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Can Accountants And Bookkeepers Work Harmoniously

As cloud technology becomes increasingly popular and in demand, changing role of bookkeepers is necessary because of the benefits that changes are capable of providing. However, the idea of changing role of bookkeepers can also create challenges in terms of their working relationship with accountants. The role of accountants differs from bookkeepers but these roles remain indefinite, making the client suffer from its effect.

Issues that accountants and bookkeepers may face:

• If accountants fail to communicate with bookkeepers when doing their work for the client, there are plenty of rooms for mistakes and confusion. Potential problems can also arise if the bookkeeper fails to inform the accountant of issues concerning the task at hand.

• There will be territorial disputes when one or both parties tend to be protective of their role in terms of client’s affairs.

• Bookkeepers have not thoroughly understood their limitations and the absence of skills needed for a specific task results in a huge mess that the accountant has to clean up.

Due to the challenges that accountants and bookkeepers are continuously facing, working together may seem like an impossible thing to do. However, when proper expectations are set and both parties are putting extra effort to make the relationship work, nothing is impossible.

There are some practices that both the accountant and bookkeeper need to follow for a harmonious working relationship to take place:

• Both parties should act in the best interests of the client and should prioritise thinking about what will work best for the client. They should not be competing against each other because both roles are crucial to the success of the client.

• The lines of communication are essential for the accountant and bookkeeper to be in perfect harmony. If there are issues related to the task, it should be immediately discussed for the problem to be quickly resolved. More often than not issues or concerns become worse due to lack of communication.

• Both parties need to be clear about the tasks they are carrying out. If they do not have the skills required for the task, they should not take on the work and find out when to seek advice. Instead of making the task less burdensome, more problems are encountered because of failure to recognize the importance of skills in carrying out a task.

• Knowing exactly where to draw the line and to set boundaries before the work commences can also help an accountant and bookkeeper establish a good working relationship. They need to be in agreement of the role they are going to play. Disputes over territory must be sorted out before working together. When accountants and bookkeepers are fully aware of their limitations, the tasks will be successfully accomplished.

Accountants and bookkeepers have important roles to play in every business. Aside from making the job easier for a client, they are also instrumental to the success of the business by ensuring that its financial aspects are kept in check. Once accountants and bookkeepers are in harmony, the best possible outcome can be achieved. The client can benefit from a great working relationship between a bookkeeper and an accountant.

Never Make The Same Financial Mistakes Again

accounting 761599 1920Even if you have just opened a small business, it does not necessarily mean that you cannot survive or emerge victorious in your chosen business niche. While it can be a series of trial and error, learning from your mistakes will hone your business management skills. Among the various business aspects, the financial aspect is often the target for mismanagement. A simple mistake such as overlooking the correct details on a statement can create a deleterious effect on the outcome of your finances. Before problems with your record could get worse, you should be careful with your financial activity and avoid committing these mistakes:

1. Not Taking Feedback Seriously

Getting advice or feedback from your bookkeeper can hurt your ego if you have not prepared for it, but as a business owner, you need to take your bookkeeper’s opinion especially if you are still trying to gauge your business. The feedback from your bookkeeper can help you take the right direction if you listen carefully.

2. Not Keeping The Receipts

If you are already familiar with your financial activity and you have estimated your expenses, throwing away your receipts seems like a natural thing to do. This may not be an issue at first, but come tax season, you will realize their importance. Never toss out receipts as they are part of the record keeping process. Save them in a file or give them to your bookkeeper for safekeeping.

3. Not Focusing On A Niche

Your business will not prosper if you do not consider sticking to a niche. Marketing is indeed expensive. This is why you need to spend your marketing budget in such a way that will reap positive results. Make sure you only focus on a niche that your product can satisfy. Never concentrate on people that are far from becoming your target market because you will not only waste your time but your money as well.

4. Not Giving Importance To Making A Budget

If you go to a battle unarmed, you are most likely to lose. The same is true when opening a business. You need to have a plan of action so you can calculate the adjustments you need to make. You won’t know the direction you are going to take if you don’t have a financial road map. You will also find it difficult to measure or track your progress.

5. Failure To Hire A Bookkeeping Professional

For business owners who have completely understood the nature of their business, they will sure realize the importance of a bookkeeper in leading the business in the right direction. New business owners are often concerned about the service cost, but you should also pay attention to quality. Choose a good bookkeeper and never fall prey to those who offer the lowest price, the result may not be desirable.

6. Not Analyzing Your Start-Up Costs

Your initial capital is important when starting a business. If you have not analyzed your capital, you can wreak havoc on a solid operation. You should keep in mind that positive cash flow does not immediately take place. You need to observe and make a wise investment  so your business will have a positive direction.

Essential Financial Statements You Need To Receive From Your Bookkeeper

copy 160129 1280Although you cannot always expect yourself to know everything about accounting or bookkeeping, it really pays to have a basic knowledge of the documents you should expect to receive from a bookkeeper. Familiarizing yourself with the documents your bookkeeper is using will help you understand the reasons they are needed for your business. You are not expected to memorize every statement that bookkeepers are dealing with, but you need to make sure that you have a deeper understanding of the gist of the statements. 

Cash Flow Statement

The purpose of a Cash Flow Statement is to show you the movement of your assets over a period of time. There are several categories that the movement is broken down into: investing, operating and financing activities. The investing activities refer to the purchase and sale of various assets such as buying a new location. Operating activities refers to the tasks that the business regularly performs such as making a sale. Financing activities refer to paying or generating debt.

