Bookkeeping

Are you interested in becoming a bookkeeper but have no experience?

For entrepreneurs, coming up with an idea and starting a new business can happen with a blink of an eye. The challenge comes when money starts heading out the door for expenses such as office rent, internet costs, paying employees or contractors, when revenue starts coming in the door and staying up to date and compliant with the ATO.

A very small business may get away with living off spreadsheets or free online accounting tools to get you by but from my experience working with a number of startups, there are some very clear differences between the businesses that fail and the ones that get past year one.

Setting up your business is exciting and challenging, and will hopefully bring you the rewards you deserve, along with the autonomy you dream of. However, if your business is going to be profitable, it’s vital that you get the accounts right. That starts with making sure you set up the books correctly.

What are some of the basic tips to bookkeeping?

Educate yourself on bookkeeping

If you are going to do it yourself, then educate yourself. Find a bookkeeping course or pay for some training from people who know what they are doing. Know what bookkeeping is about. 

Bookkeeping is the process of organising, recording and reporting on the financial transactions of your business. This involves several different processes:

  • Keeping track of daily transactions.
  • Sending out invoices and managing accounts receivable, including chasing late payments.
  • Managing accounts payable, including payment of supplier invoices, expenses and petty cash.
  • Maintaining the balance of income to expenses, to make sure the business doesn’t run out of day-to-day money.
  • Making sure the books are valid and up to date whenever the accountant needs them.

Good bookkeeping will keep your business running smoothly day to day and will make your accountant’s job a lot easier.

Get the right software

Find the right online accounting software program. It can only cost as little as $29 per month to have a complete accounting package that can do all your invoicing, tracking expenses, attaching important files like receipts and BAS preparation.

Choose accounting software that best suits the needs of your business and has all of the features you require. You may need to experiment with various products and/or ask your accounting professional for their advice. Don’t just choose the first one that lands in your lap and/or promises every bell and whistle under the sun – make sure the product does what you need it to do in terms of your business.

Prepare your BAS correctly 

Prepare your BAS correctly. This will save you time and money. Don’t take it for granted that your revenue and expenses have the right tax code associated with each transaction.

If your accounting software allows it, run some detailed general ledger reports to make sure everything is in the right place before lodging with the ATO and setup matching rules when importing your bank transactions to save yourself time.

In Australia, the recognised statutory term for a Certified Bookkeeper is a registered BAS Agent.

Set aside time to review your accounts regularly 

Set aside one day/morning every week to do your bookkeeping. Doing the job regularly helps keep the task manageable and allows you to catch anomalies like unpaid bills, slow-paying customers etc. Find time each month to sit and review your profit & loss reports, balance sheet, and cash flow. A great way to keep on top of how you are performing, and it will also highlight issues in your bookkeeping that you can have someone fix straight away.

Reconcile to the bank account every month. You need to ensure that the bank balance in your bookkeeping system matches that of the actual bank statement. This process is extremely important as not only does it make for accurate record-keeping, but it also ensures that all mistakes are ironed out regularly. Also, don’t rely on bank feeds as your sole method of bank reconciliation as they aren’t 100% reliable. Always perform a bank reconciliation to the actual bank statement at least once a month.

Engage a good accountant to help set up your business properly from the start. 

S/he will assist with aspects like business structure, obtaining an ABN, GST registration (if required), payroll set up, lodgements for BAS and tax etc. Visit your accountant regularly – don’t wait until the end of the financial year to obtain advice; visits at the end of the quarter are much more valuable as you can catch issues as they happen and avoid nasty surprises down the track.

Set your chart of accounts up correctly. Have a chat with your accountant if you have one. You will be charged by your accountant at years end to make changes if you just go with what you think is best.

Separate personal and business finances. Never ever use the same bank account for personal and business transactions. If you do, your bookkeeping will become very messy and difficult to navigate. Bookkeeping and/or accounting fees will probably double as it will take your accounting professional so much longer to process your accounts in this scenario. Always open a business bank account for your business and keep personal savings accounts and credit cards etc. for personal spending.

Use Receipt Bank or a similar app for your record keeping. 

