Want to make the preparation of your annual accounts by your accountant smooth and seamless? Save time and money — and avoid headaches at year-end — by following some simple rules during the year. To avoid business accounting headaches, simplify your daily business accounting processes.
Here are five tips to achieve this.
1. Get bookkeeping help
If you’re really wrestling with processing your business records daily, then get professional help.
The investment in a qualified bookkeeper will save you thousands of dollars in the long run. I have seen too many clients who really have no bookkeeping experience take on the task of processing their financial accounts — only to find that it is a complete mess by the time it goes to their accountant at year-end.
The headaches that are created include bank accounts not reconciled, account balances that do not agree, and transactions that are in the wrong areas in the financial accounts. This all takes time and money for your accountant to fix up for you. So save some money in the long-term by getting professional bookkeeping help if you feel that business accounting is not your strength.
2. Invest in online accounting software
Online accounting software is an excellent way to streamline and become more efficient with processing your business accounts. You have the freedom to access your data from anywhere and are not tied to your desk. It will also certainly relieve you of any headaches when it comes to year-end because it makes interacting with your accountant much more efficient. By using an online system, your accountant can access your data file at any time and make any changes progressively during the year, rather than leaving these changes for year-end.
If needed, your accountant can also ask you about transactions that are fresh in your mind, rather than having to recall transactions that may be more than 12 months old. If you work with your accountant using an online accounting package, make sure your accountant reviews your financial accounts regularly so any issues or problems can be identified early.
3. Use an EFTPOS card instead of cash
Use a business credit card to pay for all business expenses — even minor or incidental expenses — and that way you only have one credit card statement per month to process.
Resist the urge to pay cash for smaller expenses, or at least keep them to a minimum. This will certainly save the headache of having to empty your wallet, car glove box and desk drawer to find all those small receipts for cash expenses.
You can also link your credit card to a frequent flyer points system so you will get the added bonus of earning points towards a well-deserved holiday.
4. Set up your GST codes correctly
This is a major headache for many business owners. Set up your Chart of Accounts GST codes correctly for the first time in your online accounting system — and review them regularly.
Get your accountant to check that your GST codes are correct. Reviewing your total GST for the year only to discover that all your Business Activity Statements (BAS) will need to be amended because the GST codes you have set up in your Chart of Accounts are wrong could be very disheartening.
Save the grief and headaches by reviewing your GST codes regularly and involving your accountant. When set up correctly, preparing your BAS will be a breeze.
5. Back up your data
I have lost count of the number of business clients who have asked me if I have a back-up of their accounting data file. Not backing up is a cardinal sin, and no amount of paracetamol will solve this headache if you lose the data file on your hard drive and have no external back-up. You will have to go back weeks — and possibly months — and re-enter data if this is the case.
I recommend you back up your accounting data file daily onto your hard-drive, as well as a separate external drive. External hard drives are cost effective and are a good external back-up source if your computer hard drive fails. Ignore this tip at your own peril, as I have seen many clients who have lost an entire year’s worth of data simply because they did not have a back-up regime for their accounting data.
Of course, if you use an online accounting system, you don’t need to worry about daily accounting back-ups, as the cloud automatically stores data in a safe and secure location.
The goal is for your business accounting to be efficient, seamless and without grief. Accounting fees can spiral, and you will create headaches for yourself and your accountant if you don’t look at ways to efficiently and effectively process your accounting data so that it is correct the first time, every time.