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The actual process of recording these financial decisions is determined as Bookkeeping. 

When we first start a business, the scale of transactions is pretty small. Maybe one to ten sales a day and a few expenses. Recording these small transactions is a breeze.

But that breeze can quickly turn into a cyclone as your business grows bigger. It’ll get to a point where you need to prepare a Business Activity Statement (BAS) each quarter and the tax office keeps texting you that a ‘lodgement is overdue’. Then the scramble begins and you regret not starting earlier. 

However, it isn’t just about how much time and effort you’re saving with your taxes. This is how bookkeeping becomes important helps save your business money:

Mistakes happen every day - you knock over your tea or you forget to take your vitamins yet again. And so do the financial mistakes - whether it’s that double invoicing error or an accidental bank charge - these can easily escape your eyes. 

Which is why not being up to date with your bookkeeping can be a costly mistake. After all, you don’t want to be on the side of a financial error that could’ve been easily avoided. By recording all financial transactions involving the business, you’re able to catch any errors that can occur and rectify them.

In Australia, bookkeeping by a non-employee is a professional service requiring a license - why? Because there are so many rules and guidelines for the transactional taxes, it’s so easy to make a mistake that costs you later. One you didn’t even know about.

Lenders, investors and banks will require an income statement - i.e. a record of all your revenue, incomes and expenses over a certain period of time. If your accounts don’t make sense, why would anyone give money to your business? 

The reason why your income statement becomes important is so that others can gain an understanding of your business’ financial health and if you’d be able to pay back the loan amount you’re asking for. Which is where bookkeeping comes in and becomes necessary to help you prepare this statement.

Now even more so with the advent of short term lending based on your Xero file!

Because bookkeeping involves recording every single financial transaction, you’ll be able to figure out which transactions are tax-deductible. 

Any expense that contributes to your business is potentially tax-deductible. Not bookkeeping means you might add in the wrong thing and have to pay it back AND leave out the right thing and never claim it.

If you focus on recording your transactions only during tax season, one or more tax-deductible expenses are bound to escape you - which is why bookkeeping becomes a money saver. 

We’re sure you’ll relate when we say that one of the worst feelings a business owner can have is being overwhelmed and struggling to make sense of things. This holds especially true for your business finances. 

Bookkeeping allows you peace of mind. Because now, your accounts make complete sense and give an understanding of the financial status of the business. Best of all, you won’t have any issues with the ATO. Did you know that your bookkeeper can ring the ATO on your behalf? And negotiate payment plans, access specialist advice and rulings and have different lodgement due dates?

By making sense of the status of your business financial health, monthly revenue and expenses, you’ll know the decisions you need to take for your business. 

Like we mentioned in our article about managing small business finances, by keeping track of your transactions, you’ll be able to budget better, take a step back to look at your cash flow and understand your business performance. 

Bookkeeping is deceptively simple – it requires time and effort.

You can do it on your own or with accounting software as we’d mentioned in this blog post. Or even better, you can outsource all this heavy-duty stuff to our experienced bookkeepers. 

We want you to focus on the more important stuff - like your business - rather than on trying to figure out if a particular transaction is in the right spot.

Still unsure? 

Feel free to contact us using this form and we’ll get back to you ASAP!

To good financial decisions,