If you are a new business owner or an established business in Australia, then you know the importance of bookkeeping for your establishment. But keeping track of all the transactions on a daily basis is a big chore. When you scale up this cumbersome task to a year, then it gets even more frustrating. In such situations, a simple checklist can help small business bookkeeping get started and account for all transactions throughout the year.
This is why we have brought to you a simple bookkeeping checklist for small businesses in Australia to stay organized all year round. But before going into the contents of our checklist, let us understand why bookkeeping is of great importance for SMEs in Australia to get a grasp of the value of a well-crafted checklist.
Why Bookkeeping Matters for SMEs?
In its simplest form, bookkeeping is the process of tracking all income and payments made by a business entity in Australia. When tracked, these details about all transactions can be vital to dispute any issues or get tax benefits. Apart from this, it is also a compliance requirement in Australia as all financial records must be kept for a minimum of seven years according to the Corporations Act of 2001.
Accurate bookkeeping also provides a clear picture of your business’s financial status. It helps track expenses and profits, enabling informed decisions on budgeting, spending, and investments.
Reliable records from small business bookkeeping are also essential if you are seeking growth and funding in Australia. It ensures financial stability and transparency and helps secure investment by demonstrating financial viability and avoiding discrepancies.
13-Step Checklist for Responsible Bookkeeping in Small Businesses Across Australia
Now that you know why bookkeeping matters, it is time to make it an instant habit with thirteen easy steps to follow. These steps have been divided into daily, monthly, and annual tasks that you can incorporate into your business rituals. Let us start off by taking a look at the steps featured in the daily bookkeeping checklist.
Daily Bookkeeping Checklist
The daily bookkeeping checklist has 3 simple tasks for you to do each day that will guarantee a solid foundation for your financial tracking journey. Some of these steps can be done at the end of the day; however, it is generally recommended to carry out bookkeeping for small businesses at the end of each transaction for peak accuracy.
1. Record all income and expenses for the day
With modern Point of Sale PoS systems, almost all payments are tracked automatically. However, cash payments and regular expenses have to be tracked manually and with proper labeling to separate expenses from income. Recording all of your transactions diligently is the first step in bookkeeping and acts as the foundation for all the other steps in the checklist.
You can either record transactions manually on paper using a ledger or use dedicated software solutions for this based on your preferences. The main objective is to get comfortable with recording transactions first before dealing with complex interconnected POS systems.
2. File receipts and invoices in their respective folders
Another part of separating expenses from income is to keep receipts and invoices in their respective folders to keep accounts separated for better clarity. This distinct separation of finances also makes it easy to access records when calculating profits at the end of the day or month.
This point also applies to digital records as placing expenses in separate folders will help you down the line when accounting for taxable income and write-offs. It will also help you access the records faster in cases of disputed records or payments.
3. Check bank accounts for unexpected transactions
At the end of each day, checking your bank accounts for unexpected transactions can potentially save you thousands of dollars. This is because unexpected transitions have to be reported immediately for any resolutions to be offered by the bank. Thus, checking all transactions to and from your account gives you greater security from fraudulent activities and should be a core part of small business bookkeeping.
Monthly Bookkeeping Checklist
The monthly bookkeeping checklist acts as a bridge between regular financial tracking and annual profitability projections. It also serves as a checkpoint for you to see if the business is aligned with existing targets and priorities.
4. Reconcile bank and credit card statements
The goal of reconciling bank and credit card statements is to verify that every transaction recorded in your books (such as payments received, expenses, fees, or interest charges) aligns with what’s listed in the statements. If mismatches occur, they could be due to errors like missed transactions, duplicate entries, or even fraudulent activity.
By reconciling regularly, you can catch errors early, maintain accurate financial records, and ensure your cash flow is being tracked correctly. This step is ideally done monthly and helps you stay on top of your finances while making tax preparation and audits smoother.
5. Review and categorize all transactions
Categorizing all of your transactions at the end of the month can make a lot of difference in analyzing and forecasting sales trends. You can categorize expenses into utilities, subscriptions, and payroll for employees, meanwhile, for income, you can categorize them by ticket size, service type, or product type based on your preferences.
Categorization again helps with accessing records efficiently while making it easier to spot emerging trends within your business on a monthly basis. Based on these trends, you can adapt your sales strategy to see if it yields better results in terms of turnover.
6. Send and follow up on unpaid invoices
At the end of every month, if you find that there are customer entries with pending payments, then it is time to follow up on those unpaid invoices. It is often the case where customers pick up items and services and promise to pay them back by the end of the month but forget to do so.
This is why it is your responsibility to follow up with such customers to ensure that you do not miss a single payment for any of the goods and services offered.
7. Pay bills and outstanding expenses
Since bills for essential utilities like electricity, stock shipments, and internet come at the end of the month, having a dedicated day to pay them all in time is critical to avoid late payments and overdrafts. Paying bills and expenses on time also gives you a good history with service providers and lenders which may get you better deals in the future.
Another advantage of tracking and paying bills on time is getting tax rebates at the end of the year for business expenses. Having records for all of these small expenses gives you additional credibility when filing your taxes and returns.
8. Update financial reports to track progress against goals
Updating financial reports to track progress against goals ensures that your business stays on target and can adjust strategies as needed. By consistently updating these reports, you can compare your actual performance against your planned goals or budget.
This part of bookkeeping for small businesses helps identify whether you’re meeting revenue targets, controlling expenses, and maintaining profitability. If the numbers show you’re off track, it gives you the opportunity to pinpoint problem areas and make timely adjustments.
