Top 10 Tips – Accounting Advice for Small Business
Article by Julian Caruana
Small business makes up the largest quantity of Australian businesses. Spanning a multitude of industries, locations and ideologies, small businesses are an important piece of the Australian economic puzzle. Consequently, competition is fierce. It’s important to allocate the majority of your time towards business growth and development. To do this, the accounting aspects of the business must first be organised.
We know growing a business can be tricky without proper guidance. So, as business advisory specialists, we’ve put together 10 pieces of accounting advice for small business to follow for clarity and efficiency.
1. Cashflow is King – Prepare Cash Flow Forecasting and KPIs
Time and time again the hot topic of cashflow is discussed. Without cash, we cannot pay our creditors, employees, or ourselves!
Our advice? Request that your accountant provides a complete financial analysis of your small business. By tracking and understanding your expenses, you can set goals and align KPIs to achieve growth and ensure you have enough cash to meet all your obligations.
2. Open a Second Bank Account for PAYG Withholding Tax, Superannuation and GST Obligations
Something as simple as opening an additional bank account for your tax obligations can ensure that you always have enough funds present when debts fall due. Best practice would be to transfer the payroll obligations immediately into this account after each pay run to prevent the usage of funds unnecessarily.
3. Accounting Software – Utilise Cloud-Based Software
By partnering with accounting software such as Xero or MYOB Live, you can ensure that you, your accountant or anyone of importance will always have access to your financial information wherever you go. Whether that may be playing golf on the weekend or traveling interstate, having access to your data is crucial.
This will result in a smooth process for tax compliance as all the information is readily accessible. It will prove incredibly useful for applying for finance as your financial information is always kept up to date.
4. Google Reviews! – Never Underestimate the Power of Reviews
One of the most underrated and beneficial sources of reputation. Every one of us has used Google to assess the quality of a business. The quantity and quality of the reviews often will be the defining factor for new customers/clients searching for a business to deal with.
As a small business owner, take pride in asking your customers for honest reviews! By considering your review platform as a further avenue for revenue, this piece of accounting advice for small business is definitely one that you want to follow to see organic growth.
5. Goodness Me, It’s STP!
Single Touch Payroll (STP) has changed the way payroll is prepared. Being up to date with the changes and ensuring you are always reporting accurately will prevent any business audit conducted by the ATO. Stay on top of the changes and don’t fall behind!
6. Superannuation – Pay It On Time
If you fail to pay your superannuation on time, then it cannot be claimed as a tax deduction and you may be liable for the Super Guarantee Charge (SGC). The consequences include possible fines and fees/interest on top of the initial amount unpaid. Whether you use a Government Superannuation fund or a Self Managed Superannuation Fund, it is imperative that you prioritise paying superannuation obligations over other debts such as bank overdrafts, small loans or any other debt with flexibility surrounding repayment (within reason!).
7. Trade Terms – Improve Your Receipt of Cash
If you are invoicing for work completed or services provided but not receiving the funds within a reasonable timeframe, then perhaps it is worth reviewing your trade terms. For example, if you have terms of 14 days for a client to make the payment but they are paying generally in 21-28+ days, perhaps you should look to receive a percentage upfront to improve your cash flow?
A brilliant software to consider is Practice Ignition which can make invoicing smooth and simple. It is worth speaking to your accountant/accounting specialist for more information as it is a game-changer.
8. Accounting Trends – Keep Updated on the Latest and Greatest
Avoid wasting time using outdated and inefficient software. If the latest software can do payroll in 2 steps and yours currently does it in 4 steps, then you are losing time, which is arguably your most valuable resource.
Keep up to date on the latest trends and changes in the industry to ensure you not only save time maintaining your financial information, but remain the most resourceful.
With the hustle and bustle of running a small business, there is a possibility that receipts may be misplaced in the glovebox of the ute or finance documents vandalised by the younglings. Thankfully, there is software available to alleviate this stress. Receipt Bank (RB) offers an excellent function where you can simply take a photo of the receipt, upload it to RB and then have the bill sent to your respective accounting software (ideally Xero or MYOB).
10. Make Time for Family and Yourself – Don’t Get Lost in the Accounting Madness
Because why did you get into business in the first place? Happiness is important in life and by making the necessary changes to improve the accounting functionality of the business, there will certainly be additional time for the ones you love including yourself. Investing in an accountant whom you can trust is a wise decision.
By following our 10 tips of accounting advice for small business, you’re on the right track to achieve all your small business goals and ultimately, grow your business to its full potential. If you need help getting on the right track, view our list of services to see what we offer. With four office locations in the South-East, we are easily accessible and ready to assist. Contact us today to see what we can do to grow your small business.