Set up a basic bookkeeping system

It's a legal requirement to keep your business transaction records for a minimum of five years, so it's important you have good record keeping practices. The records you must keep include all documents relating to your income and expenditure.

A strong bookkeeping system can help you keep accurate records for a range of purposes. Use it to:

  • analyse business activities
  • attract investors
  • seek finance
  • lodge and pay tax
  • meet your reporting requirements.

It can be difficult to set up your own system without a bookkeeping background. So if you need help getting started, contact your accountant, bookkeeper or business advisor. You might also want to talk to your accountant or bookkeeper to see whether they have preferred software packages that may assist. Once your system is ready, the right training, effort and discipline can help you take control of your finances.

Cash vs accrual systems

When choosing an accounting system that suits your business needs, you have two choices. Some businesses use a mix of both cash and accrual systems.

Read more about cash vs accrual accounting for the advantages and disadvantages of each.

Manual vs electronic systems

Manual bookkeeping systems include a series of books or ledger accounts that are often available at your local newsagent, office supply or book store. However, be aware that the ATO is moving towards all electronic records, so now may be a good time to consider going electronic.

Some of the electronic options include:

Software

Off-the-shelf or tailored software accounting packages help you record your transactions, calculate GST, update ledgers, prepare financial statements and generate invoices. Make sure you check to see what systems your accountant or business advisor recommends and that the software complies with Standard Business Reporting (SBR).

Web-based

Using a web-based or 'cloud' system allows you to update your books from any location. It also has the added benefit of automatic off-site storage of your financial records. While this can be a cheaper option, it does come with added security risks.

Spreadsheets

If you're confident using a computer but don't have the funds for an accounting package, consider setting up a series of spreadsheets for your accounts.

As your business grows, you may find you need to update or upgrade to a point-of-sale (POS) system. Point-of-sale (POS) systems are computer systems that help your business to process sales.

What can POS systems do?

Depending on the system you choose, POS systems can automatically:

  • adjust sales income and inventory records
  • create receipts, invoices and tax invoices
  • process EFTPOS and credit and debit card sales.

It’s a good idea to think about the features your business needs before buying a POS system. For example:

  • Sam bought a POS system for his coffee shop. Easily keeping track of sales was the most important feature for him.
  • Julie runs an office supplies company. She needed something to help staff update inventory records as stock came in and out.

Find out more

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