Friday, 12 Feb 2021
Small business owners in Melbourne have to wear many hats while running their ventures. From conducted sales pitches and organisational management to paying taxes and payroll management, they have to carry out a plethora of functions.
Although most of them enjoy liaising with customers and creating business strategies, they are usually frustrated by the bookkeeping work. It consumes a lot of time and energy, which leaves them with little time to focus on business development.
Consequently, most of them rely on professional bookkeepers in Melbourne to keep the books updated and organised along with all the other responsibilities. Many entrepreneurs do not realise the importance of the time wasted in the paperwork and the money wasted in paying higher taxes and missing deadlines. Here is a rundown on how much time small business owners spend on bookkeeping.
According to a recent survey, business owners end up spending several hours per week only on tax filing. Most of them dislike the tedious task and keeping track of the state legislations that keep updating.
Businesses in Melbourne have to file three main taxes including business income tax, GST and BAS, and payroll taxes. Most entrepreneurs end up paying more than what is required, or sometimes less and then attract penalties.
Also, they spend between40 to 80 hours working on the tax preparations every year. Although filing taxes in Melbourne can be done online, preparing the returns is a cumbersome task that is best suited to bookkeepers or tax agents who work on them through the financial year.
They track the amount collected by the business and adjust for the GST paid on various purchases. In addition, they submit the report to the ATO on time along with the payment of the due taxes.
They know the tricks of lawfully lowering the profits while filing the business income tax returns, which are verified by the government’s tax experts. Also, they take charge of the employee PAYG tax, which is determined after the payments are made to the employees.
Bookkeepers keep a tab on the everyday business transactions. These days professionals in Melbourne utilise cloud-based accounting software to track the sales and purchases and make sure that the cash flow is positive.
However, staying on top of the books is still required to make sure that the records match with the bank account statements and there are no inconsistencies. Bookkeepers also need to do bank reconciliation regularly to identify any discrepancies or fraudulent transactions.
Invoicing and making payments on time for accounts payable and following up with clients for delayed payments is usually effectively managed by them as it eats up a significant amount of time of the entrepreneurs.
Although automation has reduced the workload and the chances of errors, keeping an eye on the data is essential to know about the financial well-being of the business. Therefore, it is an additional responsibility for business owners who do not like the time-intensive task, which needs them to learn a lot about accounting and bookkeeping.
They have to learn to use the software and train their employees to use them, which is another challenging chore. On the other hand, time management is one of the qualities of a good bookkeeper and comes handy in saving time of the business owner.
The bookkeepers are responsible for preparing the financial statements, including the profit and loss statement, cashflow statement and the balance sheet. These reports are crucial for understanding the financial standing of the business, its expenses, and the flow of capital during a specific time period.
The information provided by these reports is needed by the entrepreneurs in Melbourne to make informed decisions. It helps them to determine which projects are making money and which ones are not producing any significant results.
These reports are also examined by investors and creditors if the business needs a loan or capital from an angel investor or venture capitalist in Melbourne. These reports are legal obligations that need to be fulfilled to be lodged to the Australian Securities and Investments Commission (ASIC) at the end of the financial year.
The reporting has to comply with the Australian Accounting Standards and must adhere to the Corporations Act. Thus, it is best that a professional bookkeeping company works on them.
Stock management is an essential requirement for businesses in Melbourne to ensure that they are not wasting resources and utilising them appropriately. Bookkeepers perform the function effectively by calculating the stock on hand and assessing its current value.
They determine the value of the goods sold and track the resale income. They also keep a check on the sub-parts that are used to assemble a finished product and prepare accurate inventory reports that allow the entrepreneur to understand the status of the inventory.
It assists in understanding when new orders should be placed. However, when the business owner is doing stock management himself, then it can often lead to miscalculations of the product value and inaccurate reporting, which can lead to financial losses and wastage of precious time. Thus, it is better to leave the job to the professionals.
It is one of the most significant tasks that a business owner has to perform in the absence of a bookkeeper. Payroll requires determining the salary of every employee, deducting tax and retirement contributions from the amount, and disbursing it on the specified date every month.
Also, the report needs to be lodged with the ATO in Melbourne. However, making deductions according to the employee contracts can take a lot of time and thus, entrepreneurs depend on bookkeepers for the job.
Business owners have to spend hours examining the reports and understanding the statements to draw inferences. The time spent on the task can be effectively saved by hiring a bookkeeping company which can do the job more efficiently.
They create financial budgets for the next quarter and make sure that the expenses do not exceed the limit set in the budget. They are also helpful in implementing cost-cutting measures by offering valuable advice on the matter and ensuring that it is followed by the employees.
Professionals are experts in the field who have the required experience and are helpful in advising on enhancing productivity and making business improvements.
It is quite evident that there are several tasks that an entrepreneur spends time completing, which can be easily performed by a bookkeeper in Melbourne. Hiring a professional saves a lot of time that can be utilised to complete other important tasks.