7 Bookkeeping Tips for Small Businesses

Tuesday, 12 Jan 2021

Every small business owner is committed to acquiring new customers and scaling up in the future. However, both short-term and long-term objectives are challenging to accomplish without a stable financial system backing the organisation.

A professional bookkeeper in Melbourne helps in this regard by providing the foundation on which the business can grow and prosper. However, most small enterprises do not have the resources and the funds to hire an experienced professional.

The entrepreneur either balances bookkeeping along with other work or hands over the responsibility to a trusted employee. In such circumstances, they often end up making errors in calculations, late payments, incur penalties from the tax office, and lose a fair amount of capital.

Thus, it is necessary to follow the best practices in the industry if you have decided to do the job on your own. Here is a list of seven bookkeeping tips for small businesses in Melbourne that make accounting and financial management easier and efficient.

1. Be Methodical and Systematic

The essential requirement of bookkeeping is to keep things organised, which involves putting all the physical bills and invoices in chronological order under different categories. Be aware of the payment timelines and follow up with the clients to make sure the payables are not higher in comparison to the receivables.

It can lead to a deficit. Thus, the bookkeeper must always be on his toes and stay in the know. All the paperwork must be organised and kept safely for at least five years as per the guidelines of the ATO for Melbourne based entities.

The best way to become organised is to maintain a daily to-do list and a monthly calendar with all the tasks mentioned in it. You can use online tools to set reminders for follow-ups and meeting deadlines for payments. Also, do not keep postponing the chores as they can get accumulated and become too much to handle on your own.

2. Keep Business and Personal Accounts Separate

The first thing that a bookkeeper should do is to open a separate bank account for the business in Melbourne so that the entrepreneur does not mix his funds with the business capital.

If there is no distinction between the two, then it can become extremely challenging to identify the nature of the transactions. It can cause trouble at the time of filing taxes, and the business owner will not be able to claim tax deductions.

It can lead to losses and too much hassle of sorting each and every transaction, which also wastes a lot of time. The business owner can take a salary every month and spend from it rather than using the same account for personal expenses.

The bookkeeper should get a business credit card for the company, which can be utilised for the purchases and has nothing to do with the savings of the entrepreneur.

3. Get Going with Automation

It is not easy to manage all the businesses processes alone or with a handful of people. However, small businesses in Melbourne usually do not have much choice as they are cutting costs and aiming to grow.

Thus, the most cost-effective way of increasing productivity and efficiency is to start automating the processes. It is also beneficial in saving the time spent on the tedious tasks that need attention to detail.

Bookkeepers can utilise the best accounting software in Melbourne to reduce the burden of manual work and shrink the work hours wasted in data entry. Various software are available in the market which have been designed keeping in mind the needs of small businesses.

These can be customised to suit a particular type of business. They can perform a plethora of functions, such as invoicing, payroll management, generating reports, real-time data update, etc. Thus, you will be able to free up your time which can be utilised in business development.

4. Outsource to An Expert

As a business owner, if you are trying to don many hats and shouldering several responsibilities, it can make you stressed, overburdened and pressed for time. The constant pressure of meeting deadlines and covering everything can lead to errors and losses.

Thus, rather than taking up the chore of bookkeeping yourself or handing it over to an amateur, you must outsource it to a bookkeeping company in Melbourne so that you can work efficiently. It can help you save several work hours which can be utilised in the development of the entity.

5. Prepare for Filing Taxes

Procrastinators have to struggle with the taxes as they do not have the deductions sorted for the year, do not allocate funds for tax payment, and tend to forget the submission deadline. The bookkeeper must spend some time every month to meet the tax obligations in Melbourne.

They must have all the records organised in one place to provide evidence of the transactions that incur taxes. They should also prepare a list of the small business concessions in Melbourne so that they can claim deductions.

It is significant to note that a wide array of business deductions can be claimed by an organisation. Thus, the bookkeeper must be aware of them to reduce the tax burden.

6. Cash Flow Management

The bookkeeper has to maintain the balance between receivables and payables and ensure that there is no deficit. They make suggestions on long-term and short-term financing to make purchases for assets, stock, equipment, etc.

They maintain the flow of capital by improving invoicing and follow-ups to get receivables without any delay. They also defer payments by maintaining solid relationships with vendors and get more time without having to pay any late fee.

They are vigilant of all the expenses and cut down on the redundant ones which can affect the bottom-line such as business trips, free phone calls and team lunches. Also, they offer advice on leasing or liquidating the assets which are lying idle to get more cash into the business.

All these measures help in securing more cash in the organisation and make it financially stable. The bookkeeper is always on top of the incomings and outgoings and keeps a check on the warning signals. 

7. Reconcile Bank Accounts

Reconciling is a must to monitor the business funds and avoid frauds. It involves matching the bank statement with the financial records of the organisation to ensure that there are no inconsistencies.

It also gives you an account of the payments that have been processed from the business account and the payments that have been credited. Reconciling should be done once a month, depending on the number of transactions taking place in the company.

It is also used by bookkeepers to identify errors and keep the records updated. It extends the much-required peace of mind to the owner that the funds are in abundance.

Conclusion

Running a small business in Melbourne is not an easy feat. You need to work relentlessly with patience to achieve the objectives. Make sure that you handle every process with precision to avoid mistakes. Therefore, keep the bookkeeping tips mentioned above in mind while managing the financial and accounting obligations.

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