Bookkeeping – Employee Entitlements – Staff Entitlement balance on old staff

Bookkeeping – Employee Entitlements – Staff Entitlement balance on old staff

With a new client the last couple of months, we do an overall review, then as time permits, review the settings and details further, such as staff entitlement balances in the system, and send over a report to review. The client emailed:

“Clearly our staff records are WELL out of date as most of these people are no longer with us, and been paid out their leave on termination.

I will edit this document and highlight whom has left –

Can you also please ensure that the leave is correctly accrued based on their base wage “ordinary pay” and not over that please, as per fair work guidelines.

I also need you to check DS, as he resigned as was paid out, and then re-commenced employment with us.

DS left at the end of February, and then recommenced on the 13th August.

Therefore his employment is broken, therefore can you please check this figure.

I would suggest the one I have highlighted was the one he was paid out on resignation.

I would also suggest that Director’s leave details are incorrect considering X should be from 1987, and mine 1992.”

Answers –

Staff no-longer with us – NOTE in MYOB, the report will include inactive staff – and most of these are also part of what needs tidying up for STP – Single Touch Payroll (many also have incomplete addresses and info that causes an STP error, as Hari and I found in Oct 2018).

Many DO NOT have TERMINATION dates – that is why they still have balances – another part of the STP tidy-up required (termination dates, which also eliminates requiring the address detail).

Leave Balances left – it still may be correct and paid out, as you said they had been paid – eg when they were paid leave, if another payroll category is used – as MYOB recommends, called “Unused Holiday Leave”, then the balances of accrued leave will not be reduced to zero – depends how the previous bookkeepers did it.

Termination dates – from Hari and my investigation weeks ago, it looks like many of the old staff are missing TERMINATION dates – this automatically wipes off the leave balances.

I believe that may be the case with all the old staff you highlighted.

Often termination is not manually entered on staff file – so if they left in past years, not easy to find the dates – we may need to enter 30/6/17, last tax year for saving time – TBA.

Hari and I started that back in Oct for half an hour, but there were over 65 errors/issues including termination dates that needed attention, so we had to leave it as daily work and wages was the priority, as reported to you, we need to come back to STP.

Leave Accrued Calculation MYOB – Hari and I reviewed the calculations in MYOB already – back in Oct  – they are set correctly (%) and to be in proportion to work.

The problem is they cannot be given a max –

It is difficult –

If certain staff consistently work OVER 38 hrs, we could set a fixed rate per week at 38 hrs.

But – if we use “Equals” for a fixed number of hours a week – they can still accrue too much if they work UNDER 38 hrs.

And if they SOMETIMES work LESS than 38 hrs – they will accumulate TOO much.

Not sure why MYOB has not allowed a max to be set – but it must not be requested enough, above the many other updates they get requests for each week and have to prioritise which are urgent.

For staff & directors/owners, we can us the Fair Work calculator to check the correct leave – however, have past year’s leave for you and T been recorded – manually and in MYOB correctly?

If so great, if you are sure and can show how the amount was derived – we can update both your records with those amounts.

For all staff – since MYOB rolls the payroll over each year – past years cannot be accessed to see what was recorded,

EACH year needs to be restored and opened!

It is a bit of a job to restore back-ups of each MYOB payroll year back up after payment summaries are completed.

And from asking T in OCT and our search of the system, there is no central storage of all the year-end back-ups of all past years of the MYOB file – unless you know/have?

(This is common in many businesses – the back-up is not kept or not labelled well, and are very rarely needed again – but are part of the record-keeping obligation annually!)

It may require estimates for current staff leave – eg Ann leave is not the same each year at Christmas it seems, depending on the work load in Dec/Jan?

We can start a Calendar to record shut downs over Dec/Jan form now on, so we know the current staff annual leave.

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much!

Or ask a question – Email info@accountkeepingplus.com.au or call 0407 361 596 Australia

Advertisements

Business Finance 101 – The Accumulated Depreciation Asset account on Balance Sheet

The Accumulated Depreciation Asset account on Balance Sheet

The Accumulated Depreciation account is found in the assets on the company’s balance sheet and reports the amount of an asset’s cost that has been depreciated (written off) up to the date of the balance sheet. The asset’s original cost is recorded in another asset account eg Motor Vehicle at Cost, Office Equipment at Cost, Plant and Equipment at Cost.

They are shown together with the Assets at Cost account debited when assets are posted there and the Accumulated Depreciation is credited each time that Depreciation Expense is debited (usually for small business depreciation is calculated at year end by the accountant). Since Accumulated Depreciation will have a continually increasing credit balance it is referred to as a contra asset account.

