15 Steps to Getting your Bookkeeping Under Control

Most people don’t think about doing the bookkeeping for their business until things are out of control. When you are looking at starting a business, you might see your accountant and get an ABN and talk about a few things. Or you might have a friend who goes online and gets you an ABN. Then you start your business, start earning income and paying bills, maybe even wages, but what happens with the bookkeeping? Who does this? Who keeps it up to date? Who helps you, the business owner to be ATO Compliant?

Some times it 3, 5 or even 8 years before you realise that you really need to get your Tax done and lodge some BAS’s. Some businesses are ‘lucky’ to not be contacted by the ATO in this time; others just ignore the letters they receive. Most people don’t deliberately not do their bookkeeping, it’s just too hard for them to understand and they don’t know where to start or they tried but it is just too confusing. Then stress and panic set in so they push it to the back of their minds and ignore that they need to do it.

Before you get to this stage, or if you are already at this stage, its not too late. Lets look at the steps you need to do to get up to date and get things happening.

1. Get a Bookkeeper

I can’t recommend this highly enough. If you have struggled to get your bookkeeping done, or you don’t know how to tackle it, the easiest and most stress free way to overcome this is to hire a Bookkeeper to do it for you. You must keep in mind though that if it is quite a few years this will be an expensive way to go, but definitely worth while.

2. Get a Mentor

If you decide that getting a Bookkeeper is not an option, then get a Mentor. Someone who is either a Bookkeeper or someone who does their own bookkeeping. The purpose of a Mentor would be to guide you and reassure you that you can do your own bookkeeping. They will keep you on track and focused on your task. They can help you with any questions you may have.

3. Choose an Accounting Program

If you haven’t got one already, then you need to get an Accounting Program ASAP. I have written several articles on choosing the correct Accounting Program for you, but ultimately, if you are using a Bookkeeper or getting someone to teach you, or you have a Mentor then the easiest, fastest and most effective thing to do is choose the Accounting Program they use and understand. That way if you need their guidance or assistance they know how to help you straight away without any messing around.

The articles I have written are:

4. Find all your receipts

It is most important that you find all your receipts for the period that you are doing your bookkeeping for. There are two reasons for this, firstly if you get an ATO Audit you need to be able to present all receipts that you have used to claim expenses. Secondly, you will need these receipts to make sure you claim the correct amount of GST.

5. Find all your Bank Statements

It is really important that you find all your bank statements. Put them in order and make sure none are missing. If there is any missing then go to your bank and get them to print you the missing ones, or order the missing ones if you have to. Make sure that for every business bank account you have, you have EVERY bank statement.

6. Find all your Credit Card Statements

Your Credit Card Statements are just as important as your bank account statements. You need to make sure you have all of them and if you don’t you need to go to the bank and get copies or order copies. A good idea for Credit Card Statements is to also staple the relevant receipts to the statement so that you can work out what you are missing and try and get copies of them.

7. Sort out your Income

Even though you may not have been doing your bookkeeping, you would have been tracking income in some way. You may be invoicing clients from a manual invoice book or from word or excel. Or you may have had a cash register where you have been recording sales. Whatever way you have been recording sales, you need to gather this information into the one place ready for entering into your Accounting Program.

8. Set up a filing system

Once you have gathered everything mentioned above you need to sort it and file it. You need to make sure they are in financial years and in some sort of order.  I have written a previous article called How to set up a basic filing system, go back and read this and get your filing sorted.

Also, take some time to read my articles:

9. Set up your Chart of Accounts

Another major thing that you need to do as you are setting everything up and once you have worked out what Accounting Program you will be using is to set up your Chart of Accounts.

What is a Chart of Accounts I hear you say, well a Chart of Accounts is a listing of all the accounts used in the General Ledger. The accounts are what you use for recording transactions when doing your bookkeeping. Businesses have the flexibility to tailor their Chart of Accounts to what best suits their needs. The better you set up your Chart of Accounts the better reports you will get from your accounting program.

I have written two articles on setting up your Chart of Accounts, they are:

Make sure you take the time to read these articles, as they will help you get started with setting up your Chart of Accounts.

10. Enter your Income

Now you have everything sorted, filed and collated into the correct order it is time to start entering the data. The first step is to enter the income. I would suggest that if you are years behind in your bookkeeping, you do this as a Cash Receipt or a Receive Money (depending on the program you are using). And you just receive all the money, apply it against the correct income account and put it in the correct bank account or cash draw.

If you are not years behind in your bookkeeping then you can enter the income as invoices and receive payments for the ones that have been paid. This is something that you need to discuss with your Bookkeeper or Mentor.

11. Enter your Expenses

Once all your income is in and receipted its then time to move on to enter your expenses. If you are years behind then don’t worry about entering them as a bill then paying them off, enter them as a Spend Money or Write Cheque, or however your accounting program enters them.

You need to make sure you get all your expenses in that have come from your bank account, credit card and cash purchases. They should be allocated to the correct expense account in your Chart of Accounts and coming from the correct place (bank account, credit card or petty cash).

You need to also go through your bank account and credit card statements and pick up any bank fees, direct deductions or interest charges that have come out and enter them in to the corresponding account.

If you are not years behind then you can enter them as bills/purchases and then pay them from the correct account. Once again, this is something you should discuss with your Bookkeeper or Mentor.

12. Reconcile your Bank Accounts

This is one of the last steps. Once you have entered all your income and expenses it is time to reconcile the bank account and credit card statements. You need to start at the first bank account and credit card statement you have ever received and make sure that everything has been entered and the closing balance you have in your Accounting Program is the same as what is on the bank statement or credit card statement.

13. Check Tax Codes

Once all the bank accounts and credit cards have been reconciled you then need to go and find a report in your Accounting Program that will let you check the GST Tax Codes. To get a better understanding of Tax Codes and the Goods and Services Tax, read my article called Understanding the Goods and Services Tax (GST). You need to try really hard in getting these correct so that you report them on your BAS correctly.

14. Do your BAS’s

Once everything is entered, reconciled and checked you need to lodge your BAS’s. This can be a very stressful time for you as the Tax Office can be quite scary; well that is the perception anyway. Let me tell you they aren’t as scary as you think and if you communicate with them at all times you will sort everything out.

If you haven’t done your bookkeeping for a while, all I can advise is get all the steps above done as quickly as possible and then lodge your BAS’s as quickly as you can. Once they are lodged ring the Tax Office and sort out a payment plan, or if you have the ability, just pay them all as soon as you have lodged them.

For more tips on lodging your BAS’s you can read my three articles I have written on this subject:

15. Get your Tax done

Now that your data entry is done, you have reconciled all your accounts and your BAS’s are lodged its time to get your Tax done. You will need to take your Bank Statements, Credit Card Statements, BAS’s and your file to your Accountant so that he can lodge your Tax Returns.

Once again, if you haven’t done your bookkeeping for a while, you will need to get everything done as quickly as possible and then once your Tax Returns are lodged you will need to ring the Tax Office and set up a payment plan.

Now although all of the above is set out very basic, your bookkeeping may be a little more complex, so make sure you connect with a Bookkeeper or a Mentor. If you don’t know where to find either you can contact me, I have a bookkeeping business and I also do Mentoring for business owners around various things, including their bookkeeping.

Also take the time to read all the previous articles that I have mentioned, as they will definitely help you.




Please note: I reserve the right to delete comments that are offensive or off-topic.

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