Yes, every business needs a reliable bookkeeping system based on established accounting principles and ATO compliance. Keep in mind that accounting is a much broader term than bookkeeping. Bookkeeping refers mainly to the record keeping aspects of accounting. It’s essentially the process of recording all the information regarding the transactions and financial activities of a business.
Bookkeeping is an indispensable subset of accounting. Bookkeeping refers to the process of accumulating, organising, storing, and accessing the financial information of a business, which is needed for two basic purposes: facilitating the day-to-day operations of the entity, preparing financial statements, tax returns, and internal reports to managers Bookkeeping (also called record keeping) can be thought of as the financial information infrastructure of an entity. The financial information base should be ATO compliant, complete, accurate, and timely. Every record keeping system needs quality controls built into it, which are called internal controls.
The term accounting is much broader, going into the realm of designing the bookkeeping system, establishing controls to make sure the system is working well, and analysing and verifying the recorded information. Accountants give orders; bookkeepers follow them. Accounting encompasses the problems in measuring the financial effects of economic activity. Furthermore, accounting includes the function of financial reporting of values and performance measures to those that need the information. Business managers, investors, and many others depend on financial reports for information about the performance and condition of the entity. Accountants prepare reports based on the information accumulated by the bookkeeping process: financial statements, tax returns, and various confidential reports to managers. Measuring profit is a critical task that accountants perform — a task that depends on the accuracy of the information recorded by the bookkeeper. The accountant decides how to measure sales revenue and expenses to determine the profit or loss for the period. Accountants design the internal controls for the bookkeeping system, which serve to minimise errors in recording the large number of activities that an entity engages in over the period. The internal controls that accountants design are also relied on to detect and deter theft, embezzlement, fraud, and dishonest behaviour of all kinds.
A tax agent is licensed by the Tax Agent Board to provide tax advice, prepare financial statements and annual tax returns on behalf of individuals, businesses and any other entities required to lodge annual tax returns.
For businesses with a PAYG withholding tax liability of greater than $25,000 pa, the PAYG withholding tax liability must be calculated and lodged monthly via the IAS. Payment of the liability is also monthly.
Most tax agents / advisers like their clients to be “in the cloud” via software platforms provided by QuickBooks, Xero or MYOB. Please get advice from your tax agent / adviser on this matter. If you make a poor choice here, your tax agent / adviser could spend a lot of time reworking your records which may end up costing your business hundreds of dollars you haven’t budgeted for.