When running a new business in Australia, it’s imperative that cash flow, income, and expenses are all tracked. This will help show if a business has a profit or loss. It will also help make it easier when it’s time to pay taxes. Here are five accounting tips to make the job of bookkeeping a little more straightforward:
Keep Separate Personal And Business Accounts
Any time that a new business is started, it should have its own bank account and bookkeeping ledger. A personal account should be kept separate from a business account because this ensures that all business activity is accurately recorded. The Australian Taxation Office has specific rules and criteria that must be followed to be in compliance and having separate accounts will make this aspect more manageable.
Keep Records Accurate
Accounting software makes the job of keeping records accurate, smooth and simple. There are many different types of software available. Records should track every detail and business transaction. For example, if a business uses both cash and credit cards to purchase items, these two means of spending should have separate categories.
Keep Taxes Up To Date
For some business transactions, taxes need to be collected or applied immediately after a sale is made. This will make sure that a business is complying with the rules that are mandated by the Australian Taxation Office. Failure to do this may result in penalties since tax payments are delayed and this is typically done when payroll is generated, or a sale is made.
Creating Profit And Loss Statements
A great way to check to see if a business is healthy is by creating profit and loss statements. With their creation, it will assist in summarizing the activity of a business for a specific period. These statements can be made for each month, quarter or every year.
Planning For Major Costs
One of the quickest ways for a business to get hurt is by having to pay a major cost that is unplanned. It’s much better for the long-term health of a company to prepare and plan for significant expenses. Forecasting can be done to prepare for a major expense that will eventually occur in the category of maintenance, supplies, staff, taxes or supplies. An essential part of keeping accurate books is by managing them on a consistent basis so that a business is continuously monitored and set up for success.