While some business owners prefer manual record keeping systems, most businesses use an electronic record keeping system – making it easier to capture information, generate reports and meet tax and legal reporting requirements.
Electronic record keeping
Most businesses use accounting software programs to simplify electronic record keeping, and produce meaningful reports. There are many other advantages to using electronic record keeping, as listed below.
Advantages
- Helps you record your business transactions, including income and expenses, payments to workers, and stock and asset details.
- Efficient way to keep financial records and requires less storage space.
- Provides the option of recording a sale when you raise an invoice, not when you receive a cash payment from a client.
- Easy to generate orders, invoices, debtor reports, financial statements, employee pay records, inventory reports.
- Automatically tallies amounts and provides reporting functions.
- Keeps up with the latest tax rates, tax laws and rulings.
- Many accounting programs have facilities to email invoices to clients, orders to suppliers, or BAS returns to the Australian Taxation Office.
- Allows you to back up records and keep them in a safe place in case of fire or theft.
Choosing accounting software
Your business may require more than one software program to meet all of your tax and legal needs, so it’s important to:
- Seek advice from your accountant or financial adviser before purchasing software for record keeping
- Check which accounting software is tax compliant on the Australian Taxation Office website.
- Accountants and bookkeepers give varying levels of thought to this. Some are very good, considerate, and even go through a research phase before recommending any system to a client. They are quite agnostic on software vendors. They ask the right questions of the business owner and also the candidate software vendors to fill knowledge gaps. The decision is an authentic one that supports the business owners business workflow needs which may amount to hundreds or thousands of workflow hours.
- Business accounting systems perform other tasks beyond compliance such as customer management, scheduling, time capture, inventory management, channel management (such as retail, partner and e-tail sales channels). It is also the system acting as a contact list for marketing purposes in many cases. Most importantly in the era of straight through processing from e-commerce or POS into accounting software it facilitates payment tracking in real time.
Electronic backup
Set up a secure electronic backup system to ensure records are safely stored and regularly backed up. Daily backups are recommended, particularly for important records. Make sure the backup copies are stored in a separate location to your business in case of fire, theft or a natural disaster.
For small businesses, the cheapest backup options are CDs and memory sticks. If your business has large amounts of data, external hard drives are a popular backup option.
Cloud backup
Cloud computing provides a way for your business to manage your computing resources and records online. The term has evolved over recent years, and can be used to describe the use of a third party for your storage and computing needs.
Cloud backup services are becoming more popular and can be automated for your convenience, but you should make sure the method you choose protects the privacy and security of your business and customers.