Blog

Bookkeeping errors can cost your business time and money – usually both of which small business owners don’t have in abundance to waste. 

Usually at this time I year I perform a lot of yearly reviews of business financial information.  Getting clients ready to face their tax accountant – and ready to lodge their tax return. 

Getting your business’ financial information up to scratch before seeing your tax accountant is vital.  Do you really want someone charging up to $500 an hour asking why ‘bank charges’ is so high, asking what is included in ‘general expenses’, asking why you have transactions sitting in a ‘suspense account’?

No way.  You are best to get this all sorted beforehand, and that way the data file and reports you hand to your tax agent are accurate and reliable.

common bookkeeping errors

I wanted to share with you some errors that I see each and every month.  I hope by sharing this information that it prompts you to check your own transactions and data file before visiting your tax accountant.

1. Being registered for PAYG withholding – if you employ staff (part time, full time or casual) your business NEEDS to be registered for PAYG withholding.  This is regardless of the salary paid to any employee and regardless of any tax is actually withheld.
2. Annual Payment Summaries – Payment summaries should be given to each employee by the 14^th of July.  You also need to lodge the Payment Summary Annual Report to the ATO.
3. Confusion around being registered for GST – Just because you have an ABN and are running a business doesn’t mean you automatically charge GST.  In order to charge GST and claim the GST back on expenses, you must be registered for GST.  A handy tip is to check the Australian Business Register – where you can check each ABN and their GST status.
4. Bank Reconciliation – just because you have used a cloud based software with automatic bank feeds does not mean you have reconciled the bank accurately.  Always run a reconciliation report at 30^th June (although running it every month is ideal).  This will highlight any discrepancies, any double ups and will really highlight if the bank is in fact completely reconciled.
5. ‘Suspense Account’ – this is a bookkeeper and accountants worst nightmare! Business owners often don’t know where to code certain costs, so just to get it done, they put items to what is known as a suspense account.  Basically this account is a dumping ground for the unknown.  Business owners always mean to get back to it and sort it out, but usually they never get around to it.  This account should be zero at the end of financial year.
6. Payroll, Super & Tax – when payroll is paid, you need to take into account the net wages, the tax withheld and the superannuation (if applicable).  By just recording the net wages and nothing else you are not accounting for everything correctly.

Here at Healthy Business Finances, we believe that as business owners, you need to understand your financial information.  We are more than happy to provide one on one training, set up monthly reports and set up budgets – to get you on track.

Exciting things in the pipeline for us:

• Stacey will be presenting at the Clever Mamma Insight Session – Creating Budgets to Grow Your Business.  Clever Mamma is a great community of like-minded business mums.  All striving for success.  This session is for members only, so get on board and join the community today – and then you can come along and get your business budget sorted.
• The Nillumbik Business Network is running an event as part of the Small Business Victoria Festival – all about expanding your business.  Looking forward to this one – held at the Quest in Bundoora on 13^th August.
• Digital Literacy is the new Financial Literacy….that heading sure got my attention! Which is why I will be attending the Top Tech Trends run by The Training Collective, webinar in August

So take the time to review your data file, review your processes and ensure you are doing everything you can on a day to day basis that will assist you when it comes time to running your reports so they are accurate and reliable.

Don’t be afraid to ask for help

A one or two hour training session could be all that you need to set you up correctly, reduce errors and save you time and money in the long run.
Good luck – and remember, we are always just an email or phone call away.