Whether you’re a global corporation or a small business just kicking off the ground, every business needs a strong understanding of their finances in order to succeed. From tracking income and managing expenses to filing taxes, accounting is arguably the single most important tool for making smarter decisions in business. It’s the backbone of how your business operates, grows, and stays financially healthy.
In this blog, we’ll break down exactly what business accounting is, why it matters, and why working with a professional is so important.
What is Business Accounting?
Business accounting is essentially the recording, tracking, and managing of your businesses financial transactions. That includes everything from monitoring income and expenses, issuing invoices, processing payroll, preparing tax returns and generating financial reports. In short, it’s how you know where your business stands financially and how you can afford to keep going.
Why is Business Accounting So Important?
There are many reasons why business accounting is important:
- In Australia, a BAS lodgement (business activity statement) is a legal requirement for businesses, which necessitates having an accurate record of finances.
- If you are audited by the ATO, clean records keep you in the clear.
- Payments must be made on time to comply with tax laws, while claiming tax deductions can save your business money.
- Planning ahead for the future will ensure that every financial decision is made with an appropriate understanding of how it will affect your cash flow.
- If you’re looking for funding, or partnerships, accurate financial reports will help you gain the trust of banks and investors.
- In order to scale your business you need to maximise profitability by cutting unnecessary costs and forecast with confidence.
An Overview of Business Accounting
Business accounting is an incredibly broad topic, and there is never a one-size-fits-all solution. Each business has unique structures and business plans, and are different financial functions depending on the kind of business and industry you’re in.
To keep things simple, here’s a breakdown of several core areas of business accounting:
Bookkeeping
What is bookkeeping? Bookkeeping involves recording every financial transaction, including sales, purchases, payments, and receipts. It’s one of the most important aspects of business accounting that ensures your books are up to date and accurate.
Accounts Payable and Receivable
This means managing what your business owes (such as bills, supplier payments) and what it’s owed (customer invoices). Staying on top of this is crucial for maintaining a stable cash flow and building strong relationships with customers and vendors.
Payroll Accounting
For any business which employs staff, handling wages, superannuation, PAYG withholding, and leave entitlements. Accurate payroll accounting keeps your team paid on time and is essential for remaining legally compliant.
Tax Accounting
Tax accounting focuses on preparing and lodging business activity statements (BAS), GST, and income tax returns. Tax accountants also help with tax planning to legally minimise what you owe through deductions and ensure you don’t miss any key lodgement dates. Take a look at this blog for more information on the cost of a tax accountant.
Financial Reporting
Another crucial aspect for any business, financial reporting essentially means creating reports like profit and loss statements, balance sheets, and cash flow statements. These reports offer a snapshot of your business’s financial health and will guide strategic decisions.
Inventory Accounting
Inventory accounting is relevant for any business that sells physical goods, such as retail stores, or supermarkets. It involves tracking stock levels, calculating cost of goods sold, and managing stock valuation.
Budgeting and Forecasting
Budgeting and forecasting refers to planning your financial future based on past performance, seasonal trends, and growth goals. This helps with setting realistic targets and securing funding from banks or investors.
Compliance and Record-Keeping
Ensuring all financial records are accurate, organised, and stored for the required number of years (which is especially important for audits and legal compliance).
Doing Business Accounting Yourself vs. Working with a Professional
Many business owners, particularly of small businesses, choose to do their own business accounting in order to save money on outsourcing or hiring a professional accountant. And while it certainly is possible to do it all yourself, many people lack the financial expertise and knowledge in order to do it successfully.
Running a business already requires juggling a million tasks at once. For these reasons, business owners who try to do accounting themselves struggle to keep up with the demands of the role, and they tend to miss out on the key financial advice and forward planning that professional accountants can provide.
Small business owners may also find that as their business scales and grows, accounting becomes more challenging and time consuming. That’s why it can be far better to hand over the reins to an expert than to continue struggling on your own.
The Benefits of a Professional Business Accountant
Here’s how a professional accountant can help you with business accounting:
- Gain expert advice and insights into tax planning, business structuring, and financial forecasting that go way beyond basic bookkeeping.
- Free up hours each week that you can use to focus on running your business.
- Maintain accurate records, operate within legal boundaries, avoid errors, penalties, and audit headaches with professional oversight.
- Leverage data-driven strategic planning and map out scalable growth.
For more information on what does accounting do for a small business, check out this blog!
Need Help with Business Accounting? Speak to Spark Accountants Today!
If you're ready to take the stress out of your finances, our expert accountants are here to make it happen. Whether you need ongoing support or just need help getting your books in order, we can tailor our services to suit your business needs exactly.
Want to know how much a small business accountant costs? Check out our latest blogs for insights, or reach out to us directly. We’ll walk you through exactly what you need, break down the pricing with full transparency, and help you understand how accounting can save you money in the long run.
Contact Spark Accountants today and let’s get started.
