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When you should hire a bookkeeper

Bookkeepers can help with day-to-day accounts, but they do a lot more too. So, when should you hire a bookkeeper?

The tasks of a bookkeeper

A bookkeeper is someone who records the financial transactions of your business. They also:
  • keep track of sales, purchases, payments and receipts
  • work on the design maintenance and review of internal business processes
  • organise, collate and record financial data on a day-to-day basis and store this information in general ledgers
  • record the financial information of your business in a standard way, so that accountants can also access it
In this document we'll look at what a bookkeeper can do for you, and when you might hire one for your business.

Why do you need one?

If you started your own business, it’s likely that you’re passionate about running it and concentrating on the tasks you love doing. But if you’re like most business owners, you’re not so interested in recording all the details of every financial transaction.
For example, imagine you’re a hair salon business owner. You might have:
  • a simple business model
  • a high transaction rate with lots of customers
  • many sales a day – perhaps dozens or more
  • supplier invoices for hair products
  • sales recorded through cash registers or other POS (point of sale) systems
  • employee wages to record and pay
That's a lot of information to track and record. And bookkeeping might not be something you enjoy or have time to understand.
Without proper bookkeeping, it would be easy for transactions to go unrecorded, left to pile up until the end of a financial period. Mistakes could be made and important details could be lost or forgotten.
That's where bookkeepers come in. They can lighten the load on the business. They can take away the day-to-day recording of receipts, invoices and other transactions.

What do they actually do?

Bookkeepers are trained and use the same financial recording methods as accountants. They do this so that your accountant can quickly and easily process your financial information. They will:
  • take all your receipts, invoices and other transaction details
  • record the information in accounting software using proper accounting methods
  • work with you to make sense of the numbers, for example assigning costs to specific clients
But there's more to bookkeeping than recording daily transactions. People who do this work are usually highly skilled at using accounting software. They will be able to advise you on:
They can also offer day-to-day support for small business owners. In fact a good bookkeeper is your partner in keeping things running smoothly within your business.

How are they different to accountants?

Bookkeeping is a vital service. But how does it differ from accounting? The two services are often compared, but actually they are complementary:
  • Bookkeepers do the day-to-day work and bring the accounts up to a high standard of detail and accuracy. They can also advise you on issues that might affect you in the near future, such as cash flow problems or late invoice payment.
  • Accountants will look at the accounts that have been created, often on a quarterly basis. They will make any minor adjustments required. They will use the information in the accounts to file tax returns and other official reports. They will also provide high level business advisory services.
For your business to run smoothly, ideally you need both people. You'd hire a bookkeeper to look after the day-to-day work. And you'd hire an accountant to handle official reporting and high level business advice.

A detailed view of your business

Bookkeepers and accountants work with the same financial information from your business. They can share that information using cloud-based accounting software. That means they can access your financials securely online, from anywhere. It lets them share reports about the financial status of your business.
So both of them can both give you advice about where your business is right now – and where it's heading.
It’s often the case that your bookkeeper will be the constant accounting contact for your business. They'll be best placed to answer questions about where the money is coming from, and where it's going.

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When should I hire a bookkeeper?

The sooner the better. If you haven't already hired one, you should do it soon. Ideally you'd hire one soon after starting your business.
Otherwise you could end up with several months' worth of receipts and invoices to be processed. That will take time and may be difficult to do, because you'll have forgotten which client to bill for a particular expense.
For example, you may ask yourself, “What was this train ticket for? Who did I visit on 13 July?” A bookkeeper would know which client you visited and why. They would then account for the travel expense in the correct way.

You may recognise the following signs which means you need to hire a bookkeeper –
Like most small business owners, you're probably wearing many hats. And while juggling multiple tasks is part and parcel of running a small business, it can quickly become too much. With your eyes firmly planted on running and growing your business, recording your financial transactions and keeping your books in order can take a back seat. The busier you get, the more you fall behind and before you know it, your business activity statement (BAS) is due. If this sounds all too familiar, it might be time for you to hire a bookkeeper. Here are some sure signs you need a bookkeeper in your life:

More time than you can afford

There's only so much you can squeeze into one day and as a busy business owner, it's often a case of too many tasks and too little time. When time is your currency, you need to use it wisely. If balancing books is not your passion and your time is better spent selling your products or services, consider outsourcing your bookkeeping. Most accounting software is accessible from the cloud which makes for a smooth handover. With record-keeping off your plate, you'll have more time to focus on what you do best and get your work-life balance back on track.

Your books are never up to date

There's a reason why cash flow is king. Without it, you've got no transparency over how your funds are tracking and what you need to plan for. The reality for most small business owners is that your paperwork grows with your business. Leaving your paperwork until the last minute can put your small business in a precarious situation and land you in trouble without you knowing it. If you have no idea whether you're trading profitability or what cash flow looks like - you need a bookkeeper.

