Small businesses make up a large quantity of Australian businesses. With a wide array of industries, ideologies, and locations, small businesses play a vital role in the Australian economic puzzle. Also, the competition is fierce as well. It is imperative to allocate the majority of your time towards the growth and development of your business. For doing this, you have to organize the accounting aspects of the business. Being business advisory specialists, we have compiled a list of 8 pieces of accounting advice for small businesses to ensure efficiency and clarity.
1. Remember that cashflow is king – prepare the cash flow forecasting and KPIs
Time and time again the topic of cashflow has been discussed. If there is no cash, we will not be able to pay our creditors, employees, or even ourselves. Our advice is to get a complete financial analysis of your business. Track and understand your expenses and you can set up your goals, align with the KPIs to ensure growth and enough cash to meet your requirements.
2. Create a second account for Superannuation, PAYG Withholding Tax, and GST Obligations
Opening a second bank account for the tax obligations will ensure that you have sufficient funds for the due debts. The best practice is to transfer the payroll obligations immediately into the second account after every pay run for preventing the use of unnecessary funds.
3. Accounting Software – use cloud-based software
When you partner with Ava Advisors, you get the best platform that brings all your clients and their entities in one place. We are the only platform that brings together BGL clients along with entities in CSV, MYOB, and XERO. You will have complete access to all the financial details anywhere your go. This results in a smooth process of tax compliance.
4. Never underestimate the power of Google Reviews
Google reviews are one of the most important sources of reputation. Almost everyone uses Google to assess the quality of a business. The number of reviews and ratings becomes a defining factor for the new clients who are searching for businesses to work with. If you want to see organic growth you have to consider Google reviews seriously.
5. Stay updated with STP
Single Touch Payroll has changed the way payroll is prepared. Thus, you have to stay updated with the changes and make sure that you are always reporting accurately. This will prevent any business audit conducted by the ATO. You have to stay on top of the changes so that you don’t fall behind.
6. Superannuation – Make sure to pay it on time
When you fail in paying the superannuation on time, then you can’t claim it as a tax deduction and you will become liable for the Super Guarantee Charge (SCG). Consequences of this include possible fines, fees/interests along the initial unpaid amount. Whether you are choosing a government superannuation fund or a self-managed superannuation fund, it is of utmost importance that you prioritize paying the superannuation obligations over any other debts like small loans, bank overdrafts, or other debts with flexibility surrounding the repayment.
7. Trade Terms – Improving the Cash Receipt
When you are invoicing for the completed work or service offered but not for receiving the funds in a reasonable timeframe, then it is time to review the trade terms. For instance, if you have a clause of 14 days for a client to pay but they generally pay in 21-28+ days, then you have to ask for a percentage up front for improving the cash flow.
8. Accounting Trends – Stay updated with the latest accounting trends
Stop wasting time on inefficient and outdated software. If the latest software can do payroll in 2 steps and yours can do in 4 steps then you are losing time, which is one of the most important resources. Stay updated with the latest trends and changes within the industry to make sure you are not only saving time but also your financial information/knowledge is in sync with the changing time.
That’s all for now!! Practicing these will help you grow your business and manage the accounting aspects of your business in a much better way.