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Canberra Bookkeeping & Business News

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4 Simple Steps To Managing Your Cash Flow

4 Simple Steps To Managing Your Cash Flow

A small business needs to ensure that there is a steady flow of cash by managing accounts, sending invoices to customers, collecting and reconciling payments. If these practices are not regularly followed, it will be difficult for your business to survive. Some businesses do not want to spend money on an external bookkeeper. However, if you are a savvy business owner, you will realise that a bookkeeper is going to be helpful in ensuring that your cash flow is properly managed. Aside from hiring a bookkeeper, it is also important to monitor your financial activity. This way, you will know whether or not you still have enough money to pursue your plans for the future. 

Once you have sorted your bookkeeping, make sure you manage your cash flow:

Plan ahead

You need to save cash for a rainy day. While it is good to hope for the best, it is also important to plan for the worst. This is why you need to anticipate needs by planning accordingly. If you have to pay for your monthly expenses, prepare enough money so you will no longer have to worry about a bill coming out of nowhere. 

Review your financial report

Your bookkeeper takes care of your income and expenses and you will know about your financial performance if you dedicate up to 30 minutes to the bookkeeping task. For you to stay on top of your bookkeeping game, make sure you check if there are problems that you need to properly address. When you have time for reviewing your report on a daily basis, you can prevent any task from piling up.

Encourage customers to pay on time

It is not enough that you send invoices as you also need to make sure that they pay on time. When you encourage timely payments, your monthly expenses do not have to suffer. You can give incentives to customers who make it a habit to make timely payments. This is more effective as compared to chasing late payments. 

Look for cash flow instead of profits

Many businesses have the tendency to focus on profits without realising that it naturally flows. For businesses to continue to survive, managing cash flow effectively is necessary. A business that is profitable does not necessarily mean that it has enough cash flow. You will still have to keep your finances in check. Avoid spending when you know you do not have enough cash to cover your monthly expenses. Monitor the money you spend on lunch meetings and occasional business travels. 

Costly Mistakes You Make In Managing Your Cash Flow

Costly Mistakes You Make In Managing Your Cash Flow

A robust cash flow is a strong indicator that your business is on the right track. However, cash flow problems are all too common and one of the main reasons some businesses fail. Find out what these cash flow errors are and how they can be avoided. 

Untimely payment of accounts receivables

Accounts receivable is a good sign for businesses because it means that money will come in. Unfortunately, you still have to collect accounts receivable before you can treat it as profit. When expenses arise, you may even end up short. This is the most common cash flow problem that can become a patter if left unsolved. Past-due payments must be collected to prevent cash flow problem. A clear guideline regarding the consequences for late payments must be put in place. You will also need to a clear workflow that will enable you to keep track of invoice issuing and checking customers who not making a payment in a timely manner. 

Unmonitored expenses

No matter how busy you are, you need to take the time to review your expense sheet. Are there any unnecessary expenditures? You will need to trim them as they ruin your monthly budget. Being attentive will can prevent you from committing any costly mistakes. Record-keeping helps you determine whether or not you are overspending. Monitoring your expenses also help ensure that your taxes and debts are paid. 

Miscalculating the cost of business growth

It is not easy to run a business let alone growing it. While growth is a sign that your business is starting to prosper, growth can be expensive and if you do not have a financial management strategy in mind, everything will fall to pieces. Planning in advance ensures that your business will be in the right direction. Operational mismanagement can also hurt your cash flow.If you want to optimise your customer service, make sure you have long term solutions. Avoid spending spree and while a growing company requires extra help, you will still have to keep an eye on your spending habits. Although you want to grow your business, it should continue to operate on minimal expenditures. With this practice, you are guaranteed of a healthy financial state. 

Setting unrealistic expectations

Most businesses believe that receivables come in constantly, and by embracing this concept, many businesses find themselves in serious trouble. While you cannot predict the future of your business, you can still control the direction it will take. There is nothing wrong with being optimistic about growth rates, but make sure these numbers are translating properly. 

3 Principles Of Financial Management For Small Business

3 Principles Of Financial Management For Small Business

Behind a person's accomplishment is a principle that guides you in the right direction. Whether you want to lose weight, ace your exam or get rich, you need to have a solid strategy that will prepare you for the challenges ahead. The same principle applies to being financially successful. You need to have guiding principles to accomplish your goals. For business owners, here are three business principles to live by:

Earn more, spend less

If you are spending more and earning less, it is about time you reassess your spending habits. If you have found yourself drowning in a pool debt, it means that you are not following the basic rule of financial management. Some businesses fail because of not giving importance to cash flow. If your business is generating profits, this does not mean you should not keep track of the money you spend. You also need to maintain a steady flow of cash so you can pay your taxes, monthly bills and suppliers. If you run out of cash, it will be difficult for you to formulate strategies for your business. Even if you want to grow your business, it will be difficult for you to make future plans. 

Invest while you can

Making a wise investment allows your business to survive. Although the idea is easy to understand, it is still hard to do. Business owners grow their business by hiring new people, investing in training and purchasing new equipment. Unfortunately, the lack of cash will stop you from making a progress. You must also keep in mind that generating cash involves having a minimum investment and generating profit as fast as possible. 

Handle your money wisely

It is easy to make hasty decisions about your finances. However, failing to understand where your business stands and where your money is going will make it difficult for you to determine your business performance. It is important to track your income and expenses with your balance sheet. It saves you the headache of guessing whether you still have enough money for future business opportunities. When you make good decisions, you also lower stress levels and make more money. 

Simple financial management principles when followed, are instrumental to growing your business. If you wish to make future investments, handling your finances wisely is the basic rule to follow. A solid plan will prepare you from the challenges ahead so you can accomplish your long term business goals. 

