As we slide into February and say goodbye to the silly season, school holidays and long summer days, we must seriously start thinking about the year ahead – particularly in regard to getting on top of our business and our books!
January is a mixed bag for my clients. Some are eager to get the year moving – strategising with big projects ahead, while others are dreading some of the medial admin tasks like completing their BAS and staying on top of superannuation compliance. To help make the start of 2019 a little easier, I have collated an action plan to getting on top of your books, because it really isn’t that bad! Read more for Little Miss Bookkeeping’s bookkeeing action plan!
1. Get into the cloud – cloud accounting software will save you time and money What’s that saying…work smarter, not harder. I’m still astounded by the number of small business owners who are using a manual system (stack of receipts dumped in the filing cabinet) or outdated accounting software (some prehistoric MYOB desktop version) for their bookkeeping. With the vast range of options we now have available, there’s no reason why we can’t cut the time entering invoices and reconciling bank accounts in half! Cloud accounting options like Xero and Quickbooks make the bookkeeping process FASTER and EASIER.
I had a small win with a client recently where they moved over from an old MYOB desktop version to Xero. The result was:
- Reducing data entry time from about 20 hours per month to approximately 5 hours per month due to Xero’s automated bank feeds
- Being able to access the information from anywhere – real time data, then and there
- A much happier client – reduced admin hours means reduced bookkeeping costs
- A much happier bookkeeper – aka me!
Sound appealing? Review your current accounting system and consider moving over to a better one with the help of your bookkeeper or accountant. It’s not hard and your accountant will LOVE you for it.
2. Get up to date – make a plan to ensure your books nice and clean 31 December marks half way of the financial year here in Australia. It’s important look at bookkeeping as an ongoing task that needs to be kept on top of, particularly at this milestone.
I see a number of new clients who start off 1 July with every intention to keep on top of their books…next thing it’s Christmas and not even one bank reconciliation, invoice or expense has been entered.
What happens if you don’t clean your house for 6 months? It would be very messy, stressful, be a big job to clean up at the cost of increased time and money. Think of me like your house cleaner for your books. Let me help look after your books every week/fortnight/month – just as you might with your house cleaner. Your bookkeeping will be fresh, clean and up to date. Most of all STRESS FREE.
Engaging a bookkeeper to work with you throughout the year can significantly help you when it comes to completing your year end tax return and other annual compliance. The last thing you want to do is be pulling out old invoices or trying to work out what you purchased 9 months ago from a bank statement that doesn’t really give you any hints.Accounting doesn’t have to be hard or expensive - with the right solution you can ensure that you are compliant, meeting accounting standards, and can avoid juggling in-house spreadsheets or implementing expensive, complex solutions. The exact same goes for more niche accounting tasks like lease accounting too. When recorded correctly, your financial documents provide a clear picture of the value of your assets and the impact any leases might have on the overall financial health of your business, and therefore it is vital that your lease accounting documents are kept up to date.
3. Review the last 6 months – what’s been going on? Once you’ve got your accounts up to date, it’s time to review how the first half of the business year actually went (1 July to 31 December). Use comparative figures to see how you faired – how you did this year vs last year. You might ask:
- How were my income/sales? Did it increase/decrease?
- How were my expenses? Did they increase/decrease? Are there any significant jumps?
- What’s my bottom line (aka net profit)
- How much money do I owe people (accounts payable/creditors)
- How much money do people owe me (accounts receivable/debtors)
- What does my cash look like (bank accounts etc.)
- What do my other liabilities look like (car loans, ATO debts etc.)
Numbers are POWERFUL! If necessary, ask your bookkeeper or accountant to sit down with you if you need help interpreting the figures. As a business owner you need to know your numbers so you can make better informed business decisions.
4. Set goals for the next 6 months – what lies ahead? So you’ve reviewed your books and have a clear understanding of your figures. Now let’s plan for the next 6 months! Set goals and consider both financial and non financial ones. You might consider goals around:
- Increasing sales and ways to do this
- Reducing expenses and ways to do this
- Seeking finance to grow your business
- Other business projects
- Employing new staff or downsizing your team
- Simply getting on top of your bookkeeping
Michelle Knight is a fully qualified Chartered Accountant with over 6 years experience in public practice. On a daily basis Michelle deals with a range of bookkeeping, accounting and business services.
Michelle is passionate about helping others to reach their goals and driven to assist her clients in any way possible – whether it be getting a better understanding of their tax compliance, assisting with bookkeeping tasks or dealing with a range of other business issues. Michelle has a keen interest in her clients and strives to get a full understanding of how they and their business work.
Thank you Michelle for your bookkeeping action plan to help out our business gals get on top of those books in 2019! To find out more and connect with Michelle visit the website and check out Instagram.