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Bookkeeping – 7 tips for business health by keeping healthy books/accounts!

Bookkeeping – 7 tips for business health by keeping healthy books/accounts!

Bookkeeping – 7 tips for business health by keeping healthy books/accounts!

Here are some timely reminders from J T Ripton at smallbizdaily.com

Accounting is often one of the toughest jobs for small business owners, especially those who don’t have a lot of experience or a strong background in bookkeeping. Following a few simple tips throughout the year can make it much easier to track expenses and file taxes when the time comes.

1. Plan Ahead

The first step is to look ahead at the potential needs for your company and plan for these expenses. For example, if you know that you will need to replace expensive equipment in the near future, make sure to set aside funds every month to cover the costs. Other major expenses that may arise include office supplies, inventory, maintenance, and repairs. You can also set aside money each month to cover the annual taxes, so you won’t stress about the amount you need to pay when April 15 arrives.

2. Use Reliable Software

Business bookkeeping software has come a long way over the past decade, and some programs make it much simpler to input expenses and cash flow. MYOB, Reckon and Xero allow you to keep everything you need in one place for easy recovery as needed. From tracking the status of unpaid invoices, to creating customized invoices, to tracking billable hours and budget spent, online accounting software is a great way to save time and money. Some programs like Dropbox and  Google Drive also offer cloud access to your files, which means that you can pull up information from anywhere instead of having to go to the office to find a document or receipt.

3. Separate Business and Personal

If you use your business credit card to pay for a personal expense, make sure to track that and separate it as soon as possible. It is much easier to separate expenses if you use separate accounts to pay for them, but you may accidentally use your business card for a non-company purchase. Business costs are tax deductible, so make it easier on yourself by separating them every time you make a purchase.

4. Schedule Yourself

When it comes to bookkeeping, it might seem easier to just put it off until the end of the year. However, this is going to result in a big headache when you are trying to track down receipts and invoices that may be months old. Schedule time each week or each month to work on your books and stay as current as possible. It may be tempting to skip this every so often, but when you can stick to the schedule, it will be much easier to stay on top of the finances without feeling so stressed.

5. Review Invoices

Be sure to keep close track of your invoices, since some (clients) are notorious for paying bills late. You can probably use your accounting software to run a monthly report and determine what invoices are still outstanding. This gives you the flexibility to send reminders and follow up on outstanding bills before too much time passes. It is also smart to keep a close eye on your cash flow statement, so you can avoid the dreaded insufficient funds message on a payment.

6. Call in a Pro

For some things, it is definitely worth the investment to bring in an expert. You may rely on a financial advisor who specializes in your industry, or you might just need an accountant who can pay your taxes and payroll. You can even use a student intern who is working on an accounting degree if the budget is tight.

7. Track Expenses

Most experts discourage business owners from using cash to pay for any business expense, since it can be very difficult to track. When you use a credit card or debit card, you can view the transactions right away and make sure that all items are true business expenses to avoid issues with write-offs and taxes.

Accurate bookkeeping is an important part of business ownership, so it is crucial to stay on top of the expenses and invoices to prevent problems. If you have questions about bookkeeping, you can always rely on an expert, but once you have your system down, it should be much easier to keep track of the money coming in and out of your company each day.

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


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Cashflow Tips – How to Improve Cashflow in 30 days!

Cashflow Tips – Claiming Business expenses – Consider what you want to achieve

Cashflow Tips – How to Improve Cashflow in 30 days!

One of the services we help our clients with is teaching how to improve cashflow – and our aim is 30 days! – mainly how to get paid sooner is the top issue they face! A simple method we found is simply send statements EVERY FORTNIGHT – the majority of busy business owners and accounts people forget – you are not their priority.

Results we achieve –

  • Frequent reminders has cut accounts payable / debtors from 60-90 days to majority 30 days and fewer in 60 days! – nearly halved the average payment time in many cases!
  • Calls have been more than halved!
  • Regular email saves time, stress and cost! – The squeaky wheel gets attention!

But there are always the stragglers or those in financial stress that may not be their fault, and often they are a bit embarrassed to call to explain – so sometimes a follow-up call is needed.
And then there are the down-right determined to string you out (the old-fashioned attitude to lean on creditors (YOU)), or financially tight businesses that are only in to win themselves – sometimes they may become a loss.

