Our Top Tips for Effective Business Bookkeeping

Posted 29 Aug '22

When business owners think of essential strategies to run a more successful enterprise, bookkeeping can sometimes be missed off that list. However, it is only through correct business bookkeeping that a business can hope to identify discrepancies, grow, and succeed.

Business owners tend to focus a lot of attention on the big picture items of incoming money, expenditures, and even staff management. Many overlook the importance that diligent bookkeeping can help them become more efficient and effective in managing all those other areas of their business!

Whether owners and managers outsource their bookkeeping work to professionals or they tackle the tasks themselves, it is essential for businesses to ensure they are following best practice bookkeeping processes so when they look at the numbers, they can be sure what they are looking at is accurate!

Why Proper Business Bookkeeping Is Important

From businesses with just one staff member to companies with hundreds, it is crucial for businesses of all sizes to keep track of and be confident in their numbers. After all, how can you accurately say you are succeeding if you don’t truly know the digits of your profits and losses?

Furthermore, business owners who neglect accurate bookkeeping practices are the ones who often find themselves in financial trouble 1, 2, or even 5 years into the future as they didn’t have the crucial information available when it was needed. At a minimum, business owners and managers should make sure:-

• The business accounting file is set up correctly and suited to your business and operations,
• The business is correctly recording Goods and Service Tax (GST) on the transactions,
• Receipts and invoices are routinely reconciled, filed, and addressed, and
• Spending is accurately allocated to the correct reporting accounts.

There are a few easy steps business owners can take to ensure proper bookkeeping.  We believe the key to efficient and effective bookkeeping is to establish a routine. We see way too often that when businesses fall behind on their bookkeeping, the task of getting caught up and on track more often than not gets placed in the “too hard basket”. We have listed below some of the key steps to help with getting the best practice bookkeeping system in place.

• Accounting Software: Businesses who use accounting software, such as Xero, reap the benefits of real-time information about their results. It not only automates some of the data entry steps for you it, it is the easiest way to review and check your results once you have done the hard work of the data entry!
• Automate Your Processes: Reduce the clutter of holding onto receipts, invoices, and other paperwork by automating your accounts and processes. For more information about automation for proper bookkeeping, check out our previous article!
• Know your Record Keeping Requirements: So that taxes can be accurately claimed through the Australian Taxation Office, it is essential for the person in charge of bookkeeping to know what expenses do and do not have GST along with what are allowable business deductions. Check out this handy little tool to help you assess how well you are keeping your business records.
• Routinely Review Profit and Losses: Keeping track of the cost of goods sold, operating expenses, payroll, etc., are all aspects of accurate bookkeeping. By keeping a close eye on profit and losses, business owners can make sound decisions for the future of their business.

It’s more than just paperwork!

As you can see, proper bookkeeping is not all invoicing and receipts! Sure, those things are involved with bookkeeping, but there is so much more that goes into keeping track of all of the funds involved with running a business.

Having accurate and tidy books can mean the difference between being reactive or proactive to what is happening in your business. If you’re uncertain if your current bookkeeping workflows are up to standard, we are always available for a chat to help either place or mind at ease or provide some solutions to get it squeaky clean!