In our experience the record keeping system to use is the one you feel most comfortable with. This can be a simple hand written cash book through to the latest on-line software.
Your selection will depend upon the complexity of your business and the capabilities of the record keepers.
You need to look upon your records as more than a tool to help you meet your compliance and tax obligations. Well-kept records can provide you with a snap shot of how your business is travelling, they can highlight cash flow problems and help you budget and plan for the future.
Whatever system you use, it will need to keep a record of all business income and expenses. If you have employees then you will need a system to take care of wages and superannuation obligations.
So what are the options? Well, at the basic end of the spectrum there are some excellent manual cash books available from stationery suppliers and newsagents that are formatted to guide the process. These are great when you are new to business and have only a few transactions.
The next step up would be to carry out the same process by using a computerised spreadsheet. The advantage here is that you can create formulae to add data or sort information. However, you’ll need to be accurate and be confident with spreadsheets.
Moving on there are various accounting software products on the market. Some examples are MYOB and Reckon. Here you’ll have the ability to produce invoices as well as keep track of your income and expenses. Some versions will cater for payroll obligations. With accurate data entry they can produce Business Activity Statements and various business reports.
Software can save you time and you can store a backup copy of your file. There is of course the outlay for the software and it is essential that your business is ‘set up’ correctly. Some pit falls are not fully understanding the accounting principles and the calculation process. Poor bookkeeping and incorrect use of the software can lead us having to unravel a mess at tax time!
Coming on the market in recent years are ‘Cloud’ versions of accounting. Both MYOB and Reckon have ‘on line’ versions of their software. Xero and Saasu were early entrants into cloud software and are developing a great reputation.
There will always be people who are uncomfortable ‘working in the cloud’. Those with poor Internet connections may become frustrated. Advantages are not having to constantly update and upgrade software to handle new legislative changes and access is often pay by the month. As proactive accountants we love being able to hop on line and access clients records immediately or whenever there is a problem.
Whatever system you choose we urge you to contact us so we can guide your decision making. We can obtain some software at discounted rates and can help you with set up and training.