As an example let’s say that at the beginning of the current year a company’s asset account Plant & Equipment has a balance of $50,000 which will be the at-cost amount (net GST) from the previous year. From the time of purchase until the beginning of the current year the related Accumulated Depreciation account has accumulated a credit balance of $25,000 over the past 3 years. The Balance Sheet will also report the net of $50,000 less $25,000 leaving a Plant & Equip balance of $25,000 which will be used to calculate the next depreciation allowable.  So at the end of the current year the company debits Depreciation Expense for $7,500 (if that is the calculation at 30%) and credits Accumulated Depreciation Asset for $7,500. At the end of the current year the credit balance in Accumulated Depreciation will be $32,500.

Start of Year     

Plant & Equip                 $50,000 is constant unless more equip purchased

Accum Deprec              -$25,000

Total Plant & Equip        $25,000

End of Year

Plant & Equip                  $50,000

Accum Deprec               -$32,500      has $25,000 plus $7,500 (if that is is                                                             the depreciation calculated)

Total Plant & Equip        $17,500

Need help? Not sure?

Call for FREE 30min advice / strategy session today! 0407 361 596 Aust– no obligation!

You also get FREE 30 min to assess the setup of your company in the software,

DOWNLOAD a FREE “Bookkeeping Quarter Checklist” to get organised! CLICK HERE

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia

Cashflow Tips – Ways to raise cash for business – Some business cashflow tips

Cashflow Tips – Ways to raise cash for business – Some business cashflow tips

Handy ways to raise cash for business – some cashflow tips from an Australian Entrepreneur, Brad Sugars –

1.  Know your expenses when discounting
Although discounting — through coupon sites like Groupon and BuyWithMe or even on your own — can help you attract new customers, selling anything at a loss won’t help you generate a positive cash flow.
My view? Never discount. But if you do, know the costs and impact of what you’re offering and be prepared for the fallout. Among other things, you’ll need to know your overall cost basis — that is, what you paid for something. You should also know your how much you should ideally charge, the cost of your offer and the profit margins on your product or service. How else will you know if your discount has you breaking even or operating at a loss?

2.  Bundle products and services
Even though discounting isn’t always recommended, adding value is. By creating bundles of products or services, for instance, businesses can inject tremendous amounts of perceived — and tangible — value into their offerings for very little cost.
A good example is the maintenance agreements some car manufacturers are now providing with the purchase of a new car. Not only does that type of offer help allay a major concern or frustration customers have – paying for a breakdown or time lost at the dealership – it also offers real value in terms of limiting out-of-pocket maintenance costs.
Put more simply, you can increase your price point initially since you’ve helped lower a perceived risk by offering something as basic as a guarantee.

3.  Create a back-end product or service
If you know your initial offer to reel in new customers won’t be profitable (loss leader), find ways to create higher price points on back-end products or services. Perhaps the first hour of catering is free, but subsequent hours shoot up in price. Or maybe an attorney will agree to draft your will for less if she thinks you’re a likely candidate for estate-planning consultations in the future.

4.  Encourage repeat business
If you’re in a volume-driven business like retail, landing repeat shoppers is your holy grail for cash flow, profit and growth. In most cases, you won’t start to profit on a customer until the third, fourth or even fifth transaction. For this reason, you need to devote your efforts toward getting customers coming back — and more often.
Consider loyalty programs, VIP offers and other frequent-shopper programs, which can be ideal vehicles for systematizing repeat business. Also keep in mind that the word “free” is a popular incentive among shoppers, and the costs of funding a freebie may easily be covered as long as you’re dealing with excess inventory or low-cost, but valuable add-ons.

5.  Pre-sell products or services
For owners who want to encourage sales sooner, pre-sell your products or services. You might couch the pre-sale as a way for consumers to plan for their future or get a jump on shopping. You can also offer to take old, out-dated products back at a pre-arranged price.

Taken from Entrepreneur article HERE

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia

Business Tips – Ideas to grow business sales

Ideas to grow business sales

Here are a couple of ways your business can grow with some work and persistence!

Idea 1 – Add Complementary Products and Services
One way to increase sales and bring new customers to your sales base is adding new complementary products and services. But how do you decide what to add without turning your business into a third-rate department store?

Start by reviewing the definition of your business. For example, if you sell house siding, ask yourself, are you in the siding business or the exterior building materials business? The result may be that you redefine and expand your business to add gutters and downspouts, roofing and other coverings to your product line!
Another surprisingly simple way to build a list of new products or services is to ask your customers what else they might buy from you if your business sold it. A few friendly conversations with customers and staff will likely get you more information than thousands of dollars spent on professional customer surveys. Be sure to ask how much they would want to buy and how often to get a sense of whether the demand would be great enough to warrant the additional costs of building up this area of your business. (To learn how to build your network, read Small Business: It’s All About Relationships.)

