Top 12 tips for successful DIY small business bookkeeping
Some business owners struggle to stay on top of their bookkeeping. Others manage it smoothly, with minimal stress. The difference often comes down to habits. Below are ten practices we consistently see in clients who succeed at doing their own books.
1. Start with a proper setup
DIY bookkeeping is far more manageable when you start with a clean, correctly configured file. Many of the clients we’ve seen succeed long-term began with some help, whether that was a one-off setup consultation, written procedures tailored to their business, or training on key functions. Getting guidance early can save hours of confusion later and helps ensure you’re using your software in a way that suits your business structure and compliance needs.
2. Separate Business and Personal Finances
Open a dedicated business bank account and stick to using it only for business expenses. It’s the easiest way to maintain clean records and avoid issues during reconciliation - or audits.
3. Allocate Bank Transactions Weekly
A weekly rhythm is essential. Leaving your bank feed untouched for weeks makes errors more likely and BAS prep more stressful. Set a time each week to allocate and reconcile. Allocating transactions regularly also means you can run accurate, up-to-date reports on how your business is performing, whenever you need them.
4. Put Aside Money for Tax and Superannuation
Staying compliant means being prepared. Allocate a percentage of income to a separate account for GST, PAYG, and superannuation. If you wait until the due date to think about it, it’s already too late.
5. Use Receipt Management Tools
Keeping track of receipts is a key part of maintaining complete records, but it doesn’t need to involve piles of paper. Apps like Hubdoc, Dext, or Xero’s built-in receipt capture let you upload documents on the go and attach them directly to transactions. This not only keeps things tidy, it also makes it quick and easy to find any receipt when you need it.
6. Regularly Review Outstanding Invoices and Bills
Staying on top of who owes you and who you owe is vital for healthy cashflow. Make it a habit to check overdue invoices and bills each week. This helps you follow up on payments promptly, avoid double-paying suppliers, and maintain visibility over your obligations. Xero’s automated invoice reminders can also reduce the need for manual follow-ups and keep things moving.
7. Understand and Use Correct GST Codes
Familiarise yourself with GST codes in your accounting software and apply them correctly (e.g., BAS Excluded, GST-free, GST on Expenses, GST on Sales). Incorrect coding can lead to errors in your BAS and unnecessary corrections later.
8. Automate Where Possible
Use features like Bank Rules, Recurring Invoices and a pre-defined Products and Services list of items in Xero to save time and reduce manual errors. Automation ensures consistent processes and frees you up for higher-priority tasks.
9. Reconcile your bank accounts to true statement balance
It’s a common mistake to rely only on the bank feed. It is not a guarantee that your data matches your bank. Every month or as a minimum before you prepare any reporting based on the data in the system such as profit and loss or BAS, we recommend running the Bank Reconciliation Report to the end of the period that you have finished allocating for and comparing it to the actual bank balance from your online banking or bank statement. Without this, you can’t be sure the data being used is accurate.
10. Regularly Check Financial Reports
Even simple businesses benefit from regularly reviewing and understanding your Profit and Loss Statement and Balance Sheet Reports. This helps you understand your financial position and make informed decisions.
11. Be open to learning some basic accounting
You don’t need to become an accountant, but successful business owners make an effort to understand the financial basics. Concepts like cashflow, profit vs. revenue, and how to read your reports are all learnable and they make a big difference to your confidence and decision-making. A willingness to learn, rather than avoid, is what sets strong DIY bookkeepers apart.
12. Know when to ask for help
It’s important to know what to do when you come up against trickier bookkeeping scenarios. Allocating transactions wrong can cost you a lot of money both in unexpected tax bills, penalties or having to pay someone to re-do years of work down the track. We highly recommend consulting Xero Advisor for setup and guidance to get the right settings and procedures in place.
By implementing these practices, you’ll not only save time but also have greater confidence in the financial management of your business.
