MYOB – How to deduct and record child support in payroll

MYOB – How to deduct and record child support in payroll

Client called – Asked how to deduct and record child support in payroll for a staff member.

Answer – We will need to set up a new Payroll Category, (as there is none by default), create a new liability account to track child support, set the amount requested, tick on the category for the staff member, check it deducts correctly in a pay run, then later when paying the child support as employer, allocate back to the new liability account.

Here’s how –

1.     Go to Payroll Command Centre > Payroll Category >Deductions Tab > New… OR… Cards Command Centre > Cards List > Employee tab > open employee required > Payroll Details > Deductions > Create New Payroll Category (or from Actions down below in earlier V19 etc).

2.     Set up with name (add employee as it is usually unique for them, and different for another who may also have Child Support obligations), allocate to a NEW Liability account you create, set the calculation to % or $ set amount.

3.     OK to save, then ensure this is now ticked on for that employee back in Deductions in his card (if you came from the Payroll Centre, click the Employee icon and tick the employee it relates to) > OK to close card.

4.     Start a sample pay run and ensure the calculation works.

5.     It should be 4% of the gross salary in our example – $769.23 x 0.04 = $30.769 – correct.

6.     WHEN Paying Support – allocate to the new Child Support Liability account.

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Business Tax Tips – Is there GST on sale of assets?

Business Tax Tips – Is there GST on sale of assets?

Many business owners aren’t sure and wonder is there GST on sale of an asset (business asset)?

The GST law states a business must remit 1/11th of any income from a taxable supply. A taxable supply is any item not GST free or input-taxed. Examples of GST free items are exports, medical supplies, basic food, plain milk and water.

Examples of input-taxed items are interest and dividends. So if the business receives income from any item, other than these, GST probably applies even though the sale might not be within the normal trading practices of the business.

For example 1/11th of the price received for the sale of a business vehicle must be remitted to the ATO as GST. This is so even if the vehicle has been depreciated, purchased before 1st July 2000 or purchased brand new in 2000/2001 and no input credit was claimable on the purchase. The above also applies to a business selling off some of its plant.

Please note the above refers to income, not funds received by way of a loan. There are special rules regarding the sale of a business. These special rules apply to Goodwill, Plant, Motor Vehicles and Business Premises sold as part a business that is a going concern. It is important to consult an accountant before signing any contract to sell a business without paying GST as the special rules have a few traps.

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Business Finance 101 – The Accumulated Depreciation asset account

The Accumulated Depreciation asset account

The Accumulated Depreciation account is an asset account  on a company’s balance sheet that 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 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 the depreciation calculated)

Total Plant & Equip      $17,500

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Cashflow Tips – Cash Flow and Budgeting – Are they the same?

Cash flow Tips – Cash flow and Budgeting – Are they the same?

While it can be said there are similarities between a cash flow forecast and a budget because they seem to show similar information, be aware there is a difference and each method has different uses. Both are great tools in the accurate financial management of the business or organisation.

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

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

Budget – shows 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). It is usually prepared over 12 months, and focuses on profit. In addition:

• Accruals and other non-cash adjustments such as depreciation are included
• Large capital purchases are be included
• A budget also provides a benchmark to then monitor performance – after each month’s 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 above comes in.

Both Cash Flow and Budget reflect the planned objectives the organisation is aiming 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

For 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.

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 40-64 days after sending out the invoice. This would be reflected in the cash flow, but not the budget.

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Reckon/Quickbooks – Accounts Hosted and PC – How to change the email message for sales invoices

Reckon/Quickbooks – Accounts Hosted and PC – How to change the email message for sales invoices

(> means click)

To change the standard email template wording –

In Reckon Accounts > Edit > Preferences > Send Forms (in Left menu) > Company Preferences tab (on right panel)

At “Change default for:” choose form list which template you want to alter –

Eg. Invoices, Statements, Remittances, etc

Choose other options

You can blind-email (BCC) to yourself for a copy or to another email if required

 Edit the wording in the panels, as you prefer!

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