Tips to catch up on bookkeeping.Article by Emma Warren
It’s easy for your books to get out of hand. Many business owners and freelancers find that they are so focused on the operations of their work, that the financial side of things gets completely left behind.
For a while, you might be stuck in denial. You will pretend that the papers cluttering your desk don’t really exist. You will ignore incoming paperwork and have vivid dreams about magical bookkeeping fairies dealing with it all for you.
Unfortunately, untidy bookkeeping does not fix itself. The longer you leave your bookkeeping as a mess, the more challenging it will become to finally tidy up. When you fail to take a systematic approach to your bookkeeping, most of your requirements to the Australian Tax Office (ATO) won’t be met. Then, you might start getting into serious trouble.
It’s important that business owners who are drowning in their own paperwork start acting on their chaotic books asap. To help you out, we’ve created a few tips that can help you on your way.
Separate your personal and business expenses.
The first thing you need to do is collate all of your financial documents from throughout the year. This will include receipts, invoices and records in relation to: customer invoices, debt collections, business expenses and vendor accounts. If you have accounting software, you should upload all of the information into there. You’ll also need to compare your bank balance with the aforementioned receipts to ensure you haven’t missed anything.
Once you’ve gathered all of your receipts and invoices, you will need to separate your personal and business expenses. Anything personal cannot be claimed and reported to the ATO, but expenses or profits relating to your business must be.
As a sole trader, you cannot be covered as an ‘employee’ of your business with workers’ compensation. Instead, you will need to seek your own personal death, illness and disability insurance. These insurances through private insurers should compensate you in the incidence of lost revenue whilst you recover.
Pay those old bills.
As you collect your receipts and review your bank account balances, you might realise that you have fallen behind on some payments. If this is the case, consider this a grand opportunity to catch up on your overdue bills.
Don’t get too caught up in the categorising.
While it is definitely important to file and categorise your receipts, there is no need to go overboard. As an example, you shouldn’t have a folder for printer ink or coffee or sticky notes. Instead, you should have categories for office supplies and personal goods. The printer ink and sticky notes will fall under office supplies, and your coffee will fall under personal goods. (We wish we could claim coffee as a tax deduction!)
Get help from professionals.
If you don’t understand your bookkeeping requirements, or how you should be managing your files, then it might be best for you to seek guidance from professional bookkeepers. At Rumpel, we have a team of dedicated account managers that can handle all your bookkeeping needs. We take care of your payroll, BAS lodgements and performance reviews in accordance with the documents you upload onto our progressive accounting software. It’s easy to hand your bookkeeping over to Rumpel, and it means you can continue focusing on your business operations instead of learning about finance.
Just do it!
As a famous sporting brand once said, just do it. At the end of the day, your finances won’t fix themselves. Consider this article to be a sign that today should be the today you finally get onto it. The Rumpel team are here to help whenever you need it.