For a minimum of 5 years, you are legally required to keep your business bookkeeping records. You must keep all documents relating to your income and expenditure, so it’s essential to practice good record keeping.
A bookkeeping system keeps accurate records for varied purposes:
- business activities analysis
- seek finance
- attract investors
- lodge and pay tax
- organise reporting requirements.
You must also register for PAYG withholding if you employ staff, where you pay them and withhold some tax on their behalf.
Complete and lodge monthly/quarterly Business Activity Statement (BAS) with the ATO.
Also, keep all acquisition receipts to claim your expenses.
You can have this information easily with the appropriate accounting setup and program. This helps you streamline and automate your business processes to stay compliant.
You can find someone to do bookkeeping for your small business. Contact your bookkeeper, accountant, or business advisor if you need help getting started.
Depending on your budget, bookkeepers will allow you to choose different service levels. You can start out with basic bookkeeping at a low cost or more advanced services for your growing business.
Seek advice on what method you should use:
- Cash accounting — tracks the actual money coming in and out of your business. This is as simple as keeping track of you business cash flow.
- Accrual accounting — you record expenses and sales when they take place. This shows the amounts you owe to people and the amounts owing to you.
Or what system to prefer:
- Manual bookkeeping systems — a series of books or ledger accounts that are often available at your book store, office supply, or local newsagent.
- Electronic systems — the Australian Taxation Office (ATO) is moving towards all electronic records. Electronic options include:
- tailored software accounting packages — record your transactions, calculate GST, update ledgers, prepare financial statements, and generate invoices.
- web-based or ‘cloud’ system — updates your books anywhere and automatically store your financial records off-site.
- spreadsheets — if you don’t have enough funds.
Keep your business transactions separate from private transactions. In time, you can apply for a business credit card and apply the same terms.
When you apply for a business loan from a bank, they’ll want to check your credit rating as well as your financial history. This process usually takes a lot of time.
Faster loans… far less fuss!