Keeping track of sales, earnings, expenses, and purchases is fundamental to the overall health and sustainability of your business. Effective bookkeeping produces the data you need to evaluate your current practices, anticipate challenges, and set attainable future goals.
But despite their proven importance, many business owners dread and avoid bookkeeping and accounting tasks. In fact, 42% of operators have been working weekends (up 5% from the previous year), and a further 26% have been working after midnight to meet reporting obligations.
Wondering if it’s worth the aggravation?
Here are four reminders of how effective bookkeeping is the cornerstone of small business success.
Keeping track of business expenses
A reliable system for tracking business expenses ensures you capture all the expenses you are entitled to claim for GST input credits and tax purposes. Expenditure categories, can be catalogued quite simply with online bookkeeping software such as MYOB, Xero or QuickBooks Online.
Using a dedicated credit card for business expenses, and updating your records daily using bank feeds available in your software, will ensure you will have accurate records when it comes to preparing your Business Activity Statement (BAS) and at tax compliance time.
Get paid on time for your hard work
Along with tracking expenses, the most crucial lifeblood of any business is to keep the money coming into the bank. All of the online accounting systems provide platforms to invoice your customers wherever you are with smartphone apps linked to your systems and immediate payment options, getting money into your business immediately just makes business life easier.
Automating the follow up of outstanding debts with reminders is another task that takes time, luckily these systems also make that simple for you. Take the hard work out of this crucial task.
Measuring profitability and planning for the future
In order to grow your business, you must be able to track and compare its finances from one year to the next.
In addition to reconciling the books and bank statements at least every month, effective bookkeeping generates records you can use to gain a comprehensive overview of your business. This data can help you:
- measure year over year profits;
- identify opportunities to cut costs;
- identify cashflow issues;
- plan for major expenses (such as new office space, equipment, or staff); and
- develop data-based strategies for business growth.
Preparing for end of financial year
Few things are more stressful for business owners than scrambling to get poorly maintained financial records ready for tax season. In addition to the panic of last-minute filing, inaccurate or incomplete documentation or late lodgement can lead to serious penalties, fines, and even an audit.
Save money and get peace of mind with sound bookkeeping. You’ll be assured of compliance with regulations, and will receive a reliable estimate of amounts owing long before your tax bill is due.
Final tip: ask for help
Most entrepreneurs are passionate about developing new business ideas – not crunching numbers. Partnering with a professional bookkeeper/BAS Agent, even on a part-time or as-needed basis, can help optimise your accounting and increase overall profitability.
There’s a good reason 96% of Australian small businesses rely on a tax or BAS agent to help manage their tax and super affairs. We work together with the tax profession to assist those small businesses. So, consider partnering with a bookkeeper/BAS agent. It will save time, endless worry and stress. It will ensure that all your reporting obligations are met by the due deadlines. It will allow you to concentrate on other areas of your business where your skills and passion excel.
It’s well worth it. Invest in effective bookkeeping and you’ll build a solid foundation for a resilient, forward-moving small business.
Remember, you love your business, we Love Your Numbers.