How Tradies Can DIY Bookkeeping: The Right Way

Tradies Australia wide DIY bookkeeping and have for years. Running a trade business comes with plenty of responsibilities, from managing projects to ensuring customer satisfaction. Amidst all these tasks, bookkeeping often takes a backseat. However, it’s crucial for tradies to maintain accurate financial records to understand their business’s health, make informed decisions, and meet legal obligations. While hiring a professional bookkeeper is an option (hey, we are happy to help!) many tradies prefer a hands-on approach to their finances or have a family member/ partner do the books for them- which is 110% OK, as long as you know what you are doing.

Why Tradies Can Easily Handle Bookkeeping Themselves

Traditionally, many small businesses, including trades, outsource their bookkeeping to professionals. However, as technology advances and user-friendly accounting software becomes widely available, many tradies are opting to manage their finances themselves. Here’s why:

Cost-Effective:

Hiring a professional bookkeeper can be expensive, especially for small businesses with tight budgets. Handling bookkeeping yourself can save a significant amount of money. This is very much an individual preference.

Control and Understanding:

When you do your own bookkeeping, you have a deeper understanding of your business’s financial health. You can track expenses, monitor cash flow, and spot potential issues more effectively.

Timeliness:

DIY bookkeeping allows you to update your records as transactions occur, ensuring that your financial data is always up-to-date. This timeliness can be crucial for making informed decisions promptly.

The Right Way to DIY Bookkeeping for Tradies

While managing your own bookkeeping offers several benefits, it’s essential to do it correctly to avoid errors and compliance issues. Here’s a basic step-by-step guide to help you handle your bookkeeping effectively:

1. Choose the Right Accounting Software

Selecting the right accounting software is crucial for seamless bookkeeping. Look for software that suits your business’s needs, offers user-friendly interfaces, and provides essential features like invoicing, expense tracking, and reporting. We love Xero and MYOB.

2. Set Up Your Accounts

Once you’ve chosen your accounting software, set up your accounts properly. Create separate accounts for different types of expenses, income, assets, and liabilities. This organisation will make it easier to track transactions and generate accurate financial reports.

3. Record Transactions Regularly

Consistency is key to effective bookkeeping. Record all transactions promptly, including invoices issued, payments received, expenses incurred, and purchases made. Use software features like bank feeds to reconcile your accounts regularly, ensuring that your records match your actual bank balances. Don’t forget receipt apps to be able to quickly snap and save all your receipts.

4. Categorise Transactions Correctly

Ensure that you categorise each transaction correctly to maintain accurate financial records. Misclassified transactions can distort your financial reports and make it challenging to analyse your business’s performance accurately.

5. Track GST and Tax

If your business is registered for GST (Goods and Services Tax, ensure that you track and report these obligations accurately. Many accounting software solutions offer features to handle GST calculations and reporting, simplifying the process.

6. Reconcile Your Accounts Monthly

Reconciling your accounts monthly is essential to identify and rectify any discrepancies between your records and your bank statements. This process ensures the accuracy of your financial data and helps prevent errors or fraud.

7. Seek Professional Advice When Needed

While you’re handling your bookkeeping yourself, it’s essential to recognise when you need professional assistance. Consult with accountants or financial advisors for guidance on complex transactions, tax planning, or any other financial matters beyond your expertise. We are happy to offer 1:1 support as a once off to help with any bookkeeping questions you may have.

DIY bookkeeping can be a viable option for tradies, offering cost-effectiveness, control, and a deeper understanding of their business finances. By following the right steps and using the appropriate tools, tradies can efficiently manage their bookkeeping tasks while focusing on growing their businesses. Remember, accuracy and compliance are paramount, so take the time to learn and implement proper bookkeeping practices. We offer a very thorough yet easy to understand course for small business owners wanting to learn the systems and how to best utilise them. You can view the course by clicking on the image below.