On average, small business owners spend 10 hours each week recording, organising, and processing financial transactions – everything from accounts receivable and payable to employee payments, expense receipts and supplier invoices. That’s a lot of time on the not-so-exciting tasks required to keep on top of your business!
While the process may be time-consuming (and tedious!), effective bookkeeping is the foundation of sound financial management – which in turn, is the lifeblood of your business.
Here are three bookkeeping basics to help ensure a healthy financial future for your small business.
Faithfully track expenses
Accurate and consistent expense tracking is crucial for claiming tax deductions and lowering your overall tax bill. Plus, analyzing expenses can offer crucial insights into spending patterns and the overall profitability of your small business.
Small business owners should consider using a mobile app for simple, consistent expense tracking. Hubdoc is a great option for this.
Systematic invoicing and filing
Efficient invoicing is about more than ensuring you get paid in a timely fashion. An invoice is an official record of the terms of each transaction and must be completed accurately to avoid errors in your bookkeeping process.
Here are a few tips for professional invoicing:
- Ensure each invoice includes all the important details: contact information, a tracking number, a detailed list of products or services rendered, and a breakdown of the total amount due;
- Provide an electronic receipt to reduce waste and create a “paper trail” if there’s ever a dispute; and
- Maintain an invoice-filing system that records when you sent the invoice, to whom, when payment was made, and any reminders sent out.
An online invoicing tool can streamline this aspect of your bookkeeping process and provide an efficient backup filing system.
Save time with accounting software
By law, every business is required to keep organised and timely financial records. However, manually posting income and expenses to ledgers and journals is time-consuming – not to mention stressful for the math-averse.
Shave some time (and stress) off your weekly bookkeeping with an all-in-one accounting software solution. Xero is a fantastic option, and we use it here at Carbon ourselves.
When it comes to accounting, vigilance is the key to mitigating risk and ensuring the long-term profitability of your small business. Be sure to set aside time each day, week, and month to update and review your books to catch any red flags and ensure your finances are on track.
Let’s be honest. You went into business because you had a passion for whatever line of work your business is in, not because you wanted to be working through mountains of paperwork to satisfy the ATO. So why not stick to what you enjoy doing and leave the bookkeeping to us? Our team are ready to assist.