Brisbane Bookkeepers & Taxation Blog

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Can You Completely Rely On Your Bookkeeper?

One of the things that a business owner needs to ensure is hiring a professional and experienced bookkeeper.  While this can be a challenge to those who own a small business, a bookkeeper who knows how to carry out the most crucial task in a business can provide business owners much greater peace of mind. However, there are instances when a business owner loses track of the business’ day-to-day transactions and relying heavily on the information that the bookkeeper provides is the only available option. Unfortunately, business owners are taken by surprise once they see financial statements in chaos. Where exactly does the problem lie?

Common mistakes bookkeepers commit:

1.    Failure to reconcile bank accounts for long periods of time. This mistake can be costly if not properly addressed. If you are the type of a business owner who leaves everything to your bookkeeper, without taking time to evaluate or check the financial statement, duplications in entries become unavoidable.

2.    Unmonitored cashflow. Business owners do not have the time to update bank and credit card reconciliations, payment processing and invoicing of debtors. This is why a bookkeeper needs to regularly update these records. Monitoring cashflow regularly allows the business owner to receive update of their current position so contingency plans can be formulated for future business development.

3.    Making a mistake in assigning accruing annual and personal entitlements. Bookkeepers have the ability to set up the entitlement calculations and superannuation in the accounting software and their job includes ensuring that the numbers are calculated accurately. As a result, employees are paid more than the 9% super based on their ordinary times earnings. If this is not corrected immediately, it can become a costly mistake for both the bookkeeper and the business owner.

4.    Unable to understand when Fringe Benefit Tax (FBT) should be applied. Old bookkeepers had erroneously entered wrong information causing businesses to suffer due to huge ATO debt. This could have been avoided, had the bookkeepers understood FBT and the schedule that the tax must be applied.

5.    Posting GST transactions incorrectly using the accounting software. Another mistake that can cause a diabolical mess is entering the wrong information in the accounting software causing figures to mix up. Dealing with GST requires accuracy to ensure that the Business Activity Statement (BAS) that is lodged with the tax office contains the correct information.

6.    Failure to categorise expenses and income. The profit and loss spreadsheet reports are one of the essential tools that bookkeeper use to know the business’ current standing. If the bookkeeper fails to review the reports and correct entries, reports become more vulnerable to a myriad of mistakes.

7.    Overlooking tax and compliance obligations. Bookkeepers may not be completely aware of lodgment dates and compliance obligations that business owners fall behind payment schedule. These dates are critical to every business and a bookkeeper needs to be aware of these important dates.

8.    Not filing invoices and receipts. Aside from financial statements, bookkeepers must also keep a record of receipts and invoices because they allow businesses to keep track of sales and services rendered. A bookkeeper must have a simple filing system that provides business owners and bookkeepers access to the essential business information.

Reasons Small Business Struggles With Bookkeeping

entrepreneur 696976 1280It is easy to pay little attention to bookkeeping when your business is going well. Why would you still go into the smallest details of your business when you can focus on more important things? Any business owner can hover on the brink of disaster with this mindset. Your business’ bookkeeping task does not end where your success begins.

In fact, you can’t take shortcuts on other tasks such as selling without prioritizing bookkeeping. You can overlook financial activities but once these errors take their toll on your business, it is already too late for you to realize that you have already made a costly mistake. If bookkeeping stays in background, you won’t be able to determine the factors that have driven the success in your small business.

Avoid These Bookkeeping Mistakes:

Failure To Maintain Records

A small business can swim in its pool of success and just watch the bookkeeping task take a nosedive. As the temporary allure of your business starts to fade, bookkeeping starts to resurface, but this time, there are numerous questions that quickbooks can’t provide any answers to. Record-keeping is important in every business. Even if you have already tasted the sweet success of your business, this does not take the glamour out of bookkeeping. Make sure you keep all receipts in a safe place as you will need them in the future.

Unaware Of The Amount You Spend For Your Business

It is perilous to every business to assume that there is still enough cash without budgeting your spending. Keep in mind that you are spending money to run your business on a daily basis. If you are complacent that you have sufficient money at your disposal, unable to keep your financial activities in check can make you spend more than you know. When budgeting the money for your business, make sure you separate them into 4 categories: 1. Fixed expenses; 2. Prospective income; 3. Paycheque-allowance; 4. Variable expenses. You should give priorities to needs more than wants.

