Bookkeeping busted: 5 myths australian small business owners need to stop believing
As a small business owner in Australia you wear a lot of hats. You're the CEO, marketing manager, customer service rep and also often the bookkeeper. But in the whirlwind of running a business, it's easy to pick up a few myths about your finances that can lead to big headaches down the track, especially with the ATO.
Let's bust five of the most common bookkeeping myths and get you on the path to financial clarity.
Myth 1: "I’ll just track everything in a spreadsheet"
We've all been there.. a simple spreadsheet seems like a great idea to keep track of your income and expenses. It's free and you feel in control. But here’s the reality check: spreadsheets are prone to manual errors, they don't automatically calculate GST and they can become a massive time suck at BAS time.
The Fact: Modern, ATO-approved accounting software like Xero, MYOB, or QuickBooks is built to automate the tedious stuff. It links directly to your bank account, automatically categorises transactions and calculates GST with a single click. This not only saves you hours but also significantly reduces the risk of making a costly mistake.
Myth 2: "I can do my BAS lodgements myself, it’s easy"
Filling out a Business Activity Statement (BAS) can seem straightforward, but it's often more complex than it appears. Getting it wrong can lead to penalties, audits or missing out on valuable credits.
The Fact: A registered BAS Agent is a qualified professional who is trained and legally authorised to prepare and lodge your BAS on your behalf. Not only do they ensure accuracy but they can also offer you a two week lodgement extension, giving you more time to get your books in order. Their expertise can save you from costly errors and free up your time to focus on your business.
Myth 3: "I can just use my personal account for business expenses"
In the early days, it's tempting to use your personal bank account for business transactions to keep things simple. However, this is one of the quickest ways to create a financial mess and get on the ATO's radar.
The Fact: The ATO requires a clear separation between your business and personal finances for accurate record-keeping. Mixing accounts makes it incredibly difficult to claim all eligible deductions and can create a huge headache during an audit. Setting up a separate business bank account is a simple, non-negotiable step that keeps your finances clean and compliant.
Myth 4: "I only need a bookkeeper at tax time"
If you think of bookkeeping as an annual chore, you're missing out on its greatest benefits. Last minute bookkeeping is a stressful, expensive and reactive approach.
The Fact: Proactive, monthly bookkeeping gives you real-time insights into your business's financial health. You can track cash flow, plan for upcoming tax and super payments and make informed decisions throughout the year. It turns bookkeeping from a burden into a powerful tool for growth.
Myth 5: "I can’t afford a bookkeeper"
This is probably the most common myth of all. The thinking is that hiring a bookkeeper is an unnecessary expense.
The Fact: The real question is, "Can you afford not to have one?" A professional bookkeeper often pays for themselves by saving you time, helping you avoid costly ATO penalties and identifying deductions you might have otherwise missed. They provide peace of mind and the valuable insights needed to run a more profitable business.
Don't let these myths hold you back. Taking control of your bookkeeping is the best way to ensure your business is not just surviving but thriving.
Disclaimer
This information is intended to be general in nature and is not personal financial advice. It does not take into account your objectives, financial situation or needs. Before acting on any information, you should consider the appropriateness of the information provided in relation to your own circumstances.
