Stop drowning in receipts. Master the monthly routine that keeps your books clean, your stress low, and your accountant happy.
Three honest truths that will change how you think about your books
Most new business owners feel overwhelmed by bookkeeping. The good news? It's not as complicated as it looks once you have a system. You're not behind—you just haven't found your rhythm yet.
Your books don't need to be perfect. They just need to be good enough for you to make decisions and lodge your BAS on time. Perfect is the enemy of done in bookkeeping.
Seriously. With the right routine, you can keep on top of everything in half an hour per month. We'll show you exactly how to do it with our proven 5-step method.
Bookkeeping is simply recording what money comes in and goes out of your business. That's it. Everything else is just organizing that information so you can see what's happening and meet your legal obligations.
Beyond legal compliance, here's why bookkeeping matters
Your simple 5-step routine that actually works
Gather all receipts and invoices from the past month. The key is having a system so nothing gets lost.
Import bank feeds and match transactions in your accounting software. Modern software makes this mostly automatic.
Make sure your accounting software matches your actual bank balance. This is the most important step for catching errors.
Assign the right category to each expense so your reports actually mean something.
Review your profit & loss statement and check for any red flags or outstanding items.
These are the fundamentals you need to understand
Income: What you actually receive in your bank account.
Revenue: What you've earned, whether you've been paid yet or not.
Why it matters: For tax purposes, most sole traders use "cash basis" (income when received). Companies typically use "accrual basis" (revenue when earned).
Know Your BasisCash basis: Record transactions when money actually moves. Simpler, used by most sole traders.
Accrual basis: Record transactions when they happen, regardless of payment. Required for companies and GST-registered businesses over $10M.
Quick decision: Sole traders usually start with cash basis unless registered for GST.
Match Your StructureWhat it is: Matching your Xero account balance to your actual bank statement balance.
Why it matters: This catches errors, missing transactions, and fraud before they become big problems.
How often: Monthly minimum. Weekly if you have high transaction volumes.
The goal: Your books and bank should match perfectly—zero discrepancy.
Monthly Must-DoWhat it is: The master list of categories for organizing all your income and expenses.
The good news: Xero's default chart of accounts works perfectly for 90% of businesses.
Don't overthink it: Start with the defaults, customize later only if you really need to.
Pro tip: Fewer categories = clearer reports.
Keep It SimpleTrack your progress with this interactive checklist. Check off each item as you complete it.
And how to avoid them completely
The Problem: Using the same bank account and credit card for personal and business expenses.
Creates a tax nightmare at year-end when you're trying to separate business from personal. Makes you look unprofessional. Can even invalidate your limited liability if you're a company.
Open separate business bank accounts from day one. Get a business credit card. Never mix the two. This is rule #1 of bookkeeping.
The Problem: Thinking "I'll remember this" or "I'll find it later" when you make purchases.
Can't claim tax deductions without proof. During an ATO audit, missing receipts means disallowed expenses. Costs you thousands in lost deductions.
Take a photo of every receipt immediately with your phone. Use a receipt scanning app like Dext or Hubdoc, or just upload to Google Drive. Future you will be grateful.
The Problem: Doing 12 months of bookkeeping in one panic-filled weekend in June.
Massive stress. Inevitable errors. Missed deductions because you can't remember what things were for. Higher accounting fees because your accountant has to clean up the mess.
30 minutes monthly using our 5-step method above. That's it. Consistency beats perfection every single time.
The Problem: Putting all expenses in "General" or just randomly guessing categories.
Can't see where your money is actually going. Reports are meaningless. Can't identify areas to cut costs. Makes it impossible to track profitability by service or product.
Learn the basic expense categories. Use Xero's bank rules to auto-categorize recurring transactions. When in doubt, ask your accountant where it should go.
The Problem: Never checking if your Xero balance matches your actual bank balance.
Errors compound month after month. Missing transactions. Duplicates. Eventually your numbers are so wrong they're useless. Can take days to untangle.
Reconcile monthly (Step 3 in our method above). It takes 5 minutes when done regularly. It takes hours or days when you've skipped months.
