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Business Finance 101 – How does the Cashflow Statement Work – Overview for Business Owners

Business Finance 101 – How does the Cashflow Statement Work - Overview for Business Owners

How does the Cashflow Statement Work – Overview for Business Owners

There are 2 popular financial statements that are commonly given for a business – a profit & loss or income statement, a balance sheet or statement of position, but rarely used is the cashflow statement (or statement of cash flows). The purpose of the cashflow statement is to highlight the major activities that directly and indirectly impact cash flows and hence affect the overall cash for the business.

Business owners usually know by “feel” what their cash flow is like, and they should monitor cash for a very good reason – without a sufficient cash balance at the right time, a company can miss golden opportunities or may even fall into bankruptcy. 

The cash flow statement answers questions that cannot be answered by the income statement and a balance sheet. For example a statement of cash flows can be used to answer questions like where did the company get the cash to pay dividend of nearly $14,000 in a year in which, according to profit & loss / income statement, it lost more than $10,000?

The cashflow statement is a valuable analytical tool for business managers as well as for investors and creditors, although managers tend to be more concerned with forecasted statements of cash flows that are prepared as a part of the budgeting process. The statement of cash flows can be used to answer crucial questions such as the following:

  1. Is the company generating sufficient positive cash flows from its ongoing operations to remain viable?
  2. Will the company be able to repay its debts?
  3. Will the company be able to pay its usual dividends?
  4. Why is there a difference between net profit/income and net cash flow for the year?
  5. To what extent will the company have to borrow money in order to make needed investments?

For the statement of cash flows to be useful, it is important to use a common definition of cash. It is also important that a statement be constructed using consistent guidelines for identifying activities that are sources of cash and uses of cash. The proper definition of cash is broadly defined to include both cash and cash equivalents.

Cash equivalents (applicable more for large companies) include short term, highly liquid investments such as treasury bills, commercial paper and money market funds that are made solely for the purpose of generating a return on temporary idle funds. Instead of simply holding cash, most large companies invest their excess cash reserves in these types of interest bearing assets that can be easily converted into cash. These short term liquid investments are usually included in marketable securities on the balance sheet. Since such assets are equivalent to cash, they are included with cash in preparing a statement of cash flows

The 3 sections of cash flow statement (each has an inflow and outflow section):

Business Finance 101 – How does the Cashflow Statement Work – Overview for Business Owners

How does the Cashflow Statement Work – Overview for Business Owners

Operating Activities: (mostly income statement / profit & loss)

Operating activities shows the cash effects of transactions such as –

  • cash receipts from sales of goods and services and
  • cash payments to suppliers and employees for acquisition of inventory, taxes, interest on loans

Investing Activities: (mostly long term assets)

Investing activities generally show long term assets (and sometimes debt/equity securities) which include –

  • sale/disposing of plant, equipment
  • sale of debt or equity securities
  • acquiring plant and equipment
  • acquiring debt or equity securities

Financing Activities: (mostly long term liabilities and equity)

Financing activities involve liability and stock holder’s equity items and include obtaining cash from creditors and repaying the amounts borrowed and obtaining capital from owners and providing them with a return on, and a return of, their investment.

  • Increase in debt / loans taken on
  • Payment/redemption of debt facilities / loans
  • Dividends paid

Next month we will work through an example

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Reckon ONE – How to set up and how to report Taxable Payments Annual Report (TPAR) – and when due?

Reckon ONE – How to set up and how to report Taxable Payments Annual Report (TPAR) – and when due?

Reckon ONE – How to set up and how to report Taxable Payments Annual Report (TPAR) – and when due?

Businesses in the building and construction industries need to know how to report Taxable Payments Annual Report (TPAR) – so how do we set up the Reckon ONE file, how do we generate the report and when is the due date to report?

Here we look at what the 1 Australian Tax Office (ATO) requires and how to 2 Steps to set up and generate a Taxable Payments Annual Report from Reckon ONE software.

1  ATO Requirements

You may need to lodge a Taxable payments annual report by 28 August each year if you are a:

  • Business in the building and construction industry;
  • Government entity;
  • May extend to Couriers and Cleaners.

The Taxable payments annual report reports to the ATO about payments you have made to contractors for providing services. Some government entities also need to report the grants they have paid and payments they make to certain other entities.

Contractors can include subcontractors, consultants and independent contractors.

They can be operating as sole traders (individuals), companies, partnerships or trusts.

See our post HERE, for more ATO detail.

