How do I keep books for a small business?

YOU ARE READING: How do I keep books for a small business? AT PhebinhvanhocEN

Anyone in business should keep good records because it makes it easy to manage cash flow, comply with tax requirements, and understand how your business is doing.

While running a business can be unpredictable, having a good record-keeping system can help. This article will teach you about record keeping, including what to keep, how to keep records, and how long to keep them.

You are reading: Record keeping for small business cash books

many new and established companies overlook this area of their operations until near the end of the fiscal year (eofy).

All businesses are required by law to keep accurate and timely records.

I can’t stress enough how important it is to get your finances in order right away by setting up and using simple accounting software that meets your needs.

You have to handle the numbers as soon as you start a business. No matter how small, every business must keep track of all transactions. this includes sales, expenses, payroll payments and any other financial transactions inside and outside your company.

Although you can do it yourself, most business owners are not trained in accounting. As a result, companies often outsource this routine task.

We will discuss why hiring a bookkeeper is a good idea or perhaps a necessary aspect of running a business in this tutorial. then we’ll talk about how to get the best bookkeeper for your company.

what is accounting?

Accounting is the practice of documenting financial transactions in businesses and other organizations as part of the accounting process. It involves creating source documentation for all business transactions, processes, and other events. purchases, sales, receipts, and payments by an individual or an organization/corporation are examples of transactions. Single-entry and double-entry accounting systems are two of the most common types of accounting. While this may seem like “genuine” accounting, any method of documenting financial transactions is an accounting method.

Track and classify all of your company’s financial transactions with accounting. It involves keeping track of how much money your business spends and receives.

Previously, these tasks were managed by books and ledgers, hence the title “accounting”. transactions were recorded in journals, cash books, and journals before being transferred to a general ledger.

accounting software has virtually eliminated the need for physical books.

What qualities make an excellent bookkeeper? grades help, but mindset is what separates the wheat from the chaff. when something doesn’t add up, a good bookkeeper notices and cares when items go missing. A bookkeeper cares about the accuracy of financial statements and takes responsibility for encouraging customers to pay on time. In other words, a good bookkeeper is worth his weight in gold.

record keeping benefits

While running a business can be unexpected, having a strong record-keeping system can help. This article will teach you about record keeping, including what to keep, how to keep records, and how long to keep them.

Keeping good records has many benefits. first, it can help you:

track the health of your business so you can make informed decisions.
meet your tax and retirement responsibilities
track your cash flow of cash
banks and other lenders will want to see your financial situation.

tax and retirement records to keep

From the time you file your tax return, you must keep the documents for five years (in most cases) (in most situations). income statements, pay statements, and receipts are examples of records. you will get the relevant documents to file your taxes during the income year.

All transactions related to your company’s tax and retirement matters should be documented, including records that support the information you submit on your tax returns and reports.

Your company’s tax and retirement laws and structure affect the records you must keep (sole trader, partnership, company, or trust) (sole trader, partnership, company, or trust).

the australian tax office (ato) requires that:

Your records must not be tampered with and must be stored in such a way that the data cannot be altered or the record damaged.
Most records must be kept for five years, beginning with the The day you prepared or obtained the records or the date you completed the transactions (or the activities to which they pertain), whichever comes first.
If the ate requests your records, you must be able to provide them.
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Your documents must be written in English or easily converted to English.

three reasons why you need a bookkeeper

For business owners, staying on top of your accounts and your money is critical. however, you may find that keeping your records accurate and up-to-date takes more time than running your business. “Do I need a bookkeeper?” is a smart question to ask yourself. Although having a positive attitude is admirable, there are cases in which it is advisable to hire specialists to carry out the task. So, are you looking for a bookkeeper? let’s take a look at some of the items to consider when answering that question.

If you’re just starting out in business, you may think you don’t need accounting services. Perhaps you think letting your accountant sort through the figures once a quarter or once a year is enough. however, there are compelling reasons to hire a bookkeeper. here are three of them:

they save you time

It is not a good idea to do your own accounting unless you are an expert in the field. only part of the job is processing receipts, costs, and payments. they understand how to allocate expenses to certain customers. They will take all the data, enter it into your accounting program and interpret it. A smart bookkeeper knows how to treat transactions to generate relevant business reports. it is a skilled task and your accountant will complete it much faster than you.

they understand your business.

