As a peer Accountant it is fair to say, more often than not, we can find plenty of examples of Businesses who fail to do it right by the Bookkeeping basics. Let us just say it is common to go wrong without professional help, it is not their forte.
Given how we have all moved to a “Work from Home” situation, it could be all the more easy to lose track. Now is a good time to remind our clients how they should be managing their finances. In this article we present 9 tips to share with your clients for better bookkeeping.
Guidelines for business clients
No matter what size your business, a sound bookkeeping system is essential for financial security. Making sure your books are updated, accurate and readily available provides you with crucial information on your business’s financial standing.
We’ve got our top nine bookkeeping tips that you to help you along the way. Some you may know – but it’s always good to have a reminder! Some may be new and something you can implement into your bookkeeping process today.
1. Keep business and personal expenses separate
As soon as you start thinking about earning money or spending money, for that matter, in your business, ensure that you open separate accounts for your business finances. It not only helps to ensure that you don’t create a nightmare to untangle business from personal transactions, but it will also help your business build its own credit rating. You will also be able to quickly determine your cashflow, easily seeing your income versus your expenses – and your accounts person will thank you for it!
2. Invest in cloud software
Using cloud-based bookkeeping software, and doing your business banking online allows you to sync your bookkeeping software with your business bank account so you always have accurate, up-to-the-minute records. Plus, with the cloud, your critical financial data is backed up safely. Choosing the software that meets your needs can be challenging as there are plenty on the market with varying package costs and features.It pays to do your research– make sure the product does what you need it to do for your business.
3. Get help from the professionals
A good accountant will assist with aspects like business structure, obtaining an ABN, GST registration (if required), payroll set up, lodgements for BAS and tax etc. Your accountant should become a vital part of your business – not just someone you visit at the end of financial year to obtain advice; visits at end of quarter are much more valuable as you can catch issues as they happen and avoid nasty surprises down the track.
4. Stay on top of tax deadlines.
To avoid getting caught short, plan ahead and set aside money for any anticipated tax bills. Small business tax requirements differ greatly to individual income tax, so it’s important to know your obligations. A basic understanding of your tax requirements is crucial when starting a small business, so you can ensure you’re following all the rules. Ask your accountant if you are unsure of the deadlines and rules.
5. Prioritise your books and set aside time to regularly check
While it can be tempting to focus on the running of the business, it’s best to actually prioritise your bookkeeping. You will be able to manage your cash flow, get to know your weekly expenses as well as be well informed about current invoices. Putting off bookkeeping too long can see you end up missed or overdue invoices from creditors or to customers. Go over your financial reports weekly to make sure everything is in order.
6. Prompt invoicing and accounts receivable.
As soon as a job is complete, or at least by month’s end, prepare and send out the customer invoices so that the income can keep the bank balance healthy. Once you’ve invoiced your customer, be sure to pay attention to when your receivables are due and contact late-paying customers right away to nudge them along. When customers don’t pay on time, your business’s cash flow can dry up fast. Even if a customer is having financial problems, you may be able to set up a payment plan to get at least some of what you’re owed.
7. Recording your business expenses
Record all business expenses, even those not paid via the business bank account e.g. paying for postage with cash. Every expense must be recorded if you want that tax deduction. This includes cash. Any cash received should be paid into the business bank account or petty cash before spending it. Also the ATO require that all data be kept for a minimum of 5 years (or sometimes longer). This is a lot to store, so consider moving your data online to an app like Receipt Bank. Not only will you save on storage space but you will also save on data entry time as apps like Receipt Bank do most of the hard work for you!
8. Don’t be Afraid to Ask Questions
Ask questions of your accountant when you don’t know the answer. By staying on top of your bookkeeping, you’ll be able to focus on your weaknesses, efficiently manage expenses, and be better positioned to grow your business.
9. Learn The Most Valuable Bookkeeping Reports
Most good accounting software packages allow you to easily generate a wide range of reports to help you understand how your business is performing. However, they are only
useful if you actually understand what they’re telling you. Invest some time in learning which bookkeeping reports are the most valuable for your business.
Handling your business’ bookkeeping transactions can be overwhelming, especially if you don’t know what to do. It’s best to entrust this task to a reliable partner so you can have more time for your business.
Outsourcing can be cost effective and more accurate – knowing a professional is handling your accounts, you can be confident they are correct. If this is something you are considering, we talk more about outsourcing in our article ‘Is there a wrong or right time to start outsourcing’.
Boobalan Madhavan | AccSource | www.accsource.com.au
48/237 Miller Street,
+ 61 406 727061