Account Keeping Plus – Administration, Bookkeeping, Compliance News & Tips MYOB Reckon Quickbooks Xero Software TrainingSmall Business

Making Business Books and Accounting Come Alive! MYOB Reckon Xero


Leave a comment

Business Finance 101 – Accounting Standards / Principles (GAAP) – why is it important to have?

Business Finance 101 – Accounting Standards / Principles (GAAP) – why is it important to have?

Accounting Standards / Principles (GAAP) – why is it important to have?

When we do accounting (which is recording the monetary values of financial transactions) there are general rules and concepts that have been developed over many decades that apply. These are called basic accounting standards / principles or guidelines and are the groundwork on which more detailed, complicated, and legalistic accounting rules are based.

In Australia. The Australian Accounting Standards Board (AASB) uses the basic accounting principles and guidelines as a basis for their own detailed and comprehensive set of accounting rules and standards.

There is a phrase “generally accepted accounting principles” (or “GAAP“) which consist of three important sets of rules: (1) basic accounting principles and guidelines, (2) detailed rules and standards issued by AASB, and (3) the generally accepted industry practices.

When a company distributes its financial statements to the owners or the public, it is required to follow generally accepted accounting principles in the preparation of those statements. Further, if a company’s shares are publicly traded, federal law requires the company’s financial statements be audited by independent public accountants. Both the company’s management and the independent accountants must certify that the financial statements and the related notes to the financial statements have been prepared in accordance with GAAP.

GAAP is useful because it attempts to standardise and regulate accounting definitions, assumptions, and methods. Because of generally accepted accounting principles we are able to assume that there is consistency from year to year in the methods used to prepare a company’s financial statements. And although variations may exist, we can make reasonably confident conclusions when comparing one company to another, or comparing one company’s financial statistics to the statistics for its industry. Over the years the generally accepted accounting principles have become more complex because financial transactions have become more complex.

The Accounting Standards (GAAP) are split into various categories eg “Statement of Cashflows”, “Construction Contracts” etc and a list with most recent updates/ pronouncements for Australia can be found HERE.

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

Advertisements


Leave a comment

Business Tax Tips – Reconciling GST accounts in the Balance Sheet and GST Reports – How to understand

Business Tax Tips – Reconciling GST accounts in the Balance Sheet and GST Reports – How to understand

Reconciling GST accounts in the Balance Sheet and GST Reports – How to understand

A client was reconciling the GST accounts: Collected & Paid amounts on the Balance Sheet and GST reports, and wanted to know –

  1. The end of year Balance Sheet shows a different amount to the GST Accrual (& Cash) reports.  Why?            
  2. They thought that the GST Liabilities section of the Balance Sheet gets automatically updated when you enter a Spend Money purchase or raise a Sales invoice.  Is this the case?
  3. Or do we have a classification issue in our MYOB account set ups that we need to fix?

The answer is – the amounts in the GST accounts should reflect the way the transactions are created, and depend on whether cash recording (cheques and deposits or cash receipt sales) or accrual recording is used (invoice sales and purchases or bills).

Cash transactions recognise revenue sales and expenses when actual CASH is received and paid, ie when paid. The GST accounts will have the exact GST amount for each transaction, as and when paid or received.

Accrual transactions recognise revenue sales and expenses when the TRANSACTION occurs, not when paid. The GST accounts will have the GST  from the invoice or purchase.

If you report tax amounts for a period, keep in mind the way transactions are entered, as the GST on sales and the GST on purchases will not be picked up if reporting on Cash basis, and are not paid in the time frame. If they were paid, they would appear in the report.

Always check on screen the GST detail reports to see what transactions are picked up for the period, and after checking, if ok, PRINT to keep a record, then print the GST/Tax summary report.

The balance of the tax accounts also changes, as we post the amount reported to the ATO to them, reducing/increasing the account to reflect what is reported and paid (or refunded). So a tax payment during the period reported also changes the Balance Sheet amount. Look through the detail of the transactions in the tax accounts, and see what has occurred.

See also Cash and Accrual – will there be Debtors (Accounts Receivable – AR) and Creditors (Accounts Payable – AP)?

