If you own a small business, great bookkeeping is vital.
Many start-ups, as well as existing business owners, tend to neglect this aspect of their business until the end of the financial year (EOFY) is upon them.
By law, every business is required to maintain accurate and timely records.
I can’t stress enough how important it is to organise your accounts from the onset by setting up and using simple accounting software that suits your needs.
Here are six simple tips to make record keeping easier and less stressful during EOFY:
1. Allocate time each week and devote it to bookkeeping
It is very important to be on top of this. Regular reviews will let you know how your business is going and allow you to control your cash flow.
2. Open a new business bank account for business earnings and expenses.
It is important to keep your private transactions separate from your business transactions.
In time, you can apply for a business credit card and apply the same terms.
3. Get accounting software that suits your business needs.
If you are unsure which software to select, you may contact a business consultant or accountant that can better advise you before you buy.
Your files will always be backed up regularly in the cloud.
However, always ensure you keep backups of your financial data as an added security measure. With desktop software, you will have to get into a habit of regularly backing up your files.
4. Get all your tax and compliance obligations right
All businesses are required to register for an ABN, and if your turnover is more than $75,000, then you must apply for GST registration.
You must also keep receipts for all acquisitions in order to claim your expenses. If you employ staff, you must also register for PAYG withholding Tax. This is where you pay staff and withhold some tax on their behalf.
You are also obliged to complete and lodge a monthly/quarterly Business Activity Statement (BAS) with the ATO. With the appropriate accounting program and setup, you can have this information at your fingertips.
This way, you create systems to help you streamline and automate your business processes for you to stay compliant.
5. Keep your receipts
The ATO requires you to keep records for a minimum of five years.
The records you are required to keep and have accessible upon request are:
- Invoices and receipts you provide for sales or services rendered by your business.
- Invoices for goods, services or other business acquisitions purchased for your business.
- Records of payments made to employees plus other organisations on their behalf like Superannuation funds and PAYG tax.
- All financial statements, including profit and loss statement and balance sheet.
- Tax Return information.
- Bank accounts and credit card statements
- Stocktakes records at the end of the financial year and asset register etc.
- Anything else with a monetary value to the business
You could create digital files on your computer to store this information or keep a well-organised filing cabinet.
6. Or, get a great bookkeeper
As you expand your business, you may need to engage the assistance of a great bookkeeper; keep in mind that this service is also tax-deductible.
Hiring a bookkeeper helps you focus on growing your business while ensuring your record keeping is up to date.
For peace of mind this financial year, it is important to meet all your tax and compliance obligations for this EOFY.
The information provided here is of a general nature for Australia and should not be your only source of information. Please consult an experienced tax agent as each small business’s circumstance will vary for the end of the financial year.
Four ways to become a better-connected bookkeeper
Bookkeeping can be a lonely profession.
I’ve heard of many bookkeepers who struggle with the solitude they feel. Especially those who are working for themselves and feeling separated from a support network. Isolated.
I never expected to hear these accounts when I joined the industry a few years ago. The bookkeepers I’d known previously would appear in businesses once a week or fortnight, right the wrongs, and disappear at the end of the day ready for the next business in need.
But so often lately, I hear of bookkeepers who are unsure of where to turn to for advice, for a chat or are feeling disassociated from peers and lacking a network.
Fortunately, the internet has created opportunities for people to connect over large distances. Over time, we’ve come to trust social networks enough to open up about experiences and seek out assistance.
Not just social media platforms – forums too.
Let’s take a look at some of the ways the connected bookkeeper can stay in touch with his or her peers. I’m looking at this through an MYOB lens, though I’m sure other bodies have created terrific support platforms as well.
Connections are vitally important. So many opportunities pop up when you’re part of a wide network: extra work, support, friendship opportunities and more.
Here are four ways to stay connected.
1. Industry bodies
There are reasons galore for being part of an industry body. Support, services, training, templates, thought leadership, forums, events – you’ll get plenty from membership to one (or more) of these groups.
