7 Small Business Bookkeeping Tips For Entrepreneurs

Tuesday, 30 Mar 2021

Financial management is the most significant aspect of running a business successfully. Most small businesses in Melbourne fail in their infancy because of inadequate capital, which is a direct result of haphazard bookkeeping.

It is easier to manage cash flow, debts, investments, invoicing, and loans with organised books. It helps the business owner stay on top of the books and know where the money is going and the entity’s financial standing at any given point.

However, with the burden of fulfilling massive duties, it becomes challenging to prepare the profit and loss statements and keep a check on the balance sheet.

Thus, most entrepreneurs rely on the professional advice and guidance of expert bookkeepers in Melbourne to file taxes, manage a positive cash flow, minimise debts, secure funding, identify sound investment opportunities, and a lot more. Here are some bookkeeping tips for small business owners that can help them make their venture profitable.

1. Record All Transactions and Keep A Back Up

The golden rule of bookkeeping is recording all transactions whether they are too small or too rare. Every business in Melbourne is obligated to maintain these records to comply with the tax and superannuation regulations.

All the bills need to be preserved for use at a later stage, such as the evidence of business expenses while claiming tax deductions. These records aid in tax saving and completing the audit quickly. Also, they help the business owner to steer clear of penalties and late fee payments.

All the reports and financial documents need to be kept safely, including receipts, invoices, credit card statements, balance sheets, etc. A significant thing to remember is that you must appropriately record the cash transactions since these do not have bank statements to be provided as back up. Bookkeepers scan the copies of the receipts and save them in the database.

2. Separate Business and Personal Expenses

Most entrepreneurs make the mistake of using their personal savings to pay for business expenses or vice-versa. However, this is the worst mistake that can spell doom for any venture.

The first thing that a bookkeeper does is create a separate business account in Melbourne to stay organised and accurately record all the business transactions without intermingling.

The mixing of the expenses can give you a headache at the time of tax filing as it will be extremely challenging to segregate the business expenses from the personal expenses. It can also lead to tax fraud if you accidentally claim a personal expense as a business expense. Conversely, you can lose a lot of money that could be saved by claiming deductions.

3. Keep Track of the Receivables

Bookkeepers stress on maintaining the cash flow, which requires robust invoicing. It is not only limited to generating an invoice and sending it across, but also following up with the clients in Melbourne for payments.

Late payments reduce the amount of incoming capital in the business and reduce the availability of cash. The bookkeepers ensure that the payments are made on time by adding incentives for early payment.

They include the payment links within the invoice to make it easy for the clients to pay the amount without any hassles. Some bookkeepers insert the clause of penalties if the payment is made after the deadline to ensure timely reimbursement.

4. Pay the Bills on Time

Managing expenses is as vital as receiving money from clients. Every small business in Melbourne has a plethora of monthly and yearly bills ranging from utilities to supplier and vendor payments.

It is easy to lose track of the deadlines and miss out on the payments when you are on your own. On the other hand, a bookkeeper is on top of the outgoings and makes sure that they are paid on time.

It helps to avoid penalties and file taxes within the stipulated time to evade fines. They also create a budget for the financial year through projections of cash flow and allocate money for stock, equipment, maintenance, utilities, office lease, taxes, debt payments, etc.

In addition, they create an emergency fund to keep money aside for an unforeseen expense that can catch the business owner off-guard.

5. Hire A Professional Bookkeeper

Entrepreneurs in Melbourne are already loaded with a lot of work, and adding the responsibility of bookkeeping further bogs them down. Also, it is not necessary that a good marketer will be proficient in number crunching and calculating the correct tax.

Professional bookkeepers are well-versed, qualified, trained, and skilled in the task of invoicing, payroll tax management, BAS reporting, bank reconciliation of accounts, preparing financial reports for the management and the investors, error-free recordkeeping, reducing expenses, and a lot more.

They act as the financial advisors and offer valuable insights that help the entrepreneur in Melbourne to make an informed financial decision. Thus, getting assistance from a specialist is the best way to handle and manage books.

6. Review the Books Often

A successful entrepreneur needs to stay informed about the financial well-being of his venture in Melbourne at all times. Thus, it is crucial to review the books every week or fortnight to understand the status of incomings and outgoings and examine the bottom-line.

It helps in assessing the weekly income and expenses and finding out the problem areas to reduce the redundant expenses and improve savings. The bookkeeper usually reconciles bank accounts every month to evaluate the accuracy of the internal records and identify any discrepancies. It can help in determining frauds and accounting errors and getting rid of inefficiencies.

7. Leverage Accounting Software

Automation is the need of the hour and it is essential for bookkeeping which can be extremely time-consuming. With myriad other responsibilities on his shoulders, the entrepreneur is always pressed for time and cannot squeeze in the task of manual data entry and calculations.

Automation helps to free up time which can be utilised for making significant business decisions. The cloud-based accounting software is highly beneficial in streamlining the process of bookkeeping and can be customised to suit the needs of the entity in Melbourne. It reduces the paperwork and helps in accessing financial information at any time of the day with real-time data access.

Endnote

Every entrepreneur needs to be aware of the general bookkeeping tactics to understand the books, draw inferences from the reports, and make sound financial choices. So, keep the small business bookkeeping tips mentioned above in mind to make your venture a financially viable entity.

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