And for a quick summary of the reports suggested to check and use to prepare a BAS, go to MYOB – Aust. BAS Checks Reports & Entries

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


Leave a comment

Business Tax Tips – Business Christmas party ideas – when things can go wrong

Business Tax Tips – Business Christmas party ideas - when things can go wrong

Business Tax Tips – Business Christmas party ideas – when things can go wrong

The festive season should be an enjoyable time of the year but are you aware of your obligation to provide a healthy and safe environment when planning business Christmas party/workplace functions? Don’t be complacent – prepare for when things go wrong…

If a function is organised, promoted and funded by the business, it is more than likely to be considered an extension of the workplace and therefore, your business should ensure it takes all reasonable steps to minimise any risk to the business.

When is the employer liable?

In most legal contexts, an employer function/staff party will be considered as part of the ‘workplace’ and having connection with the employment of employees. As such, all the duties and obligations of the employer that apply in the office, shopfront or yard will continue to apply for the duration of the function or party. In practical terms, this could mean the organisation (or even individual employees of the employer) could be held liable for occupational health and safety breaches for failing to provide a working environment that is safe and without risks to health.

Injuries or illnesses arising out of or in the course of the function may be compensable under statutory workers compensation schemes and inappropriate conduct or comments could lead to harassment or discrimination claims. Additionally, employees must also be aware that they may be disciplined for their actions at the party, as the terms and conditions of their contract and any applicable company policies apply for the duration of the function. The employer’s liability may be limited in some circumstances where the employee has engaged in serious misconduct or for instances that occur after the completion of the organised function. However, such exceptions are assessed on a case-by-case basis. In all circumstances it is clear the employer must be able to demonstrate all reasonable and proportionate steps were taken to educate staff on appropriate standards of behaviour, to provide a safe environment, and eliminate discrimination and sexual harassment.

Some tips to minimise your risk of things going wrong:

  • Plan your function – Select a venue wisely and provide all employees with the details of the function, including clearly communicating start and finish times;
  • Educate and set the rules – Ensure all employees are aware it is a work function and, as such, that the usual code of conduct and associated policies and standards of behaviour apply. Now is also a good time to review relevant policies and consider training employees in acceptable workplace behaviour. For example, Bullying and Discrimination awareness training for managers and employees;
  • Safety – Provide alternative transport options including designated drivers, Ubers and taxi vouchers.

Other Questions

Is the employer liable for the actions of employees at an ‘after party’ event?

Employers may be vicariously liable for the actions of their employees if such actions are in the ‘course of’ or within the ‘scope’ of employment. This will differ on a case by case basis, depending on the factual circumstances of each situation. As discussed above, advising staff of the clear finishing time of the organised function and avoiding sanctioning or funding any post-function activities will assist in reducing such liability.

Does the employer have to provide transport after the function?

Employers have a duty of care to provide a safe workplace environment to all employees. Legislation concerning liability for injuries sustained whilst travelling to or from the workplace (or a workplace function) differs from state to state, but the possibility of providing transport to employees after the event should be considered as part of the planning phase, but is not obligatory.

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

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!


Leave a comment

MYOB Bookkeeping – MYOB running slow all of a sudden when doing the books? – Tips to speed up the PC

MYOB Bookkeeping – PC running slow all of a sudden when doing the books? – Tips to speed up the PC

Bookkeeping – MYOB running slow all of a sudden when doing the books? – Tips to speed up the PC

Have you found your MYOB is running slow all of a sudden while you are doing the books, or when you came back after a break? Here are some tips that may help –

Win10 –

In the Cortana window, type “Run”

Click the App “Run” in the list

Type “%localappdata%” > OK

Go to the MYOB folder

Go to the AR folder > 2017.1 > Cache folder

Delete all files there “Company File Cache”

Close the window

Then

In the Cortana window, type “Run”

Click the App “Run” in the list

Type “CMD” > OK

At the cursor type “ipconfig /flushdns” (note there is a space after config) > Enter key

Should get a message.. successfully…

Close the window

Then

Restart your PC

Win7

Click the Windows button, lower left corner

In the search box, type “Run”, and continue as above

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

Call and you also get for 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


Leave a comment

Business Tax Tips – Managing Small Business Taxes and Obligations

Business Tax Tips – Managing Small Business Taxes and Obligations

Managing Small Business Taxes and Obligations

Running a small business has many extra requirements – one of the most important is planning for reporting and managing small business taxes. Here are tips for the ATO – Australian Tax Office, to get you organised –

Reporting and paying tax

As soon as you start up your business, you need to plan for how you will pay the tax you will owe each year when you lodge your tax return.

Paying tax in your first year

In your first year of business, you can stay on top of your obligations by:

  • making tax pre-payments into your tax bill account;
  • putting money aside for your expected tax bill;
  • voluntarily entering into instalments.

