Brisbane Bookkeepers & Taxation Blog

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Signs Your Business Needs Help With Budgeting

Spending is necessary in every business, but it should come with a plan. The failure of assessing your spending habits may result in getting a zero balance in your bank account. The rule of thumb is to spend the least amount of money while obtaining the best possible return. This is where budgeting comes in. For you to manage the financial aspect of your business, a cost-effective way of using your money is a must.

You may not be doing things right if:
Bills Are Not Paid In A Timely Manner 

While it is acceptable to miss out on accomplishing some items on your to-do list, not paying important bills is a different story. Set aside money for paying your bills and budgeting is a good way to prioritize your expenses. It should start with the most important payment obligations such as tax payment. If you have to make credit card payment, you should keep a budget for funds are ready to use again.

Your Business Is Showing Clear Signs Of Overspending 

Your business is making a profit if you earn more than you spend. However, this does not mean refusing to spend money even when it is already considered necessary. It only means spending your money on necessary expenses and budgeting is going to help you monitor your expenses. 

You Have A Long List Of Unresolved Obligations 

It is time to rethink how you spend if you always find yourself depleting your funds. A long list of unresolved obligations only means that something is not right with your spending habits. You should know the difference between going out of business and growing your business. Your creditors and the people you are doing business with may lose faith in you, so you need to make sure that your problems are resolved. 

You Have Trouble With Your Petty Cash 

If your account ends up unbalanced at the end of each week, there might be part of your expenses that you need to review or re-assess. If you cannot identify what the problem is, you might be having problems reconciling your petty cash with your business accounting. The lack of budgeting can leave your financial activity in chaos. Not resolving issues with your petty cash only means that you have no idea about the amount of money you have. You also allow your spending habits to wreak havoc on your overall financial status by overspending. Make sure you are in control of your petty cash and never take money out of the rest of your budget if it is intended to cover items you have previously provided.

Poor financial management can increase the likelihood of losing your business. There are businesses that are forced to close because of not keeping an eye on the expenses. Ignoring payment obligations and spending money on unnecessary items can create a serious impact on your business. If you cannot properly identify where the problem lies, a bookkeeper can teach you wise financial management. Closely monitoring your financial activities helps you identify problems before it gets worse. You will also be able to know if changes should be made with your spending habits.

Reasons Good Bookkeeping Is Necessary

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A successful business follows a bookkeeping practice to ensure that payments are made in a timely manner and all financial activities are recorded properly. There's bad bookkeeping and there's good bookkeeping. One thing that separates bad bookkeeping from good bookkeeping is the system. Even if you have a small business, it is not a valid reason to not pay attention to your bookkeeping task. It may appear to be the most trivial task, but it can be the most critical to your business especially when you start auditing your finances. 

It takes a large chunk of your success and a lot of things needs to be undone if something goes wrong. In every business, you are expected to be in complete control of your financial activities. You don't just make a mental note of your expenses, budget and cashflow because you are required to keep a record. You may not fully appreciate the importance of good bookkeeping but you will once your business starts to grow. 

Reasons You Should Maintain Good Bookkeeping

It improves your tax return.

One of the dreaded obligations of most business owners is keeping their tax payments up to date. This is why many of them rely heavily on the expertise of a bookkeeper to ensure that everything is in proper perspective. Unfortunately, business owners often fail to realize that just integrating bookkeeping into their business is not enough to keep it in tip-top shape. You have to maintain organized records that can be easily analyzed when needed. 

It provides audit protection.

Having a separate checkbook should be regularly observed because it can provide you audit protection. More likely than not, ATO does not allow a great number of expenses, which usually take place when your personal and business accounts are one and the same. 

It substantiates the corporate veil.

A separate checkbook gives you the ability to recognize that the company is its own unique entity. You also avoid mixing your personal and business funds with a separate checkbook. 

It encourages tax savings.

Nothing can be more frustrating than falling behind tax payments. This can be due to a number of reasons and one of which the lack of ability to provide an accurate record of your finances. This can be very stressful on your part especially if you heavily rely on your bookkeeper to do the job without checking the details of your books. 

It makes record-keeping less stressful. 

When your records are disorganized, it seems like you are always try to beat the deadline. You end up juggling various tasks but none of them are accomplished. There's one important aspect of your business that you might have taken for granted. If bookkeeping is the least of your priorities, you need to change the way you manage your business. Good bookkeeping is as equally important as other aspects of your business. 

It helps you make the right decision.

Accurate records are going to be important when making a crucial decision that is related to your business. You can cloud your judgment and make poor decisions if you are being presented with records that you find difficult to understand. You can't be a good business owner if you can't get your bookkeeping task straight. 

­ Questions? Give Andrew a call 0450 605 592

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