Spending Rather Investing

There’s a difference between spending and investing. When you spend, your business does not obtain any benefits from it as you just let your money go out the window. On the other hand, investing your hard-earned money can help you reap long-term success. While it can be inevitable to spend, make sure that the benefits still outweigh the cost. Although the balancing act can be challenging, making a sound judgment usually does the trick. If you need to buy office supplies, think first if these are necessary to improve your business’ quality of work.

Not separating your business bank accounts

You can easily lose track of your cash reserves when you don’t separate your business and personal bank accounts. If you continue to follow this practice, you may end up using all the money for your business and you have nothing left to pay for your living expenses. You can avoid confusing your personal bank account for your business bank account if you pay your business expenses from a business credit card. There should be a credit limit so you can control your cash flow. It will also give you the ability to be more flexible.

5 Signs Of Fraudulent Payroll Activity

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When it comes to your business’s financial activity, accuracy is important because it is not just a simple number crunching. However, your keen eyes may not always take notice of payroll irregularities and because you’ve put so much trust in the people in charge, you become oblivious to the fact that something is not right. Payroll fraud is very common these days. The execution may be different but it all boils down to the same intention. Being complacent is not an option especially if you run a business with hundreds of employees. You just cannot afford to ignore erroneous entries on payroll reports especially if this has taken place numerous times. When payroll fraud takes place, undoing things can be such a painful and costly process.

5 signs you need to put a stop to fraudulent payroll activity:

1. Sharing logins with other employees.

The information in your payroll system should be treated with confidentiality. This is the reason logins are created. However, if your employees are sharing logins or using obsolete logins, this activity is already questionable. Make sure you have the payroll staff delete your old login to ensure that no one will use it. If you suspect that someone is trying to access your account, request a password reset. 

2. A drastic change in regular masterfile.

It is also a cause for alarm if you see the masterfile changing information at a rapid rate. This should be investigated especially if the essential information such as bank details is not what you hoped for. If changes need to be made, they have to be subject for the manager’s approval.

3. Access to payroll system outside business hours.

When payroll cut-off is getting near, you feel as though there is so little time but so much work to do. If someone in the payroll department attempts out of hours access without your permission, this activity may already be in question. If your payroll staff needs to access the payroll system outside business hours, it needs to be audited.

4. Increasing numbers of casual employees.

There are companies that may often have more casual employees than regular ones and even though this is not a tell-tale sign of fraudulent activity, casual workforce is often used to execute payroll fraud. It is important that you pay more attention to your business if the percentage of casual employees is much higher than your regular employees.

5. Inconsistent payroll reports.

You should also be suspicious if there are some obvious discrepancies in the payroll reports. These reports often undergo extensive scrutiny before they are finalized and if this process is by passed, then you know that something is just not right. It is best to outsource someone that can check the reports on a monthly or quarterly basis. More serious problems such as payroll fraud can be effectively avoided this way.

Payroll fraud needs to be taken seriously as it creates a serious impact on your business. If you suspect an employee engaging in fraudulent activity, do not hesitate to conduct further investigation. Payroll fraud prevention lies in your hands. While you cannot immediately put a lid on the problem, you can prevent more serious issues from happening when you monitor payroll activities closely.

Reasons Oral Advice Must Be Documented

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When oral advice is given based on professional standards, documenting it may be considered unnecessary. However, clients who fail to document oral advice may suffer its deleterious effect in the event of liability claim. Without the documentation, the defense will find it difficult to support any claims. Clients rely heavily on expert advice, but if this is not documented, it is as if the conversation had not really transpired. It will be impossible for the client to mitigate disputes especially when it comes to liability claim. When both sides don’t depend on oral advice, the discussions will be kept in place. 

Essential elements of documenting oral advice:

When clients have some important questions lingering in their mind, advisors will provide information for the enlightenment of the client. This is where written correspondence comes into play. While general questions only require basic notes, some information must be present to ensure that the discussion really took place.

When documenting oral advice, make sure it includes the date that the discussion took place and the names of the persons involved in the discussion. The specific advice that the solicitor provided must also be included in the documentation. The additional items that must be present in the documentation are the appropriate disclaimers, recommendations, tax and accounting considerations and the details of client follow-up. 

Essential things that must be taken into consideration

More likely than not, the client will receive unsolicited advice which is generally work-related. This may be about the work flow enhancements or improvements on record-keeping. The advice is very general and firm working papers are enough to support such an advice.

There are also instances when the client receives more specific advice which can affect business operations. In this case, the client needs to be detail-oriented. If there were allegations that the advisor or accountant failed to provide the right advice to the clients, the documentation will serve as a strong defense.

