Speak to any accountant and you will hear bookkeeping horror stories of scenarios that have literally ruined businesses. From intimidating audits to incomplete and inaccurate books, there are so many ways to go wrong in bookkeeping for your business. Incorporate these tips with your current bookkeeping practices to see improved results immediately:
1. Stop estimating
One of the main reasons business owners get in trouble with the ATO is because they estimate. They round up or down to the nearest “clean” number. For instance, few people actually spend exactly $700 on computer equipment. The cost should be specific, something more like $689.32. Though rounded numbers is convenient, you must be able to substantiate each number you use on a form. Write down all numbers, keep receipts and take pictures to ensure that you keep information accurate.
2. Invest in technology
Software, websites and bookkeeping programs can all make bookkeeping more efficient. More and more business owners are turning to cloud software and other accounting solutions that allow access to financial information from any electronic device. This is advantageous because it allows you to send information easily and back up your files regularly. Can you imagine the peace of mind that comes with never losing anything ever again? The earlier you invest in internet solutions, the better off your business will be.
3. Streamline your spending
You will be better off keeping just one account for business purposes, especially when it comes to categorising your expenses. It is extremely common to pay with cash, losing receipts in the process. When you always pay with a credit or debit card, you have access to a receipt at all times and you’ll never miss a potential tax deductible item. Also, you’ll never have to worry about keeping track of which account has a balance you can use. Keep it simple!
4. Set aside for tax time
Tax season always seems to sneak up. Unfortunately, too many of us fail to set aside money for this purpose and end up in a rut. So budget for tax season ahead of time. You know that you have to pay – why wait and make it stressful? Open a savings account for your business where you can save each month. This makes it easy to simply pay your taxes by the April deadline each year, hassle-free.
5. Set realistic goals
Setting goals for your business is essential for productivity, but you must always ensure that they are quantifiable. This means that you need to be able to track the results with numbers. You might decide that you want to increase the amount of money you spend on marketing your product. Rather than saying “I want to spend more on marketing,” set a qualtifiable goal like “I want to increase my marketing budget by 15% in 2015.” This gives you a specific target to reach.
There is certainly no doubt that bookkeeping is hard work. That is why you must always ask for feedback and set realistic expectations for yourself. Running a business should feel like a challenge, never like an unmanageable chore.
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