Getting behind your record-keeping and bookkeeping happens to everyone at least once in their business. When a business grows and evolves, it creates new needs and pressures on you the business owner. This can mean that you will have to look back sometimes to make sure that the records are correct.
When your accounts are behind, you cannot ignore it. It will catch up to you at some point because your accountant will need to audit your accounts to prepare the tax return. To keep our country in a surplus during nearly recession times, the ATO is now chasing all businesses and taxpayers aggressively. This means the pressure is on business owners to keep the country afloat. The ATO is using high tech programming to cross-reference your business footprint so you need to be on top of your accounts to maximize your tax positions and avoid paying too much tax or getting fined or receiving unnecessary ATO attention.
Consider getting some temporary rescue help. If you are growing and you need some help to fill the administrative gap and advise on how to develop an economical long term solution, get some professional help from a catch-up service like Cloud Safe Accounting. You can contact us to get some advice on how to proceed.
Here are the steps to take to get yourself back on track as soon as possible
1. Work from your backbone.
No matter the complexity of your business, the best place to start is: reconcile your bank accounts. The bank accounts for most businesses are the backbone of the business records. If the transactions in your accounting software match your bank statement, then you are halfway there. This is because you know that you are now working with real data that can be verified to a 3rd party source (your bank). Once you know that your data is accurate in your system, you then need to ensure that you are allocating transactions to the right accounts.
2. Allocate Correctly.
Using the latest technology cloud accounting software means that you can link your bank accounts to your bank and set up the rules in your system to assist you in allocating your transactions to the correct accounts. Maybe getting behind on your accounts is an indication that you need to consider upgrading or changing your systems for your accounts to make your life easier. Discuss with us the best options for your business. We can help you consider how to change efficiently and without fuss.
3. Check your Progress.
Use your reporting to see whether you are on track with some simple checks (and there may be others that you need to do for your business specifically):
Check your Balance Sheet. Do the balances on your balance sheet match your statements? For example, does your bank balance on your bank statement at the end of the month match your bank balance?
Check your Profit and Loss. Check for missing expenses and the level of the expenses from month to month. For example, do your regular expenses appear each month? Do your levels of stock used or your labour expenses look right to the number of sales you have had each month?
Check your reports against your reports. If you have a point of sale software or you have a job management software or online sales system, you can use the reports from that software to check whether your figures are correct. For example, do the sales from your point of sale software match up to the number of sales that you have recorded in your accounting software? Does the amount of sales and the material and labour purchased in your accounting software match the jobs completed in your job management software? Doing these simple checks will help you know you are on the right track.
BONUS TIP!
A final item to help you catch up and stay on track is to keep a business journal. It just needs to be a word document (cloud-based preferably) where you can keep notes of any issues that occur. It's a very valuable document should you ever encounter an auditor.
Need a hand to catch or just some advice to know you’re on the right track? Feel free to contact us.