Have you ever dreamt of owning and running your own business?
Whether it’s a sector you’ve always dreamed of being part of, or a brand new product that’ll take the world by storm, the spirit of entrepreneurship carries on.
And for many of those entering the business world on their own, the usual route they take is to own and run their own business all by themselves.
Those who set on this business path are what we we refer to as sole traders.
Make no mistake however - while being a sole trader comes with complete freedom and control, you also carry a lot of weight on your shoulders.
Be your own boss - sole trader bookkeeping
While you might be the only employee in your business as a sole trader, you're certainly not alone. More than half of all newly-registered businesses Australia-wide are sole traders.
And when you look at the draws of sole proprietorship, it’s not hard to see why it’s so popular - as a sole trader, you have complete freedom to do as you please. No more micromanaging, constant supervision or office politics!
Running a sole proprietorship is a lot of work, however. When you decide to become a sole trader, you essentially are the business - you become the owner, manager, cleaner, salesperson… and of course, the bookie.
Make no mistake, there already is a lot on your plate as a sole trader. Bookkeeping in particular can be a difficult and oftentimes boring task that can burn through your time.
And what if don’t have the foggiest idea of where to start with bookkeeping?
Maximum Business Solutions looks at some of the most common bookkeeping mistakes that sole traders often run into.
Failure to keep books up to date
There are many reasons a sole trader might fail to keep their accounts up to date. A lack of time is big one.
We don’t blame you for putting your books on the backburner - after all, you have a whole business to run by yourself. Regardless, it really wouldn’t hurt to take at least of 30 minutes each week to update your account and to know the status of your business.
Whatever you do, don’t leave it until the last minute!
The longer you leave your account unattended, the harder it becomes to resolve any bookkeeping issues that do arise.
Mixing personal finances with business finances
As a sole trader, every dollar you earn or spend affects you directly. After all, you are the business essentially, so it makes sense to merge your personal and business bookkeeping...right?
This is a mistake we see far too many sole traders make.
It’s important that you keep separate your personal and business finances. If you mix the two together in one bank account, it just becomes plain hard to identify if a particular transaction personal or business. This makes getting a clear picture of your business’ financial information difficult, to say the least!
Keep all the receipts
Whether it’s a major purchase, a trip to the shop for basic stationary, or a customer’s order, make sure you keep copies of every. Single. Receipt.
Keeping copies of all your transactions is vital when it comes to your bookkeeping requirements. Good bookkeeping is all about having an accurate picture of how much money is coming in and going out… and a record of all your receipts is essential for building that picture.
You might choose to keep hard copies of your receipts, or opt to make digital copies of them (we strongly recommend the latter).
Whichever way you decide for keeping your receipts, the most important thing is you have them and keep them organised.
The Australian Tax Office recommends that you keep your receipts for five years.
Are you a sole trader in Melbourne looking for small business bookkeeping support?
Let Maximum Business Solutions take care of your bookkeeping for your small business
Running a business all by yourself may come with a lot of pressure and expectations.
At Maximum Business Solutions, we understand how difficult life is as a sole trader.
Effective bookkeeping is essential for a successful business. And given the common mistakes that sole traders often run into when it comes to bookkeeping, we figured you might need a little help from us!
We know what you’re thinking: as a sole trader, can you really afford to onboard a dedicated bookkeeper?
That’s where we come in! Maximum Business Solutions offers a range of small business bookkeeping solutions which can be scaled to match your business needs - whether you employ three dozen staff or are a sole trader!
To learn more about Maximum Business Solutions and how we can help sole traders just like you, call us on Ph: (03) 9589 0128. Alternatively, let's catch up for a coffee! Organise a catch-up today.