Bookkeeping: It’s more than JUST numbers

It started with 1+1=2, but as life progressed, so did the complexity of numbers.

Bookkeeping is no different – understanding your basics is crucial.

Are you one of those business owners who fell into the trap of thinking bookkeeping is simple? Like, it’s so easy. How hard can it be? After all, the software uses the bank feeds from the bank and then with the suggestions from AI, is it not a TICK ‘n FLICK when the GREEN button shows? There are a number of business owners who say, ‘It’s simple, it’s automated, and AI is intuitive, but I still believe, you need to use the human brain.’

It would be awesome to take a back seat and rely on AI automation with the advanced functions of the accounting software and roll with the suggestions, however you NEED to understand your numbers as you are liable for them. 

We wouldn’t go on to a sports field game blindfolded and throw the ball.  We would do some research, get advice from someone who has played the game, and get an understanding of the rules.  If we didn’t know the rules and got a score, only to be disqualified, wouldn’t that be disheartening? 

It’s no different in bookkeeping. We need to understand ATO compliance and have a good understanding of the principles of bookkeeping, so we ensure numbers are correctly allocated and processed. 

The Hidden Complexity of Bookkeeping

It’s true, bookkeeping data entry is not as heavy burden as it used to be with software apps that extract basic data saving time in manually typing this information, however it still needs to be reviewed with a good human eye.

Compliance is constantly changing and being updated. The ATO use advanced AI data-matching technology to review the metrics from various government bodies on businesses, so it’s even more important to understand the rules and compliance. 

I’ve seen loads of costly errors—like claiming GST on non-GST items or misallocating transactions to the Balance Sheet when it should have gone on to the Profit and Loss and vice versa.

GOLD NUGGET

Start with mini goals.

1. Understand GST Basics: Know what items are GST-free and ensure transactions are correctly allocated.
2. Review Your Financial Reports: Look for clues, are there transactions sitting where they shouldn’t be?
3. Reconcile Regularly: Make it a habit to match your books to bank statements monthly.

Look out for next month’s blog for another gold nugget.