Your Chart of Accounts is not just about GST & Tax
Want to save time and money on running your business as well as having meaningful information to help you make your management decisions? More often than not, the way your accounting system is set up will predict your ability to make good decisions about the future of your business.
Accounting systems like MYOB and QuickBooks are marketed as being easy to set-up yourself and it's prefectly true - you can load them up and away you go.
Your Accounting System is not just to calculate GST & Tax - it's there to give you the information you need to help you manage your business.
What's not so easy - is knowing what information you're going to need to help you make your business decisions so that you set your system up correctly from day one.
Consider this - you've just bought a brand new home entertainment system for $5,000 (probably considerably less than it cost you to start your business) and the saleperson at JB Hi-Fi says 'would you like me to arrange someone to intall and set-up your new system?'
You pause for a moment as you remember back to the last time - the complicated instructions, the wires strewn everywhere and trying to find a joist in the right spot behind the lounge to attach the surround sound speakers to without having to re-arrange the entire room. Not to mention that you've never really been able to understand the menus that flash up everytime you press another 'mystery button' on the remote and you're pretty sure you use to be able to get SBS on your old TV.
You enquire 'how much will it cost?'
To which the salesperson responds 'about $250 if we book it now or you can call someone yourself if you get stuck - but it'll probably cost you about twice that amount to get somone out to fix the problem.'
Basic Set-up Principles: What you Need to Know Now & in the Future
There are 4 areas to set-up:
- Income - shown in your Profit & Loss Report >> Read about Income - Money In
Your sales
- Expenses - as above >> Read more about Expenses - Money Out
Costs of making your sales
- Assets - shown in your Balance Sheet
What you own and what's owed to you
- Liabilities - as above
What you owe
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