Setting Up Bookkeeping for a New Business From Day One

Most new business owners don’t think about bookkeeping until there’s a problem — a BAS deadline creeping up, a bank balance that doesn’t match what the invoicing software says, or an accountant asking for records that don’t exist yet. Setting up your bookkeeping properly from day one avoids most of this, and it doesn’t take long to get right.

1. Build a chart of accounts that matches your business

The default chart of accounts in Xero or MYOB is a generic starting point, not a finished product. A chart built for retail — with cost of goods sold, inventory and stock accounts — will only confuse the reporting of a service business, and vice versa. Spend an hour early on making sure your account list actually reflects how your business earns and spends money, not what the software assumed by default.

2. Connect your bank feeds and reconcile from week one

It’s tempting to let transactions build up while you’re focused on getting the business off the ground, but reconciling weekly from the start is far easier than trying to make sense of three months of bank feed transactions later. It also means you always know your real cash position, not just what’s sitting in the bank.

3. Decide how you’ll record income before the invoices start

Will you invoice through your accounting software, a separate job management tool, or both? Deciding this early — and making sure whatever system you invoice from actually talks to your bookkeeping software — saves a lot of manual re-entry and double-handling down the track.

4. Get your GST registration timing right

Once your turnover is likely to exceed $75,000 in a year (or immediately if you’re a ride-share or taxi driver), you’re required to register for GST. Getting the timing right, and coding transactions correctly from your registration date, avoids a messy back-dated clean-up later.

5. Keep owner and business transactions separate from day one

Paying a personal expense from the business account, or the other way around, is one of the fastest ways to make your books hard to trust. A separate business bank account and card from the very start makes reconciliation faster and your financial reports actually meaningful.

Setting your business up properly, from the start

Getting these basics right early means every BAS period, every loan application and every conversation with your accountant is easier from here on. If you’re starting a new business and want your books set up properly rather than working it out as you go, our startup bookkeeping support is built exactly for this. Book a free consultation and we’ll help you start on the right foot.

If you’d like help with this in your own business, take a look at our Startup Bookkeeping service, or get in touch for a chat.