First, the bookkeeper should have at least basic knowledge of your industry.  If your company falls within a specialised industry, such as franchises, restaurants, medicine, sports, etc., there are bookkeeping firms that work with just those industries.  If your company is not as specific, any type of professional bookkeeper should suffice, but should have a basic understanding of what you do.

Next, you should verify that the bookkeeper or bookkeeping services firm you will be using is utilizing the latest technology.  All bookkeeping tasks today should be done through using software such as Peachtree, Quickbooks, MYOB, or other similar systems.  The company or professional should be highly skilled at using these applications.

Then, you should verify that the professional has a firm understanding of the requirements you are seeking for your business.  A good bookkeeper will become a partner of sorts, that will help the business, and provide detailed financial information to assist with the decision making process.  Your books should always be maintained the right way, the first time.

Finally, the bookkeeper you hire should have a great deal of experience working with small businesses.  Errors made on the books of small businesses can be extremely costly, and can even cause a business to fail.  You need to ensure the professional you choose can provide you with evidence that he or she has a successful track record with small businesses, and that references are provided.

When you take the time to locate a firm or independent bookkeeper that meets all of the criteria mentioned above, you will gain great peace of mind.  This person will be there for you with every financial need you may have, and will become a valuable asset to your company.

Books Onsite provides bookkeeping services in Sydney, Melbourne and Brisbane.

Budgeting Reports: A budgeting report is basically a form of a profit and loss statement.  This can show how the business is doing on the whole, as well as how the projections for the quarter stack up when compared to the actual detail.

Company and Financial Reports: There are a number of reports that can be created from basic financial data that has been recorded on the books.  Here you can examine in depth balance sheet details, cash flow, statement of cash flow, vendor expenses, detailed vendor reports, income sorted by customer, income sorted by service or product, profit and loss by job, profit and loss year to date, profit and loss by class, and other profit and loss details that are broken down by specific criteria.

Customer and Receivables Reports: Basic customer and accounts receivable data can also yield a variety of customised reports.  These reports can include account receivable ageing detail, collections reports, customer balance details, outstanding invoices, unbilled costs by job, and customer transaction lists.
Inventory Reports:  Inventory reports can help business owners to track inventory status by item number or by vendor, and also perform inventory valuation.

Custom Reports: In addition to the above mentioned reports, there are also a wide variety of custom bookkeeping reports that can be created as well.  These documents can be extremely beneficial to businesses and can include reports such as payroll details, employee earnings summaries, tax details, worker’s compensation summaries, accounts payable ageing detail, sales by representative details, sales by item number, and vendor balance detail and summaries.

Did you know we do bookkeeping in Melbourne too? Contact us today on 1300 2books

For the most part, the accrual accounting method is the main foundation of GAAP (Generally Accepted Account Principles) and is the most commonly used accounted method by businesses of all sorts and sizes. Businesses who do not have any employees and those who do not deal with inventory typically prefer a cash based system.

Many people believe that a cash based accounting system is much easier to manage because every business transaction in or out of the company is recorded in a ledger, which is quite similar in design to a cheque book register. Every expense is recorded, and every bit of income that is actually received is recorded. As a general rule of thumb this method is acceptable for any business is not a corporation, that does not carry any inventory, and whose average gross income is not more than five million dollars.

Accrual systems, on the other hand, record income that is technically earned, but may not have actually been received. It also records expenses that were incurred whether or not they have actually been paid. This method of accounting is a much better choice for any business that is a corporation or one that projects several million dollars in annual income. Accrual accounting may also be a good option for any smaller company that intends to seek funding from a financial institution, shareholders, or other type of external financing medium.

These types of transactions are typically required to be audited by an independent accountant; therefore an accrual system is mandatory in order to produce the necessary GAAP financial statements.

Even businesses that are suitable to use a cash based accounting system may want to consider setting up their books to use the accrual method. This is because a cash system causes the value of long term assets and liabilities to carry over without identifying their benefit to future terms using depreciation and amortisation. Businesses using a cash system must then keep separate ledgers to track all “non-cash” items such as fixed asset depreciation, receivables, and payables.

Perhaps the biggest difference in the two accounting methods has to do with inventory reporting. When a business uses a cash based method, the whole expense of purchasing inventory is recorded at one time, which may be months or even years away from when a sale is made to produce income. Because this time may be so far away, it is difficult to accurately match the income with the actual cost of the goods sold. This makes it hard for the business to determine if the sale actually resulted in a profit or a loss.