There are also some special considerations for consulting engagements that must be put to mind. Some examples of consulting engagements include discussions between the solicitor, client and sometimes, third parties. It is definitely the client that can benefit from these engagements as they are the ones that will be held responsible for making the final decision and executing plans.

As much as possible, the consultant should only provide the recommendations or conclusions to the client alone. This way, a third party will be deterred from relying on the information that was provided for their personal interest. For consulting engagement working papers, the date, parties involved and the things discussed by all parties must be included. If specific oral advice was given, it should be confirmed in a written report. There is a huge difference when these are included in the documentation. Any discrepancies will be prevented and disputes will be corrected before worsening the problem. 

For tax advice which revolves around providing information on filing obligations, penalties, interest charges and deadlines, everything must be documented. It should show the advice provided to the client and the negative impact in case no actions are taken.

Five Tips for Choosing Bookkeeping Software for Your Business

man 475557 1280It is a dream-come-true for every business to keep transactions smooth, hassle-free and fast. This is where bookkeeping software comes into play. You can be sure that your tasks are kept in order because one of the primary benefits of the software is to reduce redundancy especially when it comes to data entry. For small businesses, the process of encoding the customer’s information can be time-consuming if they heavily rely on employees. If one employee is assisting a handful of customers, the level of efficiency is more likely to suffer.

How to spot the right software for your bookkeeping needs?

1. Choose the software that is specially designed for your business’ niche because it can save you from choosing unnecessary features.

2. It is important that you determine your budget so you will know how much you are willing to spend for the software. While your budget can be your primary concern, do not put too much focus on it because you should also take quality into consideration. 

3. It is worth investing in the software that can help your business grow. One of the challenges of most small businesses is keeping up with the well-established businesses but with the help of efficient software, this goal will be achievable. 

4. Make use of a trial version for you to find out if you have picked the right software. 

5. Ask your bookkeeper for some recommendations in case you don’t know which option to choose. Read reviews from reliable sources to get an idea about your prospective software’s features and benefits. 

The Software Small Businesses Can Rely On:

• MYOB

This bookkeeping software allows you to get an accurate view of your cash flow. You will be spared from getting stuck in endless computations for your financial report. All you have to do is to link your bank account and the software will enter the necessary data for you. If you need to obtain real-time information of invoices and tax liabilities, MYOB will provide you a clear picture so you will know the status of your company’s finances. 

While accounting tasks can be a tiring and daunting, the software will make the process a whole lot easier. You can fulfill your tax obligations in a timely fashion because your supplier invoices and bills are stored securely. The best thing about MYOB is that you can collaborate with your bookkeeper without being physically present. You can keep up with the changes and updates with this feature.

The time you spend for payroll preparation will also be reduced by up to 40% because there are only three easy steps you need to follow. You can also send invoices with the use of your mobile device. Once you download free MYOB OnTheGo app, you will have the ability to use EFTPOS and credit card. 

• Xero

Xero is the noteworthy software that small businesses can put their trust in. This is not just the usual online bookkeeping software because it provides you up-to-date financial reports so you can keep track of your financial activities accurately. Its dashboard gives you quick and clear view of your bank balances, bills, invoices and other transactions.

Sales and purchases are also tracked easily so your employees will no longer spend too much time on this task. It also has the ability to categorise or import your bank transactions. As opposed to waiting at the end of the month to generate budgets and reports, Xero gives you the ability to obtain reports in real-time. 

When it comes to paying super contributions, the process will be fast and easy as the usual long process is by-passed. With this software, you can simply pay your employees’ contribution in a snap. The software can be downloaded so you can gain access to it anywhere you go. 

• Reckon

The software is such a time-saver because of its ability to generate over 200 reports. It also features unlimited payroll and massive lists of inventories. You can also make use of its job tracking tools so you will remain in control of your business no matter how busy you are. It also integrates BAS and payment summary so you can save time sorting them. 

For bank transactions, all you need to do is to link your bank account for real-time bank transaction monitoring. The invoices are also customizable and this is going to be advantageous because the feature lets you create your own logo and payment terms.

When it comes to choosing your bookkeeping software, it really pays to start with a free trial so you can gauge the software’s ability to deliver efficient and effective service. You should also keep in mind that the software has its own glitches and this is why it is imperative that you opt for the software that offers 24/7 technical support.

­ Questions? Give Andrew a call 0450 605 592

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