When first starting a business, you're asked to quickly absorb information on new topics and handle many tasks that you have probably never done before. And, unless you have previous experience with business financials, dealing with the economic side of a business will likely be new to you. With this in mind, we've put together five tips to make the process simpler for you!
#1 Keep Business and Personal Separate
Maintaining your businesses bookkeeping will be challenging enough without mingling your personal income and expenses. You need to keep your business receipts and invoices for five years, and sorting through a big pile trying to remember if that expense four months ago was personal or business is a waste of your valuable time. Establishing separate files, budgeting systems and bank accounts for your business expenses and income makes tracking and reporting much easier.
#2 Choose the Right Bookkeeping Method for You
If your business is small enough, an Excel spreadsheet might meet your accounting needs for a while. But when your business begins to grow, you'll need a more powerful solution. Accounting software can be a huge help by organizing your invoices, cataloguing receipts and generating the reports you need to make solid financial decisions with the click of a mouse.
#3 And Keep up With It!
Bookkeeping is like any chore: the longer you procrastinate, the longer it takes to catch up. Unfortunately, ignoring that pile of statements and invoices won't make them go away! Eventually, you'll be forced to waste a day that you could be spending with friends or family entering numbers and sending late invoice reminders. Bookkeeping doesn't have to be a daily chore, but don't wait until the end of each quarter to pull all that data together.
#4 Pick the Right Time
If you're most productive and creative first thing in the morning, don't use that time on your bookkeeping tasks. Determine a time of day or week when you can focus, but don't need optimal brain function to work. That's when you should catch up on your bookkeeping. Set this as an appointment in your schedule, and keep to it! If you're finding this difficult, and that you are behind no matter what, it may be time to add a professional bookkeeper to your support team!
#5 Make Sure You Know the Law
For someone starting out in business, the legal aspects of finances can be the most nerve-wracking. The ATO provides tons of resources, but sorting through the guides can be time-consuming and mind-numbing! A few basic rules you must follow are registering for an ABN, registering for GST if your turnover is more than $75,000, and lodging your BAS on time!
We hope this tips help, but if you have any questions on how to set up your bookkeeping system or want to make sure you're in compliance with the ATO, contact us!