Understanding Bookkeeping for Small Business
If you find paperwork and data entry to be a chore or you’re not financially inclined, bookkeeping can seem like a stressful part of running a small business – but it doesn’t have to be. Bookkeeping is simply a matter of tracking and classifying cash flow and financial transactions across your business to keep a record of what money you receive and what you spend. Simple!
Why business bookkeeping is so important
We’ve all been on those holidays where you throw caution to the wind, dole out pesos left, right and centre, buy a ridiculous amount of terrible souvenirs, and vow to tally up the expenses when you return home tanned, relaxed – and broke.
Bookkeeping for your business is a tad more important as it lays the foundation for your future success. Without an accurate record of financial information and transactions, your small business can run into financial hot water quite suddenly with urgent bills to pay, limited cash flow, taxes owing, and debt collectors nipping at your heels, threatening your solvency and reputation.
Getting the basics right
Thankfully, the basics of bookkeeping can be easy to get right with an established process, a set of logical financial reports, and a little willpower. Here, we outline the absolute essentials of small business bookkeeping to keep those paperwork headaches at bay.
Organise your records
Getting your records into logical order is the number one rule for any small business accountant or bookkeeper. While traditional bookkeeping literally involved the keeping of invoices, receipts and records in physical books, today there is an array of bookkeeping technology solutions like Xero, Quickbooks and MYOB, that make this crucial process much more simple.
- Accounts receivable to track what and when you are charging clients, and to ensure you are paid correctly and on time
- Accounts payable to record what you owe and to who, and when it must be paid to keep suppliers happy
Payroll to manage accurate, on-time payments to staff
The biggest bookkeeping headache we see – especially in the creative industries – is keeping track of expenses. Throwing a taxi on your personal Uber account, overindulging in Friday team drinks, helping a client out by purchasing a font on your credit card – it all adds up and it all needs to be accounted for and allocated in the correct period and classification to help measure profitability, keep ahead of cashflow problems, and maximise your tax deductions.
Traditionally, a small business owner ended up with a wallet overflowing with physical receipts that were dumped on an unsuspecting junior every 2-3 months to sort through and reconcile.
Today’s savvy business owner uses technologies such as Dext to track and categorise physical and digital receipts and financial transactions so expenses can be quickly and accurately tallied up at the end of each month, giving you much greater visibility into the state of your business, and peace of mind that everything is where it should be – rather than stuffed down the back of the office couch.
Set aside budget for tax purposes
Ahhh the dreaded tax bill. It always creeps up and always seems to be outrageously higher than expected. Our 15+ years of experience providing bookkeeping for small businesses has taught us that the best way to manage and mitigate the inevitable tax headache is to keep an ongoing, accurate record of transactions to help you forecast and therefore plan what your future tax bills will be. Set this estimate aside each month, allowing for a small buffer, so that come end of the quarter you’re not scrambling to make payment or spending hours fighting a losing battle with the ATO.
Using accounting software to streamline, automate and track
Streamlined operations and increased efficiency are key drivers of your ability to scale. You may have gathered we’re big fans of automation and cloud technology tools that can help your small business thrive on a cost effective basis. We don’t just focus on the finance function but can complete a holistic assessment of your business and recommend, implement and train staff on a range of systems including Xero, Quickbooks, MYOB, Asana, Harvest, Salesforce and more.
Why outsource your small business bookkeeping?
How much are you paying your salaried finance department, bookkeeper or accountant? Hot Toast can work with your business at a fraction of the cost of a full time employee. We don’t just push numbers and make pretty graphs. Advisory is at the heart of our business and we provide reporting and recommendations on how to make your business more efficient and profitable, so the investment pays for itself in no time.
Currently looking after your own finances? Time is money; as experts in bookkeeping, finance and general accounting for creative and real estate businesses, leave the bookkeeping in our capable hands while you and your team focus on what you do best!
Accelerate business growth
Our outsourced CFO and business automation technology services provide you with the tools to grow your business, not just manage its finances. Do you know your numbers? Do you understand the levers of your business and have a robust strategy in place to scale? Are you hitting targets and being accountable? How efficient are your current processes and software solutions? These are some of the areas we can assist with to ensure you are running a successful (and profitable) business.
Although we unashamedly love numbers, we will never treat you like one. All of our clients have an ongoing relationship with and direct access to Director and Primary Consultant, Sarah Lawrance – winner of Australian Accounting Awards CFO of the Year 2019 and 2020, and proud to be counted among Practice Ignition’s Top 50 Women in Accounting.
It all starts with a conversation
Our team is ready and eager for a first consultation to explore how we can build the perfect outsourced bookkeeping solution to support your unique needs and help your small business thrive. Phone Sarah today on 0426 217 167 or email firstname.lastname@example.org