Bookkeepers are very knowledgeable about their company’s finances because they deal with the day-to-day accounts. they can help you determine where your business needs to go by sharing this knowledge. In addition, they can alert you to any difficulties in time for you to take action. a professional bookkeeper keeps track of your finances and keeps you out of trouble.

help manage your cash flow.

Accountants are helpful in a variety of situations, including strategic advice, annual reports, and tax concerns. however, they do not see their accounts every day. A qualified bookkeeper will monitor your accounts regularly. this will help in managing your cash flow, which is critical to business success.

basic accounting: understanding types of accounts

Many business owners do their own bookkeeping to save money and keep a closer eye on the financial health of their business. You can keep your money organized and deal with difficulties as they arise if you do it correctly and regularly.

The key to properly coding transactions is understanding the differences between account types. Here’s how to tell the difference between assets and liabilities, equity and income, and bananas and apples in a jiffy.
A current asset is anything a business has that can be converted to cash within the next year.
A non-current asset is a physical item that is not expected to be converted into cash within the next 12 months, such as office equipment, land, buildings, computers, or motor vehicles.
amount owed by the company that is due within the next 12 months, including scary things like credit cards.
anything you own that is not due within the next 12 months, like hire purchase or bank loans, is a non-current liability.
the ‘interest’ of the shareholders or owners in the business includes both the capital provided and the profits or losses accumulated over time.
Revenue is money earned from customer sales or investment returns.
Cost of sales: how much it costs to create the things you sell in terms of raw materials, your pliers and labor (also called cost of goods sold or variable expenses).

accounting checklist

This step-by-step bookkeeping checklist can help you rest easy at night, knowing you’ve completed all the necessary tasks to get your books in good order.

make sure you have bank sources set up for each account.
reconcile all bank accounts with bank statements at least once a month.
look for transactions that are dated in the past or in the future.
eat a candy bar for the whole family in one sitting (and sort through the list of debtors).
go over the list of creditors.
check all transactions for tax codes.
your gst liability accounts need to be reconciled.
take a look at your inventory.
all payroll liability accounts must be reconciled.

how to do accounting?

Recording and reconciliation are the two most important activities in small business accounting.

record each transaction

Maintaining accurate and up-to-date records is critical to the performance of your business. Good records can help you reduce losses, manage cash, meet legal, regulatory, or tax authority obligations, and improve financial analysis. your accountant can help you with setting up a record-keeping system.

track your sales. traditionally, this was accomplished by entering them into a cash book or marking them up on a spreadsheet. however, business owners are increasingly downloading sales data from point of sale or billing software directly to their books.

Keep track of your transactions. every business purchase must be documented. If you plan to claim that expense as a tax deduction, keep your proof of purchase as well. You can record these facts in a workbook or spreadsheet once again. Alternatively, you can automate the process so that all debits from your business bank account go to your accounting software.

Depending on whether you use cash or accrual accounting, you can record income and expenses at different times.

reconcile each transaction

Reconciliation is a basic accounting technique that ensures that the money spent or earned at the end of a fiscal period is equal to the money going into or out of an account.

It is essential for individuals and companies to perform accounting reconciliations, as it allows them to check for fraudulent behavior and prevents them from making inaccurate financial statements. Reconciliation is normally carried out at predetermined intervals, such as once a month or once every three months, as part of standard accounting procedures.

The process of reconciling your business accounts requires making routine comparisons between those books and your bank statements to verify that all transactions and balances are accurate and to identify why they are not, if they are not. take into account bank fees, interest payments, deposits, and payments that have not yet been made to your bank accounts.

You may need to perform bank reconciliation daily, weekly or monthly, or even less frequently, depending on the volume of financial transactions your business processes. however, in order to submit your tax returns, you will no doubt be required to reconcile your books.

When transactions are reconciled as quickly as possible, it allows for quicker problem identification and resolution. to prevent work from piling up, it is essential to complete it regularly, possibly once a day.

other small business accounting tasks

If you are acting as a small business accountant, you may also be responsible for:

accounts receivable (issue invoices and ensure payment)
accounts receivable (pay invoices on time)
payroll (pay employees)

Professional bookkeepers also assist with financial reporting (profit and loss, balance sheet, and cash flow reporting) and business performance measurement. Also, bookkeepers are often low-level agents and can help you file your taxes.

why are they needed?

