Best Practice Bookkeeping Habits
The aim of our Bookkeeping Basics Blog is to support our small local businesses. We know that running a business can be busy and stressful at times, to say the least – that’s why we want to assist however we can, by taking care of the numbers and paperwork (all the “tedious” but necessary parts of running and growing a business!)
What is the bookkeeping? Put simply; bookkeeping involves organizing all of the financial record-keeping that you might not have the time, patience or knowledge to do properly. This is to ensure that you are given a consistent insight into the financial position of your business. A good bookkeeper will be a huge asset!
Although we strongly recommend utilizing bookkeeping services (mainly for accuracy, time-saving purposes, and peace of mind), if you are managing your own bookkeeping for now or just starting your business, here are some small business bookkeeping habits that we recommend, to ensure that you’re on the right track:
Know your Software. Bookkeeping software comes in different forms and it can be tricky to navigate which one will be best for you, depending on your business needs. It is also essential that the software is set up correctly from the beginning, to avoid mistakes or doubling up in data entry. We usually recommend MYOB bookkeeping, Xero Bookkeeping & Xero Cashbook or Quickbooks, but it really does depend on what you are using it for. Get in touch with your local bookkeeper to see what they recommend & schedule in a training session so you’re set up correctly from day one. Utilising the correct bookkeeping software and knowing how to use it can save your business lots of time and money!
Record Receipts. Make sure you are always ensuring customer receipts and income is recorded correctly (and as soon as possible to avoid mistakes). Also ensure that you are obtaining invoices for each purchase and that the payment method is logged. It may seem like you’re over-doing it, but it’s important that you practise high attention to detail so that items are easy to track if necessary later on. Double entry bookkeeping is a great way to ensure that you’ve recorded correctly, as it involves entering everything into the system twice.
File Paid Invoices. You should be able to do this online with your accounting software – simply open up a new file at the beginning of each financial year and upload your paid invoices and paid bills into this folder.
Don’t use too many categories – it can cause confusion! For example, some businesses use sub-categories such as “Paper, Pen, Ink,” etc. when they could have been collected simply under “Office Equipment” or “Stationery Supplies”. At the same time, avoid creating a “Miscellaneous” category at all costs!
Consistency is key! Hence why we suggest “habits” to ensure you are going through the correct processes each time. Try to maintain records of the above weekly – the longer you wait, the harder it may be to get back on top of things.
The goal of these habits to ensure that you are always on top of your small business bookkeeping – that you’re organized and everything has been done correctly, legally and on time.
However, even if you are several years behind on your bookkeeping, a bookkeeper can get your business back on track and provide training to ensure it stays that way. Your bookkeeper will also prepare & lodge BAS, organize payroll, superannuation, data entry; whatever your business needs. You’ll have the expertise of knowledge, consistency of data entry, ongoing backup support and only one invoice to pay each month at a flat hourly rate.