I think it’s safe to say that there are few small business owners who are genuinely excited by bookkeeping – unless they own a bookkeeping business (and even then it’s a toss-up). But accurate records can lead to improved cash flow, reduced tax expenses and potentially increase your business’ chance of survival. Here are 6 tips to help you get your books in order.
- Take time. Bookkeeping tends not to be high on the list of priorities for business owners. The longer you leave your records unattended, the more difficult it becomes to organise them, so set aside a particular time each week and make yourself work on the books. Pick a quiet time so you won’t be distracted by ‘more important’ tasks.
- Use a computer. There are many different software programs that can greatly simplify your paperwork – most of our clients use Xero. Pick one that has real-time updating and online access – you can authorise access for your accountant to manage tax returns and BAS statements without having to leave your office or transfer hard copies of your records.
- Keep hardcopies. Receipts for your expenses will be important if the ATO decides to audit you. You will need to keep the documents for five years and it is a good idea to have them filed in a system so they can be accessed easily.
- Create a business bank account. Small business owners sometimes use a personal bank account for the business, but recording is easier if you have a separate account. That way, all your income and expenses are listed conveniently on one statement without the need to sort items line by line to separate business and personal transactions.
- Confirm your compliance. As a business, you will need to register for an ABN. Depending on your expected turnover, you may also need to register for GST (currently the threshold is $75,000 p.a. or $150,000 p.a. for non-profit organisations). There are other issues that can impact how often you need to report, so take the time to read the link above carefully.
- Sooner is better. The longer you take between conducting a transaction and recording it, the greater the chance it will be inaccurate – or forgotten entirely. If any of your invoicing, receipting or purchasing processes are done manually, aim to create a work process that allows time for recording immediately after the transaction.
By following these steps, you should find your recordkeeping becomes a smoother, more accurate process without impacting too much on your other duties. If you still find difficulties, perhaps it’s time to contact a professional.
By Jennifer Lowe