Bookkeeping is an essential part of running a successful business. It’s more than just keeping the score, it’s about having access to up-to-date financial information so you can make informed business decisions. As accountants quality bookkeeping records let us do tax planning that can save you money.
Psst… Crunching numbers not your thing? Sheridans offers a bookkeeping service, which can free you up to focus on being a psychologist.
1. Choose the right Software Program
The key is to make sure you match your business needs (payroll, invoicing, point of sale etc.) with your level of accounting skill. Unfortunately, we pick up a lot of new small business clients who are using software beyond their business needs.
A cloud-based digital bookkeeping system cam allow you to scan in your receipts. you can also extract reports and reconcile your transactions to your bank statements. Your data file is automatically backed-up and there’s no need to download software updates because when you use a cloud-based program it’s automatically done for you.In some cases a fancy software programme isn't necessary and an Excel spreadsheet can do the job.
This is something we can help you with. We can help you find the most suitable software programme for you and your business. We can also do the bookkeeping for you.
2. Keep your Bookkeeping up to date
Be disciplined, keep your bookkeeping up to date and make sure you meet all the ATO lodgement deadlines.Allocate a time at the start of each month to work on the bookkeeping for the previous month. If you're a contractor psychologist or a sole practicioner it should take less than 2 hours to complete. Avoid binge bookkeeping when you cram all the work into one day or night. As a small business owner, you have a lot on your plate and remembering what a receipt from 3 months ago was for can be a challenge.
3. Separate Business & Personal
Another general rule is, separate your business and personal expenses.
I recommend setting up 3 business bank accounts
One for day-to-day income and expenses,
One for tax and super
One for you to save emergency money for your business.
While it’s convenient to use your credit card for everything, it gets messy when it’s time to do your bookkeeping. If you really have to use your personal credit card for your business (perhaps you want to collect Frequent Flier points) make sure you transfer the exact amount from your day-to-day income and expenses account to your credit card immediately after you spend the money so the amount will be recorded in your business account. This means all the expenses will be recorded in one spot and make bookkeeping easier.
4. Keep Receipts!
As an accountant I don’t mind how you keep your receipts. Just keep them!
Some individuals, and even some businesses, put them in an A4 envelope for me each month. Others use Excel spreadsheets, photo albums on their phone or more sophisticated electronic storage.
The important thing is that you have evidence of the:
Date
Amount of the expense
What goods or services it was for
Name of the supplier
The ATO requires you to keep these records for five to seven years either on paper or electronically.
The ATO has made an app, called the ATO app, which includes a tool called myDeductions where you can store this information and, I have to say, it’s pretty useful. It’s got a load of functions and information. It’s free to download from Google Play or the App Store.When you spend money on something tax deductable, enter it into the myDeductions app by snapping a photo of the receipt, writing in the amount and a brief description of it and selecting which category of expense it is. At the end of the year you can email all of this to your tax accountant, or if you’re brave enough to do your own tax it can be uploaded to pre-fill your tax return.The myDeductions tool can also be used to record vehicle expenses and trips.A word of warning though, be sure to back up the information as it’s only stored on your phone. If you’re a sole trader, you can use myDeductions to keep records of your business’ expenses and income.
5. Staff Requirements
When you employ staff, your record keeping requirements increase dramatically. You must use Payroll software that is accredited by the ATO. Our preference is Xero. You must keep payroll records and track Superannuation obligations.
If you have any queries about this, don't hestitate to contact us. We're here to help.
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