Bookkeeping is a necessary part of running a small business, but it can be tricky. Many business owners manage their own bookkeeping because they have to, not because they feel confident with business accounting.
That’s where QuickBooks comes in. QuickBooks hosted a live Q&A to help small business owners navigate the bookkeeping process with the help of certified bookkeepers and certified public accountants.
Most recently, we heard from QuickBooks Live Bookkeeper Pam Bingham. Pam owns PB Tax and Accounting Services, and she has over 25 years of bookkeeping experience. Before the live event, Pam took to Twitter to find out what small business owners want to know about their books.
Four bookkeeping tips for small business owners
“Everyone is interested in preparing good, accurate books,” Bingham said.
Everyone wants to know how they can be compliant and avoid penalties, and it all starts with a reliable accounting system and accurate bookkeeping. Fortunately, Bingham has a few tips.
1. Separate your personal and business bank accounts
A separate business bank account is a good idea for any small business. In fact, if you’ve registered as a partnership, company or a trust, you’re required to have a separate bank account for business finances. Bingham says that the bookkeeping community frowns upon commingling business and personal funds.
“We don’t want to make the mistake of tracking or allocating a personal expense as a business expense,” she said.
Separating your accounts makes it easier to leave a clear spending trail. If the ATO audits you and your bank statements have personal and business transactions, it’s possible the ATO will “disallow everything”, Bingham said.
“You want to really separate those [accounts],” Bingham said. “And never the two shall collide.”
2. Do your bookkeeping weekly
For some business owners, bookkeeping and financial record keeping are necessary evils to complete at tax time. But Bingham suggests you should be in your books much more frequently.
“Bookkeeping should be done on a weekly basis, at minimum,” she said.
In fact, Bingham says “regular maintenance” is the most important bookkeeping tip she can give. She recommends setting a bookkeeping schedule and updating your books consistently. If you’re consistent, you’ll always have a complete financial picture to make smart, data-driven business decisions. And you won’t be scrambling to prep your books come tax time.
3. Consult a bookkeeper
At the end of the day, business owners want to build their businesses, not manage their books. A bookkeeper can help you move beyond basic bookkeeping and allow you to get back to what you do best.
If you find you’re spending too much time trying to work through your finances, it might be time to consider investing in bookkeeping services. As a bookkeeper, Bingham loves deciphering complicated transactions and organising her client’s finances.
“It’s very satisfying when you’re able to accomplish that goal, “ she said. “Knowing … your client has all the important information … They can see where their money has been spent [and] how much money it costs to make the money they’re making. It’s extremely satisfying.”
A bookkeeper can help ensure you have the most up-to-date financial information for your business. They can help you organise your books and find common, costly mistakes that can stem from using Excel as your primary bookkeeping system.
They can help you prepare your income statements, balance sheets, cash flow statements and other financial reports correctly. Among other things, these financial statements ensure you have the most accurate records for tax returns at the end of the year. If you’re a new business in need of a business loan, your bookkeeper can help with that too.
Most of all, a bookkeeper can help you understand your small business’s financial health, allowing you to make smarter financial decisions.
4. Use accounting software
An accounting software, like QuickBooks Online, helps you organise your financial data, prepare small business taxes, run payroll, do your invoicing and more. But, Bingham warns, you get what you give when it comes to accounting and bookkeeping software.
“Your software and your books are only as good as the information [you] actually enter,” she said.
That’s why it’s critical to make sure the information you’re entering is accurate and true. When you use accounting software, you want to make sure you can see the complete picture.
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