Starting a new business is exciting, but proper bookkeeping is essential from day one to avoid financial pitfalls.
This blog provides a simple guide to setting up effective bookkeeping practices.
Separate Business and Personal Finances
🏦 Open a dedicated business bank account to keep your finances organized. Mixing personal and business finances complicates tax reporting and can lead to errors.
Top tip: Open at least one transactional account and two savings accounts; the first savings account for GST (if you’re registered) and the second savings account for Income tax.
Next top tip: Make it a habit to set aside 15% of every sales income deposited to your transactional account to your GST savings account, and 20% of every sales income deposited to your INC tax account.
That way you won’t be caught out short at tax time.
Choose an Accounting System
💻 Decide whether to use manual bookkeeping, spreadsheets, or accounting software. Cloud-based software like Xero or QuickBooks can streamline the process, offering real-time financial data, and are often used by Accountants to prepare end of year financial statements, regardless of whether you keep your information in a spreadsheet or something else.
Need help choosing which software will be best for your business? Check out our page on our Xero Implementation Service.
Track Income and Expenses
📈 Maintain accurate records of all transactions, including sales, expenses, and payments. This helps monitor cash flow, assess profitability, and prepare for tax time. The right accounting software (such as Xero) can help keep track of all your income and expenses effortlessly, especially if you team up with Bing Bong to manage your Bookkeeping accurately and stress free.
Want our team to help get you set up right from the start?
Get in touch today and we can chat about we can help support your new business to succeed, from the beginning.
