Accounting Software Australia, MYOB, Quickbooks, accounts software, bookkeeping software
Accounting Software Australia, MYOB, Quickbooks, accounts software, bookkeeping software

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Bookkeeping – How to organise business accounts

images/Bookkeeping2.JPGYou may be doing your own business books/account records, or working as the bookkeeper for a business.

As a business owner, you find you have several roles to juggle including production/service, marketing, operations, sales, dispatch, invoicing, and bookkeeping of the accounts. These must all be done!

2 main areas need to be organised – the bookkeeping/accounting records and the money (bank and cash and credit cards).

Starting your bookkeeping accounts correctly (or re-organizing your current books and accounts)

Most business owners don’t like doing the books! But if you want to be in business then accept that the books and finances are one of your responsibilities and JUST DO IT or PAY SOMEONE to do it.

To keep accounts organised, you need a set of systems to ensure:

  • ALL sales and expenses are recorded and transactions aren’t forgotten (eg Cash receipts);
  • To keep all documents required by law easy to find them and neat and tidy;
  • Good records of conversations with customers or suppliers; and
  • At year end - a good set of all required data and reports so your accountant can complete your tax return quickly and efficiently.

Bank and Credit Cards

  • First, use a dedicated business bank account and credit card. Processing your records is much easier if you have these separate bank and card accounts (even if only a personal credit card in your name to start) that you only use for business transactions.
  • Secondly, request that all statements, including bank, debit card, credit card and petrol accounts, are sent on a monthly basis. That’s because the key aspect of processing your financial documents is reconciling them on a monthly basis.

If you follow these suggestions, nearly all of your income and expenses will be captured in statements from both your bank account and credit card account and account keeping is much easier.

The Australian Tax Office (ATO) has a good overview of what is required, and they explain more as follows – Record keeping for Small Business.

Good record keeping is essential for anyone in business because it makes it easier to manage your cash flow, meet your tax obligations and understand how your business is doing.

What the law requires

By law your records must:

  • Explain all transactions;
  • Be in writing (electronic or paper);
  • Be in English or in a form that can be easily converted;
  • Be kept for five years (some records may need to be kept longer).

If you don't keep the right tax records, you can incur penalties.

How to keep records

You can keep invoicing, payment and other business transaction records electronically or on paper. The principles are the same for each, but keeping electronic records will make some tasks easier.

With the right electronic record-keeping software you can:

  • Automatically tally amounts and provide ready-made reports;
  • Produce invoices, summaries and reports for GST and income tax purposes;
  • Keep up with the latest tax rates, tax laws and rulings;
  • Report certain information to us online;
  • Save on physical storage space;
  • Back up records in case of flood, fire or theft.

If you intend to use a bookkeeper or accountant, get their advice about the best system for you – choose a system you can understand and operate easily.

These are 6 steps to get your books/accounts off to the right start (or improve current systems). Coming up next month we will look at some templates that can help you get organized and keep you and your accountant happy!

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email This email address is being protected from spambots. You need JavaScript enabled to view it. or call 0407 361 596 Australia
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Cash Flow Tip – Some KPI for business growth and how we help clients

images/CashFlow.jpgAt Account Keeping Plus we have seen real-life examples of the results when you focus on Key Performance Indicators (KPIs) and the impact on business growth, but coming up with which KPI numbers can seem difficult when starting out.

In fact it’s as simple as this: Start with a pool of numbers that seem as though they could be important to your overall success, then rule them out one by one until the pool is small enough to count on one hand. Those are your KPIs, or critical numbers.

Here are some ways to generate a pool of possible KPI or “right numbers”:

  • Start with your top-level financial goals and targets such as the specific numbers that define success for your company - leads, conversions, visitors, mailing list, % change in these and other numbers in your business etc.
  • Look at the things going on in your market and industry. What are the trends for the last few years? What are your customers and employees saying?
  • Look at your financial statements. Often times, the “right numbers” will include sales, gross profit and net profit from the income statement (and compared to your industry). Balance sheet numbers might include level of cash, accounts receivable, debt and equity. You may also calculate various ratios such as gross margin percent and current ratio.
  • List all the vital areas of focus - customer service, marketing, sales, products and services, production and quality - then drill deeper into each of them. These may be your various departments or they may be workflow functions independent of the department.
  • Don’t focus only on just financial measures. Operational numbers (i.e. Web hits, turnaround time, customer satisfaction, etc.) can be especially helpful in analysing the progress toward your most important goals and growth.
  • Ask yourself these two questions: What numbers do you and your people currently monitor on a regular basis? How did you choose those numbers?

Now that you have a BUNCH of numbers, start the elimination game, as here is my final piece of advice for determining the metrics you’re going to track:

  • Keep the amount of information to a handful of KPI critical numbers so your attention isn’t spread. Just because you CAN measure something doesn’t mean you SHOULD. Sometimes, Less is more. Consider also having key managers taking on some of the KPIs that relate to their area - finance, production, operations, sales, marketing, etc.

Once you’ve narrowed down your KPIs, ask yourself and the team -  one more question: Are we monitoring the right numbers? Usually time will tell - it sorts out over a period - you’re not going to know your essential and critical numbers right away, and other times you’re spot on.

Finally, it is critical to create a system to organize your numbers. For this, consider starting a dashboard for all to see.

How we help one client of ours using KPIs -

Instead of showing the $, prefers to show Quotes and Invoice quantities as Hours, with minimum targets weekly & monthly for each. So once we have checked all the accounts receivable is reconciled to deposits in his Xero, we run reports on the previous month total Quotes and total Invoiced. In excel I have created a template to enter this raw data, which is automatically converted to a number called “hours” (which is derived after financial review of the required $ per hour minimum to cover the business costs and wages and super currently).

I then post the numbers - above or below the Min. target in a Dashboard (and soon will be on a white board in the office so all can see).

When targets are met they celebrate, when they aren’t they try to work out what has changed or been missed, and make changes to stop the retreat. And it's engaging all staff and creating a team effort! The KPIs are WORKING!

They are part of the AKplus service he receives from us, which includes a Business Health Review of other KPIs – Sales, Gross & Net Profit, Current Ratio.

Call to ask us to send a FREE sample of how we help businesses understand the numbers, and GROW!

Need help? Not sure?

Call for FREE 30min advice / strategy session today!

Call 0407 361 596 Aust

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