2  Reckon ONE – The steps to set up and generate the report are – (a) Set the system, and then (b) Create the Report

(a)   Set up

  1. Click the “cog” icon at far top right of screen > Settings > Book Settings under General > Ensure all Business/Company info is completed – especially Company Name, ABN, Address, Contact, Phone > Save
  2. Back to Settings > under Tax Settings > General > Are you Registered for Tax? > Yes and fill in options below > Save
  3. Set up Suppliers > Contacts in Left side Menu > Suppliers. For each supplier subject to TPAR (contractors) click its name to open, and at top right, tick Subject to TPAR > Verify ABN left side is best. Save and Close. Repeat for all applicable suppliers.
  4. In transactions – you can tick in each transaction, if subject to TPAR also, and de-select individual transactions if not applicable when generating the TPAR report later.

(b)   Create TPAR Report

  1. Click Tax in Left side Menu > TPAR
  2. There are 3 tabs – All, Draft and Lodged
  3. To start, click Add at top right. Select reporting year required and say NO to Amendment (unless it is)
  4. This gives a list of your TPAR suppliers
  5. Click the arrow on the left of each supplier and you can see all the separate transactions. You can de-select any that don’t apply
  6. Generate File – click this at top right – this generates a TPAR.C01 to upload via the ATO Business Portal – it saves as a Download
  7. Print report form top right, as a record
  8. Email a PDF to the default email (as in your Settings, General, Email Settings)
  9. Once lodged, click LODGED and the TPAR becomes Read only.

For a quick video, go here –

Reckon One TPAR video shot

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 FREEBookkeeping Quarter Checklist” to get organised! CLICK HERE

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Reckon/Quickbooks – How to set up and how to report Taxable Payments Annual Report (TPAR) – and when due?

Reckon/Quickbooks – How to set up and how to report Taxable Payments Annual Report (TPAR) – and when due?

Reckon/Quickbooks – How to set up and how to report Taxable Payments Annual Report (TPAR) – and when due?

Businesses in the building and construction industries need to know how to report Taxable Payments Annual Report (TPAR) – so how do we set up the Reckon/Quickbooks file, how do we generate the report and when is the due date to report?

Here we look at what the 1 Australian Tax Office (ATO) requires and how to 2 Steps to set up and generate a Taxable Payments Annual Report from RECKON software.

1 ATO Requirements

You may need to lodge a Taxable payments annual report by 28 August each year if you are a:

  • Business in the building and construction industry;
  • Government entity;
  • May extend to Couriers and Cleaners.

The Taxable payments annual report reports to the ATO about payments you have made to contractors for providing services. Some government entities also need to report the grants they have paid and payments they make to certain other entities.

Contractors can include subcontractors, consultants and independent contractors.

They can be operating as sole traders (individuals), companies, partnerships or trusts.

See our post HERE, for more ATO detail.

2 Reckon Accounts (and Hosted) – The steps to set up and generate the report are

1.  Enable the Taxable Payment Reporting option in the preference to be able to open the report.

  1. Go to the Edit menu, choose Preferences.
  2. Choose the Tax item and go to the Company Preferences tab.
  3. In the Taxable Payment Report section, click to select the Enable the Taxable Payment Reporting option.
  4. Click OK.

2.  Enable a supplier (sub-contractor) to become reportable on the Taxable Payment report

  1. Go to the Suppliers menu and choose Supplier Centre.
  2. On the Suppliers tab, double click the supplier’s name to open the supplier’s profile.
  3. Click to select the “Include in Taxable Payments electronic report” option.
  4. Click OK.

3.  How do I create this report to have what I need to upload or write on the ATO form?

  1. Go to the Suppliers menu, click Tax Activities, click Process Taxable Payments.
    The Process Taxable Payments annual report window opens.
  2. Click the Tax Year drop-down to select the tax year you are reporting on.
  3. If applicable, click the Withholding Liability Account drop-down to select the account you use to track withholding tax.
  4. Click the (tick) column to select the selected suppliers that you want to appear in the selected tax year’s report.
  5. Click the supplier to view the transactions for each supplier that are included in the report.
    The Supplier Taxable Payments Details – <supplier name> window opens.
  6.  You can review each transaction and click to deselect if you don’t want a transaction that doesn’t apply, included.
  7. Click OK.
  8. Click Save to save the changes (if you have made them) in the Process Taxable Payments annual report window.
  9. Click Export to save the report to your disk. The Select Location for Tax Payment Report File window opens. Enter a file name for the report, we recommend using the date in the file name.
    The default location for the file is \\ProgramData\Intuit\ReckonAccounts 2013\<level> 2013\<Company Name>\Export Files\Tax Payment Reports. For Reckon Accounts Hosted users, the default location is “Q:\ “
  10. Click Save. You will receive a message that the file has been successfully written. If you have electronic key, you can upload the file to your ATO portal.

