All businesses have to keep records of their transactions, mainly receipts and payments, in order to pay the right amount of VAT etc. HM Revenue & Customs have a very good guide which tells you all about this.
Click here to see the HMRC factsheet.
I can give you a made to measure system based on Excel which makes this burdensome but necessary task as easy as it could ever be. It's no different to entering figures in a book but provides lots more:
Bank Reconciliation - to make sure you don't overlook any tax allowable costs.
Analysis - to see just what your sales to date are and what you have spent on materials, overheads etc.
Easy Tax Inspections - to have the facility to produce printouts showing just how quarterly VAT returns have been calculated will make for a happy VAT inspector!!