While establishing a cash based accounting system is certainly better than not having any type of bookkeeping system, it is not the best option for a growing company. It is always best to establish a system that will allow you to fully track all of your resources in order to present a clear picture of how well the business is performing on the whole.

Bookkeeping tends to be the one area that most small business owners believe they can handle themselves, even if they have no formal training. In order to make this work, you need to fully understand bookkeeping principles, be extremely organized, and enjoy working with numbers. You must also be able to devote a certain amount of time to keeping accurate records each day, which means you will not be able to perform your official business duties during this time.

While there are a few advantages to keeping your own books, such as being able to keep a close eye on your business finances, and saving a bit of money on the expense of hiring a bookkeeper, the truth is bookkeeping may actually be a waste of your time. Even with the development of business bookkeeping software, the process is still quite time consuming. In some cases it simply does not make sense to keep wasting your valuable time, when you could easily pay someone else to handle this task.

If you have decided to outsource your bookkeeping to a professional, the best way to find a reputable provider is to seek referrals. There are plenty of small bookkeeping businesses in the market today, who specialize in handling the records of other small businesses. Talk to your personal accountant and fellow small business owners. Find out who these people recommend and then meet with your list of choices.

Upon meeting with your prospective bookkeepers, treat them as you would if you were hiring any other type of employee for your business. Ask for a work history, a complete resume, and references. Make sure you take the time to actually verify the references, as it is essential that you hire someone you will be able to trust with your confidential information.

If you are a very small business, and you do not want to add an actual “bookkeeper position” to your payroll, you may be able to pay the professional as a subcontractor or freelancer. This basically means the bookkeeper works for him or herself, and works on a “work for hire” basis, not as an actual employee of your company.

The pay scale for bookkeepers varies a bit, and you can shop around to ask what they charge per hour. Do not automatically sign on with a person offering the cheapest rate; more experienced professionals will cost more, however they come with many more years of valuable experience. This experience can prove quite fruitful for your business and may end up saving you money over the long term.

Always make sure you choose a candidate who you feel comfortable with, as you will be working closely with your bookkeeper. It is perfectly acceptable to take your time with the selection process. In the end, your effort will be well worth the time spent, and you will take a great deal of comfort knowing your records are being managed by an efficient professional, leaving you with plenty of time to focus on what you do best.

We are often asked which version of software is better between myob and quickbooks. It’s difficult to make a straight comparison using the spec sheet put out by either company so I thought I’d list a few of the main differences here. If you can think of any others, please feel free to post a comment:

• Apple Mac- Quickbooks does not have a version that is compatible with the Macintosh OS in Australia
• Inventory- MYOB Enterprise allows multi-location inventory. Quickbooks does not support multi-location inventory.
• Multiple Windows- Quickbooks allows you to have as many windows open as you require within the one data file wheras MYOB is restricted to nine.
• Multiple data files- Myob allows you to work with multiple entities at any one time.
• Year End Procedures- Quickbooks is much more seamless at year end, allowing you to continue working in the prior year after the financial year end.

The Australian economy has achieved incredible growth over the past 10 years. This success has lead to higher wages which, together with increased immigration and and cheaper interest rates has fueled incredible growth to real estate prices throughout Australia.

As any business owner that has attempted to raise finance for their business would know, the first question the bank manager asks is “What property can you provide as security.” Even if you own a business that may be worth more than $1M, the bank manager still likes to have “bricks & mortar” as security. Many of our clients (and myself included) would not have been able to take the risk of starting their own business without having excess equity in their home which they could borrow against.

This is all fine while the economy is booming and property prices are compounding year after year. But what happens now are successive interest rate rises and the sub-prime crises in the US has meant that lenders are being much more selective in who they lend to and the level of interest rates has meant that there just aren’t the number of buyers out there that there was over the last couple of years.

Whether this translates to 10% and 20% falls in property prices as we have seen in the UK and the US over the past 12 months, we will have to wait and see. There is a case that our high level of immigration and lack of new land releases will ensure that our property market will not crash like it has overseas. One thing for certain is that business sentiment and the ability to access credit for small business has taken a hammering and I think it is important for all of our clients to consider how it may effect their business over the next 12-24 months.

We have already noticed some clients taking a bit longer to pay their bills. There is nothing more frustrating than being used as a “bank” and we have required all new clients to agree to monthly direct debits which has been fantastic for our cashflow. You can read further about this at the Books Onsite website.

