In this article, I want to cover four very important small business accounting tips, to help fellow Australian small business owners out.
These four tips are simple yet powerful things that you can easily implement into your own company right away to help improve your bottom line.
My very first and possibly most important small business accounting tips, which is apt given that this is the Australian Software Guide, is about software. I always recommend that everyone use a cloud accounting software, there’s plenty out there, such as the ones here in the Accounting Software section.
I will tell you why; I travel around quite a lot, and when I had a desktop version, needless to say I was always behind on accounting. Since I’ve switched to cloud versions of everything, things have gotten a lot better.
Watch cashflow not reports
Whilst I do talk about using reports to get a snapshot of your business performance all the time, the biggest single inhibitor for Australia small business success if cash flow. Don’t have money in the bank, then you don’t succeed.
Look at the methods you can use to delay or part pay suppliers, whilst maximising the speed in which customers pay you. The trick is to find a common middle ground, so your business is left with cash to grow.
I strongly recommend that you set aside some time every single week, maybe on a Friday afternoon or a Monday morning, whatever works for you, to do an up to date check once per week. Even if you feel that there’s not a lot to do and especially if there is a lot to do, it will give you a breath of fresh air, and some mental stability.
The fact that I’m online enough as it is again this is where a cloud accounting solution really comes in. I used to often miss these reviews in the past, however we’ve been getting much better at doing them and they definitely helped a lot, as they open room for good debates amongst the company directors.
These quick reviews often shed light on dark holes that are siphoning out our cash, and they also show what’s most profitable for us. One of my favourite reports is the profit and loss report. I usually like to compare the most recent report to the last two, so I can identify trends.
If you want to get really ambitious, you could even try to forecast your future cashflow; I usually don’t do that because it is a lot of work at the start, however if you do it right it forces you to understand how you will reach those goals.
My last small business accounting tip here is consulting with other small business owners, especially if they are in the same industry, and discuss with them how they approach their accounting. A lot of people never actually discuss how their accounting looks like and it’s quite weird.
For example, a colleague of mine recently suggested I don’t have as many expense categories. I used to have a different account name for every expense niche that we had. I have been told that this can cause issues later, with frequent switching of expense categories and unusual activity. I have learned that this may increase the chance of an audit.
There you have it – four really effective small business accounting tips, that can help you go from struggle town to success. I hope at least one of these resonates well with you, and helps you to grow throughout 2020 and beyond.