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Question
“How can I manage my businesses finances more effectively (and economically)?”
Answer: Now that’s a loaded question. This really comes down to how much or how little you wish to be involved in the day to day aspects of your business finances.
- Hire a bookkeeper to attend to your day to day affairs & BAS
- Attend to it yourself.
The key to managing your business finance is to create a system that works for you and your advisors. The most cost effective way I have found over the years is to have a good filing and reporting system in place. The key is also not to over complicate the system as you will be less likely to stick to it. I normally recommend to my clients to establish a filing system that works for them, for example they can file all their records in an Arch Folder each Quarter (makes BAS easier). This will hold all banking records, expenses and capital purchases along with relevant finance documents applicable to that quarter. If you run a business with many supplier invoices, you may wish to have a banking folder, a supplier folder and an asset folder. Another important factor is to go through your banking statements and write down a narration of what the expense was for. It is important to write more then just personal or business, e.g if it was an expense for travel accommodation, write that. This will make preparing your records easier for you, bookkeeper or accountants. Writing down narrations reduce the back and forth questions which in turn will keep your costs down. Do this at least monthly do not leave for the end of the quarter. When it comes to managing business finances, you cannot avoid a reporting/accounting system. There are a number of packages available to meet your size and needs. I have recently come across an online accounting software called Xero that can assist small business to keep track of the business finances without the need to hold an accounting degree. No matter what system you choose, I do recommend having a chat to your accountant or tax agent, as it is important that what ever you choose they will be able to work from that to complete your end of year tax returns and accounts, as there is nothing worse to have put a strong effort in all year only to be told sorry cannot work with this. If you decide to hire a bookkeeper, it is important to check their references and that they hold a BAS Agent License if they will be preparing your BAS’s along with relevant professional indemnity insurance. To submit a question to Ask a Mentor, please email us your question.
