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Business Financials 101 – Cash Flow – What is the Difference between Cash Flow and Budget?

What is the Difference between Cash Flow and Budget?

What is the Difference between Cash Flow and Budget?

There are similarities between a cash flow forecast and a budget as they seem to show similar information, yet there is a difference and each have different uses. Both aid you in the accurate financial management of the business or organisation.

Cash flow forecast – details when the actual cash –  receipts and payments are planned and expected to happen:

  • It predicts when the actual income and expenditure occurs in the actual bank account;
  • Does not consider accruals and adjustments such as depreciation are excluded, only ACTUAL cash in and out;
  • However large capital purchases such as assets (usually not recorded in a profit and loss and budget) are included in a cash flow forecast, as to HOW they will be paid – eg show loan money in and payments out;
  • The full year cash flow forecast is usually shown on a month by month basis. But in it can be broken down into fortnightly or even weekly depending on the requirements.

Budget – details overall what you plan to do with your finances based on expected sales and expected costs, and is similar to Profit and Loss (and a Balance Sheet)

This is usually over 12 months, and focuses on profit. In addition:

  • Accruals and other non-cash adjustments such as depreciation are included;
  • Large capital purchases will be included;
  • A budget also provides a benchmark to then monitor performance – after each month accounts are finished we compare what actually occurred against what was budgeted or planned to occur;
  • Usually the full year budget is prepared in months like the Profit & Loss;
  • A budget is NOT used to monitor the amount of cash in the bank accounts – that is where the cash flow forecast comes in.

Both Cash Flow and Budget reflects the planned objectives the organisation is trying to achieve and are linked to the strategic and business plans of the organisation. The main difference is based on:

  1. The type of the transaction and;
  2. The timing when receipts and payments will occur.

As a simple example: A budget will record the income when you have sent out the invoice whereas your cash flow will record it when you actually receive the amount in your bank account. Always remember not to assume that debtors will pay the following month. Often it may be later which is why it is important to know your Average Debtor Days which may show that payment occurs typically 64 days after sending out the invoice. This would be reflected in the cash flow, but not the budget.

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MYOB / Quickbooks – Claiming your Chiro for a Work-Related Back Injury – Through the Business

MYOB / Quickbooks – Claiming your Chiro for a Work-Related Back Injury - Through the Business

MYOB / Quickbooks – Claiming your Chiro for a Work-Related Back Injury – Through the Business

A bookkeeper said her client was seeing a chiro due to a work related back injury? He was paying the gap expense’s (private health insurance is paying the rest) through the business and he is allocating it to “sundry exp’s”, he is not claiming through work cover..  I don’t feel its right to put as ‘sundry exp’s’ ?? What should I change it to.. ‘other employee exp’s’??

Answer – Whether it’s claimable should be asked to the tax agent, as your affairs are known by him/her – generally I don’t think they are claimable for the business.

It is better to avoid Sundry and Miscellaneous accounts – it makes more work for the bookkeeper and accountant at year end – as they need to see what the transactions are.

Best to use a good account name so the tax agent can decide what is claimable or not and then they don’t need to sort out all the different transactions mixed together in one account.

So I would create another account under 9=xxxx and call it “Work Injury Expenses” – they may be claimable in the personal return.

But I cannot see that Injury expenses are claimable as they are not “for the everyday running of your business in the same income year you incur them” (quoted from ATO site and this link also has a good list of what IS claimable).

As for what individuals can claim, a good start is the Guide to claiming Deductions HERE
But also ask your tax agent, or call the ATO.

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


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Business Tips – Taking on an Employee or Contractor? Beware!

 

Taking on an Employee or Contractor? Beware!

Taking on an Employee or Contractor? Beware!

Your business is getting busier and you look for more staff to help. Not always easy to find good staff, but should they be an employee or contractor? You need to get it right because penalties and back payments and interest can apply if the relationship is wrong. You are obliged to know the difference, so beware and learn the difference! The main section starts HERE.