Balance Sheets

Your bookkeeper heavily relies on balance sheets to demonstrate profit and loss. As a business owner, it is your guide in determining the amount of money that is currently available. However, you should take note that the balance sheet does not necessarily reflect your specific investments. Your bookkeeper may go into the details of your statements, but it generally presents your business’ overall success.
The balance sheets are also referred to as statements of financial position. They are considered bookkeeping’s building block. They are often used by professional for additional statement creation or data analysis so conclusions can be drawn.

There are three essential elements that you can find in balance sheets: equity, assets and liabilities.

1. Equity refers to the capital left after the asset have been used for paying off liabilities.
2. Assets are the business-controlled items such as machinery and cash.
3. Liabilities are the items that your business owes such as loans.
If you are going to examine the balance statement, your business’ assets are equal to the sum of equity and the liabilities.

Income Statement

This statement shows the profit and loss, showing the losses and net profits for the current period. If you would like to know your business’ current income, the statement provides you the necessary details you need including sales revenue. Aside from the profit and loss, the statement also provides you details of your expenses such as the rent and wages. A net profit or net loss is taken from the difference between the expenses and income. Business owners have high hopes of seeing a net profit on an income statement.

Bookkeepers also use the statement to give recommendations and advice to business owners. It provides the bookkeeper an idea how profitable your business is. It also provides business owners with the next steps to take for the business to become more profitable.

A meaningful conversation with your bookkeeper about the purpose and functions of these statements will help you find out how you can improve your business so it can generate additional profit. Make sure your bookkeeper provides you these statements so you are well aware how your business is doing.

Why Good Cash Flow Management Is Essential

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Managing your cash flow wisely is not just a business practice but a household practice as well.  There are plenty of reasons you should keep your cash flow in check especially if you are running a business. Most bankruptcy in businesses is due to poor financial management. Even if your products and services are making it big in the business industry, you still have to find a leverage that will ensure sustainability in your business. If your financial activity is in chaos, you may want to look at the benefits that a good cash flow management provides.

The major benefits of managing cash flow

In running a business, you don’t just maintain a cash flow, but a healthy cash flow. However, it takes good management skills for you to pull off a balancing act ensuring the money that comes in and goes out are proportion. When money is not coming in, you won’t be able to pay your employees or purchase essential supplies. You will also see loans and debts piling up because your business appears to be breaking the bank. A good cash flow management helps you fulfill your tax office obligations such as superannuation, GST and PAYG. 

Cash Flow vs. Profit

You might confuse cash flow for profit, but these two are never one and the same. They serve a different purpose and are not created equal. A business can be considered profitable, but may not be in a position that brings in money. The real income of your business will be determined once the Profit and Loss report has been turned in. If you have not really paid off your debts and loans yet, a steady cash flow is not yet in the picture.

Cash Flow Budget Preparation

Anticipating receipts, expenses and other income should be kept in mind as it is part of preparing a cash flow budget. You don’t just provide budget without preparing a cash flow projection. You can turn to bookkeeping software packages with features that allow you to produce graphs and reports easily. 

Note that a cash flow projection does not deliver 100% accuracy. This is just a prediction of your financial activity, but it allows you to track your cash efficiently.

How to improve cash flow

There are various ways you can improve cash flow such as cutting down on your expenses or reducing the number of contractors or employees you have. If you have items that are slow-moving, you can also avoid overstocking them. You can prevent falling behind payment schedule if you only take out a short-term loan. It helps you pay your debts and other obligations in a timely fashion. If you can’t pay your debts all at once, you can also stagger payments where possible.
As a business owner, you should be keen on checking your financial activity and cash flow is going to be an essential part of it. If you fail to keep track of your expenses and other financial activities, you might be surprised to discover in the end that more money is going out instead of coming in. Check financial reports regularly so you know where your business’ financial status is at.

Tax Systems And Other Impediments To Business Growth

Business expansion is a big decision and it can create a rippling effect on other factors of your business. It is not just a decision that you make on the spur of the moment. You need to consider several factors before you can decide which direction you are going to take. However, there are several factors that can stop a small business from growing. These factors are part and parcel of having a small business. They only become deterrents when entrepreneurs decide on taking their small business to a higher level. You may need to take a look at these several factors first, before you can decide whether or not you are going to broaden your busines horizons.

Tax systems and other barriers to business growth:

Limited access to the privileges you get from having a small business. 

When you are running a small business, you are also entitled to gain complete access to various small business concessions, which are related to GST, income tax, CGT and many others. Once you decide to expand your business, all of these will be no longer be accessible for you. When taking the road to business expansion, you need to ask yourself if you are willing to gamble or if you are ready to lose access to these concessions. 

Business restructures. 

If you want significant change to happen to your business, you need to welcome restructures. Although it is not going to be an easy decision, being familiar with the effects that restructures make can help you stay on the right track. If you are going to switch to a more effective business structure, you also have to be prepared for the challenges ahead of you. One of the challenges that you are going to face is the CGT liability. 

Payroll Tax  

One of the essentials of putting up a business is making sure that you pay the right tax including payroll taxes. The government is very particular with tax payments and they are keeping their eye on small businesses as well. This is why you need to take it seriously if you really want to run your business smoothly. You subject yourself to a series of problems if you fail to pay on time. You can also get stuck in debt which can take a serious toll on your business. Make sure you keep your payroll taxes in check and avoid falling behind your payment schedule because debts can pile up faster than you know. 

For business owners who decide for an expansion, it is necesary to step out of the business' comfort zone. There are some challenges along the way but once you are familiar with how your business works, everything will fall into place. It does take time before you can reap positive results but it will be all worth your efforts. 

There are other barriers to fulfilling your dreams of expanding your business. Regardless of the obstacles that you will face, you need to keep in mind that you can obtain remarkable results if you are going to consider the risk factors and the steps to take to reduce the possibilities of failing. 

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.

­ Questions? Give Andrew a call 0450 605 592

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