Bookkeeping may be one of your least favorite tasks unless you are having fun working with numbers. This is why some business owners deliberately ignore bookkeeping without realising it has a serious impact on their financial health. Bookkeeping involves record keeping so you will know if you still have enough money left for growing your business or for other business plans. Keeping financial details in your head will not help as there are too many distractions at work. For instance, you might be planning to get new bookkeeping software, but it has totally slipped your mind because of an urgent meeting with clients. A proper system and process in place will help you avoid any unpleasant surprises that may ruin your future plans.
Track your expenses
Have you ever wondered why you are struggling with making ends meet despite making a huge profit? You might be missing out one important task, which is tracking your expenses. Lunches, special events and occasional travels can affect your business if you do not properly monitor how much you are actually spending. Preparing audit for these expenses can have a positive effect on your tax records.
When tracking your expenses, be sure to categorise everything. Driving long distances to meetings must also be tracked so you will know the cost associated with your travel.
Save money for taxes
Putting money aside for taxes will help prevent incurring penalties and interest from the ATO. Failing to set aside money for taxes is one mistake business owners usually commit. Interest and penalties can ruin your budget and may even have a snowball effect on your financial performance, especially when the money you put aside for your monthly bills has been used for paying late fees. This is not a smart move because the lack of funds will deter you from expanding your business.
Monitor your invoices
Not keeping an eye on your invoices can hurt your cash flow. As a business owner, you need to assign a bookkeeper to track your billing. This way, you will know the people who have already made a payment. Some savvy business owners invest in a reliable bookkeeping system to ensure that no payments are missed and incurring penalties are prevented.
Handling your money wisely ensures you achieve your long-term goals and operate your business smoothly. These simple changes can also help you stay out of trouble with the ATO. Even if you are operating a small business, hiring a bookkeeper is a wise move.