One of the main reasons businesses fail is because there isn't a good bookkeeping system in place that would provide warning signs the business could run out of cash.
You can choose to set up a bookkeeping system manually (using accounting books), electronically (spreadsheets) or use accounting software. Unless you want to get familiar with bookkeeping practices, accounting software is the most efficient choice.
What to consider
Every business will have different requirements from an accounting software. When choosing an accounting software consider the following:
does the system calculate all payroll requirements (PAYE, annual leave, long service leave etc.)
does the system have good invocing, debtors, creditors control, orders, jobs and other task management requirements
will the system be able to handle multiple bank accounts
Is the software to complex or simple for your needs
does the system track separate financial records for each business or department within the business
does the system allow for interface with other computer systems such as online payments
does the system keep detailed records on customers including what they buy, how often they buy, when they buy etc (often referred to as a Customer Relationship Manager system).
There are many software packages on the market that allow business managers to successfully control records without an accounting degree. Some commonly used accounting systems used by small businesses are:
Xero (Our reccommendation, trust us you'll love it!)
If you're unsure which to choose talk to us as your Melton small business adviser.
Setting up a bookkeeping system
When you set up your financial records you need to make sure they meet any compliance requirements such as GST or other tax compliance as well as tell you the information you need and want to know out of your business.
This is done through setting up classifications, also known as a chart of accounts. A chart of accounts is a listing of all the accounts needed to cover the financial transactions of the business. Classifications are used to separate profit and loss calculations to show where a business is making or losing money. It is also used to determine the overall financial position of a business in a balance sheet. At Jeffkins accountancy we have developed chart of accounts to meet the needs of our small business clients thus taking out the complexity of software setup.