Our research shows that successful sustainable businesses understand their numbers. Live bookkeeping gives business owners up to date information so they can measure and manage their business.
The following 4 tips everybody should know about bookkeeping.
1.WHY BOOKKEEPING IS IMPORTANT IN BUSINESS?
“Bookkeeping is the activity or occupation of keeping records of the financial affairs of a business.”
In general terms bookkeeping is ESPECIALLY important in business as it keeps your business records organised, helps business budget, and prepare for all the necessary tax compliance issues.
To keep your business finances in check, we recommend you use an experienced bookkeeper who is a registered BAS agent.
The following are more specific reasons why bookkeeping is important.
- LIVE Bookkeeping – Is keeping business financial records up to date using cloud-based software and applications. We suggest updating your business records at least once a week. The benefits of using LIVE bookkeeping, is you know how your business is tracking, so you can make any adjustments quickly for improvement.
- Budgeting – Accurate budgeting is a crucial financial tool for business to measure and manage financial records. LIVE bookkeeping is the beginning process to prepare accurate and meaningful budgets. We recommend you do CASH and Accrual budgets.
- Cash Flow Improvement – There are 6 cash drivers in business to improve cash flow:
- Sales
- Cost of Goods sold
- Expenses
- Debtors
- Creditors
- Stock/WIP
By using LIVE bookkeeping and measuring the 6 cash drivers you can manage and improve business cash flow.
Download the eBook “Creating Cash Flow for YOUR Business” CLICK HERE
- Peace of Mind – We recommend you use an experience BAS Agent bookkeeper that practices LIVE bookkeeping as it will give you peace of mind that your financial records are under control.
- Spend time on building your business – Successful businesses spend their time on growing their business and let skilled bookkeepers handle the financial affairs.
- TAX compliance – Good financial records that are kept up to date will reduce your tax compliance costs.
- Reduce your PAPER RECEIPTS –Excellent bookkeepers will keep you up to date by using cloud-based applications that will reduce those paper receipts; just take a picture and file the paper.
Learn from your bookkeeper, they have a wealth of knowledge.
2.ARE BOOKKEEPING AND ACCOUNTING THE SAME?
As defined by the oxford dictionary:
“Bookkeeping is the activity or occupation of keeping records of the financial affairs of a business.”
“Accounting is the process or work of keeping financial accounts. “
For non-accounting people the definition maybe confusing.
NURSE (Bookkeeper) – DOCTOR (Accountant)
Bookkeepers will usually do the following:
- Set up your accounting software.
- Link bank accounts to accounting software.
- Reconcile your bank accounts, accounts receivable & accounts payable.
- Prepare the trial balance.
- Prepare and lodge Business Activity Statement (Must be BAS agent)
- Prepare payroll.
- And keeping records of the financial affairs on a daily or weekly basis.
Accountants will usually do the following:
- Use the trial balance to prepare financial records, like Profit & Loss & Balance sheet
- Give tax return advice.
- Prepare and lodge tax returns (Must be a tax agent)
- Plus, more
It’s also noted that some accountants are doing bookkeeping too.
In general terms, accountants charge more than bookkeepers, and it can be 2 to 3 times.
3.WHAT BOOKKEEPING SOFTWARE SHOULD I USE?
There are several bookkeeping software options in today’s market. It is super important that its cloud based.
WE RECOMMEND YOU TALK TO AN EXPERIENCED BOOKKEEPER BEFORE YOU INSTALL ANY ACCOUNTING SOFTWARE.
Some of the major players for small/medium businesses are.
XERO
Xero is an easy-to-use accounting system that lets business owners see their finances in real-time. You can also invite your business partner, accountant or bank manager online. Being able to collaborate like this takes away the headache of transferring data by discs or email. It is an ideal accounting tool for small business owners.
A set monthly fee covers everything including new features that are released regularly every month. There’s also nothing to install or back-up.
Jim’s Bookkeeping Australia is proud to be a Gold Partner with Xero.
MYOB
One of Australia’s leading accounting software for small business.
MYOB’s business management solutions are more than just accounting software. Each solution gives you a range of tools that can help you stay compliant, improve your customer service and build a more profitable business. With AccountRight
Live MYOB has found the solution for users who want the flexibility of online access anywhere and anytime, and who also want the security of having access in situations when internet access is unavailable.
Jim’s Bookkeeping Australia is proud to be a Diamond Partner with MYOB.
QuickBooks/Intuit
Intuit can help keep small business owners on track with QuickBooks Online. For those seeking the time saving benefits of an easy-to-use automated accounting system designed for essential business tasks.
There are several other accounting software packages on the market, but it is especially important you discuss your requirements with an experienced bookkeeper.
For larger business, contact an experienced bookkeeper for recommendations.
4. ARE BOOKKEEPERS’ FEES TAX DEDUCTIBLE?
The Australian Tax Office (ATO) website states that,
“Claiming a tax deduction for operation expenses:
“Operating expenses are the expenses you incur in the everyday running of your business. Examples include office stationery, renting premises and purchase of trading stock. These expenses are sometimes called working or revenue expenses.
You can generally claim a tax deduction for most operating expenses in the same income year you incur them. Ensure you keep accurate and complete records of these expenses as they occur.”
So, in general you can deduct bookkeeping fees that you pay for your business as a deductible expense.
Please note bookkeepers must be a registered BAS agent (or acting under a BAS agent supervision) with the Tax Practitioners Board (https://www.tpb.gov.au/information-clients-factsheet) to deal with GST/payroll and preparation of Business Activity Statements (BAS).
General bank reconciliations are not GST related; therefore, a non-BAS agent bookkeeper can complete the work.
Disclaimer: Ogap Pty Ltd ABN 35 162 809 118 trading as Jim’s Bookkeeping & Tax is a registered Tax agent, 25413903, the information provided in this article is of general nature only, before you act on this, we recommend you consult a registered BAS agent.
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Let’s discover the problems in your business and discuss fixing them?
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As Professional Bookkeepers, you’ll be surprised how much insight about your business we uncover about your business in a short time
Get More Done
Do you spend too much time bookkeeping and not doing other important tasks?
Are you risking nasty tax office fines and penalties?
Do you have enough time to work on your business?
Qualified bookkeepers can fix any problems expertly and professionally.
Pay Less/Earn More
Would you pay less in accounting fees if your accounts were up-to-date and correct?
Are you confident that you’re claiming the correct amount of GST each quarter?
Could you earn extra revenue in the time you spend doing the bookkeeping?
A professional bookkeeper can help eliminate trouble spots from your business.
Payroll Services
Did you know that paying your employee’s SGC ONE day late can cost you big time?
Not deducting the correct PAYG amount can leave your employees with a tax debt.
Not providing ‘correct’ payslips could cost you a nasty fine.
Payroll experts help protect you from simple but costly payroll errors.
Have Confidence
Do you worry about money?
Are you aware that small administration problems can create disasters?
Did you know many businesses waste more money than they’d pay a professional bookkeeper to get it right.
The right bookkeeper gives you more Control and greater Peace of Mind.