Keeping a company’s accounts is a daunting task. For small businesses, regardless of their size, accounting services pose a challenge as it is difficult to track invoices, expenses and sales manually.
Small business owners and startups are overwhelmed with too many tasks and wearing multiple hats. The added pressure will only make it harder for most owners to handle other overwhelming aspects. Small businesses are often a one-man show, which often results in making accounting and tracking transactions even more complicated.
Here are a few tips which would come in handy when you’re looking for pristine bookkeeping services and accounting options for your organisation.
#1. Create a business bank account
One of the first steps any small business should take is to open a business bank account, after obtaining your Employer Identification Number or EIN. Business bank accounts offer several advantages over personal accounts, including:
Make it easy to track and justify business expenses to take advantage of tax deductions.
Provides personal liability protection by keeping business funds separate from personal funds.
Offer the possibility of a line of credit that the company can use to cover liquidity gaps.
Businesses need to ensure seamless acceptance of credit and debit card transactions from customers. For that, having a separate transaction account, savings account, credit card account and merchant services account is a necessity for any business.
#2. Get a bookkeeper and a tax accountant
Here’s another decision you should make as early as possible: keep your own books and taxes or hire an accounting service to do them for you. A professional tax accountant has extensive expertise in the field and can rightly point out the areas of laxity and unnecessary burdens. Make sure that your accountant is always up to date and follows a systematic approach such as keeping the last 5 years of data intact for reference purposes.
#3. Choose an accounting structure
Deciding which accounting structure to use for your small business is not the sole prerogative of your accountant. Talk to your accountant about which accounting method to choose: cash accounting or accrual accounting.
Cash accounting: In cash accounting, companies document sales when money is received. They record expenses when cash is paid. Cash-based accounting is perfect for smaller businesses and professional service firms that don’t have inventory.
Accrual accounting: In accrual accounting practice, revenue is recognized when it is earned, not when cash is received. Expenditures are documented when the money is incurred, not when it is actually paid. Accrual accounting is suitable for significantly larger and more complex companies with existing stock or shareholders and investors.
#4. Outsource your bookkeeping and accounting work
Whether you keep your own books and taxes or hire professionals to do it, you also need reliable accounting software.
Cloud-based bookkeeping services and bookkeeping software mark a big change from the age-old processes. With cloud-based software, you can automate the manual processes and save many man hours to focus on core business issues. You can choose from one of the many software options available such as Oracle Netsuite ERP, Deskera, or Freshbooks to send invoices, track expenses and generate reports automatically.
#5. Keep a tab on all financial records
Organising and maintaining accounting services records such as business bills, receipts, and expenses can make or break your company’s books. If you don’t keep accurate records, your company’s financial health could suffer.
Having a record of all financial data, especially the business expenses will ease your job and give you the required visibility to know exactly where and how much you’re spending. Keeping a tab on miscellaneous expenses like direct labour costs, office supplies, travel, and utilities will help you document every detail of financial records and also mitigate any misappropriation of funds.
According to Hiscox, it is evident that 68% of employee theft, fraud, and losses do take place in small businesses with an average loss of $289K per year for a single small business entity. Having a detailed and updated record will not only safeguard your business from any potential theft but also help you plan for any major purchase or business expansion in the near future.
#6. Leave an audit trail
An audit trail is a set of documents that provide evidence of the transactions that you record in your books. Your trail can help you track transactions and verify that they are correct. These documents can include items such as purchase orders, invoices, and estimates.
Creating audit trails for accounting can help your business prevent fraud, improve accuracy, and find missing transactions. To ensure that your small business accounting records are as accurate as possible, you should maintain an audit trail.
#7. Monitor the tax preparation
In Australia, Business Activity Statements or BAS is a mandatory submission for all businesses that pay GST. Depending upon the business size, the timing is set for it. It can be quarterly, monthly or even annually depending upon the annual revenue of the business. Failing to oblige to this, can draw a heavy penalty for your business. As per the regulation, once you file for the Australian business number (ABN) along with GST, the regulatory body sends all the necessary details about the timely submission of BAS and other add-on requirements.
#8. Keep your books at the top of your priority list
As a small business owner, you need to constantly juggle between work and wearing multiple hats. It can be tempting to keep aside your books to focus on running your business. But if you want to keep your business thriving and your finances in order, prioritize your books first. Keep your books updated and organised from day one. Take the time to review and update your books regularly.
Add transactions to your books timely. The more often you keep up with accounting services, the less of a chore.
Geoff Cottle is a known name in Windsor for the bookkeeping and accounting domain and has expanded its horizon in Melbourne suburbs including; Cornwallis, Clarendon, Pitt Town, Mulgrave, McGraths Hill and Hawkesbury. They are specialists in the area of cloud-based and small business accounting services. In case you are a small business owner and struggling to manage the accountancy and bookkeeping part, look no more – as the leading tax accountants, they’ll be at your assistance.