Note: If you make any changes to the data whilst the Taxable Payments Annual Report Window is open, the report needs to be closed and reopened for it to refresh.

4.  How do you Amend the TPAR report if incorrect?

If you require to submit an amended report to the ATO, select the Generate Taxable Payments as ‘Amended’ option in the Process Taxable Payments annual report window.

Select the supplier that has been amended from the list and click Create Report.

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XERO – Taxable Payments – When is it due and how to set up and report Taxable Payments Annual Report (TPAR)

XERO – Taxable Payments – When is it due and how to set up and report Taxable Payments Annual Report (TPAR)

Taxable Payments – When is it due and how to set up and report Taxable Payments Annual Report (TPAR)

If you are a business in the building and construction industries, you may be wondering how to generate in MYOB a Taxable Payments Annual Report (TPAR) – and when is the due date?

Here we look at what the 1 Australian Tax Office (ATO) requires and how to 2 Steps to set up and generate a Taxable Payments Annual Report from XERO software.

1  ATO Requirements

You may need to lodge a Taxable payments annual report by 28 August each year if you are a:

  • Business in the building and construction industry;
  • Government entity;
  • May extend to Couriers and Cleaners

The Taxable payments annual report reports to the ATO about payments you have made to contractors for providing services. Some government entities also need to report the grants they have paid and payments they make to certain other entities.

Contractors can include subcontractors, consultants and independent contractors.

They can be operating as sole traders (individuals), companies, partnerships or trusts.

See our post HERE, for more detail.

2  XERO – The steps to set up and generate the report are –

How to track reportable payments in XERO

Xero lets you identify payments to contractors that you need to include in the report. The report:

  • Includes paid bills and spend money transactions (including overpayments and prepayments) from all accounts;
  • Excludes credit notes and payments made in other currencies;
  • Only includes organisations or contacts with Australian addresses.

You can filter out individual payments after you’ve run the report. If you’ve withheld tax because no ABN has been quoted you can either:

  • Enter this manually on the paper report, or
  • Continue to report it in your Activity Statements.

First you set up a Contact Group, then set up Rules, then Export the Report –

1. Create contact group

Create a contact group for contacts you’re needing to include in the Taxable Payments Annual Report, then add each contact to this group.

You can create more than one contact group if your Taxable Payments Annual Report is likely to produce more than 2500 invoice lines. Make sure your contacts belong to only one of the contact groups you’ve created.

If you don’t create a contact group, the rules you set up to run the report will find all contacts you’ve paid.

2. Set up or edit rules for contractors and reportable payments

The report identifies contacts you’ve made taxable payments to, based on the rule.

1.  In the Reports menu, select All Reports.

2.  Click Taxable Payments Annual Report.

3.  Select the year covered by the report.

4.  Select either:

  • Set up Rules to set up your first set of rules; or
  • Edit Report Rules to edit your rules.

5.  In Payments to, select either All contacts or an individual contact group you’ve set up for your Taxable Payments Annual Report contacts.

6.  In Paid from select either:

  • All accounts (if you’ve selected an individual contact group in the Payments to dropdown); or
  • An individual expense account from your chart of accounts.

7.  (Optional) Select Add Rule to add more rules, up to 12 in total. You can delete a rule by selecting x at the end of the Paid from field.

8.  (Optional) Select the Reset all previously deselected payments checkbox to reset any excluded payments or contacts.

9.  Click Save.

3. Export report

You can export the Taxable Payment Annual Report in either ATO or CSV format.

(i)  ATO format

Submit your report to the ATO through their online services Business Portal.

1.  Check your contact details and organisation settings are complete. This includes your legal (trading) name, Australian Business Number, phone number, and a physical address in Australia.

2.  Click Export ATO Format.

(ii)  CSV file

Click Export CSV to generate a report for your own review.

For example, you could use this to help you complete the ATO’s paper-based Taxable Payments Annual Report (ATO website).

You can’t submit the CSV file to the ATO.

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

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


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MYOB – Taxable Payments – When is it due and how to set up and report Taxable Payments Annual Report (TPAR)

MYOB – Taxable Payments – When is it due and how to set up and report Taxable Payments Annual Report (TPAR)

MYOB – Taxable Payments – When is it due and how to set up and report Taxable Payments Annual Report (TPAR)

If you are a business in the building and construction industries, you may be wondering how to generate in MYOB a Taxable Payments Annual Report (TPAR) – and when is the due date?

