Monday, 27 Feb 2023
Small businesses often allocate the task of bookkeeping to employees who have the competence to use accounting software. Hiring a professional with experience is considered an excessive cost that is usually avoided.
Since these amateur workers do not have in-depth financial knowledge, they conduct a superficial job. Also, most of the activities are automated with the help of accounting software that makes the user take a back seat.
However, data analysis and investment advice needed to manage finances effectively can come only from an expert. Merely using accounting software does not guarantee a positive cash flow. Thus, entrepreneurs who do not hire a professional need to know the accounting secrets their current bookkeeper may not know. These are vital for maintaining consistency, accuracy and compliance with regulations. Let us provide you with a list of these accounting secrets.
Business owners do not like audits, but there is no need to be terrified of them. If the business hires a professional bookkeeper Melbourne, it will ensure it is ready for audits. Thus, it is vital to have a trail of documents that prove the transactions through evidence. These are needed to ascertain that the numbers in the books are accurate.
The trails are prepared as sequential logs of transactions and help in keeping the books error-free. These documents include receipts, bills, bank statements, etc. Auditors can easily track and verify information provided in the books with the help of the trail.
Although small businesses in Melbourne have realised the significance of automation and adopted accounting software, many are still following the old ways of data entry. Bookkeepers understand this gap and advise entrepreneurs to get customisable software suitable for their business needs. Also, using the cloud helps store scores of data and allows its access whenever required.
These technologically advanced tools automatically record all transactions, send invoices, pay bills, manage payroll, review inventory, generate financial reports, calculate taxes and keep a backup of the files on the cloud.
Most businesses use debit and credit cards or cheques for completing transactions. However, sometimes customers may pay cash, or an employee might cover a business expense in cash. Thus, it is essential to track these cash payments to avoid missed entries in the books.
Reliable bookkeepers use cash receipts to update the records by typing them into the recordkeeping system. They use the cash deposit slip issued by the bank to match the amount mentioned in the books to ensure accuracy.
Unqualified bookkeepers do not know the tactics for improving cash flow. They are only concerned with number crunching. However, specialised bookkeeping goes beyond the obvious. They implement ways of boosting profits, and one of these techniques is getting trade discounts from suppliers. It helps to increase the purchasing power of entrepreneurs.
The capital saved with the help of these discounts can be used for investments and putting the money back into the business. Bookkeepers can avail of such discounts through long-term relationship management with suppliers and vendors. They stay connected with them and build a trustworthy image of the business and goodwill that helps get high-quality goods at a low price.
Businesses operating in Victoria have to pay taxes that are applicable to their business type, such as payroll tax, GST, PAYG Withholding, etc. Bookkeepers are aware of the tax obligations in Melbourne, which ensures that there are no defaults in compliance and reporting.
Also, the taxes should be calculated correctly and only eligible business deductions must be claimed to reduce the tax bill. The taxes must be filed on time and the reports must be submitted without any errors to avoid penalties and audits.
The records of all transactions must be stored safely by the bookkeeper. These include historical logs of business taxes and superannuation. According to the ATO, these records should not be altered or damaged. They must be saved for up to five years and presented to the taxation office whenever required.
The records must be saved electronically by scanning paper receipts and invoices. Paper copies are not required if electronic records exist for the transaction. It helps to go paperless and become a sustainable business as well. Also, the cyber security measures used by Melbourne bookkeeping companies help protect the information saved on the cloud.
Business expenses are a major concern when the incomings are low. It can affect the net cash flow and lead to deficits. Efficient bookkeeping in Melbourne ensures the business is not spending on unnecessary and wasteful activities.
Analysing the financial statements helps the bookkeeper identify the projects and techniques that are not making money and those that are generating maximum gains. Thus, they inform the entrepreneur to eliminate the unprofitable projects and focus on improving those that are getting revenue. Also, they help reduce other costs by opting for affordable office space and finding a low-interest rate loan.
Bookkeeping is a specialised service that needs the intervention of a skilled and proficient professional. If you plan to delegate the responsibility to a novice or unqualified person, you need to ensure they are doing it correctly.
