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Basic Guide For Bookkeeping For Small Business Owners In 2021

Bookkeeping

Are you planning to start a small business in Perth, Australia? If yes, you should give special attention to the accounting and recording of your business finances. And this financial recording is what we call bookkeeping. Before you start your business, you need to understand the bookkeeping basics in as detail as possible. This write-up will provide you with a detailed guide about how bookkeeping Perth works and how you can work with a bookkeeper. 

Top 3 Key Points To Remember

Before you go into further detail, look at these 3 quick points.

  1. Bookkeepers are responsible for tracking the daily financial transactions of a business. The things they commonly record include business revenue, costs, and wages. They also manage the accounting systems.
  2. The primary difference between a bookkeeper and an accountant is that while an accountant analyses the business data, a bookkeeper will record the data.
  3. Without the consistent flow of money in the business, the venture will dissolve very soon. As you have to handle many things while running a business, it is always better to recruit a bookkeeper from the company’s very beginning. It is because recording financial information is important at any stage of the economic cycle. 

 

Therefore, you must have someone in the company who precisely knows the financial situation of your business. When a bookkeeper can do their job well, an accountant’s job becomes easier. So, having an efficient bookkeeper and an effective bookkeeping system will make your business grow more rapidly.

What Is The Main Difference Between An Accountant And A Bookkeeper?

It is often pretty hard to understand what the main difference between an accountant and a bookkeeper is precise because several accountants also handle bookkeeping duties besides performing their accounting duties. 

 

Put simply, the difference between the two professionals is that while the job of a bookkeeper is to record the financial transactions that are occurring daily in a business operation, the accountant’s job is more focused on the analysis of those records. 

 

It is the accountant who generally advises a business owner to improve the company’s financial health. It is the job of a bookkeeper upon which an accountant’s work is based upon.

What Are The Duties Of A Bookkeeper?

As we have said, the primary duty of a bookkeeper is to keep the financial records for a business. The bookkeeper collects the invoices and receipts from the customers, tracks cash flow, prepares tax papers, and pays due wages. The tasks that bookkeepers usually perform include the following.

  1. They manage the accounting systems.
  2. They process the receipts, invoices, payments, and every financial transaction.
  3. It is the bookkeeper’s job to manage the payroll processing.
  4. A bookkeeper also prepares financial statements.
  5. Reconciling business accounts and preparing the reconciliation reports are two of the most important jobs of a bookkeeper.
  6. They manage loans and debt repayments.
  7. They also calculate the GST that a business has to pay annually.
  8. BAS is the Business Activity Statement that one must pay in Australia if the annual GST turnover crosses the threshold value. If you are in Australia, the bookkeeper will prepare and lodge it for you.
  9. A bookkeeper can also prepare business forecasting.

When Should You Hire A Bookkeeper?

As a business owner, you should set up your financial and accounting system from the very beginning. It will help you have a clear understanding of the economic situation of the business. On that note, a bookkeeper should be one of the first employees that you have to hire.

 

One of the best things about employing a bookkeeping is that, like accountants, bookkeepers also work as freelancers. So even if it is not affordable for you to employ a permanent individual initially, you can happily work with them on an hourly basis. In the beginning phase, you may need them only for a few hours every week.

 

An accountant will set up the tax structures and the legal systems of the business, while the bookkeeper will handle the daily transactions. Both of them will be useful for a business. Before hiring someone like that, you may take help from an experienced business consultant for specific professional guidance.

How Should You Work With A Bookkeeper?

In this section, we discuss what qualities you should see in a bookkeeper before you hire them. 

 

One of the main advantages of employing a bookkeeper is that it can be possible for you to work with them remotely. A majority of the bookkeepers do their jobs online or from home, and thus it will cut a significant portion of your business overheads. Here we list some helpful tips on how to build a fantastic professional relationship with the bookkeeper.

  • Prepare The Agreement Terms

When starting your work, you should sit with your bookkeeper and discuss the range of duties they have to perform and what you will expect.

Once the discussion on the different responsibilities and tasks are over, you should ask the bookkeeper about the total cost it will take. It is more likely that the bookkeepers will want to set limitations around their working conditions and how much they can be available in a week.

  • Decide On The Mode Of Communication

For any working relationship, it is necessary to have an effective mode of communication. Before you start, you should clarify how you will communicate with each other. Whether you talk over the phone call or prefer messaging or emailing should be discussed at the beginning. Keeping open and honest communication between the owner and the bookkeeper helps significantly in the future.

  • Have Frequent Meetings

Even if your bookkeeper works online or from home, you should have frequent face-to-face meetings, maybe personally or over the video call. 

Final Thoughts To Share

Whenever it comes to business management, a bookkeeping is considered one of the integral parts of it. So, for your business to thrive, you should hire the most qualified and experienced professional.