These are some of the accountant tasks that will help your business run smoothly:

monitor daily transactions

Recording daily financial transactions is one of the responsibilities that falls within the purview of a bookkeeper. If your accounting software allows automatic daily bank feed, your accountant will find this an extremely useful feature to use. When your bank statement lines are automatically imported into your accounting software, it not only simplifies cash flow monitoring, but also reduces the amount of time spent manually entering data.

accounts receivable ledger management and invoice submission

In most companies, the task of generating invoices and delivering them to clients is delegated to the accountant. It is also common for a bookkeeper to be in charge of the accounts receivable book and be responsible for tracking late payments.

Accounts Payable Ledger Management

Up to a specific financial amount, the bookkeepers generally make the payment on behalf of the corporation. payment of supplier invoices, costs and petty cash are included.

looking at the cash flow

Bookkeepers have a number of responsibilities, but one of the most important is to make sure your business doesn’t run out of cash on a regular basis. They can accomplish this by keeping a close eye on the relationship between their income and their expenses. If it looks like the organization could use some extra money right away, they may decide to take action or offer some suggestions.

prepare the books for the accountant

It is the responsibility of the bookkeeper to ensure that financial records are accurate and up-to-date whenever requested by the accountant. This gives the accountant the opportunity to put his or her talents and experience to work advising business owners, reporting to the board, and filing tax returns for the business.

In practice, it is the bookkeeper’s responsibility to oversee day-to-day operations, freeing up the accountant to focus on more strategic aspects of the company’s financial management. As a consequence of this, bookkeepers play a crucial role because accountants cannot fulfill their responsibilities without the help of bookkeepers.

how to keep track of logs

One of the most important obligations of a business owner is to keep accurate records and make sure all your files and documents are up to date, not only for tax season but also long term in the event of an audit and for the compliance .

You can control how your business is running by keeping the proper records and you won’t have to worry when the year comes to an end. It’s pretty straightforward, but so many business owners come to us concerned about their incomplete records! we wanted to help make this process easier because running a business means you have a lot more to think about than just record keeping.

You can store your records electronically or on paper. However, because the ATA is rapidly moving toward electronic reporting for taxes and super taxes, businesses should retain records electronically if possible. Plus, keeping your records electronically should make some jobs easier and save you time once you’ve set up your system.

If you keep your records electronically, you do not need to keep paper copies unless required by a specific law or rule.

Records stored and maintained electronically are also possible. The ato accepts images of paper business documents stored on electronic storage media as long as the electronic copies are a true and clear reproduction of the original paper records and meet the ato’s record-keeping requirements. you do not need to keep the paper copies once you have saved an image of your original paper records.

Be sure to keep your records safe, regardless of your choice. for example, back up your files and save them to a secure external location, such as cloud storage.

Whatever option you choose, be sure to keep your records secure. for example, back up your files and, if possible, store them in a secure off-site location, such as cloud storage.

The logs must also be on a computer or device that:

what you have access to (including all passwords)
is protected in case of computer failure
allows you to have full control over the data that is processes, enters and transfers finding an accounting guide

There are many accounting services available. These tips will help you narrow down your options.

Consider whether you want to hire a consultant or a company.
Bookkeepers often operate alone so they can serve multiple clients at once. On the other hand, you could hire an accounting firm or an independent expert. You could even hire a full-time employee if your business is big enough. there is no right or wrong strategy; it all depends on your business size and needs.
decide if location, location, and location are vital.
you can share remote access to your account data with online accounting software. however, you may choose to meet your bookkeeper in person from time to time. determine how important this is to you and tailor your search accordingly. For example, if you’re in Sydney, you can now locate an accountant near you.
Use your social media accounts.
To identify accounting professionals, use social media online, particularly linkedin. it’s great if they’ve been suggested by friends or acquaintances. Also, check out chambers of commerce and business advisors in your area. they will almost certainly know someone who is suitable.
Look for previous experience.
Before they can legally take on an accounting job, accountants must have professional qualifications. Although there are no restrictions for accounting, certification is available. Check to see if they are a member of a professional governing body, such as an association of bookkeepers. look for experience and a large number of previous clients, especially in the same industry as you. if you can, talk to some of those customers; they will be able to provide you with useful information.
Select the right person.
You should talk to as many people or companies as possible. If necessary, interview them twice and check their references and qualifications. personality and cultural compatibility are also important considerations. Even if they are not working full time, your selected bookkeeper will be in frequent contact with you and your staff. therefore, it pays to hire someone who is a good fit for your team. Hire someone who is friendly, helpful, and most importantly, interested.

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