Here we look at what the 1 Australian Tax Office (ATO) requires and 2 Steps to set up and generate a Taxable Payments Annual Report from MYOB software.

1   ATO Requirements

The ATO website tells us – (From Here)

You may need to lodge a Taxable Payments Annual Report by 28 August each year if you are a:

The Taxable Payments Annual Report tells us about payments you have made to contractors for providing services. Some government entities also need to report the grants they have paid and payments they make to certain other entities.

Contractors can include subcontractors, consultants and independent contractors. They can be operating as sole traders (individuals), companies, partnerships or trusts.

The details you need to report about each contractor are generally found on the invoice you should have received from them. This includes:

  • Their Australian Business Number (ABN), where known;
  • Their name and address;
  • Gross amount you paid to them for the financial year (including any GST).

We use this information to identify contractors who haven’t met their tax obligations.

2  MYOB – The steps to set up and generate the report are –

How to track reportable payments in AccountRight

Once you set up MYOB, you can start marking transactions as reportable including:

  • Spend Money payments made to suppliers as reportable. You can also set up a supplier so that any payments for them are automatically included in reporting;
  • Bills and Orders recorded for suppliers. Payments received against these transactions will be included in the report.

You can then generate a report that will help you complete the ATO forms, or create a report file you can lodge electronically.

Lodging your report electronically

You can lodge your report electronically, using the ATO’s Business Portal. If you haven’t already set up access to the Business Portal, you should do this so you’ll be able to lodge the report when it’s due. See the ATO website for more information.

Set the reporting preference

1. Go to the Setup menu > Preferences. The Preferences window appears.

2.  Click the Reports & Forms tab and select the preference, I Report Taxable Payments Made to Contractors.

3.  Click OK.
When you record a Spend Money or Purchase transaction, the Reportable Payment option will appear in the transaction window. Select this option to mark the transaction as being a reportable payment.

4. Set up suppliers to report

1. Go to the Card File command centre and click Cards List. The Cards List window appears.

2. Click the Supplier tab.

3. Click the zoom arrow of the card you want to set up. The Card Information window appears.

4. Click the Buying Details tab.

5. Select Report Taxable Payments. In the message that appears, choose whether to report any existing transactions for the supplier for the current financial year. Note that you can later remove payments from reporting.

6. Click OK. The Cards List window reappears. Whenever the card is selected in a Spend Money or purchase transaction, the transaction is marked as reportable by default. 

To create the taxable payments report

1. Go to the Purchases command centre and click Report Taxable Payments. The Taxable Payments Assistant opens.

2. Click Next. The Company Information window appears.

3. Enter any company information that doesn’t appear by default.

4. Click Next. The Review window appears.
In this window, you can click Review Your Transactions to:

i.    Review all transactions marked as reportable;

ii.    Change the reporting status of transactions.

5. Click Next. The Create window appears.

6. Click View Taxable Payments Report. The Taxable Payments Annual Report (Detail) report appears. You can use the report to help you complete your ATO forms, or to keep for your records.

7. If you’re lodging the Taxable Payments Annual Report file:

i.    Click Create Taxable Payments File. The Save As window appears;

ii.    Select the location to store the file and click Save.

8. Click Finish to close the assistant.

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

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

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


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Business Tax Tips – Taxable Payments Annual Report – Building Industry (and others to be added?)

Business Tax Tips – Taxable Payments Annual Report – Building Industry and others to be added

Taxable Payments Annual Report – Building Industry and others to be added

Are you a business in the building and construction industry? You will probably need to report the total payments you make to each contractor for building and construction services each year.

If you’re a business that is primarily in the building and construction industry, you need to report payments you make to contractors if both of the following apply:

  • You make payments to contractors for building and construction services
  • You have an Australian business number (ABN)

Contractors can be sole traders (individuals), companies, partnerships or trusts.

You need to report these payments to us on the Taxable payments annual report by 28 August each year.

Activities and services that are considered to be building and construction are broad. Some examples include architectural work (including drafting and design), certification, decorating (including painting), engineering, landscaping and construction, project management and surveying.

Payments you need to report

Report only payments you make to contractors for building and constructions services.

Contractors can be sole traders (individuals), companies, partnerships or trusts.

If invoices you receive include both labour and materials, whether itemised or combined, you report the whole amount of the payment, unless the labour component is only incidental.

