Keeping the books: 5 simple steps for small businesses

Keeping the books is probably the most hated job for some one trying to run a small business. No doubt about it – it can be time consuming, fussy and generally a hair pulling experience. But there are ways to make it much easier and if you don’t do it properly you will end up losing money and wasting far too much time. Here are five simple steps that will help to make things a little bit easier on you.

Allocate some time each week to going over the books. Money is the lifeblood of your business. You need to know when and where it is coming in and where and when it is going out.

Keep your private and business bank accounts separate. You will quickly lose track if you don’t do this. This is especially important if you are starting out. Otherwise tax time will be a nightmare AND you will miss out on deductions.

Get accounting software that suits you right from the start. Talk to your accountant about it as the right software can make everything easy. And your accountant will have more knowledge about the short and long term benefits and strengths of the right accounting software. With modern online software a key benefit is that you can access your financials from anywhere or have your bookkeeper or accountant check information for you. Online is much safer and more secure. (But have everything backed up just for peace of mind).

Get all your tax and compliance obligations correct right from the start. You have to register for an ABN and if your turnover is more than $75,000 then you also have to apply for GST. Keep all your receipts in order to claim on your expenses. And you have to hang on to them for five years. If you have staff, you will also have to register for PAYG withholding Tax. Talk to your accountant about the ramifications of this. You may also have to lodge a Business Activity Statement (BAS) with the ATO periodically.

Get a book keeper! Seriously, there is no better friend to your business than a good book keeper. It means everything is done properly (including things you would never have thought of) and it leaves you free to run and grow your business.

This list is really just a quick overview to give you an idea. To give you just one example of a point we could have expanded on; when choosing what online accounting software is right for you – think about “plug in” functionality that can be added later.

You might want to be able to add scheduling software for appointments by staff, a way of keeping Customer Relationship Management records (CRM), keep track of billable time on customer projects or Point of Sale functionality. All of this and more can be had (now or later) if you pick the right accounting software.

Talk with other people who are in business and find out what they are doing right (and what they did wrong – so you can avoid their mistakes). Talk to your accountant. Government websites are also a terrific and free resource. Here are some to get you started.

The Commonwealth small business portal.

The Department of Industry’s support for business page.

The Business Victoria website.