Small business accounting: our top tips

Keep accurate records

When you are starting a business, you need to learn how to do accounting and record-keeping – it’s pretty unavoidable. Most of your day-to-day expenses and outgoings can easily be tracked online through your credit cards and banking records. With this in mind, it’s also important to keep all of this information in one place so that it’s organised and you can view everything at a glance if ever needed.

It is common for business owners to invest in software that makes it much easier to do bookkeeping for small businesses. There is plenty of software available that allows you to track money flow and have invoicing features. Trust us – our accountant will thank you come tax time when everything is well organised and in one place!

Open a business bank account

When you own a small business, especially in the beginning, it can be easy to mix up your personal and professional finances. The results of this can be pretty messy. One of the first steps that we recommend when starting a new small business, is opening up a bank account under your business’s name.

Keeping all your personal and professional finances as separate as possible makes the tracking of cashflow so much easier and more accurate. It will also help you a lot come tax time.

Keep all your receipts

You may think that keeping receipts nowadays is pretty redundant as practically every purchase is tracked electronically or online. However, we still recommend that you keep them on file as they often contain dates and expense details that can be very helpful for future reference.

When keeping your receipts, be sure to also keep them organised and categorised so that when they are needed, they are easily found. This will especially help you (and your accountant) come tax time so you can claim accurate deductions.

It is also a good way for you to see where most of your money is going so you can adjust going forward if needed.

Be accurate

For a lot, if not most of new small business owners, invoicing can be a pretty foreign concept. However, it is important to record specific details about different transactions. They also help to prompt clients to make payments on time. They also help you keep track of your clients who never pay on time, allowing you to take action if necessary.

Some of our top invoicing tips is to never add to an invoice when it’s finalised, and never create multiple versions of the same invoice. Doing these things creates a lot of confusion and can be problematic when referencing later down the track.

Create profit and loss statements

Profit and loss statements are very helpful and can give you a good snapshot of the financial health that your business is in. It basically summarises the expenses, costs and revenues your business incurs during specific days. It can also reveal information about your business and its ability to generate profit.

As a small business owner, there is a whole bunch of things you can do to make your accounting processes more effective and easier to handle.

If you want further information on the above, or any more tips for your small business accounting, please get in contact. Phone: 08 6336 6200 or email: info@ascentwa.com.au