Hiring an accountant is a bit like getting into a romantic relationship: You need to be completely open and honest if you want the thing to go the distance. In some cases, it might even be more intimate - only you and your accountant have a complete picture of your business' financial state.
Part of this openness involves giving your accountant the essential financial documents she or he needs to understand your position and help you minimise your taxation. Here are a few of the most important.
A profit and loss statement
A profit and loss statement is a document that presents your business' financial performance and profitability in a nutshell. It's also known as an income statement or a statement of financial performance, and it needs to be prepared by you.
The idea is that you (and your accountant) will be able to look at the statement to see how much money your business is making. It involves listing your revenue and expenses, and working out your gross and net profit from there. State government websites provide templates if you need some guidance.
A balance sheet
A balance sheet is also known as a statement of financial position, and is also supposed to paint a picture of your business' financial status. It's a summary of your liabilities (taxes, bank loans and other debts) and your assets (fixed assets like machinery that won't be sold, and current assets like inventory).
Unlike a profit and loss statement, a balance sheet is a living document, rather than simply covering a fixed period. It continues to build up information as the years go by, giving you a historical record of your business.
In order to comply with your tax obligations around payroll and more, it's important to have an organised, easy-to-find record of the payments you make to employees, including superannuation contributions.
While back in the day this meant painstakingly filing every physical copy in a binder, remember that the computer is an option for filing away volumes and volumes of records with relatively little hassle. It also means you can back them up more easily.