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Bookkeeping

One area that has long been recognised by experts as being a cause for the failure of Micro businesses, is their poor record keeping.

It is estimated that 1 in 15 Micro Businesses will fail due to inaccurate record keeping necessary for ATO requirements.

Decisions to be made

There are two main reasons why these businesses neglect their record keeping

  • Lack of time
  • Lack of expertise
  • Lack of funds to pay for support

Each business operator has to decide:

  1. Whether to spend their precious time in producing their product/service — which is what they do best
  2. Pay a bookkeeper to keep their records for them — which is what they do best

This is called ‘building on your strengths’ while outsourcing to other experts to look after your weaknesses.

What support should you expect?

Bookkeeper

It will save you money if you use a bookkeeper to make your records ‘accountant ready’, as their fees will be less than if you use an accountant to complete these regular tasks. Bookkeepers should be expected to:

  • Record receipts/payments and complete bank reconciliation
  • File records
  • Work out instalments for PAYG
  • Complete the Business Activity Statement (BAS)

They may also be able to:

  • Offer training in the use of software
  • Collect debts
  • Write cheques (ready for your signature)
  • Assist with quotes

Warning

Most mistakes with the BAS and general accounting procedures is made because of the wrong installation of software and the wrong accounting codes used.

The bookkeeper should make contact with your accountant to ensure the Chart of Accounts is set up as the accountant requires. To ensure that software is set up correctly, you require someone who understands the specific software you are using as well as accounting procedures.

Accountant

As well as assist you with your income tax (which will now have to correspond with your BAS returns), an accountant should be able to give you assistance with the development of your business, by offering:

  • To prepare Cash flow projections
  • Cash Flow Management
  • Budgeting
  • Financial analysis
  • Assistance costing/pricing

Referrals to a network or professionals to advise with financial advice, superannuation, workplace agreements, succession planning, venture capital, marketing, IT, e-commerce, mentoring, marketing etc.

 

IN THIS SECTION:
Business structures
Costing
Raising Finance
Bookkeeping
Insurance
Leasing and Hire Purchase
Financial Planning
Trading Terms
Vic Govt. Info Sheets

SEE ALSO:
Taxation
Planning your business

 

 

   


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