Idea 2 – Look for New Market Niches
One way to find a new market niche is to seek alternative applications for your existing products and services, and we have a Cheez-y example of how this works. Kraft started out with a spreadable cheese product in a jar that could be spread on crackers for snacks – it was called Cheez Whiz. This was fine, but selling a cracker topping will only take you so far in this world. That’s why Kraft expanded the scope of Cheez Whiz and started promoting it as a base for a variety of dips and food toppings. Soon Cheez Whiz was an ingredient in all sorts of recipes. Kraft wasn’t satisfied with only human consumption though. One of the latest unique uses of Cheez Whiz comes from a California fishing lure and bait company that sells Cheez Whiz in a pre-packaged bait application, and it buys Cheez Whiz in 55 gallon drums!
If Kraft had stuck with the spreadable-cheese concept, sure, it would have covered a lot of crackers. But by thinking outside of its original intent, Kraft expanded the market and attracted customers it never would have targeted initially.

(Source and more Ideas Investopedia)

“What is your tip? Consider posting a review or comment for us below!”

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia

Business Tax Tips – Starting a business – The tax and super responsibilities

Starting a business – The tax and super responsibilities

Starting a business? Do you know your tax and super responsibilities? The ATO (Australian Tax Office) have many things to support you with the running (and start-up) of your business.

Here is what is available with some explanation –

From ATO site –

When you start a business, there are tax and super responsibilities you need to be aware of, including:

• the tax implications of your business structure
• whether you’re entitled to an ABN
• registering your business
• records you need to keep
• deductions you can claim.

We provide information about the key things you need to know and do when starting your own business.

Find out about:

• Before you get started
• Getting up and running
• Reporting and paying tax
• Supporting your small business
• Business Assistance Program

For your tax and super basics, this video is a good starting point:

“If we helped solve your problem, please consider posting a review or comment for us below!”

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia

Business Finance 101 – How can a company have profit but no cash!

How can a company have profit but no cash!

How can a company have a profit but no cash to pay its bills? And what does it mean when accountant’s say “Profit is not Cash”?

If you have cash sales (cash accounting)  profit will usually correlate closely to the actual cash you have.

But if you invoice (accrual accounting) clients for goods and services, the timing of when customers pay has an effect on the cash the business actually has.

Not everyone pays on time, but if they did you would have regular cash flow, and only be delayed by the initial terms at the beginning, eg 7 days, 30 days. Regular payments will mean regular flow of money to cover your expenses.

What if clients are late paying? Then the debtors on your balance sheet will grow (that is where the invoice “waits” for payment) until the client pays.

As an example, in our previous post explaining Profit and Loss, see HERE we gave an example of Profit and Loss resulting in $15,000 profit.

But what if you were only paid half of the sales at the end of the period (which is more close to reality – eg most pay the next month or two…)

Sales (invoices)                                   $100,000

But only paid (actual cash)                  $50,000

Which goes to bank (in assets)

Net Left                                                $50,000

Which sits in debtors/receivables (in assets)

Note – PROFIT would be same in accounting terms,

Note – but CASH Profit would be -$35,000 (negative!)

That is, if you still had paid all your bills, you would still have to find $35,000 to pay them – see here –

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much!

Or ask a question – Email info@accountkeepingplus.com.au or call 0407 361 596 Australia

Cashflow Tips – 5 ways to improve cashflow business success

Cashflow Tips – 5 ways to improve cashflow business success

Here are 5 ways to help improve cashflow business for success and get it under control – remember it is an on-going monitoring that keeps you on top – measure and tweak, measure and tweak…!

One of the things many business find a burden is that cashflow can easily get out of hand and several studies suggest that financial miss-management is one major contributor to business failure.

Take action on these –

1.       Look at who owes you – WEEKLY.

Check your debtors/accounts receivable report every week – get onto those tardy payers – send Statements a minimum every Fortnight! A month is too big a gap and easy to slip the mind…

2.       Plan for highs and lows.
Be aware of possible lean cashflow patches coming up and plan for them!. Avoid major purchases from your business’ working capital unless you are sure you have cash to cover it. A cashflow budget will help you see this – eg when revenue is down on forecast you expected (eg the average monthly required, or based on same time last year, or certain % growth if that is the current trend).

3.     Have finance products working to your benefit.
Overdrafts, premium funding, lease facilities and cashflow funding products can all be excellent tools to help boost a business’ cash. Even the business credit card can be a good way to ease the squeeze as long as you are sure the debt can be paid before interest kicks in, which is the best way to handle credit cards!

4.     Avoid penalties.
Keep on top of credit cards, taxes and compliance to save the cost of fines… and the stress!

5.     Keep your hands out of the till.
Make cash drawings for personal purposes as minimal and follow conservative cashflow forecasts. Take a weekly wage for yourself so it’s easier for the bookkeeper/accountant, and gives stability to regular expenses and drawings so you can PLAN better!

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia