Essential Accounting Tips for New Business Owners

1. Start with Basic Bookkeeping

Bookkeeping is the backbone of your accounting system. It involves keeping a detailed record of all your financial transactions. This might sound tedious, but it’s essential for several reasons: 

• Monitor Profitability: By keeping track of your income and expenses, you can quickly determine if your business is profitable. Regularly reviewing your financials helps you spot trends and make informed decisions. 

• Cash Flow Management: Good bookkeeping helps you ensure that there’s enough cash coming in to cover your expenses. This is key for keeping the lights on and avoiding debt. 

• Tax Preparation: Accurate records make tax time less stressful. You’ll have everything you need to file your taxes correctly and maximise deductions. 

Tip: From day one, keep your business and personal expenses separate. Open a separate business bank account and use it for all your business transactions. This will make your bookkeeping more straightforward and your financial reports more accurate. 

 2. Create Regular Financial Reports

Once you’ve got your bookkeeping in order, the next step is to use that data to create financial reports. These reports give you a clear picture of your business’s financial health and are essential for making informed decisions. 

• Weekly Checks: Look at your sales, profit margins, and outstanding invoices. Knowing these numbers will help you stay on top of your business’s day-to-day operations. 

• Monthly Analysis: Compare your actual income and expenses against your budget. This will help you identify any discrepancies and adjust as needed. Also, review your liabilities and costs to ensure your pricing strategy remains effective. 

• Yearly Comparisons: Analyse your financial performance year-over-year to see if your business is growing. This helps you set realistic goals and measure your progress. 

Tip: Consider using accounting software like Xero to automate your reporting. A live dashboard can provide real-time insights into your business’s financial performance. This also makes it easier to spot issues and opportunities. 

3. Understand Your Tax Obligations

Taxes can be daunting, especially for new business owners. But this obligation is crucial to keep your business compliant. The three main types of taxes you’ll need to deal with are: 

• Income Tax: This is the tax on your business profits. The amount you owe depends on your business structure and location. 

• GST (Goods and Services Tax): If your business is GST-registered, you’ll need to charge GST on your sales and pay this to the government. 

• Employee-Related Taxes: If you have employees, you’ll need to manage payroll, including withholding tax from their wages, Superannuation and Workers compensation insurance (depending on your state). 

Tip: Work with a tax agent to ensure you’re claiming all eligible deductions. Every business expense you can deduct reduces your taxable income, which can significantly lower your tax bill. 

4. Seek Professional Help When Needed

As a small business owner, you might be tempted to handle all aspects of accounting yourself. Remember: there’s no shame in asking for help. Hiring a professional accountant or bookkeeper can save you time and money in the long run. 

• BAS Agent: They can manage your GST and Business Activity Statements (BAS), ensuring you meet your compliance obligations. 

• Tax Agent: They can assist with income tax and end-of-year reporting, helping you avoid costly mistakes and penalties. 

Tip: When choosing an accountant or bookkeeper, find someone (or a team) who understands your industry and can offer tailored advice. Their expertise can be invaluable in helping you make strategic decisions that drive your business forward. 

5. Plan with a Financial Forecast

Financial planning isn’t just about keeping your business running today—it’s also about setting yourself up for future success. A financial forecast is a plan that estimates your future revenue, expenses, and cash flow. It’s a vital tool for making informed business decisions and preparing for potential challenges. 

Steps to Create a Financial Forecast: 

• Estimate Your Revenue: Start by predicting how much revenue your business will generate over the next year based on past performance and market trends. 

• Project Your Expenses: List all your fixed and variable expenses, including rent, utilities, salaries, and materials. Don’t forget to factor in seasonal fluctuations and one-time costs. 

• Calculate Cash Flow: Use your revenue and expense projections to estimate your cash flow. This will help you identify any potential shortfalls and plan for ways to cover them. 

Tip: Hiring a professional accounting firm, like Retinue, can provide you with the expertise and insights needed to make informed business decisions and forecasts. 

Stay Consistent and Keep Learning 

Accounting isn’t a one-and-done task. It requires consistent attention and a willingness to learn. The more you understand your business’s financials, the better equipped you’ll be to steer your business toward success. 

For more personalised advice or assistance with your accounting needs, call our team on 1800 861 566. We’re here to help you build a strong financial foundation for your business.