Tips To Improve Bookkeeping for Small Business Owners

business ownwer, officiency, small business bookkeeping, sole trader

Bookkeeping is an essential part of running a business. Managing finances can be challenging, especially for small business owners. Whether you have been in business for a while or are just starting up, managing your bookkeeping effectively can save time, reduce stress, and support informed decision-making.


In this blog, I will provide tips to help you streamline your bookkeeping, allowing you to focus more on growing your business and less on managing the numbers.

Establish an Effective Bookkeeping System

In my experience, many business owners tend to overlook their bookkeeping, especially when they don’t have efficient processes in place. It is important to establish a good system regardless of your business’s stage to streamline your bookkeeping efforts.

Begin by identifying the specific bookkeeping tasks required for your business. Since each business is different, some tasks will vary. These may start by simply tracking all your business transactions, generating financial reports to understand where your business is at, and lodgement of BAS.

Once you have determined your tasks and their frequency, you can establish processes to ensure nothing is being missed.

By establishing a clear and organised bookkeeping system tailored to your business’s needs, you can effectively manage your finances, stay on top of your obligations, and make informed decisions to drive your business forward.

Download my bookkeeping checklist to help you identify bookkeeping tasks:

Prioritise Your Bookkeeping: Establishing a Consistent Schedule

Setting aside dedicated time for bookkeeping is essential for maintaining the financial health of your business. Depending on the volume of transactions, schedule a regular time in your calendar for this crucial task.

Bookkeeping can be performed daily, weekly, or monthly, depending on the volume of transactions and the complexity of your business. Consistency is key—avoid neglecting your bookkeeping and aim to complete it as frequently as possible.

Avoiding bookkeeping for a while can lead to a daunting backlog of transactions. This can make the task seem too big to handle and increase the chances of making mistakes or forgetting important details and resulting in wasted time and energy.

By prioritising bookkeeping and establishing a regular schedule, you ensure that your financial records remain accurate, up-to-date, and manageable. This proactive approach not only streamlines your bookkeeping process but also enhances the overall efficiency of your business operations.

The Importance of a Separate Business Bank Account

Having a separate bank account for your business from the moment you start it is one step in setting up a good foundation for your business and will allow you to focus on growth rather than daily operations.

If you are a sole trader then it is not a legal requirement to have a dedicated business bank account, but my experience suggests it is a good idea and a good business practice to have a separate bank account no matter how small your business is.


Having a dedicated bank account for your business is essential for maintaining clear and accurate financial records. It simplifies tracking income and expenses, ensuring that personal and business finances remain separate. This separation is crucial for accurate bookkeeping, making tax preparation easier and provides better insights into your business’s financial health, enabling informed decision-making and effective financial management.

When you have a dedicated business bank account, you can link it to your accounting software for automation, efficiency and accuracy. This will save you valuable time and allow you to focus on growing your business.

My top tips for bank account for a sole trader:

  • Issue a visa debit card in a different colour to your personal banking card
  • As a sole trader, the bank account can be personal rather than a business account
  • Bank fees are a deductible business expense

The Importance of Using an Accounting Software

Using an accounting software for your business is a smart way to manage your business’s financials and a smart decision as a business owner, no matter how small your business is.

For a start, it will save you valuable time, and since time is money, you will be saving money as well.

But there are more reasons why:


  • Accessibility and scalability
    Accounting software is often cloud-based, meaning you can access it anywhere, any time. As your business grows, you can easily scale up and upgrade to the next subscription level.
  • Bookkeeping on-the-go
    Most accounting software comes with a mobile app, allowing you to manage your bookkeeping from anywhere. With a mobile app, you will be able to snap receipts and invoices as soon as the purchase is made, ensuring accurate record-keeping and tax compliance. Whether you’re in your car or on the go, you can send quotes or invoices to clients and track mileage effortlessly.
  • Bank account integration
    By linking your business bank accounts and credit cards to the software, you’ll have automated bank feeds. This makes it easier to categorise and reconcile transactions accurately.
  • Collaborations and team access
    Accounting software enables easy collaboration with your bookkeeper, accountant, and tax agent. You can also invite team members to assist with bookkeeping or utilise timesheets for payroll.
  • Cost effective and tax deductible
    While accounting software subscriptions incur a cost, they save you valuable time. The more you use the software, the more efficient you become, ultimately saving you more time to focus on growing your business.
    An added bonus is that the accounting software subscription is part of running a business and therefore is considered as a tax-deductible expense.

Stay On Top of Deadlines: Setting Reminders for Key Dates

As a business owner, particularly if you’re a sole trader, you handle many different tasks, so it’s easy to overlook important due dates. This becomes even more challenging without the support of a dedicated bookkeeper to manage your daily tasks and lodgements. However, meeting lodgement deadlines is crucial to fulfill your legal obligations and avoid penalties.


