sent. When these are subsequently paid, the liabilities (expense) and receivables (income) are reduced correspondingly. When the invoice method is used, VAT is reported to the Swedish Tax Agency based on the period in which the invoice was sent to the customer or received from the supplier or when the cash purchase or sale takes place.
The cash method of accounting is connected with the closing method of accounting. Under the cash method, you do not register incoming invoices as trade payables and outgoing invoices as trade receivables in the day book until they are paid. This method involves reporting VAT at the same time as the payment is made. The exception is the final VAT period of the year, just before the year-end accounts.
10. Can I use Microsoft Excel for my book-keeping?
No. It is legally prohibited to use Microsoft Excel to maintain your accounts. Book-keeping programs and ledgers must be constructed in such a way as to allow all changes to be tracked and seen. As this is not possible in Excel, the program is not used for book-keeping.