5 Essential Bookkeeping Tips for Beginners
As a business owner, bookkeeping might not be the first thing on your mind, but it’s one of the most critical elements for your success. Keeping track of your finances ensures you understand where your money is going and how your business is performing. For many, the world of bookkeeping may seem confusing, but don’t worry—we’re here to make it simple for you.
Below, we’ll share five of the best bookkeeping tips to help you maintain accurate and up-to-date financial records.
Whether you’re just starting or need to tighten up your processes, these tips will keep you on track.
1. Keep Track of Receipts and Invoices
No one likes receipts, no one wants to keep receipts, we get it!!! But without your receipts you may not be able to claim deductions you are entitled to or transactions could be coded incorrectly which could mean you get into trouble with the ATO or you end up paying MORE TAX. Yuck!!!
So the TOP TRICK is every time you make a purchase or receive income, keep a record of it. It can be easy to lose small paper receipts, so we recommend using digital tools to scan and store these documents electronically. Many bookkeeping systems allow you to upload and store receipts directly, ensuring nothing gets lost.
Not only will this keep you organized, but it will significantly help you in the event of an audit which could be 5 years down the track. Being able to access clear records quickly saves time, stress, and money in the long run.
2. Engage a Professional Bookkeeper
While some small business owners manage their books themselves, many benefit from engaging a professional bookkeeper. Bookkeeping involves more than simply recording transactions; a bookkeeper can help you understand your financial position and provide advice on improving cash flow and profitability.
At Business Angels, we make sure your records are accurate, up to date, and ready for tax season. Having a professional on board not only frees up your time to focus on growing your business, but it also reduces the risk of mistakes that could lead to penalties.
3. Separate Business and Personal Accounts
One of the best bookkeeping tips we can offer is to keep your personal and business costs separate. Mixing personal and business expenses in one account can quickly become a bookkeeping nightmare. Not only will it make reconciling your accounts harder, but it can also cause issues with tax deductions and compliance.
By using separate bank accounts, you’ll have a clearer picture of your business's cash flow and budget, making it easier to manage day-to-day expenses and forecast future financial needs. Many small business owners also find this helps them stay more disciplined with their spending and budgeting.
4. Stay on Top of Uncoded Bank Transactions
When it comes to bank feeds, many small businesses neglect to classify or "code" their transactions properly. Uncoded transactions can cause chaos in your financial records, making it hard to generate accurate reports.
Regularly reviewing your bank feed uncoded transactions ensures that every expense and income item is correctly categorized. Most accounting software platforms allow you to set rules that automatically code regular transactions, reducing your workload. However, it's still important to review your transactions to ensure everything is in the right place.
5. Set Aside Time for Regular Reviews
It’s easy for bookkeeping to fall to the bottom of your to-do list, but setting aside time each week or month to review your finances is critical for maintaining accurate records. Not only does this help you stay on top of uncoded transactions, but it also gives you a chance to identify any errors or discrepancies early.
Additionally, regular reviews allow you to assess your financial health. Are there areas where you’re overspending? Are you on track with your budget? These reviews provide you with the insights needed to make informed business decisions.