Here are 5 other tips from Elan Pamensky at Dynamic Business

Cashflow is the lifeblood of any business and more SMBs have been destroyed through cashflow issues than from any other cause. The last thing you need is to be stressing about whether you have enough cash to pay your own suppliers when you should be running your business

1. Compare Your Budgeted and Actual Cashflow

When you made your realistic budget for this financial year, you predicted  your income and expenses so that you could use those figures in your planning. The purpose of this budget was to check whether your cashflow was on target and take action if it is not.

If you are having cashflow issues, you need to determine what is at the root of the problem – lack of income, out-of-control expenses, or late payment of accounts by customers are the most common causes. Once you identify the cause, you can do something about it, but it all starts with awareness.

2. Be Clear About Your Payment Terms and Follow Up

You’d be surprised how many businesses forget this step, and it’s one of the easiest ways to improve your cashflow. Clearly defining your payment terms at the start of your relationship can transform the speed at which you are paid, and it also gives you a chance to negotiate.

If you are asking for 7 or 14 days payment and your prospect wants 30, 60, or 90 days you have the opportunity to negotiate a higher fee in return for your concession on terms, and you have the opportunity to ask yourself whether this client is going to be worth working for at all. This also puts you in a much stronger position if they are late paying your invoices because you have already had a discussion about the terms.

Once you have established the terms of payment make sure you follow your clients up quickly and professionally when they are overdue. This increases your client’s respect for the value you deliver, and helps you get paid sooner

3. Invoice Immediately

Businesses that invoice weekly or monthly are more likely to have cashflow problems. If you invoice as soon as you complete a job the chances are you will get paid immediately … or at least on time because a client who has just signed off on a job is probably happy to pay (or at least schedule payment) immediately rather than having it hanging over their head as something to do.

Tradies are particularly guilty of waiting days or weeks to invoice, and often only invoice when they have a cashflow crisis, so using an app, or developing a system that allows you to invoice immediately is an excellent way to improve your cashflow.

4. Plan Ahead for Compulsory Payments

Set aside money as it comes into your account to pay your taxes, GST   and superannuation obligations. It’s best to put this into a separate bank account so you are not tempted to think of it as ‘available cash’ because it really isn’t available at all.

I’ve lost count of the number of business owners who thought they were having an incredibly profitable year, but who discovered that they had forgotten to set aside enough cash to pay their legal obligations and were suddenly plunged into a cashflow crisis in June or December.

5. Consider Ways to Reduce your Stock Without Affecting Delivery

While many businesses need to have a certain amount of capital tied up in stock so that they can provide efficient and timely service, it’s always worth revisiting your stock levels. From stationery and office supplies to spare parts and widgets your goal should be to have enough to operate your business without interruption, but not too much.

Holding excess stock has an effect on your cashflow as well as on your expenses (warehouse and office space) so it’s important to determine the right levels for your business, and to control it carefully. Lower stock levels also make stocktake easier to manage.

In summary, if you implement one or more of these cashflow improvement methods you will find that the additional cash you have available at any time will increase, and you will also be able to look ahead and see when cashflow problems are likely to occur so that you can work around them.

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


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Bookkeeping – Quick tip – Don’t use “Miscellaneous” or “Sundry” all the time for Miscellaneous expense in the accounts

Bookkeeping – Quick tip – Don’t use “Miscellaneous” or “Sundry” all the time for Miscellaneous expense in the accounts

Bookkeeping – Quick tip – Don’t use “Miscellaneous” or “Sundry” all the time for Miscellaneous expense in the accounts

If you use a “Miscellaneous Expense” or “Sundry” account, it can indicate lazy bookkeeping. It is also no help when you or the bank reads your Profit & Loss! What is in that account will be the question!

It is better to use the closest correct expense account or to add a new account to better capture the expense type. Also use the memo in the transaction, to fully describe the expense, and invoice number if not using purchases. The more detail you put in now, then you won’t have to sift through your papers later to find out what the expense was, or dig out a copy for your accountant (or the taxman)!

