Bookkeeping is one of the most important things for a small business. This is something that many existing business and start-ups neglect until they reach the end of the financial year (EOFY). The law requires every business to maintain accurate and timely records. I cannot emphasise enough how important it is for a business to organise their accounts from the start by having accounting software that will suit their needs.
Below are some tips that will go a long way in helping you to make record keeping that much easier and avoid stress during the end of financial year.
1. Allocate a set time every week and devote it to your bookkeeping
This is one of the best ways to make the process easier. It won’t take too much work because you are not working on a lot of things, just a weeks’ worth. Doing it at the end of the fiscal year means you have to work on a years’ worth, and you might not have enough time. This can easily result in mistakes and a lot of stress. Regular reviews will also be helpful because you will get to know how the business is going, giving you the chance to control the cash flow.
2. Open a separate bank account for earnings and expenses
People make the mistake of keeping their private and business transactions in the same account. With time, you may be able to apply for a business credit card in which case, you will need to keep private and business transactions separate.
3. Choose an accounting software that fits your business needs
If you are not sure which is the right software to choose, then you should consider contacting an accountant or business accountant to help you choose. Make sure you choose software that has the ability to connect to the cloud as this means you can access it anywhere and anytime. This also means that there will always be a backup of your files. This also provides you with the comfort of knowing that your financial data has been backed up offering you an added security measure. You also need to make sure that you regularly backup your files, especially when using desktop software.
4. Make sure you have your tax compliance and obligations in order
Businesses need to register for an ABN, or GST registration if the annual turnover is more than $75,000. You need to ensure that the receipts for all acquisitions have been properly kept so you will be able to claim on your expenses.
If you employ staff, then you must register for PAYG withholding Tax. This is a situation where you withhold some tax on behalf of your staff when you pay them. You will also need to lodge a Business Activity Statement (BAS) monthly and quarterly with the ATO.
This information is easily accessible when you have the appropriate accounting program in place. This will make the work so much easier for you or your bookkeeper. Doing this will mean creating systems that will help you in streamlining and automating your business processes so that your business can stay compliant.
5. Receipts, Receipts, Receipts!!!!
The ATO will require you to keep records for at least five years.
The records that you need to have properly kept and accessible when needed are:
– Receipts and invoices provided with services rendered by your business.
– Invoices for goods and services, or any business acquisitions that have been purchased for the business.
– Records showing payments to employees or organisation on their behalfs like PAYG tax and Superannuation funds.
– Financial statements that include a balance sheet and profit and loss statement.
– Tax Return Information
– Credit card and bank accounts statements
– EOFY stocktake records and asset register
– Anything else that has a monetary value for your business.
You can keep these files in a well-organised filing cabinet or create digital files that can be stored on your computer or cloud.
6. Spend time finding the right bookkeeper for your business.
As the business expands, you might need to get a good bookkeeper and remember that the service is tax deductible. When you hire a bookkeeper, you will have time to focus more on business growth without having to worry about keeping the records up to date.
It is important to meet your tax and compliance obligations at the end of the financial year if you want peace of mind this financial year.