Your records are not accurate

If you have attempted to do it yourself, you know the skills that are involved in bookkeeping. While many small business owners consider themselves a 'jack of all trades,' it's often a different story when it comes to finances. As innocent as your mistakes may be, they can cost you. It's not just data entry errors you need to think about, it's also keeping on top of compliance. A bookkeeper can set your records straight from the start, keep your business compliant and give you peace of mind that your checks and balances are in tip top order.

Your accountant is doing your bookkeeping

Asking your accountant to do your bookkeeping is like asking a lawyer to do your admin. Accountants are generally more qualified than bookkeepers, which means you're paying a premium for that skill set. If your accountant is preparing your books and getting your records in order, you're probably spending too much. A good bookkeeper can help reduce your accounting costs by preparing clean books to hand over to your accountant.
Running a small business isn't easy. In between making sales and keeping suppliers and staff in check, there can be little to no time left for the things you love. If you find yourself working nights and weekends to get your books in order, seek help from a bookkeeper. Bookkeepers Bunbury can help you with invoicing, accounts receivable and payable, payroll processing, superannuation, bank reconciliations, BAS preparation and lodgement and debtor management. With expert set up and support, our bookkeepers will take the time and hassle out of managing your books, leaving you more time to get on with business.

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Finding the right person

Whoever you hire needs to be trusted with the everyday details of your business finances. So you should be very careful when you hire a bookkeeper.

There are many bookkeeping businesses, so you'll have plenty of choice. You could contact one directly, or you could ask if your business partners or clients have any recommendations.

If you have an accountant, ask them too. It's best if you can find someone who uses the same accounting software as your accountant. That way they can share accounts information easily.

Ideally the accounting software should be cloud-based, which means it's accessed online. Then all of you will be able to share access to the financial data for your business. You can do it remotely and securely – from anywhere.

Once you've narrowed down a short-list of bookkeepers, you can ask them some questions:

  • what stage to they take accounts: month-end management reports, trial balance, ready for year end?
  • What are their experience and qualifications?
  • Are they a member of a professional body and do they undertake continuing professional development (CPD)?
  • Do they have liability insurance?
  • Have they worked with businesses that are similar to yours so they know your industry and specifics to your industry?
  • How many clients are they handling right now and can they give you the time and appropriate level of help you need?

Trusting the financial details of your business with anyone is a big step. So do your research carefully before you hire a bookkeeper.

Now you may think you need to hire a CPA to do your bookkeeper’s job but this is usually a serious waste of resources. Mostly, accountants rarely enjoy the work, they can not charge the same rate for bookkeeping as what they would charge you on financial matters which require more expertise, like filing taxes or managing investment funds – what they trained for.

CPAs regularly work with Bookkeepers Bunbury who can fill a daily accounting role for your business at a much lower price. CPAs provide that adequate oversight and counsel and they will have connections to other industry experts such a legal which can provide extra benefits to businesses.

In summary, you should put some time and think about who you choose to be your bookkeeper, and you should not hire anyone that lacks the qualities we’ve mentioned above. Bookkeepers have access to all of your most important and sensitive financial records; therefore, it’s essential that your bookkeeper be somebody you can rely on to be timely, courteous, and trustworthy. While many companies are tempted to hire non certified bookkeepers so that they may save money in the short-term, you will likely avoid many costly blunders by assuring that you hire a fully-licensed bookkeeper. Finally, remember that a bookkeeper is a critical member of your business team; so they should be someone that you can easily communicate with, and a professional that shares the greater vision and goals of the company.

Bookkeepers create order out of chaos. They take all the numbers, receipts, bills and other accounts data that flows through your business. They funnel it all into your accounting software – into the right reports and the right account.

They turn all this data into meaningful financial information. It will all be in the correct place, properly filed and organised. This can be used to give you an immediate view of the health of your business.

A good bookkeeping partner will be with you every step of the way as your business grows. So it pays to take your time and make sure you hire the right one.

Hiring a bookkeeping service to manage your accounting needs can help you identify potential risks and opportunities, in addition to simply ensuring the integrity of your financial data. Even the smallest business owner can often benefit from their help and advice. Unfortunately, not every solution is profitable once put into practice. Protect your business by taking the time to find and hire the right bookkeeping partners.

Get the best out of your business

Bookkeepers offer a vital business service. They save you time by handling all the daily financial work for you and allow you to concentrate on the running of your business. The real-time information they collect can help them offer you new insight into your business.

That's important when you're trying to differentiate your business from your competitors. Real-time information is also vital if you want to make sound business decisions.

