Small business owners spend an average of 10 hours per week recording, organising, and processing financial transactions – this includes everything from accounts receivable and payable, to employee payments, expenses and invoices. While this process can be time-consuming, effective bookkeeping is the foundation of sound financial management.
Our bookkeepers have three bookkeeping basics to help ensure a healthy financial future for your business.
1. Accurately track expenses
Accurate and consistent expense tracking is crucial for claiming correct tax deductions and GST deductions. Analysing expenses can also offer insights into spending patterns and the overall profitability of your small business.
There are a number of cloud-based options available to assist with tracking your spending. Services such as Expensify and Receipt Bank help to eliminate manual data entry with automated functions, including:
- Receipt data capture via your smartphone’s camera;
- Synchronisation with your phone’s GPS to track mileage of business travel; and
importing bank and credit card data, plus integration with accounting software.
2. Timely and accurate invoicing
Efficient invoicing is about more than ensuring you get paid on time. An invoice is an official record of the terms of each transaction and must be completed accurately to avoid errors in your bookkeeping process.
Here are a few tips for professional invoicing:
- Ensure each invoice includes: contact information, invoice number, a detailed list of products or services and a breakdown of the total amount due;
- Ensure the invoice contains your ABN and GST status; and
- Keep track of who you sent the invoice to and when it was paid, and if needed, which ones need to be followed up.
An online invoicing tool can streamline this aspect of your bookkeeping process and provide an efficient backup filing system.
3. Accounting software
Every business is required by law to keep organised and timely financial records for a minimum of 5 years.
Manually recording income and expenses in excel or a workbook is time consuming and can be more prone to errors.
Save time (and stress) with an all-in-one accounting software solution such as Xero , QuickBooks or Myob.
Online bookkeeping offers numerous advantages, such as:
- Instant reports and real time insights on profits and loss, customer accounts, payroll – and your overall financial “big picture”
- Simplified data entry so you can collate and print invoices, purchase orders, and payroll much faster than with manual methods; and
- Improved accuracy through automation.
We understand that bookkeeping is not every business owners strength, however, when it comes to bookkeeping and accounting, vigilance is the key to minimising risk and ensuring the long term profitability of your small business.