Why bookkeeping matters
Good book keeping is vital to the survival of any business. In addition to that, it's the law! Bookkeeping is therefore important for all businesses, small or large. Be that as it may, it's sad to say, it's often neglected, causing an adverse effect on the business. According to CPA Australia, some 32% of businesses fail due to financial mismanagement, but perhaps more worryingly, others businesses have weak or no accounting records or books on hand.
It's simply not possible to make informed business decisions if you don't have the raw data. How can you decide when to expand, when to hire or fire, what products or services are working well and which should perhaps be dumped if you don't know the numbers? In addition to making the day to day operation of a business akin to flying blind, the failure to keep books and records actually means that when it comes time to think about selling your business, you'll be lucky to get anything for it - after all, what buyer is going to pay you based on what 'you say' happened? Buyers need to see hard facts, backed up by BAS returns or annual tax returns, otherwise, you'll be whistling in the wind. One of our clients, Gutter Cleaning Brisbane had a few hurdles when they were seeking finance for expansion, because they had not implemented best record keeping practices. We were able to help them and fix the issues, and in the end they got what they wanted.
Broadly speaking, there are three options available to you for keeping track of your financial transactions.
First, the least popular and lest likely method you'll choose is a hand written ledger. Whilst some very traditional operators still use hand written ledgers, they've given way in popularity because they're time consuming, they take up physical space, and they're not easily dissected when it comes to creating reports at the click of a button.
Second - computerized spreadsheets. Around 20-30% of businesses in Australia still record the transactions manually on spreadsheets, and run their entire accounts from spreadsheets. While there's nothing 'wrong' with using spreadsheets, they're also not the most efficient and practical way of recording transactions. As with many things, it's often a case of "it's too hard to change" that keeps users stuck on this system.
Third, and undoubtedly the most popular - computerized accounting software. In years gone buy, you had to go to your local Officeworks or Harvey Norman and spend hundreds (and sometimes thousands) on accounting software, then spend days fighting to set it up, and then repeat steps 1 to 2 the next year because a new update was released. That's the old way. Today, operators are switching fast to software-as-a-service accounting software, or 'SaaS'. The key players in this area are Xero.com and Quickbooks, though MYOB has also recently released a SaaS edition. In a nutshell, SaaS just means you go to a website to login to your accounting software - there is no need to install it, there is no need to have any servers, or to transfer files backwards and forwards. It's always online, and it's always ready. The key benefits are that it's always backed up, and that you and your accountant/bookkeeper can be working on the data at the same time, from anywhere. And, with no big ticket price tag to pay up front, you're usually paying just $30-$50 a month to use the software.
Through the upcoming posts on this site, I'll attempt to keep you informed and update you about the new laws and rulings in a simple to understand way that makes it easy for you to operate your business. In addition, you can post and questions or comments for clarification, and I'll be checking back here on a regular basis to help you with those questions.
In the meantime, if you're looking for book keeping services in Brisbane, Sydney, or Melbourne, you can try Brisbane bookkeeping to give you a helping hand. Likewise, if you have a house or building in Brisbane and you need some maintenance, try gutter cleaning Brisbane.
About me: I've been a finance professional for 16 years, starting my career with a suburban accounting firm in Sydney after finishing my degree in 1996. From there, I moved to a big-4 firm in Melbourne, where I worked mainly on compliance issues, helping businesses of all sizes keep in check with the fast changing law, particularly as the GST came into effect in the years that followed. Today, I spend my time with smaller businesses in my new hometown of Brisbane, doing bookkeeping and BAS returns, and offering business advice based on solid data. Stop flying blind - use a professional.
Good book keeping is vital to the survival of any business. In addition to that, it's the law! Bookkeeping is therefore important for all businesses, small or large. Be that as it may, it's sad to say, it's often neglected, causing an adverse effect on the business. According to CPA Australia, some 32% of businesses fail due to financial mismanagement, but perhaps more worryingly, others businesses have weak or no accounting records or books on hand.
It's simply not possible to make informed business decisions if you don't have the raw data. How can you decide when to expand, when to hire or fire, what products or services are working well and which should perhaps be dumped if you don't know the numbers? In addition to making the day to day operation of a business akin to flying blind, the failure to keep books and records actually means that when it comes time to think about selling your business, you'll be lucky to get anything for it - after all, what buyer is going to pay you based on what 'you say' happened? Buyers need to see hard facts, backed up by BAS returns or annual tax returns, otherwise, you'll be whistling in the wind. One of our clients, Gutter Cleaning Brisbane had a few hurdles when they were seeking finance for expansion, because they had not implemented best record keeping practices. We were able to help them and fix the issues, and in the end they got what they wanted.
Broadly speaking, there are three options available to you for keeping track of your financial transactions.
First, the least popular and lest likely method you'll choose is a hand written ledger. Whilst some very traditional operators still use hand written ledgers, they've given way in popularity because they're time consuming, they take up physical space, and they're not easily dissected when it comes to creating reports at the click of a button.
Second - computerized spreadsheets. Around 20-30% of businesses in Australia still record the transactions manually on spreadsheets, and run their entire accounts from spreadsheets. While there's nothing 'wrong' with using spreadsheets, they're also not the most efficient and practical way of recording transactions. As with many things, it's often a case of "it's too hard to change" that keeps users stuck on this system.
Third, and undoubtedly the most popular - computerized accounting software. In years gone buy, you had to go to your local Officeworks or Harvey Norman and spend hundreds (and sometimes thousands) on accounting software, then spend days fighting to set it up, and then repeat steps 1 to 2 the next year because a new update was released. That's the old way. Today, operators are switching fast to software-as-a-service accounting software, or 'SaaS'. The key players in this area are Xero.com and Quickbooks, though MYOB has also recently released a SaaS edition. In a nutshell, SaaS just means you go to a website to login to your accounting software - there is no need to install it, there is no need to have any servers, or to transfer files backwards and forwards. It's always online, and it's always ready. The key benefits are that it's always backed up, and that you and your accountant/bookkeeper can be working on the data at the same time, from anywhere. And, with no big ticket price tag to pay up front, you're usually paying just $30-$50 a month to use the software.
Through the upcoming posts on this site, I'll attempt to keep you informed and update you about the new laws and rulings in a simple to understand way that makes it easy for you to operate your business. In addition, you can post and questions or comments for clarification, and I'll be checking back here on a regular basis to help you with those questions.
In the meantime, if you're looking for book keeping services in Brisbane, Sydney, or Melbourne, you can try Brisbane bookkeeping to give you a helping hand. Likewise, if you have a house or building in Brisbane and you need some maintenance, try gutter cleaning Brisbane.
About me: I've been a finance professional for 16 years, starting my career with a suburban accounting firm in Sydney after finishing my degree in 1996. From there, I moved to a big-4 firm in Melbourne, where I worked mainly on compliance issues, helping businesses of all sizes keep in check with the fast changing law, particularly as the GST came into effect in the years that followed. Today, I spend my time with smaller businesses in my new hometown of Brisbane, doing bookkeeping and BAS returns, and offering business advice based on solid data. Stop flying blind - use a professional.