We all know that bookkeeping is essential to the financial management of any business. We also know that financial mismanagement is one of the leading reasons small to medium Australian businesses fail in the first five years. Between the ATO crackdowns on cash-in-hand work and trying to remember what you can and can't claim as an expense, bookkeeping for tradies is tough business.
Many small business owners jump into doing their own bookkeeping, believing that outsourcing is a financial luxury reserved for larger companies. True, your trade business may not be able to afford an in-house accountant, but there are many bookkeeping solutions for tradies that can keep you up to date with your finances without spending hours stuck behind a desk.
Why Should Tradies Do Bookkeeping?
Tradies are among the most physically hard-working people around. After a day in the field, we don't imagine you're excited about getting stuck into balancing your finances. It can be hard to focus your energy on dealing with finances and tax. Do you know what you can and can't claim? Are you on top of your invoices, both incoming and outgoing? Is your business losing money, but you can't work out where it's leaking from? If so, you need to implement a system, one that makes bookkeeping for tradies simple and efficient.
Solutions For Tradie Bookkeeping
For tradies, the right bookkeeping solution should be efficient, effective, and, most importantly, reduce your admin time to the minimum. Let's explore your options.
By far, the most popular solution to bookkeeping for tradies is bookkeeping software. Bookkeeping software hits the sweet spot where you do most of the work yourself (and are, therefore, on top of your finances), but systems are in place to ensure everything is done when and how it should be. Whether you're keeping an eye on accounts payable, asset management, or cashflow, the software allows you to have all the information at your fingertips. Bookkeeping software can, among other things:
- Manage and record your day-to-day financial transactions
- Keep track of fixed assets, expenses, and revenue
- Keep track of invoices, both incoming and outgoing
- Provide the necessary reports needed come tax time.
Depending on which bookkeeping software you choose for your business, you can also use the software to produce balance sheets, cash flow statements, and quarterly and annual financial statements.
Pen And Paper
Pick up an old-fashioned pen and paper! And why not? It's the way accounting was done for centuries. Keeping track of your finances by hand means you'll have a firm grip on your finances as there is no automation - nothing is in place to remind you to pay your bills or follow up on any outstanding payments. If you've got the memory of an elephant, you’ll likely have no issues running your books with traditional methods. But if you've ever gotten around to tax time and had your accountant calling you in search of outstanding payments from eight months ago, you may be using the wrong bookkeeping solution for your business.
Pen-and-paper bookkeeping for tradies often means spending twice as much time on your finances and admin compared to your more tech-savvy competitors. Is time something you have much to spare? If the answer is no, then let’s move on to a couple of more time-efficient bookkeeping solutions.
Hiring a Bookkeeper
Time-poor tradies may prefer to leave their financial admin to a bookkeeper - a perfectly practical solution for those tradies who don't have the time or acuity to balance their finances.
While bringing in a professional is certainly a time-saving solution to bookkeeping for tradies, it won't allow you to completely handball your finances to someone else. You'll still have your part to play. Consider - your accountant isn't out on the road with you to keep track of your invoicing and receipts. You will still need to hand over all the information an accountant or bookkeeper will need to do their job.
Many small business owners find a compromise by doing their own day-to-day bookkeeping and this is one of the reasons why cloud bookkeeping for tradies has become such a popular alternative to solely leaving taxes to an accountant. And when you're intent on being your own bookkeeper, it's good to have a little digital help.
What To Look For In A Bookkeeping Software
When choosing accounting software for your business, ensure you understand your needs and know what features to look for before you start. The market is full of various bookkeeping apps with different capabilities, and selecting a system for your business can be overwhelming. It helps to prioritise the features you want based on your accounting needs, usability, and budget. Here's a list of some of the most important functions to consider to help you select accounting software for your business.
Not everyone is skilled at working with numbers. Therefore, the best online bookkeeping for tradies should have a straightforward interface that improves how you work with your financial data. Good accounting software has a neat, uncluttered configuration that highlights the important aspects of your accounting and should include built-in functions to automatically calculate your profits, sales, and expenses. It should also include a certain level of automation, such as automatic invoice payment reminders and pre-set reconciliations.
When you're a tradie looking for suitable accounting software, you should also consider the on-the-go aspect of your job. Online bookkeeping for tradies should also be mobile compatible to allow you to get your bookkeeping done in the moment, saving the hassle of writing things down to complete when you get head back home or to the office.
