Maybe your business will work well if you take care of the accounting: it is quite possible that this will be enough.Or maybe you’ve notice that your drawers are overflowing with unfinish receipts, documents, and financial to-do lists. Due to the many business decisions you must make every day, you may not be able to dedicate the necessary time to bookkeeping.
Not having enough time is a fairly common problem for business owners. In order for you to reach the next level of business growth, you may have to delegate your Accounting and Bookkeeping Services in Australia to a financial professional.
But when is the right time to do it?
In this article, you will learn more about accounting for small businesses and the pros and cons of hiring an accountant versus doing it yourself.
Why is bookkeeping important?
Unless your business transactions are properly record and organize, you won’t have payment records, customer receipts, and you won’t know if cash is available.
But when you keep good records, you can track the money that flows in and out of your business.
What is the difference between Accounting and Bookkeeping Services in Australia?
Bookkeepers keep accurate records to maintain and balance accounts.
Accountants analyze the general state of finances by reviewing the records, in addition to preparing your tax returns.
How to do the bookkeeping yourself?
If you do your own bookkeeping and when all the accounts are in order:
- You can manage accounts, register transactions, run financial statements, and analyze data.
- Have a detail picture of how well your business is doing in order to plan for your future.
- Review financial transactions.
- A bookkeeper and cashier can review your books and see where your business needs help.
Accounting and Bookkeeping Services in Australia Terms You Should Know
It doesn’t matter if you hire an expert to take care of your bookkeeping or if you do it yourself: in either case you need to know certain accounting words.
It’s not that you need to be an expert in accounting terms, as an auditor is, but you do need to know some basic terminology to communicate about your company’s finances.
- Accounts payable: the amounts that you must pay to third parties are include in this account.
- Accounts Receivable – This account lists a summary of each customer / debtor and the amount they owe your business.
- Assets: Anything of value that can be convert to cash.
- Balance Sheet – A report that shows assets, liabilities, and equity.
- Cash and Accrual Accounting – Two separate accounting methods you can use to run your business. When you use the cash method, you keep track of when you receive money and pay expenses. With the exercise method, you record the income when you complete a project rather than when you receive the money.
- Cash Flow Statement – An analysis or report showing changes between balance sheet accounts and income that affect cash.
- Costs of goods sold: what it costs to produce a product offer by your company. Depending on the business, the main expenses are generally materials and labor.
- Owner’s equity: a basic formula to remember: Assets minus liabilities equal equity.
- Expenses: This account includes fix expenses such as rent, variable expenses that fluctuate, such as labor costs, expenses to operate the business (advertising, insurance, etc.) and accumulate expenses that will be paid in the future.
- General Ledger: Also call a chart of accounts, it is a record of each financial transaction for all your debit and credit accounts.
- Income statement – A report that shows the income and expenses of a company during a designate period. The statement is also known as a profit and loss statement.
- Liabilities: a summary of current liabilities that you will pay within a year and long-term liabilities that are paid beyond 12 months, such as a mortgage.
- Return on investment (ROI): the earnings you receive from investing money. If you buy inventory for $ 1,000 and sell it for $ 5,000, your ROI is 400% or $ 4,000.
- Working capital: your current assets minus the liabilities resulting from the capital that is use to complete day-to-day operations. If the ratio of current assets to liabilities is less than one, your business has negative working capital. If you have a positive working capital, your business is in a position to grow and make investments.