Small Business Bookkeeping FAQs

Starting a small business is not a decision to be made lightly. Whether you’re thinking about getting your hands dirty or looking to take your small business to the next level, you need to get on top of what’s required from a bookkeeping and tax compliance perspective first. Not only will strong small business bookkeeping habits keep you on the right side of the law, but it could also be the difference between your business thriving and your business struggling. Here are the most common questions we as bookkeepers get about successfully running a small business.

Q1: What is a small business entity?

If you are running a small business (as an individual, partnership, company or trust) and you have an aggregated turnover of under $10 million, then the ATO considers you a small business entity. This means that you may be eligible for some tax concessions that could help boost your business.

Not sure if you’re running (or should start) your business as an individual, partnership, company or trust? We break down the different business structures for you here.

Q2: What are the key bookkeeping reporting requirements for small businesses in Australia?

To remain compliant with the ATO and avoid any fines, it’s important that all businesses fulfil their recording and reporting requirements in a timely manner. For example, among other things, all businesses need to submit tax returns and business activity statements (BAS). In addition to the requirements that all businesses face, you may also have requirements that are specific to your industry or business type as well. For example, real estate agencies are required to maintain trust accounts that are audited to ensure that client funds are appropriately managed.

To read more about the general bookkeeping and accounting requirements for small businesses, check out our blog on bookkeeping for small business.

Not sure what requirements apply to your business? Give us a call on 1300 728 875 or send us a message. We can help your business remain compliant.

Q3: What does a bookkeeper do?

You may be on the fence about hiring a bookkeeper to help you with your small business. There are so many competing priorities when it comes to running a business, but staying on top of the books should be close to the top. When you have a clear picture of how much the business owes, is owed, spends and makes in profit, you will be able to make sound decisions and move your business in the right direction. A bookkeeper can set up systems to make all this information easy to view at all times. They also make sure you are up-to-date with your reporting to the ATO so that you don’t get fined.

Learn more about how a bookkeeper can help you in our blog about what a bookkeeper does.

Q4: What is bookkeeping software?

You may have heard of bookkeeping or accounting software like XeroMYOB or QuickBooks. In our experience, these are the most popular bookkeeping software options for small businesses in Australia. These cloud-based softwares can save time, facilitate compliance and help you get a better sense of your company’s financials at a glance. They allow you to easily input your financial data and can run very handy reports that can help you make business decisions or report to the ATO. Having a cloud-based accounting software also allows you to easily work with a bookkeeper remotely, saving you time and money.

To learn more about how bookkeeping software can help you, read our blog about accounting software for small business.

Q5: How can I choose the best bookkeeping software for my small business?

There are so many options for accounting software for small businesses that it can seem daunting to pick one at first. However, choosing the right accounting software from the beginning can save you a lot of hassle down the road. This is because switching to a new software once you already have systems in place takes a lot of time. It’s important to consider how you will use your software, as well as your business size and type, so that you can select the features you need. We have created a checklist and framework for deciding in our blog about choosing the best accounting software for your business.

If you’re interested in Xero, check out our blog where we break down its key features for small business. If you’ve heard good things about MYOB and want to learn more, read our analysis of the key features that small business owners may be interested in.

Q6: Should I get accounting software as a sole trader?

If you are a sole trader, you may benefit from having accounting software so you can automate your bookkeeping, track your cash flow and prepare your taxes. To learn more, check out our blog where we discuss the best accounting software for sole traders. If you need help setting up your accounting software and getting your systems in place, we can offer a once-off service to get you started.

Q7: What if my books are not already in order?

When you’ve been in business for a while and haven’t had a robust bookkeeping system, things can start to look like a bit of a mess. If you need someone to Marie Kondo your books, look no further than Darcy Bookkeeping’s catch-up bookkeeping services. With the help of a trained bookkeeper, your books can spark joy once again. We can help you set up your books for success, and can manage your continuing bookkeeping needs if required.

Q8: How much do small businesses pay in tax?

Each business is different, and each business’s tax obligations are unique. It’s important to get your taxes right, as any mistakes in this arena can lead to big penalties from the ATO. To get tax advice that’s tailored to your business, give us a call at 1300 728 875 or drop us a line today.

Q9: How do I write invoices for my small business?

If you want to make money, at some point you have to get your clients or customers to give it to you. You need to make sure you include a handful of items on your tax invoices in order to be compliant with the ATO. These are a tax invoice identification, the business name and ABN of the seller, the date of issue, details of the goods or services (including quantities and prices), a breakdown of any GST payable (if applicable), the name and/or ABN of the buyer and the payment terms and method. For more detail or to use our downloadable invoicing template, check out our blog on how to write an invoice in Australia.

Q10: Do I need to have a business budget?

Having a budget is a great way to align your business goals with the capital available to you. Having sound finances puts you in the best position possible for your business to succeed. In addition to the regular payments you make like payroll, rent and stock purchases, you may also have to make the occasional unexpected payment, like equipment repair, IT services or contracting services. Make sure there’s room for emergencies with a sound budget. Learn more in our blog about why you need a business budget.

Q11: How much do small businesses pay in tax?

There is no yard stick when it comes down to how much tax a typical small business will pay in income tax each year. There are a number of key factors that will impact how much your business will pay in tax. Here are some indicators (but please note that this is not an exhaustive list):

  • The type of business structure you operate under.
  • The profitability of the business that you operate.
  • The industry that your business is active in.
  • Protection of business and private assets.

A very obvious measure to point out is if your business sales activity is in the top tier of the $10,000,000 ceiling, then you are more likely to be handed a larger tax bill or tax loss versus a micro business turning over $100,000. This information does not take into account various other taxes that your business may be exposed too at a local, state or federal level.

If this is a concern for you, then get in touch with our accounting team and we can review your current business situation and see if there is a better alternative to your current situation.

If you’re looking for someone to come in and fix up your books and get your small business on the right foot, Darcy Bookkeeping is here to help. We can set you on the right course and leave you to it, or we can take care of all of your bookkeeping needs. Just give us a call on 1300 728 875 or send us a message to get started.

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