The ability to integrate your bookkeeping software with other apps and platforms makes your life easier. For example, if you use an online platform to send emails and newsletters to your customers, it's handy to be able to integrate that platform with your bookkeeping software. Any contact details changed in one system will automatically synch with the other, so you won't have to double-handle the information.
Note: The bookkeeping software you choose should be capable of integrating with a variety of third-party services, including CRMs, inventory management systems, and project management tools.
Secure Sensitive Data
Your financial data is vital to your business. It is also sensitive. The accounting software you select simply must protect your financial data by guaranteeing the highest levels of online security. If a bookkeeping app doesn't offer two-factor authentication, encryption, and secure communication channels at a minimum, seek bookkeeping software elsewhere.
Accounts receivable and accounts payable
Though it may seem like an obvious statement, good accounting software allows you to record both your accounts receivable and your accounts payable. Unbelievably, not all accounting software does this!
Accounting software should help you manage your receivables more efficiently, including features that let you:
- Create professional invoices
- Send payment reminders
- Collect online payments
- Track overdue invoices.
Your chosen software should also allow you to monitor your outgoings with:
- The ability to upload your bills
- Operations expenses tracking functions
- Reminders to pay your bills on time.
Bank reconciliations are a vital part of your accounting. Your bookkeeping software should easily integrate with your bank accounts and fetch your bank statements automatically. The smartest bookkeeping apps will also allow you to set up custom criteria and bank rules that automatically categorise and match your imported transactions. This will allow you to reconcile your accounts quickly and keep your business audit-ready.
Keeping your accounts in shape means you'll be on top of your finances come tax time, which is one of the most common reasons tradies choose to use accounting software. Good accounting software should calculate your tax liability, work with multiple tax rates, and generate tax reports to help you comply with the ATOs rules.
What's Best For Your Business: In Person Or Online?
You're a business owner, so you already know how vital it is to keep up with your finances (and what a drain it can be!). So now its time to decide whether in-person or online bookkeeping is the best solution for your business.
Best Software Solutions
If you're on the fence about how functional and practical online bookkeeping for tradies can be, here's a list of the top cloud-based bookkeeping software Aussie tradies prefer.
AroFlo is a cloud-based software that aims to automate and streamline the work processes of small businesses to reduce the amount of time business owners dedicate to administration and financial management. While AroFlo is so much more than a bookingkeeping software, it can act as one easily by feeding accurate information back to your accounting package through its always-online cloud connectivity. The reason tradies love AroFlo is because the software was designed specifically for tradies, builders and service professionals! AroFlo is the brainchild of a former electrician - it is designed to meet the needs of tradies on the go.
A one-stop platform for managing accounting tasks and organising transactions. Zoho Books allows users to keep up with bills and invoices, reconcile bank statements, control spending, and eliminate GST compliance worries.
Zoho Books is a great platform for sole traders - businesses with lots of employees may find the software limiting as they do restrict the number of users you can have, and they have no payroll services.
QuickBooks is a full-featured business and financial management platform that lets companies keep track of their accounting, payroll, inventory, invoicing, tax filing, bank account tracking and reconciliation, expenses, budget, and accounts receivable and accounts payable. Users will find QuickBooks very user friendly on the go from a mobile phone or tablet. Unfortunately, Intuit, the company behind QuickBooks, announced the discontinuation of QuickBooks Desktop by midnight of January 31st 2023, so make sure to choose the right Quickbooks plan if you’re interested.
Xero is renowned for its integrations as the platform is designed to connect with more than 1,000 apps to help small business owners manage their finances. It's less expensive than many of its competitors and doesn't charge extra for additional users, making it an affordable option for growing businesses. Xero also encrypts users' business information and replicates it in several locations online, making it a safe and secure platform with your information available when needed.
What We Can Do For You
Your time is precious. That's why it is important to dedicate it where it will create the most revenue - that is, growing your trade, not shackled to your bookkeeping. It's time to start looking for a bookkeeping software platform that suits your needs.
AroFlo software is an effective solution to bookkeeping for tradies because it creates complete visibility around your financial data. It was designed by tradies, for tradies. With our job management system, bookkeeping for tradies has never been easier. Our software features:
- KPI tracking systems
- Time-saving automations
- Job management systems
- Inventory tracking
- External app integrations
- Asset management.
Want to see what we can do? Get started by booking a demo of our software to find out what we can do for you!
Signup to AroFlo by June 30 2022, and save 70% off our start-up costs.Get started 💥