1. Keep track of all your business transactions: It is essential to record every financial transaction accurately. This includes income, expenses, inventory purchases, and any other monetary exchanges within your business.

2. Separate personal and business finances: Open a separate bank account for your business and avoid mixing personal and business expenses. This will make it easier to track and reconcile your business finances.

3. Use accounting software: Consider using accounting software like Xero. These platforms can help automate and streamline your bookkeeping processes, making it easier to track and manage your business finances.

4. Keep receipts and invoices organised: Save and organise all receipts and invoices related to your business expenses. This will help during tax season and also provide an accurate record of your expenditures.

5. Set regular bookkeeping schedules: Establish a routine for bookkeeping tasks and stick to it. This can be weekly, bi-weekly, or monthly, depending on the volume of transactions in your business. Consistency is key to maintaining accurate and up-to-date records.

6. Stay on top of tax obligations: Familiarise yourself with the tax obligations of your business and stay current with filing deadlines. Consider consulting with a tax professional or accountant to ensure compliance and maximise potential deductions.

7. Reconcile bank statements: Regularly compare your bank statements with your accounting records to identify any discrepancies. Reconciliation helps identify errors, fraudulent activities, and ensures the accuracy of your financial statements.

8. Back up your data: Store your financial records and data securely, either digitally or physically. Regularly back up your files to minimise the risk of data loss due to accidents or technological issues.

9. Seek professional help if needed: If you are unsure about bookkeeping or lack the time to manage it effectively, consider outsourcing bookkeeping tasks to a professional accountant or bookkeeper. This can save you time and ensure that your financial records are accurate.

10. Educate yourself: Familiarise yourself with basic bookkeeping principles and practices. Attend workshops, take online courses, or read books on small business accounting to improve your understanding and make informed financial decisions.

Do you know what records you need to keep to satisfy your tax obligations?

Income and sales records, along with expense, purchase, year-end and banking records, must be kept by all businesses, according to the Australian Tax Office (ATO).

In addition, some businesses may need to keep other records relating to areas such as the Goods and Services Tax (GST), fuel tax, employees and contractors.

Also, your records need to:

• Be in writing, which can include electronic as well as paper
• Explain all transactions
• Be in English or be easily converted to English
• Be kept for five years (or longer for some records)

Keeping electronic records can make some tasks easier and your bookkeeper can advise you on a system that is easy to understand and operate.

To check if your record-keeping is up to scratch, use the ATO’s free, five-to-10-minute record-keeping evaluation tool to answer a series of questions that will produce a report on how well you are keeping business records.

Also, you can learn more by watching the ATO’s video titled Record keeping: Tax basics for small business or by registering for a free, small business webinar that provides an introduction to business records.

During the live online seminar, an experienced tax officer presents the information and participants can ask questions to help apply the knowledge to their particular situation.

The ATO website is a great resource for learning about a wide range of tax matters including contractors, employees, superannuation and GST.

Find out general business information, watch ATO TV or sign up for a free webinar.

If you have any questions, don’t hesitate to reach out.

Are your cyber security practices as good as they need to be with the current heightened levels of malicious cyber activity?

Cybercrime cost small businesses an average of more than $39,000 per cybercrime report, according to the Australian Cyber Security Centre (ACSC) July 2021-June 2022 Annual Cyber Threat Report.

For medium-sized businesses, the average cost rose to $88,000 per cybercrime report.

That was an average increase across all businesses of 14 per cent, compared with the previous financial year.

To help small and medium businesses prepare for a cyber incident, as well as assess and improve their cyber security, the ACSC launched a free online tool called Exercise in a Box.

Business owners could discuss their responses to a range of scenarios including ransomware attacks delivered by phishing emails, threatened leaks of sensitive data and third-party software compromises.

The ACSC said the all-in-one platform included everything business owners needed to plan, set up and deliver exercises in their organisations.

Stephanie Crowe, the ACSC first assistant director-general cyber security resilience, said it was important to do the work to remain secure online before an incident occurred.

“This fantastic tool allows you to practice your response to a cyber incident, whether it’s a data breach, ransomware attack or a compromised system in a safe environment, at a time that works for you, your staff and your business,” she said.

“Exercise in a box works by taking a small group of your key staff through a series of structured questions relating to an area of cyber security.

“By completing the exercises, you will understand the risks your organisation is currently exposed to and what you can do about it.

“Each exercise concludes with a report that offers practical guidance on improving the cyber security of your organisation.”

The ACSC said Exercise in a Box would keep evolving to ensure it stayed current, relevant and engaging.

1. You MUST obtain an ABN (Australian business number).

The ONLY place that you should obtain your ABN is from the ABR (Australian Business Register) website. It is free to obtain an ABN, however, be warned there are plenty of websites offering ABN setup services for a fee. As a sole trader, you can only ever have one ABN.

2. You should register a business name.

As a sole trader, you can simply link your ABN to your own name (as your trading name). Having said this, we always recommend that you register a business name. 

3. You should register a business bank account.

Though this is not legally required, it will certainly make things clearer and easier for your record-keeping. 

4. You should develop a clear, simple, and effective bookkeeping system. 

If your business is small and simple with very few transactions, then a manual system of storing receipts and maintaining an excel schedule may well be all that you’ll need.

In most cases, it is best to be as prepared as possible and have an online bookkeeping system set up.

5. As a sole trader, you do not technically pay yourself a wage.

You are free to transfer cash between your business and personal bank accounts as you wish, and these transfers are simply recorded within your bookkeeping software as “transfers” (i.e. they are not an income nor an expense). Tax is payable on any net profits that your sole trader business makes during the financial year at your marginal rate of tax.

6. As a sole trader, you and your business are considered one and the same.

What this means is that your business is NOT a separate legal entity to you. You’ll have one tax return each year – your personal tax return. A sole trader is different from an alternative business structure such as a company, trust, or partnership – each of which requires its own separate tax return and from which funds are distributed to you personally in different ways.

7. You cannot generally offset sole trader losses against other taxable income (e.g., employment income) to improve your tax outcome.

What you can do, however, is carry forward any business losses to future income years, during which these can be offset against net profits to reduce any tax payable in a future year.

8. When your turnover exceeds A$75K within the financial year (or you expect that it will), you are required to register for GST.

Once registered, you will need to charge an additional 10% to your clients, show this on your invoices and retain this to pay the ATO through a business activity statement (BAS) every quarter (most common), or month. 

9. A sole trader is the simplest Australian business structure.

It is cheap and easy to set up and if you use the services of an accountant, you are only paying for one tax return each year (your personal tax return). A sole trader is best when your business activity is simple, risk-free, and small. There are many cases in which a new business owner will begin as a sole trader but eventually change to a company, trust, or partnership structure depending on the situation.

10. You should engage a skilled accountant and bookkeeper.

It is important that you ensure that the tax specialist you have engaged to assist you is an Australian registered tax agent. You should also be looking to check that your accountant is registered as a CPA, CA, or IPA and ideally, well-versed in using Xero. 

If you don’t enjoy bookkeeping, we strongly advise that you make use of Bookkeeping service (like ours!) which will enable you to focus on growing your business while the financial side of your business along with ATO obligations are taken care of. Incorrect bookkeeping over long periods of time can ultimately result in surprise tax and GST bills.