30th September, 2021
Understand bookkeeping in the time that it takes to order takeaway.
By the time you find the number of the local pizzeria and argue with the kids over what to order, we’ll teach you about bookkeeping.
We’ll satisfy your curiosity over what a bookkeeper actually does, how they’re different to an accountant and how to work with your bookkeeper.
And we’ll do it in about five minutes of reading time.
Sign up for added insights and business-critical news from MYOB.
If your business isn’t making money, it won’t last.
It’s important to make sure you have someone in your business who knows exactly what financial state it’s in. That’s why bookkeepers can be a huge help.
Bookkeepers are the people who deal with the cash flow of your business on a day-to-day basis. Having a good bookkeeper and establishing good bookkeeping practices will help your business thrive.
Bookkeeping is the recording of financial transactions for a business. It involves preparing source documents for all transactions, operations, and other business episodes.
A good way to think about this is that the bookkeeper keeps financial records about your business activities, while your accountant will analyse these records and give you advice on how to act accordingly.
Sometimes it can be hard to understand the difference between a bookkeeper and an accountant – especially since many accountants may perform bookkeeping duties as well as accounting duties.
To keep financial records in your own business, you don’t need any qualifications. But you do need to know what’s involved and how to manage all the different types of financial data and processes that you must stay on top of to be compliant. This can take a lot of commitment, time and reading – it’s not a business function that can be skimped on.
To become a professional bookkeeper and manage other people’s business data and record-keeping, you’ll need some training and certification. There may also be legal requirements for setting up a bookkeeping business. For example, to provide BAS and GST services you need to be registered as a BAS agent.
These are some of the tasks that bookkeepers perform.
Getting your accounting system set up and maintained requires close attention. A bookkeeper will help you get your accounts and invoicing set up, and get your clients into the system – and will keep it all up to date.
A good bookkeeper will make sure invoices are sent promptly, follow up on late payments and manage all cash coming into the business.
A bookkeeper will manage all invoices, receipts, payments and other financial transactions by entering them into the system regularly and accurately, and allocate them to the correct accounts in your accounting software.
A bookkeeper can check timesheets, allocate any commission payable, calculate payroll tax and superannuation, and keep accurate employee records including their bank account details.
Payroll also needs to be processed through both the accounting system and the bank account.
A bookkeeper will provide regular financial reports, producing weekly or monthly reports that provide useful information on your business performance
Bookkeepers will also prepare important financial reports like profit and loss, balance sheet, budgets and cash-flow forecasts that will give you all the information you need to improve the financial performance of your business.
All business expenses need to be recorded and reconciled to any purchase orders and receipts of delivery.
A bookkeeper takes on this role and can enter any petty cash and credit card purchases into your accounting system.
They can also monitor who is spending what and identify any potential excess expenditure.
If you have any business loans or debt repayments, a bookkeeper can manage and report on these as well.
Your bookkeeper should be a registered BAS agent, which means that they can prepare your BAS in line with the ATO requirements.
They will also be able to prepare any payroll tax and superannuation records and payments.
A forecast contains fixed costs, variable costs, revenue and cash flow and helps you plan for your business’ financial needs.
A bookkeeper can help you manage this, ideally a few times a year.
Getting your financial processes set up as soon as you start your business is one of the best things you can do as a business owner. A bookkeeper should be one of the first people you hire.
Bookkeepers often work as freelancers, so you can employ them on an hourly basis. In the start-up phase of your business, you may only need them for a few hours a week.
Beyond an initial consultation with an accountant to set up the legal and tax structures of your business, a bookkeeper will look after the day-to-day running of your business.
READ MORE: 6 essential elements of a great bookkeeper
One of the benefits of hiring a freelance bookkeeper is that you can work with them remotely. Many bookkeepers work from home or online, which will help you keep your business overheads down.
Here are some tips for building a good working relationship with your bookkeeper.
Whenever you start working with someone, discuss the responsibilities and expectations of both parties.
Discuss the tasks you need done and ask for an estimate of how much that will cost you. They’ll probably want set boundaries around their working conditions and how available they’ll be for your business on a weekly basis.
Good communication is crucial for any professional relationship to work.
Whether you prefer to communicate via email, text message or phone call is something you should discuss with your bookkeeper.
As your business grows and their role in it evolves, keeping communication open and honest will help maintain a good working relationship.
Even if they work from home, having face-to-face meetings, either in real life or via video call, will go a long way towards making sure you’re both on the same page.
Consider catching up every fortnight or once a month.
READ NEXT: Understanding business systems