Bookkeeping is an essential aspect of any business, big or small. It involves recording and managing financial transactions to ensure accurate financial reporting. However, bookkeeping can become overwhelming without proper guidelines and procedures. Here are some dos and don'ts of bookkeeping to ensure that your business's financial records are accurate and up-to-date.

Do:

1. Keep accurate records of all financial transactions.

Make sure to leave a trail of documentation that backs up everything you’ve purchased, and everything your customers have paid for. It will help you retrace your steps if you encounter problems with tax inaccuracies, source documents, or missing transactions.

2. Separate business and personal expenses.

Mixing your personal and business cash might not seem like a huge problem at first. However, it could pose a problem when you have to sort through the purchases and sales relevant to your business.

3. Keep monthly bank reconciliations up-to-date.

A good bookkeeping strategy isn’t just essential for tax purposes, it also makes it easy for you to perform regular financial check-ups.

4. Automate with cloud-based accounting software.

By automating your accounting system, you can track your incoming and outgoing expenses and generate reports on your cashflow. Cloud-based accounting systems like Xero make it easier for you to handle your accounting without excess effort.

5. Have a system in place to track expenses and invoices.

Every transaction should be organised and recorded in a way that’s easy for you to keep track of. This will help you predict future opportunities for your business and maintain tax compliance.

Don’ts:

1. Ignore or forget the due dates of financial statements.

It’s easy to lose track of due dates for your GST, payroll, and regular business invoices. Set reminders to avoid missing deadlines that could leave you with a fine.

2. Try to do everything on your own.

While automating your accounting systems takes off some of the burden, outsourcing an experienced and professional bookkeeper offers several benefits that computers can’t.

3. Fail to keep track of your cash transactions.

Don’t forget to record cash payments, too. While it’s tempting to take cash immediately to purchase supplies, doing so can mess up your bookkeeping system.

4. Forget to pay taxes or file tax returns.

Always remember that a portion of your income will eventually go toward tax expenses at the end of the year. Set aside a portion of your income and budget it properly to avoid shortage in payments.

5. Assume everything is fine without checking your records.

Check your records regularly. This will keep you up-to-date with the gaps in your accounting and future possibilities for your business.

Bookkeeping is a crucial aspect of any business, and following these dos and don'ts will help you manage your finances accurately and efficiently. Remember to keep your records up-to-date, split financial tasks, and use charts of accounts and class and location codes to ensure that your bookkeeping is organized and streamlined. Book a session with us and make your bookkeeping journey turbulence-free!

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