Are you a small business operator struggling to keep your bookkeeping in order? The main problem that business owners have is not having a system set-up to handle their bookkeeping.
What you do with your paperwork, and how you handle your record keeping at the beginning can make a big difference at the end of the financial year.
Here are some basic tips to ensure that your record keeping is in order
1) Open a separate bank account for the business.
It may seem an expensive option at the beginning to be paying fees on two separate bank accounts – however you can claim the running costs of your business bank account as a business expense.
The same applies to a credit card. Even if you simple have another credit card in your private name, keeping a separate credit card for the business makes the bookkeeping so much easier
2) Don’t mix your personal expenses with your business expenses.
A simple example of this is when you buy fuel; if you happen to buy some milk or chocolate etc, pay for them in a separate transaction. You need to make sure that you have legitimate business expenses and keep those personal items separate from the business
3) Always ask for a receipt
When you do make a purchase for your business, ensure that you always ask for a receipt. By getting into the habit of always asking for a receipt, you don’t have to worry about whether or not you need one, because you’ll have them all anyway.
4) Vehicle log book
You can buy a vehicle log book at the local newsagency. Take a not of the kilometre odometer reading at the beginning of the financial year, and enter ethe distance travelled each day you use your vehicle for business travel. – Use a seperate logbook for each vehicle.
5) Don’t throw the receipts on the dashboard or glovebox of your vehicle.
These days many receipts will either fade so your bookkeeper cannot read them, or the paper turns black because of the heat, so again, your bookkeeper will not be able to read them.
Get into the habit of putting your receipts into a monthly file or an envelope in your office. At the end of the month, you can attaché them to your bank statement, to give to your bookkeeper.
6) Keep all your business records
Have a place to keep all your business records for each financial year. You can buy a “concertina” type folder and place each month’s paperwork in to it’s own division in the file. Or use an A4 file with plastic sleeves to insert your receipts into
7) Keep your business records for five years
The Australian Taxation Office requires that you keep your business records for at least five years after the tax returns have been completed. If the ATO should conduct an audit they will need to see those records.