Yearly Bookkeeping Checklist
The yearly bookkeeping checklist contains the final steps in our checklist to wrap up your bookkeeping activities for the financial year. Because of the nature of these steps, it is best to carry them out a month or two before the end of each financial year to get tax documentation ready in advance.
9. Organize all tax-related documents
For Australian businesses, Organizing all tax-related documents means gathering and preparing all necessary records for tax compliance and filing. This includes income statements, invoices, receipts, payroll records, superannuation contributions, BAS (Business Activity Statements), GST (Goods and Services Tax) records, and any other documents related to deductions or credits.
It’s important to ensure that all receipts for deductible expenses are organized, as well as keep a record of any payments or refunds made to the Australian Taxation Office (ATO). This is a critical part of the checklist as it will keep you compliant with tax regulations and save you from audits and investigations.
10. Inspect inventory/asset levels
Once all of your calculations have been made before the profit and loss statement, it is a good habit to cross-check this with inventory and asset levels to account for any unexpected losses before finalizing your records. It may also be possible to recoup some of these unexpected losses through insurance, or assistance from the bank.
After you have all of your records and inventory levels clear, you can move on to calculating a final profit and loss statement to see if your business is aligned with its targets.
11. Prepare and review financial statements (Profit & Loss, Balance Sheet)
The Profit & Loss (P&L) Statement shows your revenues, expenses, and net profit or loss over a specific period, helping you evaluate your business’s profitability. Meanwhile, the Balance Sheet provides a snapshot of your business’s assets, liabilities, and equity at the year-end, offering insights into your financial stability.
Reviewing these statements ensures that all data is accurate and helps identify trends, potential issues, or opportunities for growth. Regularly analyzing these reports aids in making informed decisions, securing loans, and preparing for tax obligations.
12. Review the budget and set financial goals for the next year
The step of reviewing the budget involves evaluating your current budget to see how well you adhered to planned spending and income targets. Compare actual performance against projections to identify any discrepancies, such as overspending or underperformance in revenue.
Now you can use these insights to adjust your budget for the upcoming year, setting realistic financial goals like increasing sales, reducing costs, or improving profit margins. This process ensures you stay financially on track, respond to changes in the business environment, and plan for growth or investments effectively.
13. Closeout books and archive records for the year
Once all of the other steps in the yearly bookkeeping checklist have been executed, it is time to archive all of the collected records securely. It is highly recommended that you do this through a digital solution like cloud storage or secure NAS drives with multiple backup storage systems to ensure that no records are corrupted or lost.
Since the prior steps have already organized these records well, they will always be accessible and easy to decipher in the case of any dispute in the future. Make sure that these records are also secured with multi-factor authentication to prevent any unauthorized access.
Tips for Becoming Consistent With Bookkeeping
Now if the steps within the small business bookkeeping checklist seem too daunting, you can use the tips given below to make the habit of bookkeeping a bit easier. These tips work by making bookkeeping feel more seamless rather than a boring task.
1. Make it a part of the daily winding-up routine
One of the best ways to become consistent with bookkeeping processes is to attach it to a part of your closing routine. At the end of every day, along with signing out, make it a habit to collect and consolidate all transactions made throughout the day.
2. Use software solutions for bookkeeping
If you rely a lot on digital payment systems, then there are plenty of applications that will help you track transactions as they happen in real-time. These transactions are then synced to a digital ledger to help you keep track of all expenses and income. However, you will still have to enter transactions that happen without digital intervention manually since the applications won’t be able to track them.
3. Hire professional assistance
If you are already preoccupied with the operations of your business, then it is a great idea to invest in some professional assistance from accounting outsourcing partners. These professional agencies will help you stay compliant with all financial regulations and keep your records free from any errors.
Business Avengers is Here to Help with Bookkeeping!
We at Business Avengers are premier partners for multiple Australian businesses looking to simplify their small business bookkeeping processes. With cutting-edge technologies and experienced professionals, we help you save costs on business expenses, all while keeping your accounts clear and free from errors.
Boost Efficiency with This Must-Have Bookkeeping Checklist for Australian SMEs
With all of the ambiguity surrounding business finances, having a simple checklist to follow makes tracking and keeping income records much more approachable for businesses. And our bookkeeping checklist is a prime example of how easy the process actually is.
But despite this, it may not always be possible to pay the time and attention required to do bookkeeping for small businesses regularly. This is where trusted professional service providers like Business Avengers come into play, who offer painless solutions to automate your entire bookkeeping and accounting processes.
FAQs
1. What can I do to make bookkeeping easier?
To make bookkeeping easier, use automated accounting software, which can streamline tasks such as data entry, transaction categorization, and report generation. Set aside a regular time each day to review and update records to prevent backlog. Integrate your bank accounts with your software to automatically sync transactions. If possible, hire a professional accounting service like Business Avengers to handle more complex tasks, ensuring accuracy and saving time.
2. What additional steps can be added to a monthly bookkeeping checklist?
Generate and review financial reports like profit and loss statements and balance sheets to understand business performance. Check payroll records for accuracy and ensure tax withholdings are correct. Finally, back up financial data to secure storage and update the inventory records, if applicable, to maintain accurate stock levels.
3. What happens if I fall behind on my bookkeeping?
Falling behind on your bookkeeping can lead to several issues, including loss of financial clarity, making it difficult to understand your business's cash flow, expenses, and profits. It increases the risk of errors, missed transactions, or forgotten expenses, which can impact your ability to file accurate tax returns and result in penalties or fines. But if you have only fallen behind for a few days, then it may be possible to get things in order by evaluating transaction records and receipts.
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