7 Tips for Better Small Business Bookkeeping

Wednesday, 21 Oct 2020

Bookkeeping is the most significant part of business management, which cannot be ignored at any point. The job demands a lot of time, consumption of tons of coffee cups, and head-scratching to find out where you spent the missing dollars.

While it is easier to keep track of the incomings and outgoings in the beginning, it can become a cumbersome activity as the business grows. Thus every small business needs the support of professional bookkeepers in Melbourne to maintain the books accurately.

A single error in recordkeeping can lead to penalties during tax filing and make an impact on the payroll. However, a few tips can help you to stay on the top of the books without getting entangled in any challenges. Here are seven ways of handling the task like a professional bookkeeper.

1. Keep Your Personal Spending Separate

The first and foremost tipis that you need to keep your books organised by separating your business account and personal bank account in Melbourne. When you are taking care of the bookkeeping chores, it is essential to have two bank accounts so that you do not end up using personal funds for business spending.

Also, you will need to keep a record of every business transaction, and with your personal bills filling up the passbook, it can become challenging to do so.

You must get this done as soon as you set up the business to ensure the transactions are not getting mixed up or making your financial statements incorrect. A separate business credit card is a necessity to build the credit score and keep the finances organised and perfectly recorded.

2. Maintain A Proper System

When you are doing things on your own, you might end up tucking the physical bills into your files and forget all about them. It can become a nuisance at the end of the year when you need to find the bill and have no clue about it.

Therefore, it is vital to have an organised system and follow a recordkeeping method that allows you to feed all the information into it without any mistakes. Also, as the owner of the business in Melbourne, you may want to delay bookkeeping tasks or pay less attention to them.

However, you cannot afford to do so since completing the records should be a priority. This is the reason why most entrepreneurs rely on external bookkeepers to get things done without facing any issues and getting error-free financial reports.

3. Track All Transactions Without Fail

As a thumb rule, you must note down all the sales taking place in your Melbourne-based organisation and update the books every day. While number crunching has given way to automated systems and invoicing software, it is essential to track every transaction by downloading all the data from the software.

Another important thing to remember is that you must have proof of the sales if they are eligible for tax concessions. If you are still using a cashbook, then keep it all organised in one place and label everything to avoid confusions.

These records should be easily accessible as you will have to refer to them to make crucial business decisions. The investment-based decisions are especially dependent on the financial health of the organisation, which can be determined from this data.

4. Reconcile Bank Statements

Reconciling bank statements is required to compare your bookkeeping records with the business bank account statement for the same period. It helps in finding out anomalies in the calculations and missed bills and invoices.

For entrepreneurs in Melbourne who use the accrual method of accounting, this is a must. Error-free books mean that you spend wisely and understand the flow of cash in the company.

Another advantage of reconciling bank statements is that you can detect frauds, such as a vendor who alters the amount on the cheque to withdraw a higher amount. Thus you do not have to worry about getting deceived by people working with you. Reconciliation can be done daily, weekly or monthly depending on the number of transactions taking place.

5. Prepare for the Tax Season

Small business taxes in Melbourne differ from income taxes so you must not wait to learn about them. If you do not have the support of a bookkeeper, then you need to do your tax research adequately.

You must know about all the tax obligations in Victoria, such as income tax, capital gains tax, fringe benefits tax and goods and services tax. It will help you to know how much capital is required for paying taxes and what is the deadline so that you do not miss it.

Also, updated records will allow you to claim tax deductions. The safely kept proof of the transactions aids in this process. Bookkeeping helps in keeping tax trouble at bay and save money that could have been lost due to improper recordkeeping.

6. Automate Your Work

As a small business owner in Melbourne, you will have tons of responsibilities and a truckload of work ranging from administrative activities and preparing strategies to sales predictions and recruitment.

Since you may not have specialists for every business function, you must be multi-tasking which will leave you with little time for bookkeeping. Thus it is ideal to automate some functions to reduce to workload and streamline the process.

It will save time and energy spent on the task and offer accurate results. You can use small business accounting software which takes care of financial reporting, invoicing, payroll management and much more.  

7. Monitor the Cash Flow

Maintaining cash flow is essential for any business in Melbourne to become successful. It can be effectively managed with the help of a bookkeeper. However, when you are doing things yourself, keeping a close watch on the accounts receivable and payable can help you to balance the flow of capital in the organisation.

When you notice several pending payments in your books, it means that you are headed in the wrong direction. You must maintain a balance between the incomings and outgoings so that there is no deficit. The best way to make this possible is to make the customers in Melbourne pay on time and follow up with them to get the cash quickly.

Endnote

Bookkeepers in Melbourne are adept at leveraging the tips mentioned above to get desired results for the small business. Thus make sure you hire a qualified and experienced candidate to avoid getting into financial troubles and continue to run a successful venture. 

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