As we’ve covered in this guide, a bookkeeper is highly valuable to a small business and can provide more services than just financial recording and compliance. Often a bookkeeper will specialise in a particular industry, so it pays to ask them about this so that they can add even more value. Make sure that you get the best out of your business by hiring a bookkeeper to help you along your journey.

If you simply don’t want to hire a bookkeeper for your small business, you want to do your own bookkeeping, then here is a bookkeeping beginners guide for small business.

Bookkeeping will show you how your small business is travelling. So what does it involve and how do you make it less monotonous.

Bookkeeping and what is it exactly?

Bookkeeping involves recording and classifying all the financial transactions in your business. It’s keeping track of what your business spends and what your business receives.

These tasks used to be managed using books and ledgers, hence the name ‘bookkeeping’. Originally the transactions would be recorded in daybooks, cashbooks, or journals and then transferred to a ledger.

Bookkeeping software has now pretty much replaced the need for physical books.

Why do small businesses need bookkeeping?

An accurate, well-kept set of books is a great start to running a successful business. Here's why:
  • You can check that you’re making more money than you’re spending
  • You’ll have reliable financial information for planning and budgeting decisions
  • You can see if a cash crunch is coming and take steps to avoid it, by watching when you need to pay suppliers, and when you can expect payment from customers
  • You’re more likely to find incorrect payments (or even fraud) that might cost you money
  • You can complete accurate tax returns
  • Having your financial information organised makes it easier for you to work with other parties such as lenders, investors, and accountants

How to do bookkeeping

The two most important tasks in accurate small business bookkeeping are recording and reconciliation. Let's break them down.

Recording every transaction

Record your sales. This was traditionally done by writing them into a cashbook or punching them into a spreadsheet. Business owners are now more likely to download sales data directly into their books from point-of-sale or invoicing software.

Record your transactions. Every business-related purchase needs to be noted. You should also hold onto the proof of purchase if you plan to claim that expense as a tax deduction. Again, you can write these details into a book or spreadsheet. Or you can automate the task so all the debits from your business bank account stream into your bookkeeping software.

You can record income and expenses at different times depending on whether you do cash or accrual accounting.

Reconciling every transaction

Reconciliation involves regularly cross-referencing your business books against your bank statements to check that the transactions and balances match – and identifying the reasons if they don’t. Often bank fees, interest payments, deposits, and payments that haven’t yet hit your bank accounts will need to be accounted for.

You might do bank reconciliation daily, weekly, monthly, or less often, depending on the number of transactions going through your business. However, you will probably be required to reconcile your books before submitting tax returns at the very least.

The sooner you reconcile transactions, the sooner errors can be found and corrected. It’s better to do it often – even daily – so the work doesn’t pile up.

It is easier when you stay on top of things and one of the first things you should learn is how to do a bank reconciliation.

Your bank reconciliation in any accounting software will mean that when you check the amount on your bank reconciliation, this balance is the same as on your bank account. Outstanding deposits and withdrawals with also come into play but a simple bank reconciliation will show your bank account balancing with your software bank reconciliation report.

Other small business bookkeeping duties

If you’re acting as bookkeeper for a small business, you may also be responsible for:
  • accounts receivable (issuing invoices and making sure they’re paid)
  • accounts payable (paying bills on time)
  • payroll (paying employees)

When you are first starting up your new business in your new accounting software then tax invoices need to be ATO compliant. That is, if you are registered for GST and you make a taxable sale of more than $82.50 (including GST), your customers that are registered for GST need a tax invoice from you to claim a credit for the GST in the purchase price. If your customer asks you for a tax invoice you must give them one within 28 days.

There are rules for what a tax invoice must show and this depends on the amount of the sale, the type ie if it has both taxable and non-taxable and who issues the tax invoice.

Your bookkeeper or tax agent can help you decipher all the information which is readily available on the Australian Taxation Office website (this link will take you there) – type in QC 22438 in the search bar of the ATO website.

On their website they will give you information so you can set up your accounting software tax invoices for GST compliancy. It includes:
  • Sales under $1,000,
  • Sales of $1,000 or more,
  • Taxable and non-taxable sales,
  • eInvoicing and digital invoices,
  • Rounding of GST,
  • Agency relationships,
  • Recipient-created tax invoices,
  • GST groups.

Here is an example of a sale under $1,000. There must be enough information that shows:
  1. document is intended to be a tax invoice
  2. seller's identity
  3. seller's ABN or Australia Business Number
  4. date the invoice was issued
  5. brief description of the items sold, including the quantity (if applicable) and the price
  6. GST amount (if any) payable - this can be shown separately or, if the GST amount is exactly one-eleventh of the total price, as a statement which says 'Total price includes GST'
  7. extent to which each sale on the invoice is a taxable sale

Tax Invoice sales under $1,000 ATO

Sales of $1,000 or more should look like the below showing the buyer's identity or ABN:

Tax Invoice sale over $1,000

Professional bookkeepers also provide other services, like helping with financial reports (profit-and-loss, balance sheet, cash flow report), and measuring business performance. Bookkeepers are also often BAS agents and can help file your taxes.