We have also noticed an increased level of uncertainty. This was particularly obvious immediately after the major stock market corrections earlier in the year. The feedback I get from a lot of clients is that they are holding off on any major investment or recruitment decisions until they have more confidence in which way the economy is going to go.

This general lack of confidence has a flow on effect and some more conservative clients are “battening down the hatches” waiting to see what happens with the US and Chinese economy. This period of slower economic growth may result in tougher employment opportunities. It may also present opportunities as asset values fall for those with access to capital. The key to this period is to keep your leverage levels down and that cash is king.

When I left the corporate world, where you would receive a regular paycheque every pay period, this was the hardest thing to adjust too. It is even more difficult when you have a large payroll and have a commitment to pay regular wages.

The majority of clients appreciate this and as long as you make your payment terms clear in your service agreement, they will pay on or around the due date. However you only need a couple of larger clients to go into 60 or 90 days overdue to place some real pressure on your own situation.

If your business has regular clients with repeat business, a way to alleviate this problem is by getting them to sign a direct debit authority which allow you to debit their bank account or credit card each month for the amount outstanding.

We manage this through a secure third party arrangement so that the client can contact the third party at any time to cancel the arrangement if they choose to terminate their relationship with you for any reason.

The fees are very reasonable – only 99c per transaction, and we have had no problems with new clients agreeing to the arrangement. We make sure we notify the client the day before we process the direct debit so that they can make sure there is cleard funds in the account.

This has been a fantastic way for us to get some regularity in our cashflow and allows us to concentrate on servicing our clients rather than chasing debtors.

This becomes an issue when you receive suppliers invoices relating to the previous month after you have printed off the management reports for that month. There is a happy medium here which must be met. If you close too early, you may be sacrificing accuracy for timeliness and if you close too late, your accounts will be more accurate however, historical information loses its value with time.

Some bookkeepers do not appreciate the importance of a “hard close” at the end of each month. They print out the monthly reports to give to the manager and then if any prior month invoices arrive late, they go and enter those in the previous month without re-running the management reports. This come come as a bit of a shock to the manager when he looks at his year to date profit and loss and finds that the result is different to what he had anticipated. This can cause even bigger problems if the BAS has been lodged on the previous accounts and then they are altered resulting in a BAS that does not correspond to your accounts.
We find a good benchmark for when to close off your monthly accounts is 7 days after the end of the month. Most invoices should be received by then and if they haven’t you can make an accrual to include those costs.

MYOB and Quickbooks are off-the-shelf packages which try to be all things to all businesses. On the whole they do a pretty good job of it and due to theit popularity, there is a whole industry of IT developers that have written add-on products to integrate with your file to provide more comprehensive features where the off-the-shelf software has shortcomings. These add-on products are authorised to integrate with the original files and address such areas as:

- Cashflow forecasting
- Detailed budgets by job
- More comprehensive inventory control (ie. serial number scanning)
- Mobility solutions to enable you to produce invoices remotely direct from your software
- Setup excel reports where the cells read directly from your data file
- Consolidation tools that read multiple company files and perform automatic integration

If you think your company has outgrown MYOB or Quickbooks you should first have a good look at all of the add-on products available. The next step up from these off-the-shelf packages often requires and initial investement of over $10,000 and substantial annual fees wheras most of the add-on packages available are usually less than $1,000.

Like most business owners, I tend to live and breathe my business. I rely heavily on email communication, whether it’s an enquiry about bookkeeping services from a prospective client through our website or an MYOB or Quickbooks query from one of our bookkeepers. I always try to respond to emails within a couple of hours. With new client enquiries, if you leave it too long, they have often found one of our competitors in the meantime. With staff support, if you don’t sort out their issue that day, it may have to wait till the following week to resolve.

It was therefore with some reluctance that I bought a phone with live synchronisation to my email. I had visions of me needing to check my emails every 10 minutes of the day, every day including weekends. Fortunately, this has not been the case.

My new phone has actually given me some freedom from my desk. I previously had to quickly check my emails in the morning before I went out to any meetings. Then when I went out, I’d have to rush back to the office for another email update.  Now I can travel straight to a meeting in the morning and check my emails on the way. If I have a late meeting, I don’t have to rush back to the office as I can check my emails when the meeting ends.

I’ve also found that you don’t need to check your phone every 10 minutes as you get alerts when a new email arrives, so you just check it when you get new mail.

If you’re a business owner and you want some freedom from your desk, I’d highly recommend getting yourself a phone that synchs with your email.