Record keeping (also known as bookkeeping) is no one’s favourite task. However, the reality is if you own a small business, good record keeping is vital. Many start-ups, as well as existing business owners tend to neglect this aspect of their business until the end of financial year (EOFY) is upon them. By law, every business is required to maintain accurate and timely records.
I can’t stress enough how important it is to organize your accounts from the onset by setting up and using simple accounting software that suits your needs.
Here are 6 simple tips to make record keeping easier and less stressful during EOFY:
1. Allocate time each week and devote to your books
It is very important to be on top of this. Regular reviews will let you know how your business is going and allow you to control your cash flow.
2. Open a new business bank account for business earnings and expenses.
It is important to keep your private transactions separate from your business transactions. In time, you can apply for a business credit card and apply the same terms.
3. Get accounting software that suits your business needs.
If you are unsure which software to select, you may contact a business consultant or accountant that can better advise you before you buy. We prefer to use MYOB accounting solutions. With cloud software, one key benefit is that you can access your financials anywhere, anytime or have your bookkeeper or accountant check information for you.
Your files will always be backed up regularly in the cloud. However, always ensure you keep backups of your financial data as an added security measure. With desktop software, you will have to get into a habit of regularly backing up your files.
4. Get all your tax and compliance obligations right
All businesses are required to register for an ABN, and if your turnover is more than $75,000 then you must apply for GST registration. You must also keep receipts for all acquisitions in order to claim on your expenses. If you employ staff, you must also register for PAYG withholding Tax. This is where you pay staff and withhold some tax on their behalf.
You are also obliged to complete and lodge monthly/quarterly Business Activity Statement (BAS) with the ATO. With the appropriate accounting program and setup, you can have this information at your fingertips. This way you create systems to help you streamline and automate your business processes for you to stay compliant.
5. Keep your receipts
The ATO requires you to keep records for a minimum of five years. The records you are required to keep and have accessible upon request are:
- Invoices and receipts you provide for sales or services rendered by your business.
- Invoices for goods, services or other business acquisitions purchased for your business.
- Records of payments made to employees plus other organisations on their behalf like Superannuation funds and PAYG tax.
- All financial statements including profit and loss statement and balance sheet.
- Tax Return information.
- Bank accounts and credit card statements
- Stocktakes records at end of financial year and asset register etc.
- Anything else with a monetary value to the business
You could create digital files on your computer to store this information or keep a well organised filing cabinet.
6. Or, get a great bookkeeper
As you expand your business you may need to engage the assistance of a great bookkeeper, keep in mind that this service is also tax deductible. Hiring a bookkeeper helps you focus on growing your business while ensuring your record keeping is up to date.
For a peace of mind this financial year, it is important to meet all your tax and compliance obligations for the 2013 EOFY period. Visit MYOB’s Tax Changes Information section, meant to help small businesses and startups stay on top of their game with tax changes and more.
The information provided here is of a general nature for Australia and should not be your only source of information. Please consult an experienced tax agent as each small business’ circumstance will vary for end of financial year.