The ATO requires that all data be kept for a minimum of 5 years (or sometimes longer). Five years of data can really add up over time and could mean that you end up with boxes and boxes of files to store somewhere. Moving your data online to an app like Receipt Bank is a much better idea. Not only will you save on storage space, but you will also save on data entry time as apps like Receipt Bank do most of the hard work for you!

Go paperless. 

Related to the point above, we believe in going paperless in terms of bookkeeping and record-keeping. Again, you save heaps of physical space in your office, but you’ll also end up with an online filing cabinet that is super easy to search and is available to you everywhere and on every device. We recommend storage apps like Google Drive and Dropbox for this task.

Don’t over categorise. 

During the process of bookkeeping, don’t get caught up with too many details, e.g. categorise staplers, printer ink, coffee all under “office items” – no need to create separate accounts for each item etc. At the same time, don’t under-categorise. Lumping all sorts of expenses into accounts called “general”, “sundry” and/or “miscellaneous” makes for all sorts of issues for your accountant. It will not allow you to produce accurate or useful business reports.

Record all business expenses.

Record all business expenses, even those not paid via the business bank account, e.g. paying for postage with cash. Record them against your drawings account (for sole traders) or loan account (for companies or other). Remember – every expense must be recorded if you want that tax deduction!

Record deposits correctly. 

If you accidentally record things like loan repayments, personal cash injections and bank transfers as income, your overall income will be overstated. As such, you may end up paying extra tax by mistake.

Pay bills on time.

Not doing so will affect your business reputation and credit rating. Make this task part of your weekly bookkeeping session.

Set also aside funds to pay tax. Paying taxes and or employee super is an inevitable part of running a business. It’s easy to drift along running your business without budgeting for these costs, and then when they are due, you end up in a mad panic because you haven’t got the funds to pay the liabilities. A better plan is to open another bank account and regularly transfer funds across to it from the business account. Saving for these types of payments is a far better option and assists with cash flow.

What qualifications are needed to become a certified bookkeeper in Australia and provide bookkeeping services to clients? 

Becoming a bookkeeper is a relatively straightforward process, and the qualification needed to be a bookkeeper (FNS40217 – Certificate IV in Accounting and Bookkeeping can be completed in 6 months (Full-time study). Some people get their first bookkeeping role with a high school qualification, then learn everything else on the job. But it certainly helps to get further education. A degree isn’t required. Most bookkeeping qualifications are at diploma or certificate level.

Steps to Become a Certified Bookkeeper

Structure

  • Decide on business identity and trading name (may trade under your name initially) – Prepare a Business Plan
  • Register a Business Name – Register on ASIC
  • Register for an ABN and GST – ABN Essentials, Register for GST
  • Consider a corporate structure (Company either with or without a discretionary trust)
  • Understand and consider the ATO view on starting a new business – ATO checklist for new business
  • Understand and consider the ATO GST Checklist for Small Business – ATO GST Checklist for Small Business
  • Decide on your charging policy (Result based or time-based) – Charge Rate Calculators

Education

  • Do some initial reading – Bookkeeping for Dummies, Bookkeeping education reference material
  • Decide on which software platform(s) you will use and know – MYOB, Xero, Reckon, Saasu
  • Obtain some initial training from the software companies (see above)
  • Obtain your Certificate IV in Bookkeeping (including the BAS Agent skill set)
  • Obtain ICB Student Membership (ICB Student Membership) – provided by your ICB Certificate IV Accredited Training Provider or RTO – ICB Accredited Training Providers
  • Be certified by ICB through ICB’s Practical Bookkeeping Assessments

Bookkept

Commencing Business (May Occur While the Above Takes Place)

  • Register your business (see above)
  • Obtain Professional Indemnity (PI) Insurance
  • Apply for ICB Membership at the appropriate level – ICB Membership levels explained, Apply online for ICB Membership
  • Following obtaining at least 1 years bookkeeping experience, obtain a Practising Certificate from ICB
  • If you are providing a BAS service, then you must register as a BAS Agent – What is a BAS Service, What can a bookkeeper do? What can a BAS Agent do?
  • Understand and consider the “How to Engage with a Client” from ICB

Continuing to be Certified

  • Maintain the above registrations and insurance
  • Undertake the required CPE (Continuing Professional Education) each year
  • Undertake the ICB Annual Skill Review assessment

How do you become a certified bookkeeper if you’re working full time or part-time? 

