Training you – Solving Problems – Or We do your books for you! For Business owners and fellow bookkeepers!

Bookkeeping – Train Troubleshoot or we do it for you! MYOB Reckon Xero


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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

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

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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

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


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MYOB – Single Touch Payroll (STP) reporting in MYOB

MYOB - Single Touch Payroll (STP) reporting in MYOB

MYOB – Single Touch Payroll (STP) reporting in MYOB

We wrote last week all about what Single Touch Payroll (STP) Reporting is about, and what the ATO tells us.

MYOB is one of the top selling accounting software for small business, and they are getting ready for STP –

Single Touch Payroll (STP) is an ATO initiative to streamline payroll reporting. You’ll be able to report payroll and super information directly to the ATO when you process a pay run in AccountRight (from either online or desktop company files).

As a result of this change, for the 2018-2019 tax year, you may no longer need to complete payment summaries at the end of the financial year as your employees’ payroll information will be available to them through the government’s online servicemyGov. NOTE – All businesses still prepare the usual Payment Summaries for Year 2017-2018.

MYOB AccountRight 2018 has been updated to help you get ready for STP reporting. We’re working closely with the ATO to ensure you’ll be able to report your payroll data to them from 1 July 2018. There are 2 main steps –

  1. Check employee and Company information;
  2. Connect to the ATO.

For more see here.

MYOB Essentials is preparing to get ready also. Before reporting payroll and super information to the ATO, you need to:

  1. Check that your company information and employee details meet ATO requirements. To do this, you can check your details in MYOB Essentials and view a list of errors that need fixing. Go Here for instructions;
  2. The final step to set up Single Touch Payroll is to connect to the ATO. MYOB are working closely with the ATO to get this bit up and running as soon as we can. MYOB will be in touch when it’s ready.

MYOB AccountRight v19. You can implement Single Touch Payroll by 1 July 2018 by upgrading to the new AccountRight (an AccountRight subscription entitles you to an upgrade). Once you’ve upgraded, take a glimpse at how the new AccountRight will help you set up Single Touch Payroll reporting.

Note: The following features aren’t available yet in the new AccountRight, so if you use any of these in AccountRight v19 you might not be able to upgrade just yet:

  • M-Powered Payments
  • Multi-currency
  • Negative inventory
  • Multi-location stock tracking

If you can’t upgrade, we’ve worked with the ATO and you have been granted a deferral from STP reporting until 31/5/2019. More details about this deferral will be provided soon.

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

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


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Business Finance 101– 5 End of Financial Year tax tips 2018

Business Finance 101– 5 End of Financial Year tax tips 2018

5 End of Financial Year tax tips 2018

Time to plan for a good finish for EOFY and here are 5 tips to get started and prepare for 30 June.

1. Consider the ideal timing for asset sales

If you are thinking of selling a profitable asset this financial year, but are likely to earn a lower income in the next year, it may be worth postponing the sale until after 30 June, as the sale is income, less the original cost. However, if you expect an income windfall from 1 July, it may be worth bringing the sale forward. As always, your decisions depend on your expectations for future asset prices, so don’t postpone a sale for tax purposes if you are expecting your investment to fall in value!

2. Pre-pay investment loan interest 

If you have (or are considering establishing) a geared investment portfolio, you can pre-pay 12 months’ interest on your investment loan and claim the cost as a tax deduction in the current financial year.  This can assist to manage cashflow more efficiently, and potentially reduce your income tax liability this financial year.

3. Pre-pay income protection premiums 

If you are employed or self-employed, income protection insurance provides peace of mind about the security of your income in the event you are unable to work due to illness or injury. Premiums for this insurance are generally tax deductible; prepaying your annual premium prior to 30 June will allow you to claim a full year of cover in advance as a tax deduction.

4. Review your debtors and creditors

Review your accounts receivable / trade debtors – who is taking the longest to pay – is debt-collection failing – consider if it is simplest to write off (reverse) the sale and move on with more Profitable clients and prospects. Likewise – who do you owe? Can you pay them by end of year to tidy up your accounts – or if you are struggling – can you negotiate longer terms to keep things open with suppliers and keep the relationship going?

5. Offset capital gains with capital losses 

Generally, if you have incurred capital losses on your investments, you are able to offset these capital losses against any capital gains you have made. You can also use losses you have carried forward from previous years. Remember, income losses can only be offset against income; capital losses can only be offset against capital gains.

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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Case Study – Let down by accountant and then a bookkeeper – They needed the books up to date and accurate!

Case Study – Let down by accountant and then a bookkeeper - They needed the books up to date and accurate!

Case Study – Let down by accountant and then a bookkeeper – They needed the books up to date and accurate!

Disappointment was clear when she told me how let down she felt of the promises by an accountant to have the books and year-end tax return all handled  but the accounts were months behind! Then she appointed a bookkeeper who was a little new to the Xero software, but the bookkeeper still had the main Bank and Merchant payments with unreconciled transactions dating back 8 months to July!!! And communication with both was frustrating!

She needed a plan of action!

