Once you get your small business set up and running, it’s time to think about accounting. Don’t let the word intimidate you. Accounting may seem complicated, but it doesn’t have to be. It all comes down to tracking how your business makes and spends money.
“Know your numbers” as they say.
There are different ways to track your income and expenses. You could even use applications like MYOB and Xero. The important thing is to make sure you are accurately monitoring your cash flow, and you’re on top of your tax responsibilities.
Here are some things you should know about accounting for your small business:
Cash Basis Accounting Versus Accrual Basis Accounting
You could choose between these two types of accounting methods for your business.
In cash basis accounting, you record an earning or expenditure once the transaction has been done. Sent invoices and bills do not count until you’ve got them settled.
Cash basis accounting is simple, easy to do, and offers a day-to-day outlook of your finances. However, it may not always be accurate, especially when you have not paid the bills yet.
In accrual basis accounting, you record an earning or expenditure once you generate an invoice for your client or received a bill from a supplier. Unlike cash basis accounting, accrual basis accounting may offer a more accurate view of your company’s finances and performance. It could help you make financial decisions confidently.
Proper Record-Keeping
Many business owners struggle with record-keeping. When you’re not careful, you may forget to track transactions, making your books inaccurate. To ensure precise record-keeping, consider automating the process.
Online accounting helps make things easier. For instance, you could automatically import credit card and bank transactions into your account. Through an intuitive bank reconciliation process, the system would automatically match transactions so you won’t have to.
Working with an Accountant
Accountants could help you prepare financial statements and tax requirements. Furthermore, they will make sure that your company meets all statutory obligations that are relevant to your business.
When done right, accounting could help you make the best financial decisions for your business. This is why it’s essential to keep it as accurate as possible. If you’re falling behind on record-keeping or you’re confused with taxation, don’t be shy to get some help. The sooner you get your records and taxes up-to-date, the more confident you will become as a business owner.
Let Sutherland Reid & Farrar help you. We offer a range of business and accounting services, including bookkeeping, financing, and budgeting. Our team can also help you choose the most suitable online accounting software based on your needs.
Please send an email to office@srfpl.com.au or call us at 02 6752 9700 for more information on our services.
