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, Business Continuity Planning Software is the most efficient choice. If you’re looking for premium custom software development services, check out https://devsdata.com/. With software being the most efficient choice, it should be the first one to look into and consider. Contact a netsuite erp provider, and brief them on your situation. They might have a couple questions to further narrow down the best service to offer to you. You should ask any questions on anything that might not be clear on the service they provide for you, and determine if it is a route you want to take for your business. As mentioned before this should be the most practical option to get your business up and running but still you might find it doesn’t seem right for you. Consider the following points if you still feel unsure:

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 track stock, work in progress, orders, jobs and other task management requirements
• will the system be able to handle multiple bank accounts
• does the system need to handle foreign currency
• 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).

Software options

There are many software packages on the market that allow business managers to successfully control records without an accounting degree.  Some of them, such as Free Accounting Software, have no cost. Some commonly used accounting systems used by small businesses are:

• MYOB
• Quicken (Reckon)
• Sage
• Xero – online
• Cashflow manager
• Nominal
• Saas – online

Getting advice

If you’re unsure which to choose talk to your accountant or business adviser. It’s worth checking to make sure the package has Standard Business Reporting forms needed to report to the ATO such as BAS statements.

It’s also a good idea to ask other business owners what they use. If you don’t know any, consider joining some Facebook or LinkedIn groups.

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.

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. Any recurring payments should be handle accordingly as well.

How to set up a chart of accounts

When setting up a chart of accounts you will need to:

1. define the various accounts to be used in the business, such as different classes of assets, liabilities, expenses and sales revenue
2. make a list of all of these under the financial classifications as noted above – that is each different type of account for assets, liabilities, sales revenue and expenses
3. it can be useful to allocate a numbering system for each account within the chart of accounts, such as all asset accounts will have been classified under the 1000 number and all liability accounts will be classified under the 2000 number etc
4. allocate various sub accounts under these main accounts
5. depending on the level of information you need, determine if each sub account needs sub accounts.

The chart of accounts is very important to the overall effectiveness and accuracy of your bookkeeping, so if you don’t feel you understand it enough, then you should discuss with your bookkeeper or accountant before you set up your bookkeeping records.

Your bookkeeper or accountant can help you set up a meaningful chart of accounts if you don’t think you can do this yourself.

Example chart of accounts (DOCX 38.47 KB)

Accounting packages have predefined chart of accounts which you can allocate to your own financial transactions.

Business Wise

The team at Business Wise don't just do bookkeeping and accounting - we believe that successful businesses are those that are informed, proactive and open to change, and we want to help you on your journey to success.