(There are 5 easy steps to planning anything – start where you are at, decide what outcome/state you want to have, what that state/position will cost in money (budget to maintain) what you need to outlay set-up and get to that state, and what action we need to take now to get there.)

WHERE it was at –

She had set up the bank feed, and started to learn how to do the entries in the Xero accounts. But it was slow learning this new software, and she wasn’t sure if she was entering the transactions correctly. The expenses she paid personally, were entered, but they came out of the business bank account – was that correct? The customer payments were simple. To keep up to date with who had paid, she entered them also, but some paid by direct transfer, others by EFT and she didn’t realise only the TOTAL for the day settled to the business bank account.

When we reviewed the company file, the bank  had half the transactions with notes “What is this for?” since back in July 8 months ago!!! The customer payments to the bank didn’t match many deposits, as the Square Credit Card Merchant takes its % fee out before on-sending the balance – so the software can’t match them! There was a family loan to the business to assist with taking on a new shared office with another professional. Most of all, like many small business owners, she didn’t know how much the books can help her improve the business, nor how powerful a One-Page Business Plan and quarterly checklist for the accounts can be!

WANT to have –

She was sure the books could be up to date every month. And communication could be responsive and helpful – YES!

COST to have that state – 

A monthly cost would need to be paid, as she was not enjoying the books, and wanted to do what she knew best – her service and products! She wanted to know if it could be done for $100 based on her current small business

NEED to spend to get there –

Getting it back on track was the key – what would it cost, and what would need to be done?

NOW what action to take –

After meeting Paul Humphreys of Account Keeping Plus, at a local council event 6 months ago, luckily she had kept his card (it stood out because it came with a chocolate attached!). He was easy to talk to and helpful – I’ll give him a call and see what he is like.

Well after several tips on ways to promote my business and market online, he explained how monitoring a few key indicators is so important to know where the business is going and if it’s achieving the goals I set. He explained how the different payments arrived in the bank and the need for clearing accounts and loan accounts for the family loan.

We arranged to meet, and I was given a complimentary Business Score –and later he emailed me the results that gave me a Business Plan On a Page – it really got me focused on the weak points!

He is now getting me up to date – finally! What a relief!

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

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


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Business Tax Tips – Can I claim Home Office Expenses?

Business Tax Tips - Can I claim Home Office Expenses?

Business Tax Tips – Can I claim Home Office Expenses?

Many clients ask “Can I claim Home Office Expenses?” There is great information on the ATO website, and links for more info and a cool expense calculator, as part-reproduced here –

If you are a sole trader and your home is also your place of business you can claim tax deductions for a portion of the costs of owning, maintaining and using your home for this purpose. When you sell your home you may be liable for capital gains tax.

If you operate a business at or from your home, you may be able to claim a deduction for some of the expenses relating to the area you use for business purposes.

These expenses can be divided into two broad categories:

  • Occupancy expenses (such as mortgage interest or rent, council rates, land taxes, house insurance premiums);
  • Running expenses (such as gas and electricity, phone, decline in value of plant and equipment, decline in value and cost of repairs to furniture and furnishings, cleaning).

As for motor vehicles, if you are carrying on a home-based business you can claim the cost of trips between your home and other places if the travel is for business purposes.

Generally, you can ignore a capital gain or loss you make when you sell your home, unless you have used any part of it for business purposes.

Next step:

Home office expenses calculator

Disclaimer:

  •  All outcomes provided by this calculator are based on the information you provide and the deduction rates available at the time of calculation. You should use the outcomes as an estimate and for guidance purposes only;
  • You need to self-assess your eligibility and entitlement to a deduction for home office expenses before using this calculator.

Warning – Capital Gains Tax on Sale of Home

Be aware that if you claim home expenses for business, then Capital Gains Tax may apply if you sell the home.

The ATO explains further (and gives examples there)  –

Generally, you can ignore a capital gain or loss you make when you sell your home. However, you may have to pay CGT when you sell your home if you have used any part of it for business purposes.

CGT will not apply if any of the following apply:

  • You operate your business from a rented home;
  • You do not have an area specifically set aside for your business activities;
  • You operate your business through a company or trust.

In most cases, the portion of any capital gain on your home that is taxable is the same as the portion for which you could claim a deduction for interest. Generally, this is based on the floor area of your home you have set aside for business, for example 10%.

You do not have to pay CGT for those periods you did not use your home for your business.

If you have a capital gain because you use your home for business purposes, you may be able to apply one or more of the small business CGT concessions to reduce your capital gain.

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

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


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Cashflow Tips – A cool tool to see what affect changes make on Cashflow

Many run by gut or the bank balance early in running a business – but understanding your cash flow is critical to your business success, and a handy tool that bank NAB have created is an online cash flow improvement tool. Whether using MYOB, Reckon/Quickbooks or Xero for bookkeeping, Try it and see what you think! (Click icon to go to the page)

Cash Flow Imp CalcLet us know how you went…

For other NAB cool tools see Calculators and tools

Also see Cashflow Tips – 5 Ways to Keep Cash Flowing

Or Cashflow Tips – To Discount or ADD VALUE?

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