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The accounting process for your business may seem like a laborious and painstaking task. But with some careful planning from the beginning, the task of keeping your books in order isn’t that bigger task for a small business.

Some people may suggest that you employ a book keeper from the beginning and leave everything up to them but if you don’t know how things work you may have trouble teaching any future employees the task. Although I would suggest if you don’t have the skills, organise an accountant to come out to your office and help set up your accounting software. This shouldn’t be too expensive; it only cost me around $120.

The best way to set your up your business accounts is to use a computer based program, this makes things a lot easier to keep track of your costs, profits and generate invoices. If this is done correctly you need only print out a few reports to take to the accountant at TAX time and your BAS (business activity statement) statements can be completed in 10 minutes.

After your business name is registered and you’ve registered for GST and obtained a ABN the next step is to set up a cheque account with your bank. It’s very important to keep your business accounts separate to your personal ones. To set up the cheque account with the bank you will need to take all your business details and a copy of your business registration.

GST
BAS
Keeping records of receipts
Reconciling your account

GST (Goods and Services Tax)

GST is the goods and services tax of %10 imposed by the government. It’s important to register for GST before you begin your business and start buying stock or furniture etc… everything that you buy in Australia has %10 GST that you can claim back when you complete your BAS statement.

You don’t have to register for GST, but you do have to if your business turnover equates to more than $50,000. When registered you have to charge your customers %10 of the total sale unless you are exporting overseas.

You also have to quote the GST on your products unless you’re quoting to another business. It’s also important to tell the customer whether the products you’re selling include GST or not.

BAS (Business Activity Statement)

The BAS is where you have to report your income to the government quarterly or per annum, for this example I’ll explain it using quarters. You have to put down the total sales for the quarter, state whether the sales include GST, put your total purchases either capital or non capital (please check with your accountant as to what option to use) then calculate the total GST owed to you or what you owe the Tax Office. Then you either receive money or pay money.

If you’ve got your accounts setup using computer software there should be an option to do a GST report for the quarter.

The following notes are useful for doing your BAS statement when using MYOB;

For BAS click throught the following reports.

It’s important to keep a record of all the purchases that you’ve made so you can generate a accurate profit and loss statement at the end of the financial year, and so you can claim back that %10 from the government. You don’t want to show that your income is higher that it really is because; you’ll end up paying income tax.

The best way I’ve found to keep a record of my purchases is to pay for everything on a credit card that’s paid at the end of the month. It’s all paid in one go and then entered into the MYOB accounting software as purchases, with each specific item assigned to its correct account. For example telephone cost goes to the expense account and the purchasing of materials that were used to make a sale are assigns to the correct cost of sales account. The different accounts are explained more clearly in the article setting up your accounting program which will be available in the coming months.

If you’re claiming the receipt for a purchase you’re required to keep the receipt. This can be frustrating, but I suppose it’s all part of running a business. The best way that I’ve found to do this is to use a small filling cabinet and in the top draw use a file for each month of the year and designate names to some files that you usually buy supplies from. For example set up files for July, August, September etc… and then maybe a Telstra file for all your phone bills. It’s important to only keep them in the filling cabinet for a single financial year at a time.

Reconciling your account

Reconciling your account entails you to make sure that your every expense and income is accounted for. It involves going through and checking off everything on your monthly cheque account statement.

It’s very important to reconcile your account at the end of each month. It will make sure that everything is accounted for in your check account and mistakes haven’t been made. If it’s not done things wont get recorded and you wont easily be able to do your BAS or sort you tax out at the end of the financial year.

Kind regards,