Depending on whether you plan on undertaking this Cert IV course at a TAFE or a Registered Training Organisation (RTO), part-time, online and accelerated learning options are also available. VET Student Loans are no longer available for the accredited bookkeeping courses Cert IV and below, though you may be eligible for Austudy or a Pensioner Education Supplement. Please note that this course doesn’t qualify you as a BAS Agent. To become a Registered BAS Agent, you’ll need to engage in Continued Professional Education (CPE) in bookkeeping (1400 hours of relevant experience) and undertake a formal application process through the TPB. The Australian Bookkeepers Network has a special service called ABN BAS that can assist new bookkeepers gain their hours of relevant experience by acting as their supervising agents. This professional development for bookkeepers can be reduced to 1000 hours for Australian Bookkeepers Association (ABA) members. As an ABN member, you will receive complimentary membership with ABA.

How do you become a bookkeeper from home?

Bookkeeping from home is an option.

With a firm foundation of knowledge, skills and experience, you’re ready to take the next steps in setting up your own bookkeeping business. And for many, those steps might not even take you past your front door.

Pros

  • Lower costs – no office space rent to pay.
  • Deliver more value – you can pass savings on to clients.
  • Maximise your time – there will be far less commuting.
  • Enjoy tax breaks – claim deduction on rent or mortgage.
  • Have more flexibility – it can help juggle work and family.

 

Cons

  • You lose a room – home businesses require a dedicated space.
  • Boundaries can be hard to keep – kids and pets may invade your office.
  • Meetings are not easy – it’s not as simple to host a client meeting.
  • You may go stir crazy – it’s the same four walls, day and night.
  • You may never switch off – it’s easy to work all the time.

 

What you need to do it

Just as with any other profession, it’s the internet which makes it possible for bookkeepers to work from home. You can serve clients using just a few online tools.

  • Video conferencing – so you can have face-to-face meetings even if you’re miles apart.
  • Mobile – because not all clients are online all of the time.
  • Laptop – it’s nice to have a computer that you can easily take to a client meeting. 
  • A second screen – it really helps productivity when you’re in the office.
  • Online bookkeeping software – which allows you to work on the accounts from anywhere.

How an online ledger works

An online ledger allows you to look at and work on a client’s accounts over the internet. The business books live online, and you login from wherever you happen to be. You can both log in at the same time if you like.

It means there’s one source of truth that’s instantly accessible to anyone who’s been granted permission.

Getting the data onto the ledger

Of course, an online ledger is only part of the solution. You need to get the data into it without constant visits to or from the client. There are software solutions for that too. You can link accounting software to other business systems, so it automatically retrieves sales and expense data.

Taking advantage of home-based bookkeeping

Not only do online systems give you the power to work from home, but they also cut back on a ton of costs. You skip the expense of commercial office space, and you knock out hours of data entry. That means you can deliver services at a fraction of what your competitors do. You could hand some of those savings onto your client and still grow your margin.

What challenges will you experience in bookkeeping?

Here are some of the most common challenges small business owners face with bookkeeping:

  • Not invoicing your customers correctly or on time leading to lost income and poor customer experience.
  • Losing important receipts or not allocating then to the correct expense accounts, which could mean paying too much tax or not being able to justify the expense to the tax department.
  • Incorrect preparation of your BAS. You will pay either too much or too little to the ATO. Both will result in you being out of pocket somewhere down the line.
  • Wasted time being spent by yourself or an employee on record keeping, data entry mistakes and liaising with external groups like the ATO. Surely, your time is more valuable doing other things like selling your products or services.
  • Unable to correctly reconcile business loan accounts. Very costly when your accountant needs to come in and determine what is right or wrong or worst case you are audited.
  • Money down the drain when an external bookkeeper or accountant needs to fix up your mistakes when it could have been down correctly the first time.

 

Setting up your business is exciting and challenging, and will hopefully bring you the rewards you deserve, along with the autonomy you dream of. However, if your business is going to be profitable, it’s vital that you get the accounts right. That starts with making sure you set up the books correctly.

 

Scroll to Top

Learn how we've helped businesses just like yours