Woo hoo, you’re in business, but it comes with many challenges and obstacles. One thing you can do to give yourself the best chance of success is, you must conquer bookkeeping, to avoid financial pitfalls!

As a business owner, good bookkeeping is essential to maintain an accurate view of your company finances. It enables you to manage your cash flow, set budgets, plan your tax returns, make more accurate business decisions and plan ahead for growth.

Managing financial records is not the most exciting aspect of running your own business. However, maintaining good bookkeeping will ultimately save you time, hassle and money, and help you reach your business goals faster.

What are the basics of bookkeeping?

At its most basic level, bookkeeping is the practice of keeping track of a businesses' financial transactions, i.e. how much money goes in and how much money goes out.

This includes:

 # Income - e.g. from sales revenue, investments, sale of assets, interest, rent

# Outgoings - e.g. expenses, buying stock, rent, overheads, salaries, bank charges, marketing costs etc.

The days of manually keeping these records are gone, and at the very least, this should be recorded in a spreadsheet. However, it is best to use specialist accounts software, as this will give you greater control and help you meet your obligations tax obligations.

Bookkeeping tips for business owners

To stay on track with your business finances:

• Set up a business bank account. To make things easier and efficient, it is good practice to keep your business finances and personal finances separate. This is as simple as setting up a separate bank account and using a business credit card for every financial transaction. This in itself is a basic accounting system. Even if you lose track of your transactions, they will be much easier to find if they are all on one business account statement, rather than searching through your personal finances.

• Be disciplined about recording business expenses. You should make it a habit to keep an up-to-date record of all your business expenses, i.e. purchases that are made specifically for the business. It's important to capture every single one of your expenses, or you will miss out on tax deductions. If you stay on top of recording your expenses, you will be prepared for when tax time comes again, as you won't need to track down receipts or search through bank statements to find what you've spent. Also, you may be required to show evidence of legitimate business expenses to ATO, so it pays to have an accurate record. Paper copies of transactions are still an acceptable way of record keeping, however, we would highly recommend keeping your records stored digitally, to prevent fading and improve efficiency. If you ever receive a paper invoice or receipt you can take a photo of it on your phone and send it to your Dropbox for quick and easy storage. This will result in fewer headaches from having to keep the paper version and remembering where you put it!

• Find the right accounting software. Using specialist accounting software instead of a spreadsheet to keep track of all your business expenses and income can make life much easier. Cloud accounting software allows you to access your finances wherever you are, on any device, so it's much easier to stay on top of bookkeeping. There are many accounting software out there, such as Xero and Quickbooks. It's worth doing a bit of research to determine which is best for your needs. Just make sure your chosen software is ATO compliant. If you're unsure, then consult a professional accountant, like LA SOURCE ADVISORY.

• Produce financial statements. If you use accounting software and adopt a robust bookkeeping process, then it is easier to produce financial statements such as balance sheet and profit/loss report. These types of reports will provide valuable insight to help you run your business more effectively. For example, accounting software has add-ons such as cash flow reporting, which can help you to keep on top of payment deadlines.

• Be disciplined with your bookkeeping. Business owners are naturally driven people who throw all of their time into making their business a success. We understand that's all too easy to avoid time-consuming tasks like bookkeeping and we come across a lot of business owners that put it off for as long as possible. It's not uncommon for some to wait until the entire year has finished before they open up the shoebox of invoices and receipts! This will most certainly will make the financial year end very stressful and confusing. A regular approach is far more beneficial. We recommend spending a small amount of time on bookkeeping every couple of weeks, or every month to benefit you in the long run. Not only will your tax returns become a lot easier, you will you be more financially aware of how your business is performing, which will help you make better decisions on spending.

Hopefully, after reading this you will be inspired to conquer bookkeeping

All accountants can be bookkeepers but not all bookkeepers are accountants… A bookkeeper can adequately record and organise financial transactions, but has no formal accountancy training. We, at LA SOURCE ADVISORY, can manage your bookkeeping as well as providing financial reports, business support, tax and GST services, payroll and much more.

Getting organised and staying on top of your bookkeeping can be a timely and complex task. For some business owners, the time and effort it takes to stay on top of bookkeeping can really obstruct businesses growth. Using the services of an experienced bookkeeper can save you a lot of time and money so that you can dedicate more effort towards your running your business. In addition, a bookkeeper will keep you in line with tax laws to avoid costly penalties and protect the financial health of your business. There is very little input and effort required on your part - it can be as simple as taking a picture of financial records, such as invoices, and emailing it to your bookkeeper for them to deal with.

Get in touch, with LA SOURCE ADVISORY for bookkeeping advice and services

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