Bookkeeping Hints & Tips

Bookkeeping is a very important part of the accounting process for all businesses. Accurate bookkeeping allows for measurement & management of aspects businesses finances (i.e. costs control, analysis of income sources, cash-flow analysis, budgeting etc.) as well as providing a way to track how the business is performing as a whole. However for those new to business bookkeeping can prove to be complex, stressful and a waste time that could be spent elsewhere (i.e. chasing new customers, improving the business etc.). Below are some useful hints and tips that the team at Progressive Accounting Solutions have compiled in order to assist in making the bookkeeping process easier for all small business.

Firstly choosing the right accounting software is one of the most important decisions business owners need to make with regard to the accounting and finance function of there business. The accounting software you choose for business should be: easy to use and interact with, provide efficient data entry solutions (i.e. data streaming), produce accurate, reliable and relevant reports & fit the businesses budget. There is no point purchasing software that provides thousands of reports when you will only use a handful of them in the operation of your business or software that requires manual data entry when there are programs out there that can automatically enter transactions for you. Cloud accounting programs are proving to be a very popular solution right now as they can be affordable, stream data from internet banking services (saving a lot of data entry time) and are accessible anywhere. However before you make a commitment to one of these programs it is important to ensure that it will provide all the services that your business requires when compared with other programs.

Once an accounting program has been selected the next step is establishing a chart of accounts to suit your specific business. The Chart of Accounts is the list of accounts that your business will use for bookkeeping, reporting etc. Although all accounting software’s will include a generic chart of accounts (and sometimes even a chart of accounts specified to your industry) it is important to adjust this to suit your unique business. By eliminating the accounts that you won’t use, and adding new accounts that may not have been included otherwise, the data entry process is streamlined. There may still be instances through-out the businesses life where you are adding and deleting accounts, however if the initial chart accounts is accurate it will make the data entry process a lot more efficient.

Accurate, detailed and consistent data entry is vital for small business looking to produce accurate, detailed and consistent reports. This may seem pretty self-explanatory however many small businesses make errors when it comes to data entry, which can result in poor reporting & un-reconciled accounts not to mention the time wasted in searching for the errors. By ensuring the correct amounts are being entered against the accounts they have previously been entered against it will ensure that reports are consistent and therefore can be compared from period to period which helps business owners identified trends and/or areas of concern. Furthermore by ensuring detailed annotations are used in the data entry process it will make items a lot easier to identify when analysing reports (i.e. “Bill’s Mobile Phone Bill – July 15” is a lot easier to identify than “Telstra”).

Finally it is important to enter data and reconcile bank accounts on a regular basis. If you wait until such time as you need a report or you need to provide your books to your tax agent/accountant, the data entry process can be lengthy and stressful, as you may trying to reconcile transactions from months previous. However if you complete this process on a regular basis (i.e. weekly) it will be a lot easier as the transactions are fresh in your mind. This will also allow you to produce more regular reports and identify discrepancies and/or other issues immediately rather than waiting until months down the track.

Taking all of the above into account there will still be times when you, as a small business owner, experience difficulties when it comes to your bookkeeping. Therefore it is important to have third parties that you can call upon to guide you, whether they be bookkeepers or accountants. At Progressive Accounting solutions we have many years experience is assisting the small to medium businesses of Geelong, the Bellarine & the Surfcoast with their bookkeeping problems: from choosing the right accounting software right down to deciding which account certain transactions should be allocated to. Should you be experiencing any problems with your bookkeeping and/or any other accounting issues please feel free to contact us and set up a free, no-obligations, consultation. info@progressiveas.com.au or 0438329958.

2 replies
  1. Michael Robinson
    Michael Robinson says:

    I had no idea that bookkeeping for a small business was so complicated! My brother and I want to start our own little coffee shop in town and just figured that we would write everything that we did down and then call it good. Just like you have written down right here, we will need to establish a chart of accounts to suit the needs of our coffee shop — interesting! Thanks again!

    Reply
  2. Steav Smith
    Steav Smith says:

    Very informative article. Learned a lot of things. From my personal experience, I believe bookkeeping is a very simple process if you can keep everything organized, or it can be a great pain to bear.

    Reply

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