Small Business Bookkeeping

Whether your business is a start-up or an established operation with a full book of clients, small business bookkeeping practices are essential for keeping your finances on track.

Here are the basics of managing your finances for financial stability and growth.

The importance of accounting

“To put it bluntly, so much can go wrong if you don’t keep a close eye on where your money is,” says Jamie Mobbs, principal of Mobbs & Company Accountants.

The importance of accounting should not be underestimated, says Jamie, as it helps businesses plan ahead, weather financial shocks and detect problems with expenses before it’s too late.

Employing a bookkeeper and/or an accountant can also help avoid nasty surprises around tax time.

The benefits of proper accounting

• Finances are managed professionally by experts who know your industry
• Simplified, more accurate expense tracking
• Saves time for owners and managers, who can focus on other things: marketing, staffing, or negotiating with suppliers
• Simplifies the production of accounting statements, BAS and other reports
• Lowers the risk of income-reporting mistakes, thereby reducing the risk of a tax audit
• Provides an accurate, business-wide financial picture at any stage of the accounting cycle

It’s all about expertise

With so much to know and so much riding on getting it right, it’s important to seek professional advice, says Jamie.

“You can’t expect someone who is already running a business to know the details of tax implications, opportunities for investment, company structure and tax minimisation,” he says.

“Larger companies can have people dedicated to looking at those things, but when you are small you don’t have the resources, so you are relying on your advisors to be proactive.”

Protect your business

According to Jamie, there are serious consequences for not complying with income-reporting laws. “It will cost you every time you don’t submit a form to the government,” he says.

“If you’re registered to submit quarterly and you miss all four, obviously that’s a number of fines. And if you don’t pay on time, the interest rates are 4% or 5% above the normal loan rate.”

Worse, however, is the possibility of your business failing. Poor financial management is one of the main reasons for the failure of small businesses.

Accounting services

Some professional accountants offer more than simply helping prepare your financial statements and tax forms.

“We offer a benchmarking service where we put the client’s current financial statement against the industry standards, so we can highlight areas where they are down or up and help them find ways to improve it,” says Jamie.

Other accountants offer business coaching, whereby you can get advice on issues ranging from managing staff to moving your marketing online.

Good accounting and your business

Don’t be one of the many small businesses that fall over because of poor financial management.

Call an accountant to find out how they can help you with your small business bookkeeping.