Bookkeeping software, like Xero, is a convenient way to organise your business records, as it allows you to review your profits and expenses at a glance, and spares you the hassle of sifting through mountains of paper.
However, despite their complex automation capabilities, these programs do not provide a simple ‘do-it-yourself’ method of organising your Business Activity Statement (BAS).
In recent weeks, I have met with many clients who were surprised and frustrated that their chosen bookkeeping program would not make tax-time as straightforward as they had hoped.
Here, I will share my advice about best bookkeeping practices: if your diligent digital reporting is combined with a professional’s expertise, your BAS comes easily indeed!
Paper conservation and related storage woes aside, a digital bookkeeper allows you to easily record, view, and review the innermost workings of your business. If you are a small business owner, this is an excellent way to uphold your legal obligation of maintaining detailed and accurate business records. This, in turn, ensures your business is transparent when under examination by the Australian Tax Office (ATO).
As I tell my clients often: the more detail you can provide, the better. Fortunately, digital bookkeeping programs also make such data collection easy, as you can add new entries even when away from the desk. Many programs come with a companion phone app so you can make important adjustments on the fly.
Additionally, bookkeeping programs allow you to link your bank accounts to your record, which saves you much tedious data entry work. However, this functionality should only be seen as the time-saver it is: much confusion arises from when my clients think they have generated a complete BAS.
While much bookkeeping software bills itself as simple and streamlined ‘do-it-yourself’ generation of your BAS – and in many respects, it can be! – it crucially lacks important taxation knowledge that can only be provided by a trained professional.
As users of the program need to input all of the information themselves, errors are likely to abound, because it is a task that requires an awareness of which expenses are subject to GST.
To avoid these categorical mistakes ahead of tax-day, I recommend booking a meeting with your local accountant for review. The statements generated automatically by the program are certainly useful, but they are only accurate if the data used in the calculation was correct in the first place!
At Chan and Naylor, we have established a rigorous process to scrutinise your data, ensuring that you can be confident in the quality and accuracy of your BAS come tax-time. A trained professional (and not to mention Chartered Accountants!) can spot glaring and potential errors right away.
Digital bookkeeping is a fantastic resource, valuable for both its data-entry convenience and its ability to automate statements. However, without the advice of an industry professional, it should not be used as more than an organisational tool. When you are armed with both, managing your business could not be easier.
If you need assistance with books, contact a Chan & Naylor accountant in your area, and we’ll be more than happy to help.
Aside from our reliable bookkeeping services, have a look at our other accounting and advisory services that we do to help you achieve greater success.
Chan & Naylor Group has nationwide offices in North Sydney, South West Sydney, Sydney, Pymble and Parramatta in New South Wales, Melbourne, Moonee Ponds and Hawthorn in Victoria, Brisbane and Capalaba in Queensland, and East Perth in Western Australia that can assist you with digital bookkeeping as well as any tax enquiry that you may have. Contact us today.