Everything you need to get started with bookkeeping
Choose the right accounting software for your Australian business
Never lose a receipt again with these tools
Download our ready-to-use bookkeeping templates
Watch step-by-step guides for common tasks
Honest guidance on what works for your situation
Many businesses use a hybrid model that balances cost and quality:
You should do bookkeeping monthly at minimum. This takes approximately 30 minutes per month with our 5-step method. Daily or weekly bookkeeping is ideal if you have high transaction volumes, but monthly is sufficient for most small businesses in Australia.
The key is consistency—30 minutes every month is infinitely better than 6 hours once a year.
While spreadsheets can work for very simple businesses, we strongly recommend using proper accounting software like Xero, MYOB, or QuickBooks. Here's why:
The time saved and errors prevented easily justify the $50-70/month cost.
Don't panic—this is extremely common. Here's how to catch up:
Option 1 (DIY): Block out 2-4 hours, gather all your receipts and bank statements, and work through them month by month. It's tedious but doable.
Option 2 (Professional help): Hire a bookkeeper for a one-off "catch-up" job. Budget $300-800 depending on how far behind you are. They'll clean everything up in a few hours.
Moving forward: Once you're caught up, commit to the 30-minute monthly routine so you never fall behind again.
In Australia, you must keep most business records for 5 years from when they were prepared, obtained, or the transaction was completed (whichever is later).
What to keep: Invoices, receipts, bank statements, tax returns, BAS statements, payroll records, financial reports.
Important exceptions:
Digital copies are fine—you don't need to keep physical receipts if you have clear digital records.
Bookkeepers: Record daily financial transactions, reconcile accounts, manage accounts payable/receivable, process payroll, and maintain your financial records. They keep your books organized and up-to-date.
Accountants: Provide strategic advice, prepare tax returns, handle complex compliance issues (BAS, PAYG), offer financial planning and forecasting, interpret financial data, and represent you with the ATO.
The ideal setup: Many small businesses use both—a bookkeeper for ongoing record-keeping (either DIY or hired) and an accountant for annual tax work and strategic advice.
Yes! If you work from home, you can claim a portion of your home expenses. There are two methods:
Fixed rate method (simpler): Claim 67 cents per hour for heating, cooling, lighting, cleaning, and depreciation of office furniture. Plus 100% of work-related phone and internet, stationery, and computer consumables.
Actual cost method (potentially higher claims): Calculate the actual costs of running your home office based on floor space. More record-keeping required but potentially larger deductions.
What you need: Keep records proving you worked from home (timesheets, diary entries) and receipts for all expenses claimed.
Pro tip: Your accountant can help you determine which method gives you the best result.
Mistakes happen to everyone. Here's how to handle them:
Catch it quickly: Most bookkeeping software lets you easily edit or delete incorrect transactions. The sooner you catch it, the easier it is to fix.
Don't panic: Small errors in categorization rarely matter unless they significantly distort your financial position or tax obligations.
When it matters: If the mistake affects your BAS or tax return, tell your accountant immediately. They can help you lodge amendments if needed.
Learn from it: Set up bank rules or processes to prevent the same mistake happening again.
Important: The ATO is lenient with honest mistakes that are disclosed and corrected promptly. Deliberate errors or failing to fix known mistakes is where penalties come in.
The simple system that works:
1. Capture immediately: Take a photo of every receipt the moment you get it. Don't wait.
2. Use one central location: Either a dedicated receipt app (Dext, Hubdoc) or a simple Google Drive folder structure:
3. Name files clearly: "2025-01-15-Officeworks-$67.pdf" is better than "IMG_8374.jpg"
4. Match to transactions: Attach receipts to transactions in Xero so everything's connected.
Bonus tip: Email receipts should go to a dedicated folder in your email, then exported monthly to your main receipt storage.
A chart of accounts is simply the master list of categories you use to organize all your business transactions. Think of it as the filing system for your money.
Do you need one? Yes, but the good news is Xero, MYOB, and QuickBooks all come with default charts of accounts that work perfectly for 90% of businesses.
What's in it:
Best practice: Start with your software's default chart and only customize if you truly need to. Fewer categories = clearer reports.
Consider hiring professional help when:
The math: If bookkeeping takes you 3 hours monthly, and your time is worth $100/hour, you're spending $300 in opportunity cost—same as hiring a professional bookkeeper who'll do it better.