When launching a new business, bookkeeping might not be the first thing that comes to mind. Your priority is probably finding clients and focusing on your business’ success. However, bookkeeping is foundational to the success and financial health of your startup. Having your books in order and detailed financial statements can help you make more informed decisions for your business.
So, where should you start? Here are ten bookkeeping tips for startups.
Do startups need bookkeepers?
Bookkeeping is essential to every business. As a startup, you may have extra reasons to keep accurate financial records: lenders will ask for them when you apply for finance, and if you raise capital, investors will expect them too.
Here is why it pays to get a bookkeeper involved early:
Accurate and reliable numbers
Bookkeepers record and maintain accurate and reliable financial numbers. With these figures, it will be easier to make well-informed decisions about where to invest your money, how to acquire new clients, access financing, and grow your business.
Monitor cash flow
Bookkeepers track revenue and costs so you can see cash flow problems coming, and they can point out expenses worth reviewing.
Tax preparation
Bookkeepers keep your records ready for BAS and tax time and work alongside your tax agent. A bookkeeper who prepares or lodges BAS, or handles payroll and super obligations, for a fee must be registered with the Tax Practitioners Board as a BAS or tax agent, or work under the supervision of one. This applies to payroll work that involves interpreting or applying a BAS provision; purely administrative data entry does not itself require registration.
Professional advice
Before major business decisions, it helps to have someone check the numbers with you. Your bookkeeping team can tell you what the records show; for tax or legal advice, talk to a registered tax agent or other qualified adviser.
Save time for other essential duties
Tasks like financial monitoring and account reconciliation can consume a lot of hours that you can otherwise spend on growing your startup. Handing them to professionals frees that time.
It’s also essential to maintain a healthy work-life balance.
Top 10 bookkeeping tips for startups
Building good bookkeeping habits early saves you clean-up costs later, keeps you ready for tax and BAS deadlines, and gives you numbers you can make decisions with. Below are ten essential tips.
1. Select an accounting method for your business
There are two accounting methods: cash and accrual basis accounting.
Accrual basis accounting
This method records revenue when you earn it (when you deliver the goods or perform the service), even if the customer hasn’t paid yet, and records expenses when you incur them, even if you haven’t paid yet.
For example, if you sign a contract with a new client, nothing is recorded as revenue on signing. When you complete the first month’s work and invoice it, you record that revenue, whether or not the client has paid. If the client pays in advance, the payment is held as a liability (income received in advance) until you do the work.
While this method is a bit more complex, it matches income to the period it was earned, which gives a truer picture of performance when you are making scaling decisions or reporting to lenders and investors.
Cash basis accounting
This simple method involves recording income when you receive the money and expenses when you make the actual payments.
For GST, the ATO lets businesses with aggregated turnover under $10 million choose to account on a cash basis or a non-cash (accruals) basis. Many startups keep management accounts on an accrual basis even if they report GST on a cash basis. Ask your tax agent which suits you.
2. Stay on top of your financial records
Keep every document that shows your business income and expenses: invoices, receipts, bills, proof of payment, bank statements, payroll records and contracts. The ATO requires most business records to be kept for 5 years, in English or easily converted to English, and digital copies are fine.
3. Use bookkeeping software
Cloud accounting software can be a lifesaver for startups. Bank feeds bring transactions in automatically, invoices and bills live in one place, and you can lodge BAS from most packages. That means fewer manual calculations and spreadsheets.
Choose software that supports your accounting method and suits your business needs. Also consider security, user access controls and which apps it connects to. Our guide to choosing the best accounting package for a small business has the full checklist and a six-step setup.
4. Outsource your bookkeeping
Accounting software streamlines the work, but it doesn’t decide how each transaction should be coded, chase overdue invoices or check that your BAS is right. That still needs a person who knows what they are doing.
Outsourcing offers various benefits, including saving time and ensuring that you maintain up-to-date and organised financial records.
Look for a bookkeeping service that works inside your own accounting software file, so the records stay yours and you can see them at any time.
5. Identify the most important financial metrics and key performance indicators (KPIs)
Financial KPIs help you measure whether the business is heading in the right direction. For most early-stage businesses, the useful ones are operational rather than market measures:
- Gross margin (and margin by service or product line)
- Net profit margin
- Monthly cash burn and runway (how many months your cash lasts at the current burn)
- Debtor days (how long customers take to pay)
- Revenue growth and customer concentration
Pick the few that matter for your startup, set up your chart of accounts so the books can produce them, and review them every month.
6. Use a payroll system that works with your accounting software
Once you hire, you need payroll software that reports each pay run to the ATO through Single Touch Payroll (STP). From 1 July 2026, under Payday Super, employers must also pay super for each payday, so it reaches the employee’s fund within 7 business days. A payroll system that integrates with your accounting software keeps wages, PAYG withholding and super in step with your books.
7. Maintain current and accurate cash flow statements
Tracking the flow of cash into and out of your business is essential. Keep an up-to-date cash flow statement to see how your business generates cash, funds expenses and pays debts.
A cash flow statement groups cash movements into three types:
- Cash flows from operating activities
- Cash flows from investing activities
- Cash flows from financing activities
8. Make accepting payments easier with a payment collection system
A clear payment collection system makes it easier for customers to pay you on time. It covers how you invoice, the payment terms you set, and how you follow up overdue accounts.
Offer convenient payment methods, such as bank transfer, PayID and card payments, put clear payment terms on every invoice, and set reminders for when invoices fall overdue.
Setting up a payment collection system can help your business maintain a healthy cash flow.
9. Minimise discrepancies with regular bank reconciliation
Bank reconciliation means matching every transaction on your bank statement to your records and explaining any difference, such as a payment that hasn’t cleared yet. Do it at least monthly. See our step-by-step guide to bank reconciliation.
Regular reconciliation matters even more once you have lenders or investors, who expect accurate accounts.
10. Establish an expense policy
As an early-stage business, you need to track and manage your expenses. Without a clear expense policy, your team members may spend money without considering factors like acceptable expenses, budget and expense limits.
An expense policy sets out what team members can spend, who approves it, and what receipts they need to keep. It cuts unnecessary spending and makes your records easier to keep.
Conclusion
It’s tempting to let bookkeeping take a backseat when growing your new business. However, if you want to run a profitable business, you must keep your financial records on top of your priorities. Follow the bookkeeping tips for startups above to avoid tax and cash flow issues and increase your chances for growth.
Visory runs bookkeeping, payroll, accounts payable and receivable for growing businesses, with a dedicated team and its AI, Delphi, overseen by that team. Book a discovery call.
About this article
Written by The Visory Team. Published . General information for Australian businesses, not advice for your situation.
