Running a Business in Australia? Here’s Why You Need a Bookkeeper

Successful businesses around the world have several things in common. They have good products, excellent customer service – and proper bookkeeping.

The same goes for Australian businesses.

Bookkeeping is essential for making informed decisions on budgeting, investments, and growth strategies. It’s also crucial for reporting and saving on taxes.

Hence, having a reliable bookkeeper is an essential requirement for companies to sustain and grow their businesses.

In this article, you will learn how bookkeeping works, how to find the right bookkeeper, and how they can help your business grow. Let’s take a look.

The Role of Bookkeepers in Australian Businesses

For starters, bookkeeping is the recording, organising, and monitoring of all financial transactions within a business. It involves managing and recording sales, purchases, receipts, and payments.

Its primary goal is to provide business owners with a clear and accurate picture of the company’s financial health. However, tax reporting, audits, and evaluating a business’ financial performance can be challenging.

Thus, a lot of AU entrepreneurs turn to professional bookkeepers for additional support.

Key Responsibilities of Bookkeepers

A bookkeeper is a must for sound financial decision-making. Here’s why:

Financial Record Management

They are responsible for documenting every business-related transaction, as well as generating financial reports like balance sheets and income statements. They also:

• Identify and rectify any discrepancies to ensure healthy cash flow;
• Assist accountants and auditors during audits and financial reviews; and
• Help with submitting tax returns.

Accounts Payable and Receivable

Bookkeepers also help businesses keep track of incoming and outgoing payments. Here’s how they do it:

• Track and record all vendor invoices, utility bills, and other operational costs;
• Ensure all invoices are approved, processed, and paid on time;
• Monitor and negotiate payment terms;
• Track incoming payments from customers;
• Monitor outstanding balances; and
• Follow up overdue payments.

By handling both accounts payable and receivable, bookkeepers help organisations maintain financial stability and plan for future expansions.

Payroll Processing

Many companies also delegate payroll processing to a bookkeeper. They rely on them to:

• Calculate employees’ wages based on hours worked, overtime, and bonuses;
• Apply the correct tax rates, deductions, and benefits;
• Stay updated on current tax laws and regulations in terms of payroll;
• Maintain detailed and accurate documentation of all payroll transactions; and
• Prepare payroll reports.

A good bookkeeper meticulously maintains accurate records, ensures legal compliance, and pays employees on time.

Bank Reconciliation

Bookkeepers are also adept at cross-checking the company’s internal records with bank statements. This way, they can verify all deposits, withdrawals, and bank fees and ensure they are recorded correctly in the company’s books.

They also:

• Review each transaction;
• Note any differences and investigate causes;
• Make necessary adjustments to the ledger; and
• Identify and prevent potential fraud.

Done regularly and correctly, reconciling business records with the bank’s can strengthen your financial statements, and help build trust with stakeholders, investors, and clients.

BAS Preparation

The Australian Taxation Office (ATO) requires companies to prepare Business Activity Statements (BAS). This document summarises obligations for:

• Goods and Services Taxes (GST),
• Pay As You Go (PAYG) with withholding, and
• Other taxes.

Bookkeepers can take this task off your plate by:

• Gathering all necessary financial data like expenses, sales, and GST collected and paid;
• Calculating the GST amounts to be reported on the BAS;
• Managing and calculating PAYG withholding; and
• Lodging the BAS through ATO’s online portal or through registered agents.

Financial Reporting

Lastly, bookkeepers have financial reporting skills. They prepare and maintain income statements (profit and loss), balance sheets, and cash flow statements. They also:

• Compile financial data from various sources within the business;
• Organise and categorise data to create a comprehensive financial report;
• Ensure financial statements adhere to regulatory requirements; and
• Record revenue, expenses, assets, liabilities, and equity figures.

These reports uphold transparency, accountability, and credibility in terms of financial management.

Skills and Qualifications of a Professional Bookkeeper

Finding a qualified and reliable bookkeeper can be tough. You have to find the right balance between technical, soft, and interpersonal skills, including:

Accounting Knowledge

A bookkeeper must have the adequate accounting knowledge to prepare, interpret, and analyse income statements, balance sheets, and cash flow statements. Moreover, they should be able to facilitate:

• Abidance with taxation laws and regulations;
• Compliance with local, state, and federal tax requirements; and
• Calculation of tax liabilities and manage tax filings.

It also helps if the candidate is proactive when it comes to continuous learning and upskilling.

Technical Proficiency

Bookkeeping software proficiency is also a necessary skill. Your bookkeeper must possess enough working knowledge of various accounting software tools, such as:

• QuickBooks,
• Xero,
• MYOB, and
• Microsoft Excel.

Furthermore, they should be:

• Adept at using cloud-based accounting systems;
• Good at database management;
• Familiar with electronic payment systems; and
• Updated with current advancements in financial technology.

