The move into your own private practice can be daunting. Not just because of the onus to source your own work, employ staff or pay a myriad of bills on time, but keeping track of income and expenses can also be difficult.
If you’re thinking about setting up your private practice soon and believe using your familiar and trusty spreadsheet or the more traditional ‘shoe box’ method will suffice, you may be in for a rude shock!
The time spent attending to both of these strategies as a means of record management by not only you but your accountant, can be astronomical, so too can the fees you ultimately pay at tax time.
Time and accounting fees can both be decimated by implementing the right software into your business. There are a few key players in the bookkeeping software market which track bank feeds and have cloud based servers meaning:
- You can access and update your data file anywhere you can connect to the internet (even from a mobile device)
- Multiple users can access the files simultaneously so that it is easily updated by an office manager, bookkeeper or accountant
- You won’t miss a transaction as everything that hits your bank account(s) also hits your data file and must be reconciled
Your accountant may also have a partnership with one of these main players (Xero, MYOB, Quickbooks, Reckon etc) meaning you can access valuable discounts to your monthly subscription cost. Most of the time, it is worth asking and comparing.
One of the main benefits of using ‘software’ is having access to live data for cash flow and profit and loss figures. At any time you can see how much you have collected in billings or how much you have spent on certain expenses for a given period. This gives you the power to make on-the-fly decisions about the running of your practice and access real time information faster.
For those not yet in private practice, you can, and arguably should, use software to track your private income and work-related expenses which will help at tax time. Or, just to get into good habits early, why not start using software to track all of your expenditure now?
Do you know what you have spent on drinks, entertainment and dining out in the past month? Your software does the calculations for you and can give you the honest truth about your spending. This way you are able to monitor and prioritise your spendings with better visibility and purpose.
Speak to your tax adviser about the software that is right for you to save you time and money at tax time.
To chat to a DPM Tax Consultant about your personal situation, call us on 1800 376 376 or book a free no-obligation initial consultation.
* The information contained in this site is general and is not intended to serve as advice. DPM Financial Services Group recommends you obtain advice concerning specific matters before making a decision.