Record Keeping – how to manage a business better through efficient bookkeeping practices

Why it is important to keep accurate financial records

It is important to keep accurate financial records not only for legal reasons, but also as good management practice.

1. Keeping accurate records means you make informed business decisions. As a business owner your oprations should be based on facts, not intuition.
2. Keeping accurate records means you can determine where the business stands. A good understanding of your financials allows you to accurately evaluate your current business position.

Important Source Documents

It is important to keep records of the following:

1. Receipts – necessary for proof of payment and taxation purposes
2. Bank slips – to check records against bank statements
3. Bank statements – to check your records against those of the bank
4. Cheque butts
5. Diary – with a record of  travel, minor purchases etc
6. Petty cash – with a record of small purchases
7. Tax invoices – very important for GST legislation as it records purchase information and taxation paid
8. Purchase orders – records the detail of stock and equipment orders
9. Time sheets – Records employee work time, can be used to calculate costs of projects

Organising your records

You must keep source documentation for a minimum of five years. Keep you filing system current by:

1. Using source documents to check and extract information into record books
2. Then file source documents in archive boxes

Tailor the filing system for your use – keep it simple, up to date and ensure that you can access necessary information as required.

Computerised accounting records

Why computerise?

1. To use e-commerce and electronic funds transfer
2. Easier calculation of GST tax payable and tax credits
3. Companies update their software regularly to meet changing legal requirements
4. Integrated systems to produce Profit & Loss Statements and Balance Sheets

What should you consider when selecting software?

1. Is the software compatible with your computer?
2. Is the software tax compliant?
3. Can the software be upgraded as necessary?
4. Is it an integrated system that can process transactions as well as produce reports?

 

Sources of help and information

Northern Rivers BEC – for first base support, advice / referral and training services

Your accountant – for quarterly financial reports, setting up of bookkeeping systems

Australian Taxation Office – for publications on tax

Business mentors – for practical tailored advice and networking

Banks and other financial institutions – for free publications and financial planning tools

TAFE and training providers – for courses

 

TEMPLATES

Budget Template