Things Every Business Owner Should Know About Their Bookkeeping And Finances

Things Every Business Owner Should Know About Their Bookkeeping And Finances

As a business owner, it’s likely that there’s a lot on your plate besides your bookkeeping and business finances.

You’re busy managing customers, keeping up with your marketing and doing the day-to-day tasks involved in running your business. And, when you’re wearing all the hats, it can be tough to find the time to sort out your numbers and manage your cash flow (especially if numbers aren’t your thing).

However, the reality is that there are some core things you need to know about your bookkeeping and finances, to ensure your business is compliant and profitable.

To help you narrow down where to prioritise your precious time and headspace, we’ve put together some of the bookkeeping essentials you need to know.

1. Simplify your bookkeeping: keep business and personal accounts separate

Whilst it can be tempting to mix your personal and business finances together, it’s important to separate them from day one.

Why?

Firstly, for some business structures having separate business accounts is compulsory.

Secondly, as your business grows it will become increasingly difficult to accurately track your business income and expenses, leading to headaches and potentially costly mistakes at tax time.

Once you have separate accounts for your business finances, make sure to keep records of every transaction that happens within your business (including keeping records of all receipts and invoices).

2. Use a bookkeeping process to track your business expenses

In the early days of your business, it may feel difficult to predict exactly what your expenses will be. However, spending some time recording each expense you know (or can anticipate) will help you to understand your running costs, and keep track of your tax deductible expenses.

Many of the day-to-day costs involved in generating income and running your business are tax deductible. However, purchases that are just for you, or are only partially used by the business, can’t be claimed or claimed in full.

If you’re unsure about the expenses that are appropriate to claim, you can find out more information from the Australian Taxation Office, or an accounting or bookkeeping professional.

3. Structure your business finances to account for tax payments

As a business owner, you’re responsible for paying tax on your business earnings. It’s important to budget a portion of your income towards tax expenses to avoid expensive surprises at the end of the financial year.

Depending on what is right for your business situation and the tax bracket that you sit within, putting aside a percentage of each sale into a separate ‘tax payment’ account means you avoid the stress of trying to come up with the money when your tax bill is due.

4. Know the basics of bookkeeping and business finances

Even if you decide to use an automated accounting software or outsource your bookkeeping to a professional, it’s still helpful to understand the basics.

Whilst professional support can reduce your risk of running into tax problems, it’s always best if you also understand the basics of your tax obligations.

There’s plenty of resources online covering different business structures and their legal obligations. The information relevant to you and your business will depend on whether you’re registered for GST, paying corporation tax, and the structure of your business. For example, registered companies have different taxation rules to sole traders or partnership structures.

Having a basic understanding of the tax rules that relate to your business could save you from serious fines and penalties.

5. Regularly review your financial reports

Whether you keep manual records or use cloud-based accounting software, make sure you have a way to run reports that can give you a clear snapshot of your finances at any point in time.

Running bookkeeping reports monthly ensures all outstanding customer invoices are paid, and any gaps in your records are addressed.

You might also want to run in-depth reports at the end of each quarter to identify growth or loss trends in sales, follow up on outstanding money you’re owed, and gain valuable data that can inform your business plan and goals for the next quarter.

6. Outsource to a professional bookkeeping services professional

Managing your bookkeeping and business finances is crucial to the health and compliance of your business.

Yet, it’s also time intensive and there’s a lot of complex information to understand. That’s why many business owners choose to invest in experts to manage their business bookkeeping.

Bookkeeping professionals live and breathe everything business finances, and thanks to the help of automation tools their services are often more affordable than you might think.

Outsourcing to an experienced bookkeeper can offer several benefits, including:

  • Freeing up your time and energy to focus on what you do best
  • Ensuring your books are always up to date and organised
  • Meeting all compliance requirements, including BAS and tax obligations
  • Peace of mind knowing that your business finances are in experienced hands.

7. Get professional help
If you’re ready to streamline your bookkeeping and finances, finding the right fit in business bookkeeping services can be a game changer.

Maree’s Mobile Bookkeeping provides a complete Bookkeeping, BAS Lodgement 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.