Why Keeping your Bookkeeping up to date is Important and How to go about it.

When you start a Small Business the last thing on your mind is the bookkeeping. Most Small Business owners continue down that path for many years. Bookkeeping is something that most Small Business Owners consider they can do themselves but they don’t give it the respect it deserves.

Most Small Business Owners see bookkeeping as something that they have to do so they can lodge their BAS or get their Tax done, but its so much more. Keeping your bookkeeping up to date gives you knowledge. Knowledge to make business decisions, knowledge to employ staff, knowledge to increase prices and the list goes on.

Why keep your Bookkeeping Up to Date

I always say that the best thing that happened to Small Business was the introduction of GST. And the reason I say this is because being registered for GST forces you, the Small Business Owner to look at where your business is at and how much money you are making or loosing.

But sadly a lot of Small Business Owners don’t take the time to do this. They work at getting their bookkeeping done so they can lodge their BAS or get their Tax Return done, but they don’t take the extra 5 minutes to print off a Profit and Loss Statement, or a Balance Sheet..

These two reports can give the business owner so much information. They are the reports they need to use to make the important decisions about their business. Or to just look at and see how things are going.

Lots of Small Business Owners will just use Excel or a book to record their transactions and how much GST is in each one, but these are limited options and actually add time to the workload.

I have found over the years that the more involved in the bookkeeping, the more they keep on eye on the figures, the reports, the better the business is. They don’t necessarily have to do the bookkeeping, but sorting it, paying bills or authorising bill payments and following up on debtors all makes for a better ran business. Then looking at reports and understanding how the business is going makes it easier to make decisions.

Accounting Programs 

So what do you need to start taking control of your business, I hear you ask. First of all I would suggest that you get yourself an accounting program and not use excel or a book to record your transactions. I know this is an extra expense to you, but the benefits will far out way the costs.

Most Accounting packages these days include what is called bank feeds, this means that for every transaction that goes through the bank account, all you have to do is allocate them to the correct income account or expense account and the entering of data is done. Very Easy.

There are 4 main companies in Australia that bring you Accounting Programs. Xero, MYOB, Reckon and QuickBooks. All of these companies bring your various programs at various levels. I have listed below what I believe are the better options for small business owners.

Xero

Xero has three levels – Starter, Standard and Premium 10.

Starter            $25/month

Standard        $50/month

Premium 10 $60/month

I would suggest not to use Starter unless you are an extremely small business who only has 20 transactions go through your bank account each month. Standard is the most popular of the three and it does everything you need to including payroll for up to 5 staff members. Premium 10 is the same as Standard but it is for up to 10 staff members.

MYOB 

MYOB has four main options – MYOB Essentials Payroll for One, MYOB Essentials Unlimited Payroll, MYOB AccountRight Plus and MYOB AccountRight Premier.

Essentials Payroll for One    $29/month

Essentials Unlited Payroll    $40/month

AccountRight Plus                 $77/month

AccountRight Premier          $99/month

I would suggest to avoid Essentials all together, these aren’t easy programs to use and make your bookkeeping harder. AccountRight Plus is your best option unless you need multiple accounts and then you will have to have Premier. Both AccountRight programs are based around the original desktop version of MYOB and therefore are awesome for correct bookkeeping practices. And the team at MYOB have done a great job integrating the benefits of online based programs into these packages.

Reckon

Reckon has a few different options – Reckon One, Reckon Accounts Hosted, Reckon Accounts Easy Start, Reckon Accounts Accounting, Reckon Accounts Plus, Reckon Accounts Premier and Reckon Accounts Enterprise.

Reckon One                                        $5/month – as you add apps the price goes up

Reckon Accounts Hosted                  $42/month/user

Reckon Accounts Easy Start             $295/year

Reckon Accounts Accounting           $360/year

Reckon Accounts Plus                       $420/year

Reckon Accounts Premier                $520/year

Reckon Accounts Enterprise.           Ring for a price.

Reckon One is new to the world of online accounting programs. I have had no real experience with it so can’t really tell you if its good or not. Reckon Accounts Hosted and all the other Accounts Desktop versions are all based around the original QuickBooks Desktop version that we have known for a very long time. It is an awesome program and one I would recommend you use. Easy Start is the basic version, it has no payroll or bank feeds. Accounting is the next step up, it has bank feeds, but no payroll option. Accounting Plus is the same as Accounting, but it includes Payroll. Premier has everything, including inventory and foreign currency. Enterprise has everything, but very few Small Businesses would need this version.

QuickBooks Online

QuickBooks Online has three levels, Simple Start, Essentials and Plus.

QuickBooks Simple Start                  $15/month

QuickBooks Essentials                      $25/month

QuickBooks Plus                                $35/month

Although they are always having specials so you may be able to get it cheaper.

QuickBooks use to be the same as Reckon, but due to a split in the companies they are now separate and what we use to call QuickBooks is now Reckon. QuickBooks Online is a great little program and I recommend it to all cients who are wanting an online accounting program.

I have a lot of Small Business Clients who aren’t registered for GST using the Simple Start version. Essentials has payroll so you would definitely need this if you have staff. Plus has everything, payroll, inventory, foreign currency, you name it.

If you want more information on choosing an accounting program then you can have a read of my previous blogs:

Choosing the right Accounting Program

Accounting Software Vs Online Accounting Solutions

Controlling your Receipts

The next thing you need to do when getting your bookkeeping under control is to control your invoices and receipts. Set up simple systems where you never lose a receipt or where you file everything and know exactly where it is. I have a few blogs that I have written previously that you can go back and read to get information on this subject:

How to set up a basic filing system

You’ve set up your filing system… now what?

What’s your legal requirement when it comes to keeping paperwork?

Controlling your receipts and expense invoices.

So now you know why it is important to keep your bookkeeping under control and how to do it, I want to hear from you all how you have implemented this and what have your learnt about your business by doing this.

 


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

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