Starting a business and making a profit is what every dedicated business owner wants to achieve. However, very few business owners give priority to keeping accurate and updated business records in the initial stages. Bookkeeping is a crucial but time-consuming task. If you have still been using outdated bookkeeping systems, you won’t be able to scale your business. With advanced bookkeeping systems, everything is moving to the cloud, and so is bookkeeping. Thus, if you are running a new business or planning to start a new business, then you must focus on creating a good bookkeeping system. You can do so by opting for bookkeeping services Melbourne.
How Can You Build a Scalable Bookkeeping System?
As your business scales, the complexity of your financial operations will also increase. Poor bookkeeping systems can create chaos that prevents you from making effective business decisions and can lead to costly mistakes. Effective bookkeeping systems present a solution to organise every record effectively. Here, we’ll discuss steps to build a scalable bookkeeping system:
- Choose the accounting system for your business
Make sure to decide how the financial transactions will be recorded. It would be better to use a customised accounting software rather than depending on traditional bookkeeping processes. The computerised method minimises the time spent on recording financial records and reduces the risk of making financial mistakes. In addition to this, the records can be easily accessible and more organised. The bookkeeper decides whether your business needs a single-entry or double-entry bookkeeping system.
The single-entry system is suitable for an exceedingly small and basic business. On the other hand, a double-entry system can create two entries for every financial transaction. The financial transaction is usually marked as a debit in one accounts and in another account, it will be marked as credit.
- Prepare a chart of accounts
As a business owner, you must choose between cash and accrual accounting. An owner or a sole trader can choose cash accounting. You can also switch to accrual accounting in the future when you decide to scale your business. It becomes important to switch if your business starts producing income exceeding the limit. With cash accounting, the financial transactions get recorded only when the cash is exchanged between the two entities. However, in an accrual system, the entry is recorded even if the cash is paid later. If you are looking to provide credit to your clients, then you need to choose the accrual accounting system. Therefore, the expenses get recorded when they are incurred instead of when they are paid. Additionally, it is more important for large organisations as it allows better monitoring of accounts receivable and payable.
- Open a dedicated account for business and personal use
All bookkeepers encourage every business owner to open a dedicated account for business and personal use so it doesn’t interfere with each other. It ensures that you don’t use personal funds for business purposes and vice versa. It is also important to track business expenses at the time of lodging tax returns. With organised financial data, it will also become easy for your tax return accountant Melbourne to lodge the tax return accurately.
With separate accounts, there will be no confusion, and you can be sure about the business-related income and expenses. It helps in sending all the financial transactions data directly to the accounting system and using effective record-keeping. It keeps data simplified and organised and helps in preparing accurate financial reports.
- System for tracking bills and invoicing
Getting delayed payments from your clients can lead to a cash shortage in the company. Thus, you must have a robust invoicing system that produces invoices and gets the payments on time. Generally, the bookkeeper follows up with the customers who fail to pay the amount on time. They discuss the terms of the deal to them and include clauses like fines for late payment, which can help in expediting the flow of incomings.
- Bank reconciliation
Bank reconciliation in Melbourne is an important bookkeeping responsibility, which helps in determining errors in the business books. Bookkeepers reconcile accounts to match the balance sheet figures with the bank statement to ensure that every financial transaction has been recorded accurately.
Conclusion
Bookkeeping is not an easy task. It needs a lot of factual data collection and assessment. If you are looking to opt for a scalable bookkeeping system, you can rely on our Reliable Bookkeeping Services.