You may be working as the bookkeeper for a business.
Or you own your own business and you find you have several roles to juggle including production or service, marketing, operations, sales, dispatch, invoicing and bookkeeping of the accounts.
These must all be done!
Two main areas need to be organised – the bookkeeping records, and the money (bank and cash and credit cards).
- Starting your bookkeeping records correctly (or re-organizing your current books and accounts)
Most business owners don’t like doing the books! But if you want to be in business then accept that the books and finances are one of your responsibilities and JUST DO IT or PAY SOMEONE to do it.
To keep accounts organised, you need a set of systems to ensure:
- ALL sales and expenses are recorded and transactions aren’t forgotten (eg Cash receipts);
- To keep all documents required by law easy to find and neat and tidy;
- Good records of conversations with customers or suppliers; and
- At year end – a good set of all required data and reports so your accountant can complete your tax return quickly and efficiently.
2. Money – Bank and Credit Cards
- First, use a dedicated business bank account and credit card. Processing your records is much easier if you have these separate bank and card accounts (even if only a personal credit card in your name to start) that you only use for business transactions.
- Secondly, request that all statements, including bank, debit card, credit card and petrol accounts, are sent on a monthly basis. That’s because the key aspect of processing your financial documents is reconciling them on a monthly basis.
If you follow these suggestions, nearly all of your income and expenses will be captured in statements from both your bank account and credit card account and account keeping is much easier.
3. Other Help – ATO
The Australian Tax Office (ATO) has a good overview of what is required, and they explain more as follows – Managing your Small Business Records
Good records help you make sound business decisions, monitor your business health, analyse your cash flow and demonstrate your financial position to lenders, businesses, accountants and prospective buyers.
Under tax law, your records must explain all transactions and be:
- in writing, either on paper or electronically;
- in English, or in a form that we can readily access and convert into English;
- kept for five (5) years (although some records need to be kept longer).
If proper records are not kept, we may impose penalties.
You can choose to look after your record keeping or engage a bookkeeper or registered agent to do all or part of this work. We can also give you advice and help on record keeping systems.
Find out about:
Getting help with setting up your record keeping system early will save you valuable time and money in the long term.
You should consider:
- whether you’ll manage your records yourself, or pay a bookkeeper, registered tax or BAS agent to do all, or part of this
- what business activities you need to do – for example
- reconciling electronic and cash payments
- issuing invoices and paying your own bills
- making wages and superannuation payments
- lodging activity statements and tax returns
- preparing financial accounts, profit and loss statements and balance sheets
- how often you need to report.
- Electronic and manual record keeping systems
- Getting started
- Records required by law
- Manage your cash flow
- Closing your business
These are 6 steps to get your books/accounts off to the right start (or improve current systems). Coming up next month we will look at some templates that can help you get organized and keep you and your accountant happy!
Need help? Not sure? Call for FREE 30min advice / strategy session today!
Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!
Email info@accountkeepingplus.com.au or call 0407 361 596 Australia
