Bookkeeping is essentially the task of recording financial transactions of a business.
You might groan at the thought of doing your business bookkeeping, but good record keeping is essential for anyone in business. It makes it easier to manage your cash flow, meet your tax obligations and understand how your business is doing and which direction to take it.
Different methods of bookkeeping
There are many different ways to approach bookkeeping. You can opt for traditional manual methods, or use some of the newer electronic options available.
The most basic system is also the cheapest – all you need is a ledger from a newsagent or stationer and a pen to write down your income and expenses. If you’re a sole trader or small business with very straightforward accounts this may be all you need.
As the ATO moves to an all-electronic records system it makes sense to take advantage of the benefits as soon as you can. Once you’ve made the change, you’ll find record keeping is much faster and easier, and you’ll also save on physical storage space at home or in the office.
Electronic bookkeeping falls into three categories – spreadsheets, accounting software and web-based systems.
If you’re starting out and doing your best to keep expenses to a minimum, a simple Microsoft Excel spreadsheet is a low-cost alternative. Spreadsheets can work well for small business and sole trader bookkeeping.
Off-the-shelf or tailored software accounting packages automate processes such as calculating GST, updating your ledgers and generating invoices. They can also simplify your payroll, BAS and tax returns. You can ask your accountant to recommend a brand that complies with Standard Business Reporting (SBR).
A web-based or cloud system automatically stores your financial records off-site. It can cost significantly less than software and also make for a seamless integrated experience. Now that NAB has joined forces with accounting packages including Xero and MYOB you can set up links with a NAB business transaction account to track expenses, view bank balances, send out invoices, approve payments securely and receive alerts as soon as payments land in your account. Plus you can do it all from any computer or device when you’re on the road, in the office or working from home.
Not confident about doing your own bookkeeping?
If the prospect of doing your own business bookkeeping fills you with dread or you’re not confident about doing it yourself, an online course in bookkeeping basics might help. When you see how everything falls into place you could feel more positive and confident.
Alternatively, you could decide to delegate the task to a professional bookkeeper. The time and stress you save by handing over your record keeping might make financial sense. New cloud and fixed-fee options can also keep costs relatively low and easy to factor into your budget.
Whatever you do, don’t make the biggest mistake of all – forgetting that accurate bookkeeping is the key to business success.
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The information contained in this article is intended to be of a general nature only. It has been prepared without taking into account any person’s objectives, financial situation or needs. Before acting on this information, NAB recommends that you consider whether it is appropriate for your circumstances. NAB recommends that you seek independent legal, financial and taxation advice before acting on any information in this article.