Whether you are an established business or setting up a new business, developing good bookkeeping habits is important and will put you in good stead with understanding and keeping track of business performance.
You may be looking to fine-tune your bookkeeping procedures and if you are a new business, you may just want to set it all up right.
We all know that good cash flow is the backbone of any business, so regular processing of sales invoices and input of creditor invoices will help you understand your cash position. Using an online cloud accounting software will give you access to real-time data 24/7.
Adopting accounting software to help manage your payroll and compliance obligations is also a bonus.
Here are 5 essential bookkeeping tips for small businesses:
#1 Choose a good accounting and bookkeeping software
Invest your time and money in researching and adopting an accounting software that is right for you. All businesses are different and have varying requirements. Good accounting software can make a world of difference by managing and streamlining bookkeeping processes.
Cloud accounting solutions are now becoming popular amongst small businesses as this solution allows you to check-in and work on your financial data anytime, anywhere, if you have internet access.
Accountants and bookkeepers may also have access to the accounting file, meaning any issues you have can be raised and resolved in a timely manner.
A simple and robust accounting solution will allow the processing of financial information with ease and reconciling account balances regularly will become a breeze.
To create efficiencies, choose accounting software that will manage all your accounting and payroll functions in one place.
#2 Regularly review financial data and know when to outsource to professional bookkeepers
Take the time to regularly review your financial data and reports. A good accounting software will allow you to easily generate a wide range of reports to understand how your business is performing. This will help you plan for major expenses, understand your taxation obligations, and will assist you when preparing profit and loss and cash flow forecasts.
These reports will only be useful if you understand what they are telling you. Consult with your accountant if you have questions about the financial data and reports.
As small businesses start to grow, business owners often become overwhelmed by the amount of work involved with keeping their bookkeeping up to date, so know when to outsource your bookkeeping to a professional. It will be a good investment in your business and your mental health and well-being!
#3 Get on top of your tax obligations
Understanding your tax obligations is imperative for any business owner. Take the time to understand what your tax obligations are and schedule payment and due dates. Some examples of business tax obligations include but are not limited to:
- • Business and instalment activity statement
- • PAYG withholding
- • Income tax
- • Fringe benefits tax
- • Payroll tax
Timely bookkeeping and processing of financial data will assist you with keeping on top of your tax obligations. Accurate record-keeping of your business expenses will also make sure you are maximising your business deductions.
Consider keeping savings for your tax obligations separate from a normal business bank account.
#4 Keep your business and personal bookkeeping separate
It is a good business practice to keep your business and personal bookkeeping separate.
This could involve setting up separate bank accounts and only include business income and expenses in your business accounting software. This will ensure you can only see day to day income and expenses relating to your business to give you a clear view of your business financial data and cash flow.
Keeping your personal and business bookkeeping separate will also ensure business resources are not wasted processing personal financial information.
#5 Ensure good record keeping is maintained
Good record keeping is critical to business success and an Australian Taxation Office (ATO) requirement.
Managing and filing tax and accounting records can be a tedious task and some cloud accounting software providers have developed processes that allow you to capture your receipts and invoices to upload directly to each transaction within your accounting software.
Ensure that your records are eligible and contain enough information to calculate and support data included in your accounting records. Also, check that invoices received for purchases that include GST are valid.
If you are electronically filing your accounting records outside of your accounting software, ensure your data is backed up and can be accessed if and when required.
Please contact us to find out more about how we can help you manage your bookkeeping and accounting processes. The team at EMspire Advisory are experienced accountants, bookkeepers and tax agents in Sydney and would like to help you create, grow and succeed in business.
Please note that this information is not specific and is general in nature and cannot be relied upon as advice. Please contact us for specific advice for you and your circumstances.