Love it or loathe it, Facebook has matured into a strikingly open and honest support environment. (Well, perhaps not always.)
The Bookkeepers Support Group Australia provides a safe, friendly (and closed to the public) environment for around 2,000 bookkeepers.
From the description:
“I wanted to create a space where we can support each other, ask questions when we are confronted with a curly transaction and help each other grow within our businesses.”
And if you’re not feeling your best, you’re sure to attract a heartwarming #hugabookkeeper in reply to your post.
(Note that the industry bodies listed above have active Facebook pages as well, where you’ll get direct access to subject matter experts.)
Industry events perform a double function: information dump and social get together. I’ve heard of bookkeeping practices using these events as a business bonding session, with two-day conferences morphing into five days and a shopping trip/booze fest/bonding trip!
The best event on our calendar is September’s Partner Connect, with the big events happening in Auckland and the Gold Coast. Fantastic connections can be made at these events. It’s critical that you get your networking game on to make the most of the event.
So there are four ways for the connected bookkeeper to improve their network, for friendship and support. Have I missed any? Let me know in the comments below.
Understanding bookkeeping in the time that it takes to order takeaway.
By the time you find the number of the local pizzeria and argue with the kids over what to order, we’ll teach you about bookkeeping.
We’ll satisfy your curiosity over what a bookkeeper actually does, how they’re different to an accountant and how to work with your bookkeeper.
And we’ll do it in about three minutes of reading time.
Top 3 takeaways
- Bookkeepers are involved in the day-to-day financial running of a business. They typically record revenue and expenses, prepare wages and maintain accounting systems.
- One way to remember the difference between bookkeepers and accountants is that bookkeepers record business data, and accountants analyse the data.
- Consider hiring a bookkeeper as soon as you start your business to get your financial records right from the start.
If your business isn’t making money, it won’t last.
It’s important to make sure you have someone in your business who knows exactly what financial state it’s in. That’s why bookkeepers can be a huge help.
Bookkeepers are the people who deal with the cash flow of your business on a day-to-day basis. Having a good bookkeeper and establishing good bookkeeping practices will help your business thrive.
What’s the difference between a bookkeeper and an accountant?
It can be hard to understand the difference between a bookkeeper and an accountant – especially since many accountants may perform bookkeeping duties as well as accounting duties.
A good way to think about the difference between the two is that the bookkeeper keeps financial records about your business activities, while your accountant will analyse these records and give you advice on how to act accordingly.
What do bookkeepers do?
Bookkeepers are the financial record-keepers of a business. They’re the ones that collect invoices and receipts, record cash flow, pay wages and prepare tax documents.
Some of the tasks bookkeepers perform include:
- Managing accounting systems
- Processing invoices, receipts, payments and other financial transactions
- Managing payroll
- Preparing financial statements
- Reconciling accounts and preparing reconciliation reports
- Managing any loans or debt repayments
- Calculating GST
- Preparing and lodging your BAS if you’re in Australia or your GST return in NZ
- Preparing to forecast for your business
When should I hire a bookkeeper?
Getting your financial processes set up as soon as you start your business is one of the best things you can do as a business owner. Due to this, a bookkeeper should be one of the first people you hire.
Much like accountants, bookkeepers often work as freelancers, so you can employ them on an hourly basis. In the start-up phase of your business, you may only need them for a few hours a week.
Beyond an initial consultation with an accountant to set up the legal and tax structures of your business, a bookkeeper will look after the day-to-day running of your business.
We’ve put together a list of things you should look for in a bookkeeper, which you can find here. We’ve also prepared a list of qualities you should look for when hiring a bookkeeper, which you can find here.
How to work with your bookkeeper
One of the benefits of hiring a freelance bookkeeper is that you can work with them remotely. Many bookkeepers work from home or online, which will help you keep your business overheads down.
