Essentials of financial record keeping

Whether starting up or currently operating a business, it’s essential that complete and accurate financial records are maintained, with the principal reasons being:

  • Financial statements can be produced and taxation requirements processed in a manner which meets legislative requirements; and
  • The financial stability of the business can be analyzed regularly to ensure its ongoing profitability and sustainability.

Financial records are arguably the most critical part of the business and must be set up correctly to capture the required data before the business begins operations. Not all start up business operators have the skills needed to set up their financial records, so it’s recommended that they seek the services of a qualified bookkeeper or accountant.

A skilled bookkeeper, for instance, would assist the business operator to put in place a financial information recording system relevant to the operator’s ability to maintain it.  This could be one of a number of options, including a paper / book based system, a computer based spreadsheet system, or a fully integrated computerized online accounting system.  Whichever method is implemented, and with the business operator ensuring the right information is always recorded or filed, the bookkeeper and accountant would work together with the business operator to ensure both the legislative requirements and business sustainability goals of the business are achieved.

Simply speaking, a bookkeeper will assist in setting up the financial record keeping system and assist the business operator with the ongoing recording of financial transactions.  For example, in a paper or spreadsheet based system, it’s likely that the bookkeeper will enter data such as receipts and invoices into a computerized system.  The bookkeeper could then produce the required financial statements and regular taxation returns, such as calculating GST and preparing quarterly BAS (“business activity statement”) reports for the ATO.

On the other hand, an accountant can analyse the financial data provided by the bookkeeper, compare it with historical records and provide financial advice on improving such aspects of the business as gross margins and profitability.  Other accountant provided services can include taxation advice and planning, business audits, corporate annual reporting and superannuation advice.

In fact, behind a successful business there is almost always an accurate up to date financial data recording and reporting system, a skilled bookkeeper and a professional accountant.

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Media contact:  Lucy Nankervis 0457 286722