Key lodgement dates include BAS lodgements, PAYG reporting, superannuation payments, and tax return lodgements. To ensure you never miss a deadline, set up calendar reminders well in advance. This gives you ample time to prepare and lodge your documents accurately and on time.

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Cash Flow Monitoring

As a small business owner, understanding and monitoring your cash flow is essential.

Cash flow refers to the movement of money in and out of your business, including sales, investments, expenses and bills. Keeping a close eye on cash flow ensures you have enough money to cover daily operations, pay your bills on time, and invest in growing your business. Effective cash flow management helps prevent money shortages, allows you to make informed decisions, and gives you a clear picture of your business’s financial health. Without careful monitoring, you risk running out of cash, missing growth opportunities, and jeopardising the success of your business.

Understand Business Expenses

Understanding and effectively managing your business expenses is crucial for your business’s success and profitability. Business expenses can include costs like rent, utilities, payroll, raw materials, and marketing. By keeping track of these expenses, you can make better decisions about budgeting and pricing strategies. Separating your expenses into fixed costs (like rent and salaries) and variable costs (like raw materials and commissions) helps you control your spending. Regularly reviewing your expenses can help you identify where to cut costs or spend more efficiently.


Knowing which expenses count as business expenses and are therefore tax-deductible is important. You want to make sure you don’t miss any legitimate business expenses, but you also need to avoid claiming expenses that aren’t really for your business. So, it’s important to be careful and get it right to save money.

If you are unsure about a specific expense, it is best to consult your tax agent.

Record Keeping for Australian Businesses

In Australia you must keep record of all business expenses, typically in the form of a tax invoice or logbook.

The record needs to contain enough information to allow the ATO to determine the nature or purpose of the transactions. With the minimum information required to provide is date, amount, and description (for example, sale, purchase, wages, rental) and the relevant goods and services tax (GST) information for the transaction, purpose of transaction, and relationships between parties to the transactions, if relevant.


There are 5 rules to record keeping in Australia:

  1. You need to keep all records related to starting, running, changing, and selling or closing your business.
    If your expenses relate to business use and personal use, make sure you have clear documents to show the business portion.
  2. The relevant information in your records must not be changed.
  3. You need to keep most records for 5 years from lodgement date. Payroll records need to be kept for 7 years.
  4. You need to be able to show your records if requested by the ATO.
  5. Your records must be in English or able to be easily converted to English.


You can keep your records either electronically or in hard copy format. Utilising your accounting software allows you to attach relevant source documents to a transaction to meet your obligations. It also allows easy access for your BAS agent and tax agent when reviewing your records or in case of an ATO audit requiring copies of source documents.

Boost Cash Flow with Timely Invoicing and Payments

Managing customer payments efficiently is crucial for the financial health and growth of your business.

Here are key strategies to help you stay on top of sales and ensure timely payments from your customers:

  • Prompt Invoicing
    Timely invoicing is essential. Issue invoices immediately after providing goods or services, including payment terms, due dates, and preferred payment methods. This approach helps to minimise payment delays.
  • Persistent Follow-Up
    Monitor your accounts receivable and promptly follow up on overdue payments. Gentle reminders or courteous phone calls can encourage customers to settle their invoices promptly, maintaining a healthy cash flow. You can utilise your accounting software by setting-up automatic payment reminders for overdue invoices.

  • Convenient Payment Options
    Offer diverse payment options solutions like online payments and credit card processing, to enhance the likelihood of faster payments, strengthening your cash flow.

By implementing these strategies and proactively managing your accounts receivable, you enhance your business’s financial stability and can focus on achieving sustained growth and success.

Unsure how to write an invoice? Read by blog:
Information to Include in An Invoice

Mastering Financial Reports for Business Success

Understanding financial reports is a fundamental skill for business owners for effective business management and financial success. It empowers business owners with the necessary financial insights to make informed decisions, evaluate performance, forecast and fulfill their legal obligations.

Why do business owners need to understand financial reports?

  • Performance evaluation
    Financial reports help business owners understand the business financial position and assess the overall performance and profitability of their business.
  • Facilitate business decision based on accurate data
    Financial reports provide information about the financial health and performance of a business. By analysing these reports, business owners can make informed decisions about resource allocation, pricing strategies, and cost reduction measures. Understanding financial reports allows owners to assess the potential risks and benefits associated with different options and make sound business choices.
  • Financial planning and forecasting
    Financial reports provide historical data that can be used as a basis for financial planning and forecasting. Business owners can analyse revenue trends and cost patterns to develop realistic budgets, set financial goals, and project future performance.
  • Compliance and tax obligations
    Financial reports play a crucial role in fulfilling tax obligations. Business owners need to understand reports to comply with tax regulations, prepare accurate BAS and tax return and make sure they have the funds to pay for BAS and tax.