The definition of building and construction services is broad – it includes any of the activities listed below if they are performed on, or in relation to, any part of a building, structure, works, surface or sub-surface:

  • Alteration
  • Assembly
  • Construction
  • Demolition
  • Design
  • Destruction
  • Dismantling
  • Erection
  • Excavation
  • Finishing
  • Improvement
  • Installation
  • Maintenance (excluding the maintenance, service or repairs of equipment and tools)
  • Management of building and construction services
  • Modification
  • Organisation of building and construction services
  • Removal
  • Repair (excluding the service or repairs of equipment and tools)
  • Site preparation

The ATO website tells us – (From Here)

You may need to lodge a Taxable payments annual report by 28 August each year if you are a:

  • Business in the building and construction industry
  • Government entity
  • May extend to Couriers and Cleaners

The Taxable payments annual report tells us about payments you have made to contractors for providing services. Some government entities also need to report the grants they have paid and payments they make to certain other entities.

Contractors can include subcontractors, consultants and independent contractors. They can be operating as sole traders (individuals), companies, partnerships or trusts.

The details you need to report about each contractor are generally found on the invoice you should have received from them. This includes:

  • Their Australian business number (ABN), where known
  • Their name and address
  • Gross amount you paid to them for the financial year (including any GST)

We use this information to identify contractors who haven’t met their tax obligations.

Find out about:

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

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


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MYOB Quickbooks – Tax Tables for 2018-2019

MYOB Quickbooks – Tax Tables for 2018-2019

MYOB Quickbooks – Tax Tables for 2018-2019

For an update on this post, see THIS POST

Parliament agreed to the Budget tax cuts last week, meaning new tax rates will apply from 1 July 2018 and will now affect most employees – not just those with student loans as previously expected. As a result, HELP/SSL/TSL and SFSS rates and thresholds  cause every tax table has changed – see the ATO website for more details. 

Tax Rate Table 2018-2019

Does your MYOB/Quickbooks software have out of date tax tables, or you know you need them by experience every year. (To find what you have, click Set Up then General Payroll Information. In about the middle is the table date at the start of that tax year it applies to).

Tax tables become out of date nearly each year as tax rates and/or Medicare and HECS thresholds can be changed by the Tax Office (ATO). MYOB only supply new tax tables via full software annual subscription. You can no-longer buy the  latest tax tables separately as many years ago. Users must upgrade to a new version or take out Cover under their support program to receive the latest tables or ‘pay2myob.bin’ file for earlier versions (MYOB) to keep payroll compliant. (If you want assistance to upgrade to the latest MYOB call Paul 0407 361 596 or email us – info@accountkeepingplus.com.au).

The special MYOB tax file (eg ‘pay2myob.bin’) has been specially formatted so that it disallows any manual edit. Additionally, each version is formatted specially, so you can’t use a tax file formatted for MYOB Version 19 with say Version 16. For the Mac version (AccountEdge®) the tax table file is called “MYOB Tax Tables” or in v9 to 9.6 has a “.tax” extension. Everything else though is the same and all the comments here apply equally to the Mac version.

Note: Third-party tax tables cannot be used in MYOB 2011 onwards – you MUST have subscription or upgrade. Contact the software supplier.

If you have older desktop versions, there is a Solution up to MYOB v19.13 and Account Edge 15.5 Third party updated tax tables available for $82 provide a substitute, have been tested by ourselves and work with many prior versions. They are for those who want to continue to use their current versions of MYOB® without the need to upgrade. Note that there is nothing in your license agreement that prevents you using 3rd party tax tables.

Installation is simple. The tables are supplied with easy to follow video and instructions and instantly downloaded after secure credit card  payment in most instances, or will be emailed to you. You also receive a PDF copy of the applicable Aust Tax Office Weekly Tax Table for you to check the accuracy of the calculations. After-sales email support is available for any installation or setup issues you may encounter. If you would like Account Keeping Plus to install for you, we can do by remote desktop – Teamviewer (free software). For $50+GST. Call or email for instructions.

Note: NO changes are made to the software. The only changes made are to the tax rates in your company data file that the software calls upon to calculate PAYG Withholding in a pay, when processing payroll. The changes made are not permanent and can be reversed by reloading the tax tables from your current tax table file, simply moving a file in the software folder

These third-party tables are available, which Account Keeping Plus have tested in the software and tested against the ATO tables and work perfectly for us and our clients. To get more details and purchase for your MYOB – click the grey box to the right – “Tax Tables” or CLICK HERE.

For the latest tax tables, to download the PDF and keep a copy, or use the Tax Withheld Calculator online all from here ATO Tax Tables – PDF’s.

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

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

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