Can I Do My Own Bookkeeping?
For every reason out there to outsource your bookkeeping, there are umpteen reasons for doing it yourself. Even if that reason is that things are a bit of a mess, but you know where everything is and you will do it when you get to it, you still want to have the best system for you – a system that you can easily follow and maintain and that facilitates your business requirements.
Where Do I Start?
Start your analysis and assessment with these three basic questions:
- What system do I currently have in place?
- What system do I want to have in place?
- What system will I easily follow and maintain?
Systems should be highly personalised because we all think differently and respond differently to the world around us. If you don’t have a coherent system in place, these questions may not be that easy to answer, so first consider the second question on its own: What system do I want to have in place? How does that look for you? Let’s break it down further…
- What devices are you most comfortable with and use regularly? Your phone? Your tablet or ipad? Your PC?
- Do you already have an online bookkeeping system, or is it manual?
- What functions do you need the system to provide? Invoicing? Payroll? Reports?
From this, we can start to get an idea of what bookkeeping system will be best for you.
Cloud-Based Bookkeeping, or Manual?
After considerable testing of the waters in the initial phase of cloud-based bookkeeping systems, I am definitely biased towards going online with your bookkeeping. Bank feeds are the bomb! They save so much time and increase accuracy. The cost is well and truly justified and, since you don’t get paid for doing your own admin, you want those tasks to take up as little of your day as possible.
Of course, there is always the Excel spreadsheet method of logging expenses and income, (I love Excel), but that necessitates using several systems in order to create invoices, log transactions, and reconcile accounts. Suddenly, your system is not a system at all but rather a mashing together of different functions. What we’re looking for is interconnectedness within one platform.
What Do I Need To Know?
Cloud-based accounting software.
Could the terminology be any more off-putting? Accountants use that, right? No, we do. We, the everyday people.
In my first stint at university, one of my many accounting modules was Tax Accounting. I took one look at the Tax Guide and thought ‘I’m never becoming an accountant!’. Not only is it a doorstopper of rules, but it is amended every year! Now in my twenty-something year of bookkeeping, guess what I need to know? All….those….rules. As a business owner and your own bookkeeper, so do you to a large degree.
When it comes to claiming expenses for your business – if in doubt, leave it out. If in doubt but you have a sneaking suspicion, ask your accountant.
Don’t be tricked into thinking your accountant checks all of your data entry. That’s on you.
My driving philosophy is would this stand up in an audit? Also, don’t be tricked into thinking online software does it all for you because it doesn’t. You have to understand the basics of accounting and eligible claims. You need a baseline knowledge of legal requirements and taxation law, the most basic of which is that you can’t claim personal expenses no matter how much you think you need that thing for your business. If you are audited, YOU are responsible for your taxes, not your accountant.
What Is The Best Bookkeeping Software?
That’s a bit like asking which type of apple tastes better? There is so much available on the market and it comes down to personal choice.
Going back to that list of requirements you compiled, you can start searching for software that offers those functions and do a cost/benefit analysis. If your needs are very basic right now, consider whether that will change with the growth of your business and the impact that will have on your software requirements. I have my favourites and I have some that I will not work with, but it is a very individual choice. For every online accounting system that I do not like to use, there is a bunch of people who love them.
Understanding Your ATO Compliance Obligations
The very idea of having to meet ATO reporting obligations can be anxiety-inducing. Keeping good business records facilitates maintaining ATO compliance. It makes sense that if you have a bookkeeping system that works for you and is easy to maintain, the reporting side of business becomes a byproduct of that system.
Your compliance requirements will be determined by your business structure and some of the choices you made when setting up your business. If you registered for GST, you will have to submit a BAS at regular intervals. Knowing your due dates and setting reminders will help you to meet your deadlines. Similarly, if you employ staff, you will have the extra layer of reporting for PAYG withheld and superannuation. It is critically important that you realise and understand that these are laws, not suggestions. If you collect GST, that money is not yours, it’s the government’s. If you employ people, you are legally responsible for paying their taxes AND their superannuation. That is not a choice.
Keeping Business Records
The rule of thumb for keeping business records is five years. It even says so on the ATO website. Having experienced audits before, however, I am not sure why this is even suggested. If you have the physical space, keep your business records, period. When you have experienced someone turning up in your driveway with a subpoena to produce employment records for an individual you employed for two weeks sometime way back when, who has taken out a class action against all of his previous employers for a sore back, you come to realise that the timeline for keeping business records is infinite.
Is That All I Need To Know?
Nope! We could literally go on for days with what you need to know to do your own bookkeeping, but you have to start somewhere. If you still feel lost, make an appointment with a bookkeeper who is willing to share their knowledge and provide some guidance, whether it’s to get started or to come back to for regular check-ins. Understand that, without physically seeing and doing your books, a bookkeeper will be able to offer information on an educational basis but may require access to your software if you need them to troubleshoot for you, and expect to pay for their expertise.
