Six tips to great bookkeeping

If you own a small business, great bookkeeping 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 organise your accounts from the onset by setting up and using simple accounting software that suits your needs.

Here are six simple tips to make record keeping easier and less stressful during EOFY:

1. Allocate time each week and devote to bookkeeping

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 this EOFY.

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.

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  • Great set of pointers for someone who likes to do their own books. Very helpful.

  • A bookkeeper can really be an investment for a lot of businesses; especially where the Director takes a hands-on role in the business. Having a knowledge bookkeeper not only frees you up to actually do what you do best, but it also gives you timely financial advice.

  • Being CLEAR on expectations is key to MEETING expectations. And a client who is able to supply me with receipts that are marked is one of my favorite clients. A client who actually pays attention to their money is also one of my favorite clients. You should work with your bookkeeper to get reports that make sense to you and are useful to you in understanding how well you are doing financially.

  • When I come across clients who have properly allocated and categorized expenses, tax preparation can become cheaper for these small business clients and noticing discrepancies becomes easier as well. Spending a few minutes to update books close to when the time the expense or income was incurred can be far less of a headache than the days it will take at tax time.

    Thanks again for sharing!

    Logic Tax & Accounting, Winston Salem, NC

  • Kate Kinny

    These are some truly great tips on bookkeepings. It covers different aspects of bookkeeping succinctly. the language used is reader-friendly. This post will give a great insight to those who want to understand bookkeeping in detail. Bookkeeping is an art which is mastered only be experts like Fusion Partners.