Melbourne Wealth Money
15-Oct-2020 By - team

Here are some bookkeeping tips for your small business


One of the reasons why startups tend to fail is the fact that they don’t have the right small business bookkeeping practices. Bookkeeping services are known to give businesses an objective look at what is happening in their place. Ultimately, it could lead to identifying money-generating opportunities and avoiding cash flow problems along the way.


Small business bookkeeping may seem intimidating for small and new organisations. But in reality, there are practices that small business owners can do that can make a massive difference in the long run. Here are some of the best small business bookkeeping tips that small organisations can apply.

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If you’re in the throws of starting a new business, now’s the time to get a handle on your books. Once your business is thriving, and your cash flow starts moving, you’ll benefit from having a solid strategy when it comes to your bookkeeping. Keeping track of your income and expenses, recording-keeping of receipts and monitoring your invoices are all part of the job.

Having good financial records is crucial for running a business, whether you’re a sole trader, company, partnership or trust. With expert, up to date bookkeeping, you will be able to easily manage your invoicing, cash-to-cash cycle, deposits, credit and any of the other myriad of daily finances your business engages in. Keeping your finances in good shape is fundamental to business growth and success.

Running your own business? The importance of staying on top of your finances cannot be overstated – yet many small business owners lack the financial knowledge required to keep their accounting and bookkeeping processes running smoothly.


Whether you’re a new student considering a career in finance or a small business owner looking to get a handle on your finances, we’ve put together some accounting and bookkeeping tips for small businesses to help fuel their financial futures.

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 an understanding of 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.

Small business makes up the largest quantity of Australian businesses. Spanning a multitude of industries, locations and ideologies, small businesses are an important piece of the Australian economic puzzle. Consequently, competition is fierce. It’s important to allocate the majority of your time towards business growth and development. To do this, the accounting aspects of the business must first be organised.

Always Stay Organised

The simplest tip that every business can follow is for them to stay organised. Be sure to log your sale and your purchases properly. Doing it daily prevents you from missing anything. Be sure to have proper documentation every month. One good way to stay organised is to have a folder that keeps monthly expenses separated from the income.

You want to make sure that you take into account the income you received in cash, check, or even digitally. Also, for the expenses, everything recorded should have their receipt. If there’s no receipt, there should at least be a note to signify the amount that was spent on a specific item or service. This makes sure that it can be checked later if there’s a need to verify your reports for tax purposes.

With the hustle and bustle of running a small business, there is a possibility that receipts may be misplaced in the glovebox of the ute or finance documents vandalised by the younglings. Thankfully, there is software available to alleviate this stress. Receipt Bank (RB) offers an excellent function where you can simply take a photo of the receipt, upload it to RB and then have the bill sent to your respective accounting software (ideally Xero or MYOB).

Separate business and personal

Don’t wait until your business is booming to set up your bank accounts properly. Once things start to get busy, it can be an absolute nightmare trying to untangle business with personal. Set up your business bank accounts right from the start and make sure all transactions are processed through those accounts. This will also help you quickly determine your cash flow, as you can easily see your income versus your expenses.


Some small business owners mix their business and personal finances. If running a business, you must open a separate business bank account to help keep accurate records of your business’ financial transactions and help build your business credit rating.


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.


Prioritise your books

As a new business owner, you have a million and one things to do. While it can be tempting to avoid your books and focus on the actual running of your business, it’s best actually to prioritise your books. Make time from the very beginning to keep control of your paperwork, and you’ll be thankful in the long run, particularly come tax time. If you’re struggling to make time for your books, it may be worthwhile hiring the services of a bookkeeper to help you.

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.

Learn to do a bit of accounting yourself

Accounting is a bit expensive, especially if you only have a few employees. Now, instead of hiring an accountant to get the job done, why not learn a bit about accounting yourself? Payroll dates along with requirements such as federal and state filing dates can be handled on your own instead of an accountant.


But of course, you should let an accountant do his or her job if it involves computing annual returns and ensuring that you are up to date with your taxes.

