HOW TO EXCEL AT BOOKKEEPING FOR SMALL BUSINESS
People don’t usually get into business to do bookkeeping. But we did. Every day we help small business owners to step back from the hands-on task of bookkeeping, so that they can focus on the planning and growth of their business. Here, we want to share with you some useful tips that we have learned through years of experience and success in this field.
Basic Bookkeeping Tips
If you are planning on not hiring a permanent bookkeeper for your business, consulting one for initial set-up and training will ensure that you are off to the right start. They will get your accounts set up, give you a run down on how to use the system, as well as guide you on what to check each month to ensure that you stay on track with your payroll and BAS obligations.
1. Ditch the Excel Sheets
Getting set up on a cloud-based program is much cheaper than you would think. And reconciling numbers manually is just way too old school and time consuming. Using a system like Xero or QBO, you can sync your bookkeeping software with your business bank accounts and always ensure that you have accurate and up-to-the minute records. Plus, your data is backed up safe and sound online.
2. Split your Finances
Have separate bank accounts for personal and business transactions. Mixing your personal and business finances will make for messy and difficult-to-navigate books. It will take so much longer for your bookkeeper to process and this will come at a cost. Opening a business account is quick and easy with most banks, so as to help you keep your business account transactions and savings separate.
3. Set Aside One Day or Morning Every Week
Doing bookkeeping regularly pays dividends. Not only will it keep the data manageable and allow you to catch anomalies but will also allow you to spot slow paying customers or errors.
4. Sign up for Receipt Bank or Hubdoc
These programs come highly recommended. The ATO requires that all data must be kept for a minimum of 5 years or sometimes even longer. Five years of data can really pile up and if not organised well result in hours of extra work in the event of an audit. Moving your data entry online with an app like Receipt Bank, will not only save on storage space, but will also allow you to extract data, along with categorising and creating publishing rules for you. This can save hours of data entry per week.
5. Go paperless
Following on from Receipt Bank, it is highly recommended to go paperless in all areas you can for bookkeeping, record keeping and admin. Again, you save a heap of physical space that would otherwise end up in filing cabinets and plus the data is available to you everywhere. Most popular options for this include Google Drive & Dropbox.
During the process of bookkeeping, don’t get caught up with too many details when it comes to your accounts. Work out what accounts you want to track across the year, what you want and need clarity on. At the same time, don’t under-categorise. Lumping all sorts of expenses into accounts called “general” or “Sundry” makes for all sorts of issues for your bookkeeper or accountant and will not allow you to produce accurate and useful business reports.
7. Record it all
This includes even those expenses not paid out of your business bank account such as postage paid in cash. Every expense must be recorded if you want that tax deduction. Create a petty cash account or code these according to your business structure such as drawings or director’s loan.
8. Check your recordings
It can be easy to just jump into the BAS section of your accounting system and lodge your BAS. A couple of clicks and its done, Right? Wrong! It’s important that you check your transactions each month or every quarter to ensure that you’ve not only recorded the correct amount of GST but that you’ve allocated transactions into the correct account. If you don’t do this your books can quickly get right out of whack.
9. Reconcile Bank Statement Every Month
With software such as Xero and QBO it can be easy to relax and trust that the software is doing its job 100% of the time. However, it’s important that you are getting your business bank statements each month and reconciling them with your software transactions to ensure that all the days have been accounted for and there have been no duplications.
10. Set Aside Cash for Upcoming Obligations
Paying GST, Super and PAYG are inevitable. But it’s easy to drift along in running your business without budgeting for these costs and resulting in a mad panic when you realise that you’re a bit short on funds for your liabilities. Open another bank account and regularly transfer funds across to it from the business account.
If you have any questions at all, feel free to get in contact with our team.