Most Australian small businesses do not fail because the bookkeeping was wrong. They fail because the bookkeeping was late, and nobody found out what the numbers were saying until the quarter had already happened.
This is a practical guide to the records that actually matter, why Australian bookkeeping genuinely differs from what you will find in an overseas template, and how to tell when you have outgrown a spreadsheet. Every template mentioned is free and needs no signup.
The five records that do the work
- General ledger:
every transaction, coded to an account, using double entry
- Chart of accounts:
the list of accounts everything gets coded to
- Bank reconciliation:
proof your books agree with the bank, monthly
- Trial balance:
proof the ledger balances before you report anything
- Petty cash book:
the small purchases that otherwise never reach the books
Why Australian bookkeeping is genuinely different
This is not a formality. If you download a general ledger template from a US site, it will calculate sales tax as a percentage added on top of the price. Australian GST is one eleventh of a GST-inclusive amount. Those are different numbers, and the template will be wrong on every taxable line.
Three more differences matter:
| Australia | Most overseas templates | |
|---|---|---|
| Consumption tax | GST at 1/11th of the inclusive price | Sales tax added as a % on top |
| Financial year | 1 July to 30 June | 1 January to 31 December |
| Reporting | Business activity statement (BAS) | Sales tax return |
| Record retention | Generally five years | Varies |
That is why the free bookkeeping templates on this site carry GST codes, BAS field labels and a July-to-June year rather than being a generic ledger with an Australian flag on it.
Start with the general ledger
The general ledger is the complete record of every transaction, coded to an account. Under double entry each transaction is recorded twice — once as a debit, once as a credit — so the two sides always agree.
If you pay $1,100 of rent including GST, rent expense is debited $1,000, GST paid is debited $100, and the bank is credited $1,100. The entry balances. That constraint is what makes an error visible later.
The mistake that costs the most
Coding wages and superannuation as taxable. Neither is subject to GST, so claiming a GST credit on them overstates what you claim at BAS label 1B — and that is the direction that attracts attention.
A ledger built for Australia defaults those accounts to GST-free. A generic one has no concept of a GST-free code at all.
Keep the chart of accounts short
Your chart of accounts is the list of accounts everything gets coded to. The most common mistake is having too many, because adding an account is easy and deleting one feels risky.
The test is decision-usefulness: if you would never make a different decision because two accounts are separate, make them one. Most Australian small businesses run well on 40 to 60 accounts.
Number them in ranges with gaps — 200s revenue, 300s direct costs, 400s and 500s expenses, 600s and 700s assets, 800s liabilities, 900s equity, jumping in fours or fives. When you need a new account between two existing ones, you drop it into the gap rather than renumbering the whole chart.
Reconcile monthly, not yearly
A bank reconciliation ties the cash figure in your books to the closing balance on your bank statement, and explains every difference. It is the control that catches unrecorded fees, duplicate payments and coding errors — usually before they matter.
Nearly every difference is one of four things:
Deposits in transit — you banked it, the bank has not cleared it
Unpresented payments — you issued it, the payee has not banked it
Bank items not in your books — fees, interest, merchant charges, direct debits
An error — a transposed figure, a duplicate, or something coded to the wrong account
Two tricks find most errors in under a minute. If the difference divides evenly by nine, you almost certainly transposed two digits. If it is exactly twice a transaction you can see, that entry is on the wrong side.
Do this monthly. An annual reconciliation is far more work than twelve monthly ones, because errors compound and old statements get harder to obtain. If you lodge quarterly, reconcile each month before preparing the BAS.
Prove it balances before you report
A trial balance lists every account balance and totals the debits and credits. They must agree.
But understand what that proves. It proves the arithmetic of double entry held — nothing more. A transaction coded to the wrong account balances perfectly. So does one entered twice, and one never entered at all. Reconciling the bank is what catches those.
Keep the paperwork for five years
The ATO requires business records to be kept for at least five years, in English, explaining the transaction well enough that someone else could follow it. That covers the tax invoices behind your entries, not just the ledger.
Two thresholds are worth memorising:
| Amount | What you need |
|---|---|
| $82.50 inc GST or less | No tax invoice needed to claim the GST credit — but keep a record of what it was |
| Over $82.50 inc GST | A valid tax invoice from the supplier |
| $1,000 inc GST or more | The invoice must also carry the buyer’s identity or ABN |
Thermal receipts fade well inside five years, so scan them as they arrive. A GST credit claimed with no surviving substantiation is a credit at risk.
When a spreadsheet stops being the cheaper option
Roughly at the point you have employees, more than one bank account, or quarterly GST reporting. The failure mode is not arithmetic — it is that nobody notices when a formula gets typed over, so a number that is wrong stays wrong until someone checks.
Staff bring that threshold forward considerably, because payroll adds modern award rates, PAYG withholding and superannuation guarantee to what you are tracking. Award rates vary by classification, age, employment type and the hour and day worked — a Saturday evening shift and a Tuesday morning shift at the same classification are paid differently.
The wages line is where small business books go wrong
Wages are usually the largest number in the ledger and the hardest to verify by eye. Penalty rates, casual loading, overtime and public holidays all move it, and a spreadsheet cannot tell you whether the rate underneath was right in the first place.
That is what award interpretation exists to handle. It is also why a bookkeeper who specialises in award-heavy industries is worth more than one who does not.
Where to start this week
If you are starting from nothing, do these in order. Each one takes an hour or two and makes the next one easier.
Set up a chart of accounts and delete everything you will never use
Reconcile your bank account for last month
Enter the current month into a general ledger as you go, not at the end
Set up a petty cash float on the imprest system so small purchases stop disappearing
Diarise your BAS due date and reconcile the month before it
Every one of those has a free template on the bookkeeping templates shelf — Excel files with working formulas, no signup and no email wall.
Staff on rosters? Get the wages line right first Award rates, penalty loadings and superannuation on ordinary time earnings, calculated on every timesheet before it reaches Xero or MYOB.
Bookkeeping basics — FAQs
What records does a small business need to keep in Australia?
At minimum: a record of all sales and income, all purchases and expenses with the tax invoices behind them, bank statements and reconciliations, and — if you have staff — payroll records including wages, PAYG withheld and superannuation.
General business records must be kept for at least five years. Employee records must be kept for seven years under the Fair Work Act, so seven is the number to work to for anything payroll.
How is GST calculated in Australia?
GST is one eleventh of a GST-inclusive amount, not a percentage added on top of a GST-exclusive price. On a $1,100 sale that includes GST, the GST is $100 and the revenue is $1,000.
This is the single most common reason an overseas bookkeeping template produces wrong numbers here — it calculates tax the other way round.
Do I need a bookkeeper or can I do it myself?
Plenty of sole traders and micro businesses do their own books successfully, particularly with a structured template. It gets harder once you have employees, because payroll brings award interpretation, PAYG and superannuation with it.
A bookkeeper who is a registered BAS agent can also lodge your BAS. See accountant vs bookkeeper for who does what, or find an accredited advisor.
How often should I reconcile my bank account?
Monthly at minimum, and before preparing each BAS if you lodge quarterly. Annual reconciliation is considerably more work than twelve monthly ones, because errors compound and old bank statements become harder to obtain.
Can I do my bookkeeping in Excel?
Yes, and many small businesses do. The free bookkeeping templates here are built for Australian rules with GST at one eleventh and BAS labels.
The usual limit is not the arithmetic but that nobody notices when a formula gets overwritten. Once you have employees and quarterly GST reporting, accounting software is generally the safer option.