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


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Cashflow Tips – Claiming Business expenses – Consider what you want to achieve

Cashflow Tips – Claiming Business expenses – Consider what you want to achieve

Cashflow Tips – Claiming Business expenses – Consider what you want to achieve

We see many business financial situations, working on the business books in different industries. Commonly the owner is told by fellow business owners and often accountants, to be claiming business expenses as much as you can to reduce profit and pay little tax. That is sensible, and the Australian Tax Office (ATO) website encourages tax minimisation that is lawful (but not tax avoidance by manipulation if false claims etc).

However, while assisting with the debt collection and client payment allocation to correct invoices (one service we provide – we tailor to what the client needs) and while working on one client’s books, I notice quite a few personal transactions like F&V and Meats, that they want to claim as staff/office expenses, but aren’t aware that it looks like the accountant is allocating them as NON-DEDUCTIBLE – it would be hard to justify as “office or staff” amenities to the ATO so often as well!

Additionally, IKEA and paint and Bunnings can be legitimate office Repair and Maintenance, but if purchased while your business is closed, it could look suspicious.

So be aware that it looks like the accountant is not going to claim some things for you any way, and that is probably safer for you also, in case of ATO audit.

Cashflow Tips – Claiming Business expenses – Consider what you want to achieveOften, really isn’t much value to try claiming as much as possible as business expense (from what I have seen other businesses do) and as we often hear them say they do.

WHY?

  • If there is an audit it can be denied and reversed and fines imposed – the ATO website is clear that only business-related expenses are claimable
  • The other thing is low profit can inhibit funding if required in the future via bank overdraft or venture capital, or partner investor – Not all will really look into the real detail. And if you want/have to sell, you need to show 3 good years of good profit – otherwise who would want to buy it?
  • Doing a year-end” Directors bonus” to reduce profit shows a clear easy message to potential bank or financiers. I have done that in earlier years – it clearly says you are profitable, but reduces the profit legitimately, so less company tax needs to be paid, and can be done declared after the year end!

It needs to be discussed with the accountant, but even they miss-understand the disadvantage of claiming lots of expenses to reduce profit, and the harm to your future financing and wealth potential.

I have seen that if you want to borrow or expand, it is better to have clean accounts, and take bonus wages if extra Profit and money is there, as wages are fully deductible, and don’t need to be explained or justified as some transactions such as mentioned above, may need to.

And you will also know that a good wage for you and your wife is better when you want to re-finance or borrow for an investment property in the future. The brokers I work with (and even in my own situation this year) have a hard time explaining to lenders the true story – most do not understand business and Profit and Loss (especially “Extra expenses” claimed on the business)

Yes you need to improve your home, and you need to do that, but it doesn’t bring in income like an investment property will.

The quicker you access more property or other investments, the earlier you set yourself up for better wealth later, by passive capital growth.

I wish I had that shown to me 10-20 years ago, but no-one did, and I realise only a few see how it can work or how to make it work – owners and accountants alike.

You may be in a good position to be able to get an investment property with your incomes, and growing business turn-over. But if you load up non-business expenses it gives the accountant more work, looks like they may not claim it all any way so it wastes their time, it makes extra work for a broker to convince a bank you are very profitable etc so they are comfortable to lend to you as a low risk to them (which is what they aim for!)

So consider the bigger picture – you may be able to do more, but that is up to you and when you have the time/interest to look into it.

Just my observations of other business people and how most limit the possibilities.

Need help? Not sure? Call for FREE 30min advice / strategy session today! 0407 361 596 Aust

***BEFORE you BUY ask us for a competitive software price BELOW retail – No obligation!

You also get FREE 30 min to assist in setting up your company in the software, and FREE ongoing email or phone support – no-one offers as much! 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


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Cashflow Tips – What Cashflow means to your Employees

Cashflow Tips – What Cashflow means to your Employees

Cashflow Tips – What Cashflow means to your Employees

The Great Game of Business (GGOB) is a book and website and coaching movement that originated as a means to save a company division of International Harvester on its demise back in the 1980’s and how employees and management saved the company and their livelihoods with a unique way to run business – it has grown to launch another 60 associated companies and is regarded as one of the for-runners of Open-Book Management. Here is an exert from one of its blog posts).

Dave Sholten writes … Here are three statements in which I fully believe:

1.     Cash flow trends can be the ultimate measure and indicator of success and/or failure of the company performance.

2.     Your employees are begging you to be transparent with them.

3.     It is important to your employees that they can TRUST you.

Put These Three Statements to Good Use

If we can assume (and agree) that the above three suggestions are accurate, then employees really want to know the honest financial health of the company, which most often includes cash flow.

