Does this sound like you? You’ve started your business and made a few sales or gained a client or two, now its time to start recording your companies transactions.
The biggest hurdle when thinking about setting up your books is just getting started. Bookkeeping can be daunting to new business owners. You need to to think about how you are going to organise your accounts, choose a program (see some affordable programs here), and make time to deal with the backlog of transactions the will creep up on you.
No. More. Procrastinating.
FIRST STEP: KNOW WHAT YOUR FINANCIALS LOOK LIKE
When you go to clean out your pantry the first thing to do is open it up and procrastinate just how long this mess is going to take to clean up and organise. Today your financials are that pantry and you need to determine what stage you are at in your business timeline. Are you one of the following?
- Just Starting – Group A
- Current Year Operations – Group B
- Mature Business – Group C
Group A – This would be you if you have just started and are within your first few months of getting things off the ground. You might have spent a bit of money on advertising and getting your name out there. Maybe purchased a few facebook boosts and some office expenses but have had little to no return. If this sounds familiar, start bookkeeping RIGHT NOW. Your future self will be thanking you! If you are wondering how the section at the bottom of the post is for you.
Group B Just a further into your career. You’ve started earning income, and feeling a pinch knowing that the bank statements are getting longer and longer with transactions. But, your business activity is creeping up and you find yourself thinking about what is going to happen at tax time.
Group C – This is you if you have been at it for some time. If you’re reading this post, I’m guessing you don’t have a bookkeeping system in place, which makes me think you are thinking about whether or not your are actually making money or how well your company is doing. This post is mainly for you and you are really, really procrastinating starting the set up process. Stay calm! Getting the numbers cleaned up and a great system in place would be a DREAM. So keep reading!
Figure out which group your little business fits into and have a read of the section that applies to you!
GROUP A: “JUST STARTING”
Good news!! You don’t have much to catch up on, BONUS! But, you do need to get started.
Our biggest recommendation is is to set up a system that has bank feeds. This will automatically track all your bank transactions. That way nothing gets missed (this can be very painful to find) or ifa bookkeeper has to clean it up in the future everything has been tracked in one place. This will save so much time!
Here’s what you can do TODAY:
- Start one bank account solely for the business. A savings account is also advisable to save for the taxes.. Shudder! If your focus is just getting the basics, at least do the one bank account – then only use that account solely for business activity. Do not mix business and personal transactions!
- Choose a bookkeeping system. Wave is free along with a few others that can be fond in our Blog. Set up your bank feeds and download your transactions – Contact us if you need help with this, its better to start it correctly the first time.
- Enter in the transactions that occurred before your separate bank account. You may have to go bank to old bank statements and highlight or search for business related transactions. HINT: You should try to find all of them if you want to have a good tax return next year.
- Pro Tip:
ALL DONE! Not so scary when its outlined is it? The hardest part is to start. Everything gets recorded accordingly and you are now in control of your numbers! Congratulations, such a good feeling!
GROUP B: “CURRENT YEAR OPERATIONS”
If you’ve been in business for several months your actions will be similar to Group A’s, but it might take you a bit longer.
- First step – you NEED a seperate bank account for your business. If you don’t have one, open one right this minute! Move all of your income and expenses into that account. All the other data can be sorted later. Separate personal and business activity NOW. See if your current bank will let you open one online.
- Choose a program. Wave is an amazing free option, but eventually if your company grows you might need to change to something like Xero or MYOB. Check out our recommended programs on our blog post.
- If everything is already in a separate account, start to import as many transactions as possible. You might need to manually enter some. If personal and business transactions are mixed, export your bank statement to excel. You can then get sifting to find your business transactions. You will want to find every business-related income or expense for as far You’ll might need to manually enter these, but it will all be worth it when tax time comes!
- Once you have every transaction recorded, it’s all about classifying everything correctly and reconciling your accounts! (Contact Accountable bookkeeping if you need help with this)
GROUP C: “MATURE BUSINESSES”
Group C, .You will need a couple of extra steps in order to organise you life like Marie Kondo.
Typically, if you have been in business for a bit you may already started a separate bank account for your business. (If not, Eeeeekkk, get one! Have I stressed this step enough so far?
There may be problems in your prior year data and reconciling your bank account(s).
What many owners don’t realise is that, by submitting a return with your business’ data, you’re cementing your financials for that year.
A tax return is to report your exact amount of money earned (and lost) for the year. This figure is then used to calculate the exact amount of tax to be paid on your income. An auditor will need to see that your financial records match your tax return exactly. Otherwise… it can be seen as a false report. Annddd that doesn’t look good in any audit.
You will also want to have your bank account balances for the start of the tax year. This will be important for reconciling your bank accounts. Your accountant can do this using an accountants Journal Entry. (best left to the professionals, not really a DIY sort of thing)
MAKING IT HAPPEN!
So, has this started to make you feel like getting your toosh into gear?
Group A, you can probably tackle this in a matter of days depending on how much time you have.
Groups B and C are looking at a little more time. This depends on how organised you have been to date. Now you need to decide how you want to approach this.
Now, with this info, face the fear and get organised! Start now. If it seems a little to out of your scope of knowledge or like its one for the too hard basket you are always welcome to contact our team here at Accountable bookkeeping. We deal with these types or rescue projects daily.
This could also be good for you to hear – so many business owners neglect their books and it becomes something on their worry list like a dentist appointment or a car service. They know it needs to be done but it gets pushed to the back burner.
We are always here questions along the way.
Our Facebook page is always being monitored. All who like our page gets free bookkeeping support so feel free to send us a message
-Jasmine