See also:

Paying tax by instalments

Once you lodge your first income tax return and report a tax-payable amount above a certain threshold, you will automatically enter the pay-as-you-go (PAYG) instalment system.

If you voluntarily enter into instalments prior to lodgment of your first tax return, you will be able to make quarterly payments towards you tax bill.

See also:

Reporting

Once you’re up and running, you’ll need to report your business income and other tax information. The key reports you should be aware of are:

  • Business Activity Statement (BAS) –

    • the main taxes you will report on will be GST (if you’re registered for GST)
    • any tax you withhold from employees’ pay
    • instalments towards your own tax once you are in the pay as you go instalments system;
  • Income tax return  
    • to report your personal and business income and claim deductions.

Most of your business reporting can be done online.

Next steps:

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


Leave a comment

Bookkeeping – Motor Vehicle Assets – How to set up cars in accounting records

Business Tax Tips / Bookkeeping – Motor Vehicle Assets – How to set up cars in accounting records

Business Tax Tips / Bookkeeping – Motor Vehicle Assets – How to set up cars in accounting records

Client emailedOur Company bought 2 cars  –

  • Holden Cruze for $16,700.00 includes GST/stamp duty/transfer fee          
  • Barina for $12,888.00

We traded in the company car – Holden Commodore for $3000 and the wife’s car for $1500. Daniel has not claimed the $1500 but gave it to the business.

Now both ’new’ cars belong to the company.

Invoice for Holden Cruze is $16,700.00

The $4,500 trade in was netted out of the purchase of the Barina so the invoice is

($12,888- $4,500) $8,388.00 net.

We have in our accounts:-

MV @ cost                             18539.37

MV Accum Depn                  15412.00

Please advise. Thank you.

How to EnterTo keep things simple, we need to set up some new accounts (“NA”) for each motor vehicle, and new accounts for the loans on each car – it is then easiest to leave the final reconciliation and adjustments to your accountant year end.

I assume the 2 MV accounts are only for the Commodore and no other cars. It is good practice to create new accounts for EACH vehicle so the accountant can reconcile at year end with ease!

Separate the Rego (and Insur if included in the deal) from the $16,700 (or you can leave for accountant at year end to pick up).

AKP Case Study*Is the Loan a Chattel Mortgage? – Can mention type of loan in account name as well

Monthly payments – for simplicity, allocate from bank to NA Liability MVeh Loan Fin Co Name (the new finance account).

The old car accounts – Asset MVehicle @ Cost Commodore, and the MV Accum Dep can be left for the accountant to calculate and adjust at year end, in case there are other adjustments he needs to do.

For other examples of entering MV assets in the accounts, see –

Quickbooks – How to go about setting Chattel Mortgage up and accounting for the monthly payments in Quickbooks.

Another Asset Example – How to enter assets in the books

How do I show liabilities for the total borrowed including interest, not just the principle/asset amount?

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

0407 361 596 Aust

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


Leave a comment

Business Tax Tips – Reducing Red tape in Australia

Business Tax Tips – Reducing Red Tape In Australia

Reducing Red Tape In Australia

Did you know there is a current 4 year plan where the ATO is working hard at reducing red tape in Australia for tax payers?

The ATO says at Reducing red tape Reforms to the Australian Taxation Office

In the 2015–16 Budget, the Government announced it will provide funding over four years to deliver an improved experience for clients in their dealings with the Australian Taxation Office (ATO).

Red tape will be reduced and future administrative savings delivered through investment in three foundational initiatives: a digital by default service for provision of information and making payments, improvements to data and analytics infrastructure and enhancing streamlined income tax returns through the my Tax system for taxpayers with more complex tax affairs.

The package of service improvements supports the Government’s commitment to reduce red tape and forms part of the Government’s digital transformation agenda.

This measure delivers on the Government’s election commitment.

Click for links with information on the legislation

A detailed website on tracking the initiative is https://www.cuttingredtape.gov.au/  – It says –

The Government has committed to reducing the cost of unnecessary or inefficient regulation imposed on individuals, business and community organisations by at least $1 billion a year. An important part of this commitment is the development of a Framework to review the performance of Commonwealth regulators.

This Framework isn’t just for regulators. It will benefit business and the community, including individuals. Find out more.

What are YOUR thoughts and experiences? Comment below! Call for FREE 30min advice / strategy session today!

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!