The basics of accounting
Whenever you make a business decision, you should always be able to provide figures that justify your decision.
A basic knowledge of accounting will help you and others who may want to invest in your business.
Take the story of Rob, a hard worker who admits he isn’t comfortable with accounting. Rob wants to start a courier business in his area and prepares a business plan that shows good prospects for his business.
Rob knows he’ll need some accounting software and speaks with his accountant to discuss how to manage his financial statements. By understanding what his profit and loss statement actually means, Rob can now better account for his revenue and costs and assets and liabilities.
Your accounting checklist
Read the seven steps below to get your business’ accounting basics on track:
Sit down with your financial advisor and review your business finances. Look at whether you met your targets last financial year and what you can do differently this year to help your business grow.
Your business operations may have changed throughout the year, so it’s important to take stock of the current licences, permits and registrations your business holds.
Not only does keeping good records make running your business much easier, depending on your industry, you might need to keep certain records to comply. It also help you to keep track of how your business is going financially.
Take time to set yourself up for the year ahead. Updating your business and marketing plan can help you review your goals and priorities, and assess whether your business strategies are working.
Running a small business can be overwhelming and requires a variety of skills. From marketing to balancing the books, it’s important to remember not to be afraid to get help when you need it.
Check that you have the right insurance policies in place for your business, particularly if your circumstances have changed. You may need to update your level of cover if you’ve moved locations, started employing people or changed your business structure.
Don’t leave it until it’s too late. Backup and store your business registrations, financial information and customer data and other important business documents in a secure off-site location. Also consider eligible online or 'cloud' accounting, bookkeeping or payroll software to process certain government tax forms. Find out more about the online or 'cloud' software service on the Australian Taxation Office (ATO) website.
Find out more
- Learn more about the key financial terms that apply to your business.
- Find out how rural financial counsellors help farmers, fishing enterprises, forest growers and harvesters, and small related businesses through their one-on-one service.
- Check out the free Be MoneySmart online course run by the Australian Securities and Investments Commission (ASIC).