How software can help

Many small businesses use online bookkeeping software to speed up these jobs, and cut down the chances for human data-entry errors. These tools can:
  • pull transaction data straight from point-of-sale (POS) system, invoicing software, and banks
  • dramatically speed up bank reconciliation
  • automatically pay bills
  • send automated invoice reminders to people who owe you money
  • tell you when sales invoices have been paid
  • allow you to check cash flow from your phone

Online “cloud” software will benefit your small business but what is the cloud?

The cloud is where you put all your data, all your files and even your software so you can access it all from any computer or device, anywhere, at any time. See the difference the cloud can make in how you work, bank, communicate, sell and buy.

Traditional banking vs internet banking

It used to be the case that your financial data was only available to you when you were physically at the bank. With internet banking, your financial data is available online in the cloud. You can access it anytime, anywhere and on any device.

Traditional mail vs web mail

Traditionally, your correspondence was only available at the post office. Web mail means that your mail is available whenever you’re online. You can send an email anytime, from anywhere and on any device.

Traditional filing vs cloud storage

Your files used to only be accessible at the office. With online or cloud storage, your files are conveniently available for you whenever you’re online at anytime, from anywhere.

Traditional shopping vs online shopping

When your physical business is only open at limited times and places then customers have a limited time frame to view and buy your products. With online shopping, customers can enjoy the convenience of being able to view products and shop anytime, anywhere and on any device.

Traditional accounting software vs cloud accounting software

With traditional desktop software, your data lives on your computer or laptop. This means it’s only available at limited times and on limited devices – and often to a limited number of people. With cloud software, your data lives online, so it’s always accessible from anywhere at any time if you have an internet connection. Good cloud software will also let an unlimited number of people use it at the same time.

Cloud myth busting

The cloud isn’t all rainbows and sunshine, we’re tackling the tough questions about cloud computing so you can be prepared before moving your small business to the cloud.

Isn’t cloud computing just the internet?

You use the internet to connect your device to the cloud, but the internet is just the connection – the cloud is where your data lives.

Isn’t it possible to lose your data in the cloud?

Your data is actually much safer in the cloud than on your computer. Your computer can be stolen or corrupted quite easily, but cloud companies spend millions on systems and experts to protect your data.

Isn’t the cloud an Apple product?

Apple has a product called iCloud which uses cloud technology, but many other companies provide products in the cloud such as Google, Dropbox and Xero.

Aren’t you stuck if the internet goes down?

These days, the internet is like electricity – it’s very rare for it to go down and when it does you just have to wait a short time for it to be available again. In the meantime, all your data is safe in the cloud.

Isn’t cloud computing just a fad?

The cloud has been around for years and it’s only getting bigger. Internet banking started over 15 years ago. Now the technology is so fast and cheap that it’s being used for everything.

Isn’t cloud computing expensive? 

It’s much cheaper because you only pay for what you use. You’re not paying for endless upgrades, system maintenance, support fees or additional hardware like backup systems.

Don’t I lose control of my data?

You actually have much more control of your data, since you can access, share and work with your info, anywhere, anytime, on any device. You also control who has access – which you can revoke in an instant.

Isn’t the cloud only for tech people?

The cloud is much easier for everyone – you just log in and it works. Imagine: you don’t have to install files, worry about versions, or deal with patches and upgrades. Just log in.

Let the cloud set you free

As you can see, the big benefit of cloud computing is that it lets you get at your data anytime, anywhere. The cloud breaks the chain between your office computer and your business information.

Need access to your business bank account while you're on the move? No problem with the cloud. Want to buy office supplies while you're on the train? It's easy. Need to update your accounts while you're out of the office? Now you can.

With the cloud there's no need to keep all your files and applications on a single computer – no need to worry about backups, theft, data loss, support and upgrades. It's all taken care of by dedicated teams of technical people. You no longer have to worry about what's happening behind the scenes.

The cloud takes the stress out of computing. It lets you use computers, laptops, tablets, smartphones and other devices to access all your business information – seamlessly, securely and in real time. Just log in and go, anytime and anywhere.

If you’re too busy to do the bookkeeping for your small business, then you can find someone to do it for you. Bookkeepers often allow you to choose different service levels depending on your budget. That means you can start out with basic bookkeeping at a modest cost and ladder up to more advanced services as your business grows.

DISCLAIMER: this article is not providing accounting, tax, business or legal advice. It is for information purposes only. Please check with a professional for advice for your business needs and before taking any action in relation to any of the provided content.
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