Don’t ever let your pride convince you to hide the bad news, or get in the way of being honest. Honesty doesn’t have to be easy, and doesn’t always have to be good news, but it is necessary and fair in every trusting relationship.

It would serve you and your conscious well if you identified a few of the key “success/failure” financial indicators of your company’s performance, and then plan a way to start sharing with the employees the “score” involving those indicators.

You might start with your annual update, and then enhance that communication to a quarterly update. You should look forward to when your employees start to ask you questions like:

  • Why did that number go up?
  • How does this number impact that numbers results?
  • What can we do to make that trend better?

When this happens, YOU HAVE ARRIVED! Your team, however many, are asking the questions, are asking to be more included in your game of business and want to learn more about the numbers and how to positively impact the future. You will gain support and teamwork in the future course of your business. Your entire workforce will be engaged in supporting your quest to “win the game.”

For those employees who don’t embrace the information and learning, keep a close eye on them. Their heads are in the sand, and hopefully (not a recommended corporate strategy) they don’t treat your product/service/customers/clients and fellow employees that way.

In conclusion, here is what your company’s cash flow means to employees:

  • Honesty
  • Trust
  • Confidence
  • Continued employment
  • Commitment to the team and organization
  • Faith in the future
  • Winning

What is your experience with employee engagement and helping you run the business as a team together so ALL benefit?

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


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MYOB – How to Delete Old Items

MYOB – How to Delete Old Items

MYOB – How to Delete Old Items

Website enquiry from Lilian

Hi Paul

Hope you are well.

I would like to know if you know how to get rid of 56k of old items in MYOB (currently we are using Premier Enterprise 19.7version) pls?

I have done research and found that a Program called “FGHTables” may work. But we were too scared to use it so we don’t mess up.

So I am wondering if you have experience in this area pls?

Best regards and thanks

Lilian

Answer

Hi Lilian,

Yes it is hard to delete old items – usually up to 2-3 years after rolling over a financial year, because the MYOB keeps totals of some sales and item data for comparison reports for 2-3 years. Some clients also find well beyond the 2-3 years that items will still not be able to be removed, and it is not clear why!

Yes http://www.fghtables.com  is a very reputable company and they have a service to assist removal of items not required, as well as other very reasonable offers

We also use them for clients for Payroll Tax Tables for those who don’t want/need to upgrade from v19 Account Right with Payroll.

Please don’t hesitate to call if you have any questions

Kind Regards,

Paul Humphreys, Account Keeping Plus

Ph 0407 361 596

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


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Cashflow Tips – Improve your Cashflow – By Invoicing Promptly!

Cashflow Tips – Improve your Cashflow – By Invoicing Promptly!

Cashflow Tips – Improve your Cashflow – By Invoicing Promptly!

Many times, small business owners are uncomfortable about asking to be paid, yet the top way to improve your cashflow is by invoicing PROMPTLY! When you run a business, (especially service businesses) if you don’t invoice promptly as well as collect payment promptly (which causes a cash crisis in the first place), then consider the following –

Consequences for your cashflow:

  1. Clients can quickly forget what they owe you;
  2. They are less likely to remember how much they loved your work and pay you promptly;
  3. They may conclude that you do not expect quick payment and will take their time in sending in their money.

Some ACTION solutions:

  1. Where possible, issue invoices at the time services are delivered;
  2. Send your invoice by email to speed the process;
  3. If you can’t issue immediately, be sure to issue your invoices weekly, or at least twice per month on designated days, such as on the 15th and the last day of each month;
  4. Do it like clockwork – it will help to even out your cashflow.

Take-away message

Create the habit – invoice quickly and often.

Part of our service is assistance with cashflow budgets, debtor collection and reviewing supplier costs and terms.

One of our clients said the business finance is now in the BEST shape it has ever been – for our 4-5 hrs work weekly involves managing the invoices, payment follow up unique method and now supplier payments! The owner now can catch up on quoting jobs and finalizing the sale to grow the business.

Could this assist you in your business and let you focus on your best skills and on running the business? If you would like to speak with these clients, email me and I’ll supply contact details!

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