When the ATO lists the reasons small businesses end up in trouble, poor record keeping is always near the top, ahead of far more exotic sins. The good news is that the fix is not a full time bookkeeper. It is a ritual.
The fifteen minute ritual
Pick a time you already have, like Friday with your first coffee, and do the same four things every week:
- Reconcile the bank feed. In Xero or similar, match every transaction from the week. Twenty transactions take a few minutes when they are fresh and an hour when they are three months old.
- Snap your receipts. Photograph anything paper into your software's receipt inbox and throw the paper away. A deduction without a record is a deduction you may not get to keep.
- Chase one invoice. Send a reminder for your oldest unpaid invoice. Debtors who hear from you get paid first.
- Glance at cash. Thirty seconds on the bank balance versus what is due for wages, super and the next BAS.
Why weekly and not quarterly
Bank rules and memory decay are real: in week one you know exactly what that hardware store charge was for. In month three it is a mystery, and mysteries become either missed deductions or made up ones. Both cost you money, one now and one at review time.
Fifteen minutes a week is about 13 hours a year. A shoebox handed to your accountant in July costs more than that in fees alone, before you count the deductions that fell through the cracks.