The ATO site says –“Many businesses are getting this decision wrong as they are basing it on incorrect information. Often workers who should be employees are being incorrectly treated as contractors.

None of the following makes a worker a contractor:

  • Your business only needs them for short term or irregular work (such as during busy periods)
  • You are using their specialist qualifications or skills
  • The industry ‘norm’ is to use contractors
  • They have an Australian business number (ABN)
  • They have a registered business name

Just because a worker has an ABN or registered business name does not mean they will be a contractor for every job. To determine whether a worker is an employee or a contractor, you need to consider the whole working arrangement and look at the specific terms and conditions under which the work is performed.”

And a table helps define the difference between employee and contractor – eg one is psi for the hours, while the other for the result, only one can delegate the work by subcontracting and paying someone else to do the work, one uses and provides their own tools while the other has their tools supplied by your business and other factors that differential the two include commercial risk, control of work and independence – see the great table at ATO site HERE.

The ATO site also emphasises myths that commonly arise about employee/contractor decisions. It states:

“There are many myths about what makes a worker an employee or contractor. Often businesses rely on these myths and get the employee or contractor decision wrong.

Myths

To ensure you know fact from fiction when determining whether your worker is an employee or contractor, we discuss some of the most common myths about:

Another great part of the site is the decision tool:

“To get an answer about whether your worker is an employee or contractor, use our Employee/contractor decision tool. It is free, anonymous and easy to use.”

What are your experiences of employing staff? Do you always determine if you will employ or contract? Write about it below!

 


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Quickbooks Hosted – Printing Problems?

Quickbooks Hosted – Printing Problems?

Quickbooks Hosted – Printing Problems?

Quickbooks Hosted gives many advantages that “cloud computing” can offer. But have you had printing problems? Error messages such as : Error: Printer Settings Damaged, or Error: ‘QBW32 has performed an Invalid Page Fault in module qbwwpr32.dll’, or even Error: ‘QBW32.exe has performed Invalid Page Fault in spool32.dll’?

Or maybe the following erratic behaviours such as –

1. Form part printing

2. Won’t print from Printer Setup or print a report from QuickBooks display

3. Can’t view or edit the printer settings in a report

4. Printer settings loose changes for margins, etc

5. Emailing problems

6. PDF image is only partially created or not saving

7. Can’t select a different printer when printing BAS Reports

8. Printing a cheque whether by normal print or print forms window, cause Quickbooks to freeze.

Then the QuickBooks printer files (qbprint.qbp and wpr.ini) are damaged.

Steps to a solution

Firstly, when logging-in – ensure that you tick the printer box and the ports box in the RemoteApps window.

You may also need update your printer driver from the manufacturer’s website – Google your brand and model code.

Then determine whether the printing problem is with QuickBooks or another component of your computer system.

1. Your printer is working correctly – that is, other applications on the computer are able to print to this printer.

2. Are all users on QuickBooks Hosted are having printing difficulties.

3. If possible, print to another printer to see if the problem still occurs.

4. Log in to QuickBooks Hosted on another computer and check whether the same problems are occurring.

If are satisfied that the problem is with QuickBooks, use the QuickBooks Hosted System Maintenance tools to delete the printer files. It is safe to delete them as QuickBooks will recreate these files when it is launched again.

How to use the QuickBooks Hosted System Maintenance

1. All users must exit QuickBooks and log off QuickBooks Hosted

2. Launch the web browser, go to: https://www.reckononline.com.au/login/  – then

3. In the Select your product box, select Manage Your Account

4. Enter your username and password to open the Manage Your Account index page

5. On the left-hand side under System Maintenance, click on Delete Print Files

6. In the Delete Print File table, click on the Delete Print File hyperlink

7. File Deleted will appear in red when the process is complete

8. Click on Logout to end this session or on Help to select another function.

Log into QuickBooks Hosted and you should now be able to print.

