So now you've started your business and you're getting in good custom. You believe you're making a profit. You have to file your BAS and make your GST payments as well as record your income tax. How much exactly is your income and expenditure? Is your business venture as profitable as you think it is?
You can find the answers to those questions by examining your accounting records or simply put, by reviewing your books. That's where Bookkeeping Melbourne can assist you to keep your books in proper order so you can have a snapshot of how your business is doing at any point in time.
Importance of Keeping Good Books
Based on your business records you can analyse your finances. You can do this by maintaining accounting records that are up to date and contain all the relevant information pertaining to your business. If you don't have any formal training on bookkeeping, then it's essential that you rely on a bookkeeper like Bookkeeping Melbourne or an outside accountant to maintain and balance your books.
Accurate financial statements are critical to enable you to answer critical business questions such as Is your business making money? and Are you haemorrhaging cash? You have to know how much money is coming into your business and what your expenditure levels are. This information provides you with crucial knowledge to leverage your insight to augment income channels or stem the outflow of cash. Bookkeeping Melbourne can provide a very sound bookkeeping system for your business.
Critical Benefits of Bookkeeping
You can gain a wealth of benefits simply by ensuring your bookkeeping records are timely and up-to-date:
When you approach a financial institution for a loan to expand your enterprise, one of the first things they'll ask you is the financial statement of your business. You won't be able to produce this document without the services of a bookkeeper such as Bookkeeping Melbourne. They'll be able to hand over the income and expenditure statement, balance sheet and cash flow forecast to confirm that you're running your business in a professional manner.
Budgeting Your Resources
Managing your small business involves budgeting the use of your resources whether human capital, fixed assets or finances. You can only affect a good plan for your business and control your expenses if you have a record of your cash inflow and outflow. Bookkeeping Melbourne provides a valuable and important method of assisting you to budget your resources after careful consideration of your books.
Recording Daily Transactions
You'll have to keep all your personal transactions distinct from your small business accounts especially if you're a sole trader. You may be tempted to co-mingle your personal funds with that of the business. Bookkeeping Central, Melbourne may advise against this practice to avoid complications in record keeping. This is necessary to prevent penalties for errors in your tax returns.
Use a combined sales and cash receipts journal to record your daily sales. The source documents are your sales invoices, daily cash register totals and registers of daily sales. Keep a copy of every invoice that you issue to your clients and customers. Record the cash that you receive from your clients in the sales journal as well.
Your sales invoices should be serially numbered with a minimum of two copies. The original is for your client and the duplicate for your records. Retain any cancelled invoices on file and keep the duplicate copies in running sequence. Bookkeeping Central, Melbourne will be able to assist you in preparing invoices for customers and take away the burden of managing your accounts so you can concentrate on running the business.
Transactions must be recorded in the form of debits and credits called accounting entries in specific accounts. Recording the debits and credits accurately from your cash register, cash receipts and sales invoices is an exercise in skill. Errors in recording are likely to put your books out of whack and you'll find it difficult to balance your records.
When you're working with Bookkeeping Central in Melbourne, you'll get all the help you need for recording daily transactions. You'll learn about the maintenance of a general ledger, an accounts receivable (AR) ledger and an accounts payable (AP) ledger. You'll know the importance of cash records and income tax returns. In fact, with a professional bookkeeper, you'll satisfy your obligations to the Australian Taxation Office with regard to your tax returns and GST payments.
You need to record your sales and revenue transactions, cash transactions, AR and AP as well as a summary of your transactions in your general ledger. Bookkeeping Central, Melbourne will be able to assist where you sell more than one line of product or offer a variety of services under one business entity. You might want to consider maintaining separate books for each type of product to assist you in identifying the profitability of different categories of your products and services. However, owing to the complicated nature of allocating overheads to different products, a bookeeper may be able to advise on the most efficient way to keep your accounting records and provide you with the information that you desire.
The general ledger is the summary of the various accounts in your bookkeeping records. There will be corresponding account headings in the general ledger for every account in your sales and cash journal. There will also be miscellaneous accounts in the general ledger that does not have separate headings in the journals. The general ledger forms the basis of your financial statements. The sum total of all the debit entries must be equal to the total of the credit entries. Bookkeeping Melbourne will prepare your monthly accounts and your quarterly BAS by reference to your general ledger and other records.
You need excellent assistance in keeping your books when you're managing a small business in Australia. Bookkeeping Central in Melbourne has the professional expertise and skills to aid you in keeping an accurate account of the state of your business.