Bookkeeping habits to adopt in the new Financial year

It’s not easy growing a business, and it’s not easy maintaining a business within the current circumstances we’ve faced over the last year, so pat yourself on the back as we wrap up the 2020/21 financial year and reflect on your business successes.

It’s important for you to examine and fine-tune your finances to make sure you’re delivering in the best possible way. Poorly tracked finances can cause your business a world of problems, from poor cash flow to improper filings and beyond. These kinds of problems can put a business at serious risk.
Good bookkeeping habits, on the other hand, can help a business thrive, not just survive.

As the tax year rolls over we’ve put together some bookkeeping habits to implement into your business and manage the new financial year with confidence.

• Get professional help.

  Business owners are pulled in a dozen different directions. That’s why it makes sense to outsource work you don’t have the expertise or time to do. If you’re like many entrepreneurs, you likely went into business to pursue a passion, not to become a bookkeeper or accountant.
  Sometimes outsourcing the job to somebody who can do a quicker and better job is much smarter than trying to tackle it yourself. 
  Professional Bookkeepers can do more than just ensure your paperwork is in order. They will be the person that assists you with the ongoing financial recording of transactions that keep your business running smoothly.  They have a trained eye that can spot ways for your bookkeeping to be improved.

• Don’t hand ball everything.

  Outsourcing your bookkeeping doesn’t mean you should leave it entirely to somebody else. You’ll want to review reports, understand what’s happening with your business, and ask questions.
  No matter your level of expertise, it is beneficial to your business for you to understand as the owner some of the basic business numbers, including profit, trend in expenses, accounts receivable and more. You can use this information to monitor the health and growth of your business.

• Get the right software and Commit to Cloud.

  If you still haven’t made the switch to cloud accounting, the new financial year is the perfect time to take the plunge and get an online accounting software. Instead of countless spreadsheets and a shoebox full of receipts, streamline your business bookkeeping with cloud software. It will help you keep track of your finances and make it dead easy to share information with your bookkeeper, accountant and business partners.
  You don’t want to skimp on the program that you use, a good system is worth the investment. These days there are many different options out there, so look for a system that best meets your business needs, and one that you’ll actually use. Ask around for recommendations from friends who run businesses similar to yours.
  We personally LOVE Xero! It has live accounts, cloud storage, multiple currencies, automated superannuation payments and is super user friendly!

• Keep expense receipts.

  You can’t know how much you’re spending on your business if you don’t keep receipts. This is somewhat straightforward for electronic purchases, since you’ll have both receipts and monthly statements against which to check them.
  Where things can get tricky is if you aren’t careful with cash expenses. These receipts matter even more since there are no backup statements. Some people keep a small notebook with them to log cash expenses as they’re incurred. Better yet, use an accounting app on your phone to snap pictures of the receipts as you go! Consistency is key for good bookkeeping and it can help you spot errors later on.

• Keep Business and Personal Finances Separate.

  When you start your business, it may not seem like a bad idea to keep your business finances and personal finances in one account. However, it can quickly create many problems for your business. During the reporting period, for example, you have to review all your bank statements to make sure you have invoices for each payment you receive from a client/customer.
  In the case of a separate account just for business, it is easy to determine what expenses are incurred for business purposes, but when mixing personal and business transactions in the same bank account, it will result in a nightmare to understand which one is personal and which one is business.

• Track your receivables.

  It’s one thing to issue invoices, but it’s another to ensure your invoices are paid. Keep up-to date logs of your invoices and the status of each sent, received, paid, partially paid, and late. Some accounting softwares can even keep track of invoices and flag late and unpaid invoices to automatically send invoice reminders.

• Set Due Date Reminders.

  Dedicate some time in your schedule to handling your books, why not set some automatic reminders while you’re at it? Keeping on top of deadlines and due dates for things like filing dates, invoice due dates, and regular bill payments will help you better manage your cash flow and that means a healthier business.

• Work as a team with your Bookkeeper.

  Business owners often look at their Bookkeepers as just another expense, a trusted bookkeeper, however, can be a key ally in your business, It is important to understand that bookkeepers are integral parts of your business, helping to guide you to success and spot potential issues in the business before they arise.
  Think of your bookkeeper as a business partner, not just a money shuffler, and find someone who can offer insight into your business. A great bookkeeper can help take a business to the next level.

The goal of these habits is to ensure you are always on top of your bookkeeping, that you’re organised and everything has been done correctly and on time.
Even if you are several years behind, a bookkeeper can get your business back on track and provide basic training to ensure it stays that way.

If the new financial year has you feeling overwhelmed, disorganised and just plain worried, your business might benefit most from outsourcing bookkeeping services, so let us work with you to develop and perfect good financial habits to implement into your business. Please don’t hesitate to get in touch, we can discuss your business needs and tailor a package that is right for you and your business.