The importance of Regular Reporting and Analysis

Producing and analysing financial reports regularly is essential for maintaining an accurate and up-to-date understanding of your business’s financial health. Regular reporting allows you to promptly identify and address issues, track progress towards financial goals, and make timely adjustments to your strategies. This continuous monitoring ensures that you are always aware of your business’s performance, enabling you to make proactive decisions that can drive growth and avoid potential financial pitfalls.

The three most important business financial reports

  • Profit & Loss report
    P&L report summarises the business’s revenues, costs, and expenses over a specific period.
  • Balance Sheet
    A balance sheet provides the business’s financial position at a selected point in time. The reports show the business’ assets, liabilities and equity. It is called “balance” sheet because it shows what the business owns (assets), what it owes (liabilities) and the difference is the equity.
  • Cash Flow Statement
    Cash flow statement provides information about the business cash movements.

These reports provide business owners, with a comprehensive understanding of the business’s financial performance and position and play a critical role in decision making.

To learn more about these three financial reports, read my blog:
3 Most Important Business Financial Reports

Planning ahead: Setting Up a Tax and BAS Hold Account

As a sole trader or a partnership in Australia, you generally don’t pay tax throughout the financial year. This can lead to an unpleasant surprise when you lodge your tax return and are faced with a substantial bill. To avoid this situation, it’s essential to plan ahead and set aside funds regularly to cover your tax obligations.


Setting Up a Tax Hold Account

A good rule of thumb is to put aside 30% of your taxable income each month into a separate hold account. This proactive approach ensures that when it’s time to lodge your taxes, you have enough money set aside to cover the bill without financial strain.


Managing GST Obligations

If your business is registered for GST, it’s also wise to manage your GST obligations proactively. Run a GST summary report weekly or monthly and transfer the corresponding amount to your hold account. This helps you accumulate the funds needed to cover your GST obligations when they come due. Alternatively, you can make monthly payments to the ATO, which can cover some or all of your GST obligations, reducing the amount owed when you lodge your BAS.


The Importance of Regular Financial Reporting

This strategy ties into the importance of maintaining up-to-date financial reports. By keeping your bookkeeping current and reviewing your financial reports weekly or at least monthly, you gain a clear picture of your business’s financial position. This includes understanding your upcoming tax and GST obligations, allowing you to set aside the necessary funds proactively.


Regular financial reporting and diligent management of a tax hold account not only help you avoid unexpected tax bills but also ensure you are prepared for your GST obligations. This financial discipline contributes to the overall stability and success of your business. 

The Value of Hiring a Bookkeeper for Your Business

When managing your business’s finances, knowing whether a purchase is deductible or what records you need to keep can be challenging. Hiring a bookkeeper can ensure you meet your obligations to the ATO and avoid costly mistakes. A professional bookkeeper provides valuable expertise, helping you navigate complex issues and maintain accurate financial records.

Even if you prefer handling your own bookkeeping, a bookkeeper’s services can be invaluable for one-off consultations, training, or setting up your accounting system. These professionals offer guidance on best practices, ensuring your financial processes are efficient and compliant with regulations. Their expertise can help you streamline your bookkeeping, saving you time and reducing errors.

I am passionate about helping business owners understand their finances and supporting them in achieving financial health and growth. As a dedicated BAS agent bookkeeper, my goal is to ensure that my clients have balanced books and a clear understanding of their financial situation. It’s crucial to understand the reasoning behind financial processes and not just the technical steps involved. This knowledge empowers you to make informed business decisions and fosters a deeper connection with your financial data.

I provide customised solutions tailored to your specific needs, whether it’s regular financial management or occasional support. I can help set up accounting software, train your team, and offer ongoing support to keep your financials in order. By investing in professional bookkeeping services, you can focus on growing your business while ensuring your financial foundation is solid.


Effective bookkeeping is crucial for small business success. By following the tips outlined in this blog, such as setting up a reliable bookkeeping system and staying on top of deadlines, you can simplify your financial management and focus more on growing your business. Remember, good bookkeeping saves time, reduces stress, and provides valuable insights into your business’s financial health. Prioritise consistency, embrace technology, and consider seeking professional support to optimise your bookkeeping practices and drive business growth.

My top tips

Prioritise Consistent Bookkeeping
Set aside dedicated time on a regular basis to manage your finances, ensuring that your bookkeeping stays up to date and is accurate.

Leverage Technology
Invest in accounting software to streamline your bookkeeping processes, automate tasks, and gain real-time insights into your financial performance.

Seek Professional Support
Consider hiring a bookkeeper or accountant to provide expert guidance. This can save you time and optimise your financial management practices.

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