baccounting - Essential Steps to Get Started

Setting up your books properly in the first month saves you from months of cleanup later. Most of the mess accountants get handed at tax time didn't happen because the business owner was careless — it happened because nobody laid the groundwork before the first invoice went out.

Here's the order that actually works, whether you're a sole trader taking your first client or a small company processing its first payroll run.

Step 1: Register for the Right Tax Numbers First

Before you touch software, confirm your ABN is active and decide whether you need to register for GST. In Australia, GST registration is compulsory once your turnover is expected to hit $75,000 (or immediately for ride-share and taxi-like services), but you can register voluntarily earlier if you want to claim GST credits on setup costs. Getting this sequencing wrong — invoicing with GST before you're registered, or not charging it when you should have — creates a mess that takes real time to unwind later. This isn't tax advice; confirm your specific registration obligations with a registered tax or BAS agent. If you also plan to trade under a name other than your own, register that business name at the same time — it's a small task now and an awkward retrofit later once invoices and contracts are already out under the wrong name.

Step 2: Open a Dedicated Business Bank Account

Related: Master Accounting & Controlling Best Practices for Business Success.

Even as a sole trader with no legal requirement to separate accounts, do it anyway. A dedicated account makes bank feeds clean, reconciliation fast, and your real profit visible without manually stripping out personal transactions. Get a business debit or credit card at the same time so day-to-day purchases never touch your personal account.

Shop around briefly on transaction fees and feed compatibility with your intended accounting software before settling on a bank — some business accounts sync feeds more reliably than others, and a clean, uninterrupted feed is worth more over a year than a marginally lower monthly fee.

Step 3: Choose Accounting Software Before You Need It

Set up your software before your first transaction, not after your first BAS deadline. Wave is a reasonable free starting point for a very early sole trader with minimal transaction volume. Xero and QuickBooks suit businesses expecting to grow, add staff, or plug in inventory and payroll add-ons. MYOB remains strong for Australian payroll compliance specifically. B Accounting Pro is worth a look if you want bank feeds, GST-ready reports and invoicing set up quickly without wading through features built for larger companies. Connect your business bank feed immediately — this is what makes weekly bookkeeping take minutes instead of hours.

Don't over-invest time comparing platforms at this stage — every major option listed here can be migrated from later if your needs change, and the cost of switching a few months in is far lower than the cost of delaying setup for weeks while you compare features you don't need yet.

Step 4: Build a Simple Chart of Accounts

See also: baccounting Best Practices for Efficient Financial Management.

Resist the urge to create a category for every possible expense. Start with the essentials: income, cost of goods sold (if applicable), wages, rent, utilities, software and subscriptions, marketing, insurance, and a general "other expenses" bucket you review monthly and split out anything that recurs. You can always add categories later; you can't easily un-clutter two hundred that never got used.

Most accounting software ships with a default chart of accounts template for your business type — start from that rather than building one from a blank page. Rename and trim it to match your actual expenses in the first week rather than leaving generic labels that won't mean much when you're reviewing reports six months from now.

Step 5: Set Up Invoicing and Payment Collection

Create a professional invoice template with your ABN, payment terms, and a direct online payment link — the gap between sending an invoice and getting paid shrinks dramatically once a client can pay with one click instead of doing a manual bank transfer. Decide your payment terms now (7, 14 or 30 days) and apply them consistently from your very first invoice; it's much harder to tighten terms later than to start firm.

If you're GST-registered, make sure your invoice template clearly states the GST component and includes the words "Tax Invoice" — this is a compliance requirement, not just good practice, and getting it wrong from the first invoice means reissuing every one once you notice.

Step 6: Build a Tax Buffer, Then Get a Professional Check-In

Open a second savings account and transfer a set percentage of every payment received into it — GST collected plus a buffer for income tax. Treat this money as already spent. This single habit, started from your very first sale, prevents the most common cash flow emergency in small business: a BAS or tax bill due with no funds set aside to cover it. A rough estimate transferred consistently from day one beats a precise calculation you only start once the first BAS deadline is looming.

Once the basics above are in place, get a professional to review your setup in the first month or two — chart of accounts, GST treatment, and any structure decisions (sole trader versus company versus trust). Catching a setup mistake in month two is a five-minute fix; catching it at your first tax return can mean re-coding a year of transactions. This is general information, not advice for your specific circumstances — a registered tax or BAS agent can confirm what applies to your structure and income level. Get started properly once, and the weekly admin from here is genuinely light.