There is one time of year that usually brings dread to even the best entrepreneurs: Tax Time. But you can stress less if you implement these 5 bookkeeping practices into your business now, well ahead of those end of year obligations.
1. Prioritise your bookkeeping
Make it a regular priority to focus on your bookkeeping by allocating certain times each week that MUST be spent on your books. Put away the phone, social media and if you must lock the door to avoid interruptions and give yourself the time to focus on your numbers. If prioritising your book-keeping is impossible for you (or simply not your cup of tea), then we highly recommend hiring a bookkeeper and let them make your books a priority.
2. Keep your business and personal expenses separate
One of the quickest and easiest ways to overcomplicate your bookkeeping is to start mixing business with personal. A separate bank account for business income and expenses gives you surety that ALL transactions within that account are for business-related purposes. And to make sure there are no unnecessary ‘wrong account’ moments, know what you can and cannot claim before even opening your wallet.
3. Use the right technology for your business
With so many options now available to help with your bookkeeping practices, are you using the right one for you? Ensure you speak to your tax agent well before tax time about your yearly tax obligations such as BAS, PAYG & Superannuation and make sure your bookkeeping technology suits you and your business. The right software can even talk to your accountant for you so any issues can be addressed early, and did we mention with the right software you can even ditch those shoeboxes full of receipts?
4. Get your expense categories right before you start
If you overcategorize you will waste time itemising purchases that will eventually be lumped together for tax purposes anyway. So instead of individually categorising items such as staplers or printer ink replacements, check with your accountant if these can be itemised under one heading like Office Supplies. In the same token, do not under categorise. If everything is lumped under Sundry or Miscellaneous, you will create more work for yourself at tax time when you must go back through it.
5. Regularly back up and secure your files
Let’s face it. Technology always has its glitches and quirks, so make sure to backup your book-keeping files on a regular basis on a secure and external storage system such as a hard-drive or cloud-based storage system. To determine what is regular for you, ask yourself: Is it a minor inconvenience to lose a months’ worth of book-keeping? If the answer is no, then maybe a weekly back-up schedule would be more appropriate.
And of course, it goes without saying to communicate regularly with your accountant about what is happening in your business and with any questions you have in relation to your book-keeping requirements. Always err on the side of ‘get it right now’ so you can stress less and save yourself (and your accountant) a headache come tax time.
If you’ve got questions about how to best implement these practices into your business, give us a call.