1. Get some type of accounting software – I will highly recommend Xero Cloud Based Accounting Solutions. I tell people that Xero is accounting software for those that don’t necessarily understand accounting. It is very user friendly and is gaining popularity amongst the Tech savvy in the business world. It has great online help and training videos.
2. Enter everything and reconcile - if you enter each transaction that hits your bank account, credit card accounts etc. you can’t go wrong. Use the reconciliation function in your accounting software to balance back to your bank statements every month.
3. Approved format Tax Invoices – all of your sales invoices issued should contain the necessary information as prescribed by the ATO (must be called a Tax Invoice; contain your ABN; list the items supplied including quantity and price; date of issue; show the extent to which supplies are taxable; total GST payable; for supplies over $1K the recipients ABN or identity). Ensure that you receive and file all purchases tax invoices from your suppliers and that they meet the above Tax Invoice criteria.
4. Don’t mix business and personal expenses – Don’t intermingle personal expenses! Got it? It’s easy - just don’t do it. Get a separate bank account, credit card etc. for yourself and your business. If you are in the very beginning stages and you don't have a business bank account set up go ahead and pay for everything with your personal money. Later on when you do get a business account set up you can cut a reimbursement cheque to yourself to keep things clean. There is no need to ever bring your personal accounts into your business bookkeeping system.
5. Develop a filing system - a good filing system is not a box full of receipts. Use some file folders with the letters of the alphabet on it (I know ingenious huh?). Maybe if you pay a vendor often make a separate folder just for them.
6. Sometimes doing nothing is better than doing anything – the worst thing you can do is doing half of the job. Entering some stuff, but not everything. Entering invoices, bills etc. even though you don’t know what you are doing. If you are confused or lost, hire a bookkeeper. The bill to clean up the mess that you created will be motivation enough to just outsource it from the beginning.
These simple steps will keep you organized financially. Eventually you will become too busy and notice that you are spending too much time doing your bookkeeping and not enough time doing what you love - running your business.
When that time comes feel free to email me.