Bookkeeping Essentials For Dummies – Australia. Veechi Curtis

you’ve worked in a business before (although it’s possible, of course, that you’re a bookkeeper extraordinaire with 30 years’ experience under your belt). All I assume is that you are at least vaguely interested in bookkeeping and the results that the process yields.

Icons Used in This Book

      Throughout this book you find icons in the margins to help you navigate through the text. Here’s what these icons mean:

      

Want to be streets ahead of the competition? Then look for this handy icon.

      

You find this icon next to stuff relating to GST or taxation (ah, such fascinating topics).

      

This icon flags information to do with working online, in the ‘cloud’.

      

Tie a knot in your hankie, pin an egg-timer to your shirt but, whatever you do, don’t forget these little nuggets.

      

This icon points the way to doing your job better, faster and smarter.

      

A pitfall for the unwary. Read these warnings carefully (then you can’t say no-one told you ...).

Where to Go from Here

       Bookkeeping Essentials For Dummies isn’t a gripping novel to be read from cover to cover. This book is designed (all 12 bite-sized chunks) so you can pick it up at any point and just start reading.

      If you’re new to business and trying to set up a bookkeeping system from scratch, I recommend you read Chapters 1 to 3 before doing much else. If you’re trying to figure out how best to organise paperwork and record sales and expenses, then Chapters 4 to 6 are made for you. Chapters 7 to 9 provide a reference for more technical stuff, such as understanding GST, working with payroll and reconciling bank accounts. And finally, Chapters 10 and 11 deal with the topics of financial reports and starting a new financial year, while Chapter 12 provides some guidance about starting your own bookkeeping business.

      

Five Tips for Collecting Money

      • Draw up a credit policy. If you’re charged with chasing money from customers, you want to have a set of rules that outlines the deal for any customer who receives credit. This is called a credit policy and, if such a policy doesn’t yet exist, you may need to prompt the business owners to create this document.

      • Do your homework. Just asking a customer to complete a credit application isn’t enough. Take the time once you receive the application to perform a thorough background check.

      • Don’t waste a moment. When a customer’s account runs overdue, get on the phone straightaway. Start chasing as soon as an account is seven days overdue. The longer you leave a debt before chasing it, the more risk you run of not getting paid.

      • Calculate the cost of debts. Not only does the business risk increased bad debts the longer they wait before chasing money, but slow-paying customers also tie up valuable capital.

      • Keep a dossier. Keep track of every phone call made, every reminder sent and every promise received. Sometimes it takes months, numerous phone calls and many emails or letters before you succeed in getting someone to pay, and if you repeat this process with a lot of debtors, you soon lose track of who promised what.

      

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Chapter 1

      Getting Started

       In This Chapter

      

Choosing accounting software

      

Matching bookkeeping systems to the game in hand

      

Understanding GST, working with payroll and reconciling accounts

      

Settling into a certain mindset

      

Deciding whether you need to get more training

       In some ways, bookkeeping is like cooking up a fine meal. The process of washing and chopping and steaming and frying isn’t much to write home about. What makes everything worthwhile is the outcome: The hot taste in your mouth, the warm feeling in your belly. A good bottle of red simply adds to the fun.

      In the same way, adding up receipts and paying bills isn’t the most exciting activity in the world. What brings the buzz to bookkeeping are the results: An organised office, cash in the bank and a set of financial reports that help a business succeed. After all, without a Profit & Loss report, how does a business know how it’s doing? And without a Balance Sheet, how can business owners gauge their personal worth?

      In this chapter, I explore the qualities of a good bookkeeper: Not just someone who can record transactions accurately, but also someone who cares about the financial statements that they generate. This chapter also considers what kind of training you require in order to become a bookkeeper, and what skills you may need to develop.

Deciding What Software to Use

      Probably the first thing that a bookkeeper (or business owner, if you’re doing your own books) needs to decide is what software to use. In this book, I assume you’re going to use accounting software, as opposed to recording your business transactions in a handwritten ledger or a spreadsheet. I make this assumption because accounting software is significantly more efficient than any other option, and part of my role in writing this book is to help you do your books as easily as possible.

      If you don’t already have accounting software, you will need to decide what product is going to work best for you and your business. Do you want to subscribe to a browser-based system, where you store your accounts in the cloud? Or would you be better advised to work locally on a desktop-based system?

      

I explain the pros and cons of different kinds of accounting software in Chapter 2. However, one tip I do have is this: Whatever software you choose, ensure this software has bank feeds capability. I explain more about bank feeds in Chapters 2 and 5, but put simply, bank feeds are a feature that can save up to 90 per cent of data-entry time, and provide a significant efficiency boost for most businesses.

Designing a System to Fit You

      After you have chosen your accounting software, you’re ready to set up a bookkeeping system that works in harmony with your business. The first step is to customise your accounts list (often also