The surest way to fail in business
What if someone told you accurate, up-to-date record keeping can save you loads of money and DRAMATICALLY increase your chances for success? You’d probably start sifting through the bin for any missing receipts. Well, I’m telling you now that it can and it will.
Notice I left the words “record keeping” out of the title here. I did that on purpose. As soon as I mention those words, I notice my clients get that far-off look in their eyes.
I get it, record keeping can be boring. If everyone found it exciting, we’d have a whole world of accountants. But, every business owner should be concerned with it and excited by it.
Why is record keeping so important?
Small business owners have many tasks. One of the most important to the success (and survival) of their business is keeping good records.
The Australian Taxation Office has implemented a system of small business benchmarks which they utilise to establish whether businesses are correctly reporting all their income and to ensure they are not claiming on illegitimate or excessive expenses. If you don’t keep records, you’re putting your business at risk and could face a number of penalties.
There are many other perks to effective record keeping:
- You’ll have a much better line of site on your business so you grow it more effectively;
- You’ll have better internal control of your business;
- You’ll be better at business planning and decision making;
- You’ll protect your business against business losses, internal fraud and theft; and
- The cost and effort when preparing for your tax and other reporting obligations will be greatly reduced!
What records do I have to keep?
It’s imperative you maintain the correct records. You must record all monies coming in and going out of the business. These records include:
- Source documents that substantiate all transactions in your business – e.g. receipts, invoices, vouchers, and other relevant documents issued or received from customers/suppliers;
- Accounting records and schedules – manual or electronic records of assets and liabilities, revenue and expenses, gains (profit) and losses; and
- Bank statements
By law, businesses must keep records:
- For five years after they are prepared, obtained or the transaction is complete (whichever occurs last)
- In English and in a form the ATO can access and understand to work out the amount a taxpayer is
How do I go forward?
Considering the massive benefits to your business, if record keeping is at the end of a very long to-do list, I would encourage you to move it up to the top. I know it may sound like a lot of work, but with today’s technology and software it’s been made easy.
You may still feel you don’t have the time and know-how to do this. If you are in need of help building better record keeping into your business, our expert accountants are here to help. They can advise you on how to get started, suggest the best software for your business and help you build systems to maximise the impact it has on your business.
Get in touch today for a free consultation. You have nothing to lose and loads to gain!
Upwards and onwards,