Many business owners fall behind in their bookkeeping due to many reasons – the most common one due to lack of time and knowledge.
If you’re a small business owner who doesn’t have a bookkeeper on their team, chances are good that your bookkeeping isn’t 100% on track. It’s easy for time to get away when you’re focusing on running and growing your business. Before you know it, it’s BAS time again and you know you’re going to have to spend the weekend getting your books up to date!
As your business grows, it’s always best to hand this task to a bookkeeping professional as the cost of getting it wrong could result in huge unexpected costs and harsh penalties.
Bookkeeping is a profession in itself and it’s not as easy as many people think it is – this is the thinking that gets many business owners into hot water with their cash flow and the tax office. In this article I’m going to show you how to know if you’re behind in your bookkeeping and what to do to catch up.
1. How to know if you’re behind in your bookkeeping
- You feel overwhelmed and not sure where your BAS lodgments are at
- You have no time and your bookkeeping is usually last on your to do list
- You don’t have up to date financial statements and you never knowing where your business is heading and you operate day to day
2. Possible consequences of being behind in your bookkeeping
The Tax Office has started to really crack down on business owners in 2022 to get their lodgments back on track and payments up to date. The consequences of incorrect or late payroll processing could result in:
- Not knowing where you’re at financially with your business – inability to make clear and confident business decisions
- Audits from the Tax Office
- Growing GST liabilities (late lodgment fees + interest)
- Penalties and interest for underpayment of super or not paying super on time
- Cash flow problems due to not paying employees the correct amounts and having to back pay them to catch up
- Cash flow problems due to not paying GST lodgments or tax liabilities on time
- Losing money due to overpaying employees that you may not be able to recover from the employees quickly due to their financial position and laws around overpayments
- Fines from Fair Work Inspectors for paying incorrect wage rates
- Wind-up action from the Tax Office if you cannot pay your tax debts
3. How a bookkeeper can help you get back on track
Bookkeepers look at many things to make sure your books are balanced and up to date, which means you’ll have accurate financial information that is critical to run a business successfully.
Rescue bookkeeping often involves being a detective who must analyse the errors or omissions in the accounts and make sense of the existing data. It is often necessary to correct errors from prior months or even years that are affecting the current reporting.
Here are the the most important areas a bookkeeper focus on first when getting and keeping a set of bookkeeping records up to date:
- The bank balance equals the bookkeeping software balance
- The customers (Trade Debtors) and suppliers (Trade Creditors) balance with the Balance Sheet
- The Payroll Categories are set correctly so that employee Pay Slips, Leave Accruals, Tax, and Super Calculations are correct
- The lodged BAS’s equals the bookkeeping software records
- The inventory records equals your bookkeeping software records
This is just the start – there’s many more areas a bookkeeper checks to ensure up to date and accurate bookkeeping.
4. How long will it take to catch up?
It really depends on how far back that needs to be caught up, so it could take a bookkeeper several weeks to several months. But the good news is that a bookkeeper can at least keep your current bookkeeping records up to date while catching up.
5. Once you’re caught up, how to always keep your bookkeeping on track and never get behind again
Do your bookkeeping weekly no matter how busy you are. If you genuinely cannot keep up, you are far better off to outsource the bookkeeping to a professional to keep on top of
Regular bookkeeping means that your BAS preparation and lodgment will be much easier to keep on top of too. Make note of the BAS lodgment and payment due dates and pop these into your calendar so you won’t forget to lodge on time: https://www.ato.gov.au/Business/Business-activity-statements-(BAS)/Due-dates-for-lodging-and-paying-your-BAS/
If you can’t pay your BAS in full, you’ll still need to lodge it on time, then you can arrange a payment plan with the Tax Office.
6. The benefits of using a professional bookkeeping service
Doing bookkeeping and payroll to the level required these days can be complicated and time-consuming. Plus there are a lot of legal requirements, which means there are serious risks to getting things wrong. For these reasons, many business owners prefer to leave it to the experts. It can free up their time and give them extra peace of mind.
In addition, professional bookkeeping services providers are often able to do your bookkeeping at a lower cost than you may realise, as they use software to automate many of the tasks involved.
Bookkeeping services providers may offer different levels of service which you can choose depending on what you need. But they’re generally all capable of:
- Catch up bookkeeping
- Ongoing bookkeeping using the latest bookkeeping apps (e.g. MYOB, Xero, Quickbooks, etc)
- Setting up a new bookkeeping file (new business owners OR when changing from one bookkeeping app to another, e.g. MYOB to Xero)
- Full payroll management
- Filing Superannuation returns
- Filing Business Activity Statements (BAS) with the Tax Office
- Filing Payroll Tax returns
Expert bookkeeping and payroll services are worth their weight in gold. When you find the right outsourced bookkeeping and payroll service, you’ll spend less time thinking about your bookkeeping and more time doing what you do best – running and growing your business!
Maree’s Mobile Bookkeeping provides a complete Bookkeeping, BAS Lodgment and Payroll Service for small business owners. As we work virtually, we service business owners from anywhere in Australia. From bookkeeping services through to payroll services, we’re here to help you take control of your bookkeeping and compliance functions so that you can focus on growing your business.
To find out more about how a professional bookkeeping service can save you time and money, phone Maree today on 0429 363 047.
Maree Punzet | Maree’s Mobile Bookkeeping | 0429 363 047
You didn’t go into business to do your Payroll and Bookkeeping, BUT WE DID