Brisbane Bookkeepers & Taxation Blog

Everything Bookkeeping & Taxation in Brisbane!

All You Need To Know About Keeping Your PAYG Payment Summary

file0001770792325As a business owner, you will be asked to run through your PAYG (Pay As You Go) payment summary and when you have nothing to present, it can spell trouble on your part. It is easy to get sidetracked by other business obligations and forget about the payment summary. You may consider these summaries less important especially when you lodge timely payments. However, there can be instances when you need to file a payment dispute and if you don't have any concrete proof to show, necesary corrections and updates cannot be made. 

What every business owner should understand about PAYG?

 There are two types of PAYG that every business owner must be familiar with: the first one is referred to as Pay As You Go Installment or PAYGI. This refers to the tax installment payments business owners make to the ATO. The second one is called Pay As You Go Withholding or PAYGW. This refers to the tax that employers or business owners collect from payees, workers or employees. The summary provides the payment made and the amount withheld throughout the financial year. 

The importance of payment summary to your business:

 Not everyone has a sharp memory to remember the payment made by the employees. Business owners are often busy on other tasks that tracking payments become the least of their priorities. With PAYG payment summary, it will be much easier to take note of the payments regardless of the date the payments were made. If there are discrepancies on the information, erroneous entries can be corrected right away. 

The benefits of keeping a copy of PAYG payment summary

1. The process of filing taxes becomes much easier.

When it comes to filing your taxes, accuracy is going to play a huge role to ensure a stress-free process. If you already have a payment summary, there is no need to do some calculations as figures are available. You are less likely to overlook essential details such as withholding taxes.

2. A detailed accounting information is obtained.

You can get very specific information about each payee right off the bat when you have a copy of PAYG payment summary. Their tax numbers, tax liablities, salary and earnings are available. In case payees need to gain access to the relevant information, you can provide what they need easily. 

3. It will be simpler and faster to generate reports.

The fact that PAYG information has already been sorted can save you a great amount of time generating reports. Since the information for each payee is available, discrepancies can be spotted easily. 

4. You can answer queries accurately.

If payees are going to ask about under or over-payments, you know where to get the answers from. The summary can also remove doubts especially when it comes to deductions. If you are being audited, the summary can help you stay on the right track. The request for accounting records can also be reduced when the summary is available. As a result, financial transactions become more efficient and errors are effectively reduced. Not only do you spend less time gathering data, but you also complete the task in a timely manner.

Why Good Cash Flow Management Is Essential

ball 163345 1280

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.

­ Questions? Give Andrew a call 0450 605 592

­