Attention to Detail

On top of technical and accounting skills, bookkeepers must pay attention to detail.

They have to be thorough and meticulous in tracking and recording every financial transaction. Otherwise, even minor errors can lead to costly discrepancies or legal sanctions. They should:

• Scrutinise financial documents including invoices, receipts, and bank statements;
• Verify all data entries;
• Identify any inconsistencies;
• Double-check and cross-reference figures; and
• Reconcile accounts to ensure all transactions are accurate.

Simply put, attention to detail is indispensable to maintaining your business’ financial integrity and sound financial management.

Regulatory Knowledge

Bookkeepers are expected to be more familiar with tax laws and other industry-specific regulations impacting financial reporting and record-keeping.

By doing so, they can properly calculate tax liabilities and prepare necessary documents for relevant authorities. They must also:

• Understand laws on employee compensation, benefits, and tax withholdings;
• Ensure payroll processes comply with labor laws and employment standards; and
• Know the timelines for submitting financial statements and disclosures.

Organisational Skills

Lastly, a good bookkeeper must be organised. Good organisation skills allow them to handle large volumes of financial data more effectively.

They do this by:

• Maintaining meticulous records;
• Categorising expenses;
• Managing invoices and receipts;
• Creating schedules to ensure all financial activities are completed on time; and
• Having effective filing systems for quick access to financial documents.

Thus, having an organised bookkeeper is essential for maintaining accurate and up-to-date financial statements, thus improving your business’ financial operations.

How to Find a Good Bookkeeper in Australia

Finding the right bookkeeper can be tricky. Fortunately, there are tried and tested ways to make it easier:

Tip #1: Understand the Scope of Bookkeeping Tasks.

It’s important to identify the tasks you can delegate to your bookkeeper. This helps you set clear expectations and find a candidate who matches these requirements.

Here’s a step-by-step guide:

• Assess the Scope of Bookkeeping Tasks – Start by identifying aspects of your specific bookkeeping needs like volume of transactions, complexity of financial activities, and frequency of reports.
  This thorough evaluation helps you select a candidate who can handle the multifaceted and challenging nature of bookkeeping.

• Determine the Required Level of Expertise – The complexity of your business’ financial operations dictates the level of expertise required.
  For a small business, a bookkeeper with basic accounting knowledge may suffice. However, larger companies with intricate financial activities may need someone with advanced qualifications.

• Identify Specific Industry Requirements – Different sectors have unique requirements and bookkeepers must understand specific nuances and regulatory demands.
  For instance, construction and healthcare industries may come with specialised tax considerations, inventory management requirements, or project accounting needs.

Tip #2: Review Qualifications and Experience.

Qualifications and experience are equally important when selecting candidates. These pertain to both essential skills and practical knowledge. Here are some tips on how to screen more effectively:

• Verify Educational Background – Always verify a candidate’s educational background, particularly their formal education or training in accounting or bookkeeping.
  Look for qualifications like degrees in accounting, finance, or certifications from reputable institutions.

• Check Professional Certifications – Organisations like the Institute of Certified Bookkeepers (ICB) provide certifications as proof that bearers completed rigorous training, passed exams, and maintained ongoing professional development.

In addition, look for certifications that match your needs. For instance, if your business handles complex tax matters, look for a bookkeeper with Australian taxation knowledge.

• Evaluate Work Experience – Look for a bookkeeper who has a good track record in similar roles. These include experience in reconciling bank statements, managing accounts payable and receivable, and preparing financial reports.
  Moreover, ask about the size and complexity of businesses they’ve worked with. Bookkeepers experienced with similar financial operations are better equipped to meet your specific needs.

Tip #3: Evaluate Technical Skills.

You should also consider their familiarity with industry-specific software or tools like inventory management systems, point-of-sale software, or specialised reporting tools.

Here are the technical skills you should look for:

• Proficiency with Accounting Software – Modern accounting uses software tools such as Xero, MYOB, and QuickBooks. A skilled bookkeeper should know these platforms well and be able to use their features effectively.
  You should also consider their willingness to learn new software updates and technological advancements. This shows their commitment to maintaining and enhancing their skills.

• Knowledge of Australian Tax Laws – The candidate should be knowledgeable about AU tax laws. Tax regulations are intricate and subject to frequent updates, requiring bookkeepers to stay informed to apply these accurately.
  They also have to be well-versed in GST requirements, fringe benefits taxes (FBT), and other relevant tax obligations specific to your industry.

• Ability to Manage Financial Reporting and Compliance – A bookkeeper not only manages day-to-day financial transactions. They also ensure that your business meets legal and regulatory obligations.
  As such, they should have a strong understanding of compliance obligations such as tax filing deadlines, superannuation obligations, and reporting requirements.

Tip #4: Check Membership in Professional Associations.

