Often, the importance of a business’s financial record can be undermined. Many people think that the success of a business lies at the end of the production line and hinges upon effective marketing methods but that’s only partially true. A successful business strikes a balance among all the departments of the business but places a strong emphasis on solid financial management. Here, we’re talking about managing the efficient financial recording of accounting transactions for a typical small business.
The Purpose Of Good Financial Records
A good financial record gives you an understanding of your business’s cost-benefit analysis. It’s a gauge of whether you’re making a loss, breaking even, making a profit, or sweating for nothing. By harnessing the capability to roughly analyze what’s going on, you have a leading edge over your competition. Next, once you know what aspects of the business are profitable, where sales demand is coming from and what aspects are too costly, you have a starting point to begin the next phase of your business.
Now that you have an understanding that the financial records of a business are the bloodline of your business’s history you can learn to make decisions based on the collated history of transactions for your business. Why would you want to do this you ask? The primary reason for this is the best prediction for the future performance of your business is the past history combined with current present-day information. This is how an accurate business forecast is undertaken.
Where to Begin With Bookkeeping For Your Business
Upon the start-up of the business, you should already be thinking about creating the accounting records that your business requires. This reason is twofold, firstly to help you manage the business in an effective manner and secondly because by law you are required to keep the financial records of the business in good order by substantiating the transactions that the business has undertaken in case the Australian Tax Office wishes to audit the business’s financial records.
Deciding upon a suitable accounting software package to do your bookkeeping would be the best starting point. Depending upon the nature and size of the business, the choice of accounting software may vary. MYOB, Xero, Saasu and Quickbooks are good general software alternatives for those looking for an all-round accounting software solution.
How to Set Up Your Bookkeeping System
Once you have chosen a good accounting software solution it is often a good idea if you have not already to get the input of a bookkeeper or an accountant to ensure you have set everything up right from the beginning. By setting up the chart of accounts correctly, applying the correct tax codes and recording business transactions appropriately you will save the business hundreds and possibly thousands of dollars down the track. An alternative to hiring professional accounting support is to look into self-educating via webinars or short courses in bookkeeping, accounting and specific training associated with the accounting software that you are using for the business.
Things To Look Out For When Bookkeeping For Your Own Business
Firstly, it is most important to keep the paperwork relating to each transaction whether it be in electronic or paper form, to be referred back to at a later date in case adjustments or corrections need to be made.
Secondly, ensure that all the transactions that go through your accounts reflect what has gone through your bank account, credit card and cash till where applicable.
Thirdly, ensure you lodge all documents required by the Tax Department and other relevant government agencies on time.
Fourth, if in doubt about what you are doing seek advice whether it be online or through the advice of a bookkeeper or accountant to avoid a lengthy clean-up process.
If after reading this article you still require assistance with bookkeeping and accounting for your business please click here and contact us.