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Business Tax Tips – ATO and GST Owed to Them – Are You One Like Many Businesses?

 

Business Tax Tips – ATO and GST Owed to Them – Are You One Like Many Businesses?

ATO and GST Owed to Them – Are You One Like Many Businesses?

Ignoring how much GST may be an outstanding debt to the ATO, the ATO recently reported that for the 2009/10 year there was a 5.4% GAP between what statistics say should have been collected and paid as GST and what was actually reported to them.

2011/2012 GST Performance Report

GST PERFORMANCE

The ATO 2011-12 performance in relation to GST is in!
It says:
$46b GST (up from $44b in 09-10)

GST Debt outstanding

  • Balance of $5.1b of which only $3.5b is collectable ($4.3b & $3.2b respectively 09-10)
  • $886.8m written off
  • Ageing of balance by no of cases 13,059 totalling $191.7m90days

Interest paid on Delayed refunds (ATO withheld and then had to pay interest) $15.7m ($9.7m)

For a full report http://ato.gov.au/content/00336240.htm

 

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MYOB – Recording Overseas Purchases and GST on Customs Invoice

 

Recording Overseas Purchases and GST on Customs Invoice

MYOB – Recording overseas purchases and GST on Customs Invoice

Client is importing goods from overseas and selling in Australia, and wanted to check the correct recording of the transactions.

There is NO GST on the goods when bought from the supplier, but many items have GST charged on the calculated Australian value based on the exchange rate on the day.

Whether you use Purchases or Spend Money, the purchase or amount when spent will have NO GST. The Customs Agent invoice will have a large amount of GST and some other charges.

You need to use FRE on the purchase/payment of the goods in foreign land for the Australian amount the bank transfer calculated.

On the customs transaction, let’s say the GST is $1800, so with tax inclusive ticked off, on purchases account line do 10x the GST and type $18,000 use GST code, on second line, to purchases account do -18,000 with N-T code. There should be $1800 GST raised, but the amounts to purchase account will cancel each other out.

When you report GST, on the GST Summary Report, on the GST line, there will be $19,800 under Purchase Value with $1800 under tax paid. There will also be -$18,000 on the N-T Line and no GST. If you re-create the report by customise and showing tax EXCLUSIVE, the report will show $18,000 on both lines and they cancel each other out. There will be  $18,000 on the FRE line, which in the correct amount to declare.

The lesson is you need to ADD the GST Purchase values on ALL FRE, GST and N-T lines to get the correct Purchase GST to declare at G11 on the BAS form.

There can be other ways to record – do you have another way? Tell Us!


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Quickbooks – Version 2013 – Appearance and Changes – What do you think?

 

Quickbooks – Version 2013 – Appearance and Changes

Quickbooks – Version 2013
Appearance and Changes

The 2013 has been out for a while and like all things, some like it some don’t. There has been time to consider the changes, so how are you finding it? Comment below!

Here are some of the changes –

  1. Home Page and Icon Bar – there are small changes, especially the icon bar on the left – you have limited options for change, and you can’t remove the “Do more with Quickbooks” section nor change it, but you can minimize it – click the arrow at the top of the pane. The icons are now grey and can’t be changed either. You can use the top icon bar – turn on by going to View > Open Windows List.
  2. Font Increases and spacing on forms, such as Invoices – ensure you use full screen to see more if you find you are scrolling up and down. There is more area at the top of the invoice, and the bill and ship-to areas are smaller, as well as new light grey and small text at the bottom and other areas – do you find these hard to read?
  3. Ribbon tool bar to assist in forms – eg Invoices. Note that the ribbon now contains some commands that were accessed by Right-Click – see them in the ribbon now
  4. Desk-top colour cannot be changed and the company is looking at whether to re-introduce. In earlier 2012 and before versions, change colour as follows – >Edit >Preferences >Desktop View >My Preferences >Colour Scheme >choose the colour you want.

Leave a comment about your experiences with 2013 – share the conversation!