As an accountant or a financial adviser, you tend to see a lot of different clients, doing many things differently. Some of those clients are well organised, and unfortunately, some of them are in a real mess. In certain instances, bad bookkeeping is a major contributing factor to this mess.
The question then arises on what’s the point of bookkeeping anyway? There are several reasons why you need to keep your books straight and the main reasons are:
- To run your business properly and stay in the black
- To meet your obligations – to your creditors, to your staff, to the tax office, and your shareholders (ie: you the business owner).
- Those should be the goals of your accounting systems and processes.
If your bookkeeping system is not helping meet those goals, then you’re wasting your time and money. You should be getting useful information out of your accounting system regularly. Key points being:
A few things to remember:
There is no point in keeping information which does not help you meet your goals. The aim is to work smarter to ensure that your records are easy to use in the future.
Spending a lot of time and effort on something does not make it valuable.
Just because you’ve always done something a certain way and it covers the basics it doesn’t justify continuing to do it the same way. You would be surprised how a new method could save you on time, money and create a seamless process for you.
It’s easy to narrow down what the best bookkeeping solution for you, and the criteria is one which helps you meet your goals, saves you time, and doesn’t cost a fortune.
We know the strains of running a business can be strenuous if one of your major time-consuming tasks is you are staying up late doing your books yourself, your priorities are wrong.
By now you are probably asking yourself, what are a few warning signs that my bookkeeping process may not be serving my needs?
- Well, are you looking at your reports and not understanding your accounts? That is one of the most important warning signs.
- In your balance sheet, your super, GST and other liabilities don’t match reality, and the numbers are just not adding up.
- You have to contact your bank to find out how much cash you have.
- You can’t speak to your bookkeeper as and when you need to.
- Your end of year tax and accounting bills are coming out higher than they need to be, it’s probably because your books are disorganised.
- You’ve been doing things the same way for years, and there are no new ideas on the table.
Good bookkeeping alone isn’t enough to create a great business. However, it does ensure you are compliant with the law always, it is easier to keep track of books, conduct audits and have instant reporting. Despite of all these benefits, you still need to find profitable customers and deliver your product or service.
Remember bad bookkeeping can be enough to create a bad business or even send it broke.
What advice do we have for you? Step one is to get the right information in the right way. Good bookkeeping is essential.
Step two is to use the information to make the right decisions. That’s up to you (but your adviser can help).
If you want to know more about good bookkeeping, contact Scope Accounting today.