Whether you’re an established business or you’re just setting up your first small business, developing good bookkeeping habits will stand you in good stead when it comes to understanding how your business is performing. Keeping track of your income and business expenses, regular invoicing and management of your payroll are all part of the job. So what processes should small business owners put in place to keep things in good order. Here are 5 top bookkeeping tips for small businesses:
1. Choose The Right Accounting and Bookkeeping Software
Investing in an accounting software program can make a world of difference for small businesses trying to manage their bookkeeping. It’s worth having a good look at the various options available. Among the most popular packages are MYOB, Xero, Reckon and Quickbooks but there are many more out there.
Many small business owners now choose cloud or online accounting packages as they enable you to work on your data from anywhere that you have internet access. It also means that your accountant and bookkeeper can work on files remotely and simultaneously.
It’s also worth noting that some accounting and bookkeeping firms specialise in one or two packages. So if you are looking for advice on which accounting software will best suit your needs, it’s best to look for advisors who work with all packages. The team at Numera have experience with all the major packages and can offer independent bookkeeping tips and advice about which software will best suit your needs.
And it’s worth remembering that you can claim the monthly software subscription costs as a business expense.
2. Keep Business And Personal Banking Separate
If you are a new small business owner, one of the top bookkeeping tips is to set up business bank accounts straight away. Make sure that all business transactions are processed through these accounts so that you can easily see day to day expenses and income.
Once your business is up and running it can be much harder to untangle your business finances and get a clear view of your financial data and cash flow in your bookkeeping and accounts.
If you or your bookkeeper are spending time processing personal transactions it’s a waste of time and resources. If your personal finances are mixed up in the business financial data, they will have to be entered into the bookkeeping software and coded to drawings. If you are paying a bookkeeper to do this, it can add unnecessary costs to your bill.
It’s also a good idea to set up a business savings account to set aside money from your business earnings to pay your tax obligations. You may also want to consider applying for a business credit card.
3. Understand Your Tax Obligations
Taking some time to understand your tax obligations may not sound that exciting but it’s definitely one of our top bookkeeping tips for small businesses. You would be amazed at how many small business owners, many of whom have been in business for a long time, don’t fully understand their business tax requirements and how they differ to individual income tax.
Make time to understand the basics such as when your small business is required to register for GST and what your BAS reporting requirements are. That way you can feel confident that you staying compliant with ATO rules and guidelines.
And it’s not only about understanding how much tax you may be liable for. Keeping accurate records of your spending and business expenses can also ensure that you get any tax deductions that you may be entitled to.
4. Learn The Most Valuable Bookkeeping Reports
Most good bookkeeping and accounting software packages allow you to easily generate a wide range of reports to help you understand how your business is performing. However, they are only useful if you actually understand what they’re telling you.
One of our top bookkeeping tips for small businesses is to invest some time in learning which bookkeeping reports are the most valuable for your business.
The accounts receivable report and balance sheet are among the most important accounting reports for your small business. Start by spending some time getting familiar with these and build your financial literacy from there.
5. Know When To Outsource To Professional Bookkeepers
As a small business owner, you have a million and one things to do every day. Making enough time to stay on top of your bookkeeping might be just a step too far, particularly as your business starts to grow. Knowing when to engage the services of a professional is another of our top bookkeeping tips for small businesses.
A good bookkeeper can help your business in so many ways. Keeping accurate financial records will make life much easier for your business when it comes to remaining compliant with ATO requirements, such as BAS reporting, as well as helping you get meaningful advice from your accountant.
At Numera Bookkeeping Services, we provide more than most traditional bookkeepers. With significant experience across a wide range of industry sectors, we are able to support you with all the standard bookkeeping services as well as BAS preparation and lodgment, accounting software support for packages including Xero, MYOB, Quickbooks and Reckon as well as payroll outsourcing and accounting support services.
Work with the Brisbane bookkeepers you can trust. Give us a call today on 07 3002 4880 or email firstname.lastname@example.org to find out how we can help your business.