Membership in professional associations is an indicator of a bookkeeper’s adherence to industry standards. These associations often require members to maintain ongoing education and training, keeping them updated with the latest industry trends.

Let’s take a look at some examples:

• Membership in the Institute of Certified Bookkeepers (ICB) – ICB members are required to undertake continuous professional development courses in tax laws, accounting standards, and technological advancements.
  The ICB also enforces a code of ethics requiring members to maintain integrity, confidentiality, and professionalism. Moreover, it provides members with industry updates, allowing them to stay informed of best practices.

• Membership in the Australian Bookkeepers Association (ABA) – Meanwhile, ABA is a professional body representing bookkeepers across Australia. An ABA membership often indicates that a bookkeeper has met high standards of professional practice.
  Just like the ICB, it also requires its members to continue upskilling with ongoing education and training.

Tip #5: Review References and Testimonials.

Lastly, ask for references. This gives you a view of the candidate’s track record and their contributions to other businesses’ financial management. Here’s how to do it:

• Request Client References – Ask the candidate to provide references from both current and past clients. These references can offer insights into their capabilities, reliability, and overall performance.

• Read Online Reviews and Testimonials – You can also search online and see what past clients are saying about the candidate. Begin by checking their LinkedIn accounts or personal websites.
  Online reviews often highlight specific strengths and weaknesses. Look for comments about their:
  • Accuracy in maintaining financial records;
  • Responsiveness to client queries; and
  • Ability to meet deadlines.

• Check Case Studies or Success Stories – Reviewing case studies helps you see a bookkeeper’s skills in action. Meanwhile, success stories highlight the importance of measurable results like timely tax submissions, cost savings, and increased financial accuracy.
  This information can guide you in finding the right candidate who demonstrates the same characteristics.

The Importance of Bookkeepers for Australian Businesses

Bookkeepers play a vital role in the success and sustainability of Australian businesses due to the following reasons:

1. They Maintain Accurate Financial Records.

An efficient and organised bookkeeper keeps well-maintained records, ensuring transparency and reducing the likelihood of discrepancies. This results in smooth audits and reviews by external auditors.

Moreover, accurate records support effective internal controls. They help monitor expenses, detect fraud, and keep all financial practices in line with the company’s policies.

2. They Help You Comply with Regulations.

A good bookkeeper helps businesses operate smoothly within the bounds of the law.

Their knowledge of financial reporting, payroll taxes, and other industry-specific regulations help businesses:

• Adhere to government-mandated standards;
• Maintain financial transparency; and
• Report financial performance to stakeholders.

3. They Provide Financial Analysis.

Bookkeepers also help business owners understand financial performance, trends, and areas of strength or concern. Some bookkeepers also conduct variance analysis to compare actual financial results against budgets or historical data.

This financial analysis helps businesses project future financial outcomes and cash flow scenarios while planning for growth, expansion, or potential challenges.

4. They Help You Save Time and Resources.

Accounting and bookkeeping mistakes can be costly. They’re also time-consuming and taxing, especially for those with no accounting background. This is where bookkeepers come in.

They streamline financial processes by efficiently recording and categorising business-related transactions. This organisation reduces the time spent on manual data entry and reconciliation tasks.

Additionally, bookkeepers mitigate the risk of costly errors, penalties, or audits. They understand legal requirements, saving you potential costs associated with non-compliance.

FAQ

Here are some frequently asked questions related to bookkeeping:

Question #1: What is Single Touch Payroll (STP) and how do bookkeepers handle it?

STP is an Australian reporting rule where employers send payroll information to the Australian Taxation Office every time they pay their staff. This includes salaries, wages, PAYG withholding, and superannuation.

Bookkeepers handle STP by using compliant payroll software that automatically sends this information to the ATO. This way, businesses meet their reporting obligations in a timely and accurate manner.

Question #2: How Often Should a Business Update its Financial Records?

Businesses should update their financial records regularly, ideally weekly or monthly. This frequency keeps financial data current and accurate. It also provides timely insights into cash flow, profitability, and financial health.

Question #3: What Is the Difference Between Cash and Accrual Accounting, and How Do Bookkeepers Manage These Methods?

Cash accounting records transactions when cash is received or paid out. Meanwhile, accrual accounting records transactions when they occur, whether money changes hands or not.

Bookkeepers apply these methods based on business needs. In terms of cash accounting, they keep accurate records of cash receipts and payments. For accrual accounting, they record revenues and expenses when earned or incurred.

Lastly, they reconcile cash and accrual method differences to ensure accurate financial reporting that meets your business goals.

Conclusion

A good bookkeeper can help your business grow while ensuring compliance with AU tax laws, regulations, and industry standards. Their financial insights enable business owners like you to manage cash flow effectively, assess profitability, and strategise growth opportunities.

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