In today’s fast-paced business world, understanding financial management is crucial. Efficient bookkeeping is more than just numbers. It gives insights that can drive your business forward. This guide is for startup founders, entrepreneurs, or anyone interested in understanding bookkeeping basics, from effective systems to invoicing details.
The Importance of Having a System in Place
An effective system is vital for tracking financial transactions. It keeps you organised and ensures you don’t miss anything financially. Many businesses know this is important but often don’t implement it well. Missing small details can have a big impact.
A System Example
A good bookkeeping system includes recording monthly sales and keeping track of invoices and bills. Record all expenses, whether by credit card, cash, or direct payments. Also, track stock movement and losses. Consistency is key in bookkeeping.
Keeping Paperwork
Maintaining a detailed record of all financial documents is crucial, especially in case of an audit. These records can be in the form of hard copies, scanned files, or emails, but they need to be in English or have an English translation.
While it’s good practice to store all receipts, it’s not legally required for expenses under $82.50 ($75 + GST). However, if you wish to claim the GST, it’s necessary. It’s essential to retain all paperwork for at least five years after lodging your tax return. For instance, if you lodged your 2010 tax return on 23rd September 2020, then all related receipts should be retained until 23rd September 2025.
Reconciling Your Accounts
Reconciliation ensures that all transactions within your bank account are accounted for and appropriately classified. This includes identifying any personal expenses mixed with business expenses and coding them accurately. Having multiple business accounts, such as a day-to-day account, savings account for GST, and a business credit card, can aid in streamlining this process.
Reconciling Accounts with Xero
Most online accounting platforms, like Xero, incorporate bank feeds. This feature connects your bank to your accounting program, enabling seamless transaction imports. To expedite the process, you can set up bank rules for automatically coding transactions.
General ATO Requirements
Every business must hold an Australian Business Number (ABN). It’s free to acquire, so you should be cautious of third-party companies charging for this service. Furthermore, having a Tax File Number (TFN) is mandatory. Ensure timely lodgment of business documents like Business Activity Statements, Instalment Activity Statements, Taxable Payment Annual Reports (TAR), and Single Touch Payroll.
Invoicing
Proper invoicing is essential for accurate financial tracking. Your invoices should include crucial details like your name, address, ABN, a clear description of sold items, GST details (if applicable), and the amount. For invoices exceeding $1,000, you must also provide the purchaser’s name or their ABN. Once you raise these invoices, tracking their payment status becomes crucial for healthy cash flow.
eInvoicing
eInvoicing, integrated into many bookkeeping and accounting software, offers several advantages like saving time, reducing costs, ensuring faster payments, and providing cybersecurity readiness.
Debt Collection
Chasing overdue accounts can be challenging. Utilising a computerised system can help send reminders and streamline the process. It’s essential to approach this task with a prepared mindset. Taking notes during each interaction can ease future communications and make the debt collection process smoother.
Simple Guide to Payroll
Engaging staff is both an exciting and daunting aspect of business. If you’re hiring for the first time, you might need to register for PAYG with the ATO. Various tools and software can assist in streamlining payroll. It’s vital to provide payslips to employees within a day of their payment.
Claiming Motor Vehicle Expenses
Claiming vehicle expenses can be straightforward if approached correctly. Using a logbook, either physical or electronic, can help in tracking kilometres travelled for both personal and business purposes. Ensure you retain all related receipts, and consult your accountant to determine the best method to claim your vehicle expenses.
Wrap Up
We’ve navigated the vast landscape of bookkeeping, touching upon systems, the significance of paperwork, account reconciliation, ATO essentials, the nuances of invoicing, the world of payroll, and the steps to claim vehicle expenses. Equipped with this knowledge, you’re better prepared to manage your finances and make informed decisions.
Take Your Bookkeeping to the Next Level with NORTEC
Ready to dive deeper and optimise your bookkeeping processes further? NORTEC offers advanced solutions tailored to your unique business needs. Our team of experts can guide you, ensuring your financial management is both efficient and compliant. Contact NORTEC today and transform your bookkeeping journey.
