It’s never a bad time for accounting. Even if you are just starting your business it is important to always keep in mind what is happening with your money. Whether this be figuring out accounts or creating a payroll, you need to manage your money. Small businesses can live or die on their accounting. Even if you have an incredible product, if you don’t manage your money properly you could risk falling into pitfalls that you cannot get out of. While you may not have the ability yet to hire a full-time accountant there are some great local accounting services who can put you on the right path. Here are 12 tips to help you get on track with your small business’s accounting.
1.Set up your accounts
Once you have registered your business you should set up your business accounts. This allows you to separate your personal accounts and expenses from those for your business. While legally if you are a sole trader you do not need a separate account, it will make your life a whole lot easier if you do set one up.
Start by shopping around at different banks. Look at fees and other benefits for a business account across multiple banks. Some may have higher fees but offer other benefits that may be more beneficial to your business.
Once you have set up your main account it is also a good idea to open a business savings account. This will help you when managing tax, bills, or even help in building money for future investments. If you are in an industry that commonly has ups and downs in terms of work, it could also be useful to have a savings account that acts as a ‘war chest’ saving you on a rainy day.
You could also look at a Business credit card. This can help you begin to build your business credit for the future. It is a good idea to keep it separate from your personal credit card to avoid any clashes of usage or bills.
Before going to set up an account ensure that you have all the required paperwork completed. You may be required to have an ABN so ensure that you have completed that process before applying.
2.Look at a good bookkeeping system
Bookkeeping is important for looking at your day to day expenses and revenue. It involves recording transactions, keeping track of receipts, categorising transactions, and reconciling bank statements. It is important to understand what is happening day to day financially in order to get the most out of your accounting. There are many important reasons to begin bookkeeping the second you start your business and we have written about them in more detail here.
Start by figuring out how you want to do your bookkeeping. You could either get a good bookkeeping software, hire a bookkeeping service, or hire a bookkeeper full time. Obviously each has there own strengths and weaknesses in regards to cost, time, and output. Hiring a bookkeeper full time is the most expensive option and is something your business may not benefit entirely from. While just buying bookkeeping software may be cheaper, but you must put a lot of time into it in order to get the most out of it. A good bookkeeping service is the perfect middle option. It costs less than an in-house bookkeeper but still can give your business the benefits of one. However, it is important to choose a bookkeeping method that is right for your business.
Now is where the fun begins, we begin bookkeeping! Keep track of your day to day expenses and revenue through your chosen bookkeeping method. You will begin to see the day to day on where your money is coming and going allowing you to fine tune to push towards profitability. The aim of this tip is to encourage you to keep a close eye on your bookkeeping and be open to adjustments to the way your business is run. This way you can get the most out of the time invested.
4.Keep your receipts
This is a quick and simple tip. Keep your receipts! It will help when it comes to tax time or if you happen to find any inconsistencies in your expenses. While this is a part of bookkeeping, it is important enough to warrant its own tip.
5.Determine your payment methods
Figuring out what payment methods your customers can use is not as simple as it seems. There are so many payment services that you can implement into your online store that it can be a little overwhelming. Beyond standard Eftpos and Credit Cards you should look at incorporating other online payment methods to provide options for your customers. A few good examples are PayPal and Apple pay. When a customer pay through these methods PayPal or Apple, or whatever other online payment provider you use, takes a small cut. This may seem bad, you want to be receiving as much money as possible, however, a lot of these services are expected by customers. They offer a secure payment method that customers trust. It is up to you to decide what is best for your business.
6.Find out your tax obligations
This is where a professional Accountant will come in handy. They can help you understand all your tax obligations. Do you know when you need to begin adding GST to your products? Or how much you can get back in tax returns? Possibly not but, by using a professional accountant, you can help maximise your return come tax time and avoid costly pitfalls.
7.Establish a payroll system
At first while you are a one-person-show you may not need to worry about a payroll system. However, you may grow and find that you need to employ a part-time employee to assist you. Now you will need a payroll system. You will need to establish a payroll schedule and ensure that you are withholding the correct taxes. If you have hired an accounting service or an accountant, they will be able to help you set this system up utilising the latest software like Xero. If you are on your own, consider payroll software as that will make the entire process far simpler by automating it.
8.Update your business and marketing plans
Each year you should look over your business and marketing plans. Review your previous year, see if you hit your goals, and set new ones for the next year. Set up financial goals and prepare for the next year. This is an obvious tip but something some businesses do not do. Planning for your future is a key to success and so should not be taken lightly.
9.Investigate overseas taxes
Maybe you have begun to expand into new overseas markets. Now you may have to begin looking at import taxes and any other requirements for trading within that country. Begin by talking to an accountant. They can help you understand all the taxation requirements and can help prepare your business’s financial plan for the expansion.
10.Review Insurances, registrations and licences
Along with reviewing your business plan you should also review your licenses, insurances and registrations. You may find that there are registrations or licenses that you no longer need, or new ones that you do need. Insurance prices could also shift. By reviewing these three items each year you could potentially save money or prepare for increased expenses.
11.Re-evaluate your methods
Don’t be afraid of questioning your accounting methods. By questioning your methods, you could find that what originally worked well for your business no longer does. This could be caused by the growth of your business or simply changing technologies. If your business has begun to grow rapidly and you are still doing your own accounting, look into hiring an accounting service or an accountant.
12.Hire an accountant or accounting service
This brings us to the final tip. A good accountant will help you make money, or at least show you where you are losing it. They can help you streamline your accounts and may even reduce some of your own stress. While it may seem like unnecessary extra expenses it is well worth it in the long run. If you need a good accounting service contact Link Strategies and see where we can take your business.
Accounting is incredibly important to the future success of your business. It will help provide you with an understanding of what exactly is going on within your business so that you can plan for the future. If you are still unsure about what exactly an accountant can do for your business contact us at Link Strategies, we will gladly answer any questions.