Running a small business in Australia is a lot. You're juggling customers, jobs, stock, invoices, planning, marketing… and then somewhere in there you're also meant to magically "keep your books organised."
If you've ever had that moment where tax time rolls around and you're digging through emails, bank statements, and crumpled receipts, you're not alone.
This guide breaks everything down in plain English so you can stay compliant, stay organised, and save yourself a whole lot of stress down the track.
What Actually Is Bookkeeping?
Bookkeeping is simply the process of recording what your business earns and what your business spends.
That's it.
Everything else is just keeping those records tidy enough so:
- You can make good decisions,
- You know what you actually take home,
- And the ATO is happy.
Why Bookkeeping Matters (Even if You Hate It)
Most small businesses don't fail because of bad products or bad service, they fail because the financial side gets messy and overwhelming.
Good bookkeeping helps you:
- Know exactly what's coming in and out
- Track what you owe and what you're owed
- Avoid big ATO surprises
- Understand your real profits
- Make smarter business decisions
- Sleep better at night
And the big one: It makes tax time a 20-minute task instead of a 20-day nightmare.
ATO Record-Keeping Requirements (In Plain English)
The ATO requires you to keep accurate, complete, and readable records for 5 years.
This includes:
- Invoices (both sent and received)
- Receipts for business expenses
- Bank statements
- Mileage logs for business vehicle trips
- Records of cash sales
- Any documents supporting deductions
- Work-from-home records
- Asset purchases
These can be digital (paper isn't required anymore) but they must be:
- Easy to access
- Unaltered
- Stored safely
If you ever get audited, you need to produce them quickly.
Income vs Expenses
What Counts as Business Income?
Everything your business earns:
- Sales
- Services
- Market stall revenue
- Online payments
- Cash jobs
- Deposits
- Commissions
- Rental income related to the business
- Barter/trade value (yes, this technically counts too)
A common mistake: forgoing cash sales. It's not worth the risk, the ATO cross-checks more than people realise.
What Counts as Business Expenses?
Anything directly related to earning your income:
- Tools & equipment
- Stock/materials
- Fuel & vehicle costs
- Work-from-home utilities
- Phone & internet percentage
- Market stall fees
- Software subscriptions
- Business insurance
- Uniforms & PPE
- Advertising
- Bank fees
- Repairs & maintenance
If you bought it because you run your business, it probably counts.
Monthly Bookkeeping Checklist (Simple & Doable)
You don't need to do bookkeeping every day. Just give it 10–20 minutes each month.
Each month:
- Log your income
- Upload/store receipts
- Track paid & overdue invoices
- Record expenses
- Reconcile your bank account
- Track vehicle mileage if applicable
- Update your job/logbook if you keep one
Once per quarter (if on BAS):
- Check GST collected vs GST paid
- Make sure your records match your BAS report
- Put money aside for tax
Once per year:
- Update asset list
- Finalise income & expenses
- Hand everything neatly to your accountant
If you do tiny bits often, you never get buried.
Common Small Business Bookkeeping Mistakes
And how to avoid them:
❌ Waiting until tax time
You forget things, lose receipts, and your BAS becomes guesswork.
❌ Mixing personal money with business money
The easiest way to ruin your books. (Solution: open a separate business account.)
❌ Not keeping receipts
The ATO doesn't accept "my accountant said it was fine" as evidence.
❌ Not tracking mileage
Most people miss hundreds (even thousands) in deductions.
❌ Losing invoices or not chasing overdue payments
Cashflow kills more businesses than the ATO ever will.
How Software Makes This 10x Easier
Most people struggle with bookkeeping for one reason: They're trying to use photos, notes apps, spreadsheets, or paper.
That's where software simplifies everything.
With a small-business management tool (like ORCA), you can:
- Store receipts the moment you get them
- Track income automatically
- Generate & send invoices in seconds
- Monitor what's overdue
- Log vehicle trips
- Track work-from-home hours
- Keep everything in one secure place
It reduces admin, eliminates paperwork, and means you're not hunting through your camera roll trying to find a faded Bunnings receipt.
Final Thoughts
Bookkeeping doesn't need to be scary. It doesn't need to be complex. And it definitely shouldn't ruin your June.
If you stay organised, keep good records, and use the right tools, you can run a tidy business that gives you clarity, confidence, and calm come tax time.