Here are some tips for building a good working relationship with your bookkeeper:
1. Work out the terms of your arrangement
Whenever you start working with someone, discuss the responsibilities and expectations of both parties.
Discuss the tasks you need done and ask for an estimate of how much that will cost you. They’ll probably want to set boundaries around their working conditions and how available they’ll be for your business on a weekly basis.
2. Find out how you prefer to communicate with each other
Good communication is crucial for any professional relationship to work.
Whether you prefer to communicate via email, text message, or phone call is something you should discuss with your bookkeeper.
As your business grows and their role in it evolves, keeping communication open and honest will help maintain a good working relationship.
3. Have semi-regular catch-ups
Even if they work from home, having face-to-face meetings, either in real life or via video call, will go a long way towards making sure you’re both on the same page.
Four bookkeeping trends to watch out for in 2021
1. Technology & AI will continue to dominate
Cloud-based, online accounting transformed the bookkeeping and accounting industry, and technology is not done with us yet.
Our alerts are always pinging with new programs, applications and add-ons that make our lives as bookkeepers so much easier.
By streamlining and automating processes, bookkeepers can develop add-on services and spend more time on client services to make sure their clients get value-driven services.
The days of a bookkeeper’s single purpose being to input that shoebox of receipts into the ledger are long gone. And the rollout of STP in Australia last year and Payday Filing in New Zealand in 2018 showed us that the powers that be are just as invested in technology and streamlining processes as we are.
We view keeping up to date with the latest tech trends as a must for bookkeepers, and educating yourself on new developments is vital.
2. Bookkeeping will continue to shift towards advisory and planning
All this new technology & automation means the bookkeeping role is changing.
Bookkeepers are becoming more like business advisors and virtual CFOs, rather than data processors.
Being able to analyse the numbers and make recommendations to the way our clients work is how most of our bookkeepers are spending their time these days.
Beyond operating financial software and submitting BAS (Australia-only), bookkeepers have to understand what the numbers mean for business performance and communicate that to their clients.
Bookkeepers that haven’t embraced technology or are reluctant to help their clients beyond basic data entry will undoubtedly need to upskill if they want to thrive in 2020 and beyond.
3. Finding balance in business
As small business owners whose purpose is to support small business owners, bookkeepers need to focus on their own work-life balance as well as helping their clients achieve it for themselves.
We’ve seen a real trend towards finding the clients that fit your business, rather than just saying yes to everyone, as well as not being afraid to let clients go if the working relationship is not a positive experience.
Finding a way to balance workload with planning (the old working on your business, rather than in it) is also key to a successful practice and balanced work life.
Finding meaning in your work by focusing on the impact your business has on your local community is something our most successful bookkeepers do.
We also frequently hear the word ‘sustainability’ brought up in our training sessions – both environmentally and economically – and believe changing business practices to address these concerns is a key focus in 2020.
4. How we work is changing
Flexibility is the rising star in HR trends, and we believe it will continue to dominate in 2020. This impacts bookkeepers not only from a business owner point-of-view but also in understanding how to advise their clients when it comes to hiring staff.
Understanding the impact that rigid expectations of success have on workers’ mental health could see the demise of the 7.5-hour day.
There’s a real trend towards focusing on task-based achievements rather than watching – and paying by – the clock, as workers try to carve out flexibility within their workplaces.
There’s also an increasing amount of awareness around gender equality in the workplace when it comes to parental leave.
We’re predicting more of a push towards encouraging fathers to take parental leave and adjust their schedules to reflect them being ‘working dads’ (as opposed to the label only applying to ‘working mums’). This could pave the way for more senior roles for women and see more men partaking in the part-time workforce.
Focusing on different ways people can perform their jobs and different ideas surrounding flexibility and remuneration forces employers to innovate what they’re offering to staff. Finding the perfect job is not just about salary anymore; it’s about what other benefits the employer is offering – and flexibility is undoubtedly high on the list for many.
A very fortnight or once a month.