Record keeping for small businesses may not be the most exciting task on your to-do list, but it is crucial for staying organized and compliant with regulations. Even when you don’t have a full-time accountant, you can still hire a professional accounting firm to help you with your bookkeeping. Business owners in Frankston and Mornington have a lot of options in terms of accounting firms, but Guidance Accounting stands out as one of the best. By having the best experts to work with you, you can get the best business advisory service, taxation, and accounting help that can help build you and your business.
The Best Practices For Business Record Keeping
Accounting practices can be defined as the methods and processes that a business follows in order to keep track of its financial transactions. Here are the top five best ways to keep records for your small business:
1. Keep physical and digital records separate
it’s important to have a backup in case one system fails. This is important because there will be a time when you might be required to produce evidence of a transaction or action. If you receive a financial record in digital or electronic form, back it up and create a hard copy version that you can file and keep away. This will help to keep you safe just in case there is a breach in your digital storage.
2. Keep documents organized and easily accessible
Create a filing system that makes sense to you and is easy to navigate. This way, when it comes time to find a specific document, you’ll be able to do so quickly and efficiently.
3. Store important documents in a secure location
This could mean a locked filing cabinet, safe, or off-site storage facility. It’s important to protect your business and these documents from theft or damage.
4. Keep records for the appropriate amount of time
Each type of document has a different retention period, so be sure to check with your accountant or legal advisor to determine how long you must keep certain records.
5. Have a system for the destruction of documents
Once their retention period has expired, it’s important to have a secure and safe method for destroying these documents. This helps protect the privacy and confidentiality of your business and customers.
What Happens When You Don’t Keep Proper Accounting Records?
As a business owner, the consequences of not keeping proper financial records can be severe, and here are 10 of the things that you may be faced with if you don’t keep proper financial records:
1. You may face penalties and fines,
Fines and penalties may be a result of failure to remit tax deductions and other statutory deductions on time.
2. You may face an audit by the ATO
Not keeping proper records puts you at a higher risk for audit, making it difficult for the ATO to verify your financial information and ensure that you have correctly reported income and expenses.
3. It may be difficult to obtain financing
If you don’t have proper financial records, it may be difficult for banks and lenders to assess the financial health of your business and determine if you are a good candidate for financing.
4. It may be difficult to track expenses and make informed business decisions
Without proper record keeping, it will be difficult to track expenses and monitor the financial performance of your business. This can make it difficult to make informed decisions about the future direction of the business.
5. It may be difficult to protect against fraud and theft
If you don’t have proper records, it will be difficult to detect and prevent fraudulent activity within the business. A lack of records also means it may be difficult to prove that expenses are legitimate.
6. Your business reputation may suffer
Not keeping proper records can make it difficult for customers and vendors to trust your business’s credibility.
7. It may be difficult to accurately prepare financial reports
If you don’t have proper records, it will be difficult to prepare accurate financial statements and report on the overall financial performance of the business.
What To Look Out For When Hiring Professional Accountants For Small Business
Since business owners in Mornington and Frankston, Australia have many options for hiring accountants, it is important to do your research and find the right accountant for your specific needs. Here are a few things to consider and look out for when hiring an accountant:
1. Make sure they have experience in the industry
It is important to find an accountant who has experience working with small businesses similar to yours. This means they will have a good understanding of the specific challenges and needs of your industry.
2. Look for an accountant with good communication skills
An accountant should be able to clearly communicate financial information to you, as well as advise on important financial decisions. Good communication is also important in building a strong working relationship with your accountant.
3. Look for an accountant who stays current on industry changes and regulations
It is important to find an accountant who stays up-to-date on relevant industry changes and regulations, as these can have a significant impact on your business’s financial health.
4. Make sure they offer the services you need
Before hiring an accountant, make sure they offer the services you need for your business. This could include tax preparation, financial planning, cash flow management, and more.
5. Consider their fees and payment structure
It is important to find an accountant who offers fair and reasonable rates for their services. Also consider if they have a flexible payment structure, such as offering monthly payments instead of a lump sum.
Frequently Asked Questions
Here are 5 commonly asked questions about small business record keeping in Mornington and Frankston, Australia:
1. How often should financial records be updated?
It is recommended to regularly update financial records, such as at least once a month or quarterly.
2. What types of records should be kept?
This can vary based on your specific business, but generally, it is important to keep records of income, expenses, sales, purchases, and payroll.
3. How should records be stored?
This can vary based on personal preference, but it is important that the storage method ensures the safety and security of the records. This could include saving digital copies and/or keeping physical copies in a secure location.
4. How long should records be kept?
In Australia, it is recommended to keep financial records for a minimum of 5 years in case they are needed for tax purposes or audits.
5. Do I need to hire an accountant for record-keeping?
This can depend on your personal preference and the specific needs of your business. Some business owners may choose to handle record keeping themselves, while others may find it more efficient and beneficial to hire a professional accountant. Ultimately, the important thing is to keep accurate and organized records for your small business in Mornington and Frankston, Australia. This can help ensure the financial success and longevity of your business.
Overall, it is important to do your research and find the right accountant who will have the knowledge and skills to effectively manage your business’s finances. This will not only save you time and stress but also help improve the financial health of your business. Business owners in Mornington and Frankston, Australia have several choices when looking for accountants that offer help in areas that include tax preparation, financial planning, and cash flow management. Make sure to find an accountant with experience in your industry, good communication skills, and who stays current on industry changes and regulations. It is also important to consider their fees and payment structure. Taking the time to find the right accountant can ultimately improve the financial health of your business.