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Know Your Taxes

If you are doing your own taxes, you may be familiar with the processes and the documents needed. But, keep in mind that business tax may differ from personal income tax with different rules, regulations and claims you are eligible to make. A basic understanding of the tax requirements of a business is crucial, so be sure to consult a professional tax return accountant, so you know exactly what you need to do.

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 are 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.

Small businesses pay taxes differently compared to income tax, so you must research your tax obligations and stay on top of them. Keep records of your spending and expenses to claim deductions when it’s time to calculate tax.

It’s also important to understand just what tax deductions you’re eligible for. While your Financial Adviser can help you out with this, it’s still good practice to understand just what you’re entitled to.

Don’t confuse business with pleasure.

One of the most important aspects of business is cash flow – so your bookkeeping process should be an important, separate part of your life. Don’t confuse your personal finances with that of your businesses – and don’t leave your business finances until the last minute. Keep your business bank accounts separate and ensure all transactions related to your business go through that account. Prioritise your paperwork and keep track of your finances, rather than fall behind and be left trying to play catch up.

Cashflow is King – Prepare Cash Flow Forecasting and KPIs

Time and time again, the hot topic of cashflow is discussed. Without cash, we cannot pay our creditors, employees, or ourselves!

Our advice? Request that your accountant provides a complete financial analysis of your small business. By tracking and understanding your expenses, you can set goals and align KPIs to achieve growth and ensure you have enough cash to meet all your obligations.

Superannuation – Pay It On Time

If you fail to pay your superannuation on time, then it cannot be claimed as a tax deduction, and you may be liable for the Super Guarantee Charge (SGC). The consequences include possible fines and fees/interest on top of the initial amount unpaid. Whether you use a Government Superannuation fund or a Self Managed Superannuation Fund, you must prioritise paying superannuation obligations over other debts such as bank overdrafts, small loans or any other debt with flexibility surrounding repayment (within reason!).

Invest In Cloud Accounting Software

Make it even easier to get a handle on your books with QuickBooks software. You can download the app and keep an eye on your finances at any time. You’ll also love the receipt capture functionality so that you can do away with the shoebox of receipts under the bed. You can also use QuickBooks to invoice and receive payments, track your GST, lodge your BAS and instantly report on your business finances – saving you time and money.

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.

And it’s worth remembering that you can claim the monthly software subscription costs as a business expense.

Ensure you are paid correctly

Invoicing is one of the most important parts of running a business. If your clients aren’t paying you, how can you continue operating? To ensure payments are made, you need an efficient invoicing system and a way to keep track of what has been submitted. Invoicing software can accomplish this – but you can also manually input the data into a spreadsheet and find free invoice templates online.


Use Digital Tools for Payroll

A problem with a lot of business owners is that they still stick to paper when it comes to tracking down the number of hours their employee has worked. There are a lot of software solutions available today. There are even free timesheets that local business managers and business owners can use to make things more organised. The data collected by the software can then be directly uploaded to accounting software. It helps save hours of tedious work on the part of business owners and managers.

Small businesses don’t need enterprise-level software.

If you’ve only got a small team, there’s no need to spend big on accounting software. Payroll, for example, can be done all on your own. Learn how to use Excel to track and schedule pay for your employees. Purchasing software you don’t really need adds a big expense – whether it’s a subscription service of a one-off fee.

In terms of the software you should purchase, it’s important to look into cloud-based platforms. These help ensure your finances are accessible on-the-go, allowing you to check budgets, manage payroll and more. Plus, cloud-based systems mean safe backups and heightened security which are both essential in modern businesses.

If you study accounting and bookkeeping, track your own finances to avoid having to spend big on software. However, if you don’t want to study a course, you should hire a freelance accountant. You can also invest in software – as an untrained eye can make lots of little financial mistakes which will add up to a costly total.

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.

Make Time for Family and Yourself – Don’t Get Lost in the Accounting Madness.

Because why did you get into business in the first place? Happiness is important in life, and by making the necessary changes to improve the accounting functionality of the business, there will certainly be additional time for the ones you love, including yourself. Investing in an accountant whom you can trust is a wise decision.

By following the tips of accounting advice for small business, you’re on the right track to achieve all your small business goals and ultimately, grow your business to its full potential.




Guest post by : team Form -

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