I get that bookkeeping can be a bit of a hassle or (dare I say it) boring for some small business owners. Your focus is on doing a great job for your clients and being able to pay your bills. So with that in mind I’ve chosen 3 of my favourite bookkeeping tips to make life that little bit easier for the tradies out there.
1. Separate personal banking from business banking
Many business owners start out by using their personal bank account for business purposes. And if you’re a sole trader the Australian Taxation Office doesn’t have a problem with this. However, I still advise people to separate the two as soon as possible. Why? Well firstly getting your paperwork ready for tax time will take longer if you don’t (and ideally you want the process of getting ready for tax time to be as streamlined and pain-free as possible). Secondly, it makes it much more difficult to know how much money you have personally pumped into the business to get it off the ground and to know how much you have taken out for personal expenses.
2. Keep all receipts
There may be some tax deductions you aren’t aware of – and no-one expects you to know them all. For example, if you’re outdoors a lot as part of running your business the cost of purchasing sunglasses and sunblock may be a tax deduction. If you’re not sure, keep your receipt anyway and run it past your accountant before tax time. Storing your receipts electronically is a great way to go as well. There are also some great apps that can help you with storing receipts and reducing data entry time – be sure to check out Hubdoc and Receipt Bank.
3. Invoice promptly
If you have time after completing a job can you invoice whilst there or straight after? Using mobile software is ideal because you can log in anytime, get your invoice prepared and emailed through then and there. Lack of cashflow is one of the main reasons small businesses don’t survive. So the faster and more regularly you can get that cash coming in, the more likely you are to have money to cover your bills when they become due (and the less reliant you will be on expensive loans and credit cards). Rather than let your invoicing build up into a big job that you dread doing, doing little bits more often means less stress and better cashflow. If you’re having trouble with clients paying you on time, I prepared this infographic: Top 6 Tips – Keeping on Top of Customer Payments
If you’re looking for easy to use accounting software, Xero is popular with tradies and you can try a free 30 day trial here. It works well with the above 2 mentioned receipt apps Receipt Bank and Hub Doc as well.
You might also like:
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- 4 reasons to choose Xero accounting software