Economics 101: We live in a world where our wants are unlimited but the resources to meet them are scarce.  Good record keeping is an essential tool to help best manage this endless conflict. For the business owner this conflict is expressed in the form of how do we maximise profits with the limited capital, property and human resources that we have available?

For too many small business owners, bookkeeping is a necessary evil required only to keep up with compliance requirements. This mindset unfortunately blinds those who hold it to a wide world of opportunities.  The business owner who takes a proactive approach realises that good business record keepingis an essential resource to enable informed decision making involving a whole range of matters, including of course keeping on top of compliance.

Keeping good business records is about much much more than just managing your tax obligations  yet it is an inability to manage these matters that leads to most business failures. So here is a summary of what the Australian Taxation Office has to say on the subject:

 

Good record keeping

There are a number of reasons why you should keep good records of your business transactions. Good record keeping:

• Makes it easier for you meet your tax obligations
• Makes it easier for you to understand how your business is performing
• Helps you make better business decisions

Record keeping is a legal requirement. By law you must keep business records for at least five years, either on paper or electronically. They must be in English or in a form that can easily be converted.

 If you don’t keep the right tax records, you can incur penalties. Poor record keeping is also one of the main reasons why many small businesses fail.

 

Other great reasons for keeping good records include:

• To help you manage your cash flows so you can pay your tax and other bills as they fall due
• To be able to demonstrate to your bank or other financiers your financial position. Also to prospective buyers for your business
• To make the best use of your advisers. Instead of paying them to sort out the mess, well prepared financial reports will make it easier for them to give you good advice based on the best available information
• To show the basis for any amendments to Activity Statements or tax returns that you may wish to make

At Great Perth Bookkeeping we guarantee that the business records we produce will provide a complete and accurate representation of your business transactions. We guarantee that what we produce will be traceable to the source documents provided. Just as importantly we use filing systems to ensure that you can find that bank statement or invoice quickly and easily.

We don’t aggregate transactions as that just makes things impossible to find and we don’t just throw all the paperwork into a box! (Yep, that’s what we inherited from one of our client’s previous bookkeepers – how they hoped to find anything afterward still baffles us!)

For more information download our awkwardly titled FREE eBook Why Relying on Your Profit & Loss Report Can Send You  Broke plus Ten (or 11) Tips on How to Improve Your Cash Flow plus Is Your Bookkeeper Really looking After You plus Much Much More!

If your bookkeeping records are less than they should be; if you can never find the paperwork when you need it, contact Great Perth Bookkeeping today.