3 Small Changes That Keep Your Financial Health In Check

3 Small Changes That Keep Your Financial Health In Check

For people who are not a fan of numbers, bookkeeping can be a daunting task. Taking bookkeeping for granted does not come as a surprise for business owners who do not have a proper bookkeeping system in place. Bookkeeping may only be a tiny fraction of your business, but it creates a serious impact on your financial when it is habitually ignored. Surprisingly, it does not take rocket science, but only some simple habits to ensure your financial health stays intact. 

1. Monitor your business expenses

It is easy to lose track of the money you are spending when you think that they will not seriously affect your cash flow. However, special events, travels and even lunches can accumulate. If you are going to check your tax records, you may be wondering why you have zero balance when you are only spending a minimal amount. Audit your expenses so you will know whether or not you are overspending. Aside from keeping financial details, you will also have to prepare audit. Making this a habit will ensure that you are not going to miss out any essential information. You will also have peace of mind as you know where money is spent. 

2. Put aside money for taxes

Delayed tax payment can result in incurring interest and penalties. Constant delays can affect your cash flow and instead of allocating money for paying your monthly bills, you end up using the money for penalties. The plan of expand your business needs to take a backseat as you need to prioritise tax payments. A simple neglect of tax payments can definitely hurt your business. Setting aside money for taxes can save you from these inconveniences and avoid paying unnecessary penalties. 

3. Track your invoices

As your business grows, you will need to monitor your clients including payments made and missed payments. Identifying the clients who have already made a payment and those who have not can be challenging without a bookkeeping system. When monitoring your invoices, make sure you have bookkeeping software that will be able to generate invoices and provide information of clients who have not yet made a payment. 

4 Bad Habits That Can Destroy Your Business

4 Bad Habits That Can Destroy Your Business

Do you know the reason why some businesses fail? A simple neglect of your financial report can mean a lot especially if it becomes habitual. Imagine being complacent with your business performance when in truth, it is going haywire. A business owner can overlook serious problems such as insufficient cash flow when a financial report is unavailable. Each month, your financial health can get affected by unpaid bills, unrecorded expenses and many more. Aside from which, here are 5 bad habits that can expose your business to greater financial risk:

Not planning ahead

If only business owners could predict the future, hiring a bookkeeper or accountant will not be necessary. However, this is not the case. You need to keep your income and expenses in check to ensure you are still on the right track. Whether it is a short-term or long-term plan, you need to create one so you can prepare yourself for whatever challenges that come your way. A concrete plan ensures that you will be able to stay in the game. Without a plan, you will never know which direction your business will take. 

Not creating long-term goals when investing

They say that higher risks have greater rewards. While this may ring true, you still need to have long-term goals when investing because this is a serious matter that can result in a plethora of financial problems if you do not consult experts. Investing involves sound decision-making. If things did not go as planned, do you have a better plan to leverage your business? 

Not getting the advice of professionals

Consulting an expert is essential to obtaining financial security. Even if you are a small business owner, you need to hire people that will help you grow your company. Your financial goals will not be accomplished if you do not get the best advice from experts.

Not tracking your budget

Even if your business is profitable, this does not give you peace of mind unless you have enough cash flow to pay the bills and cover monthly expenses. When tracking your expenses and budget, you need to keep receipts so you will know the amount you are spending whether the money is intended for buying office supplies or for travel. When you monitor your expenses, it is easy for you to find out if you still have money to spend. Once you know how much you are earning, it will be much easier for you to rethink your spending habits. Hiring a bookkeeper will also help you get access to your financial statement regularly. Having access to your financial report will also help you identify your financial health. 

5 Good Bookkeeping Habits Business Owners Can Adopt

5 Good Bookkeeping Habits Business Owners Can Adopt

A business owner is often faced with a myriad of business-related problems because of bad bookkeeping. Although bookkeeping is only a tiny fraction of business management, failing to track your expenses can result in costly disaster. Businesses that continue to survive and thrive have a good bookkeeping system in place. If your bookkeeping task is in chaos, here are some habits you can adopt to improve your bookkeeping system. 

1. Purchase the right software

Traditional bookkeeping takes a large chunk of your time as you need to be focused on manual processes. With bookkeeping software, you will be able to reduce manual tasks and streamline processes. While there are are many bookkeeping systems for you to choose from, not all of them meets your needs. When searching for bookkeeping software, always take your business needs into consideration. 

2. Give importance to expense receipts

Monitoring how much you are spending on your business will help you keep your cash flow intact. Purchasing office supplies, paying your monthly bills and traveling for business purposes are part and parcel of managing a business. However, not keeping track of these expenses can have a negative impact on your cash flow. You may think you still have enough money to take care of your monthly bills, but since you have not done any regular monitoring, you realised that you no longer have cash left. Keeping expense receipts enables you to know the amount you are spending. 

3. Get professional help when preparing tax returns

Tax time can be stressful to most business owners especially to those who resort to DIY bookkeeping. However, there are still ways you can make the process less challenging such as hiring a professional to help you get the job done. Preparing tax returns require accuracy to prevent an audit from ATO. Make sure you leave the job to a bookkeeping professional.

4. Do not go completely "hands-off"

A business owner might think that outsourcing a bookkeeping professional takes care of the task and there is no need to check reports and other essential information. Wrong. As an entrepreneur, it is still important to know your financial health and business performance. This way, you will have an idea whether or not it is time to grow your business. Having a basic understanding of bookkeeping and accounting will keep you on the right track. 

5. Track your receivables

Monitoring clients who have not made a payment is not an easy task because you need to classify your invoices to prevent them from mixing up. Tracking receivables will be made much easier with the help of bookkeeping software. It enables you to classify invoices so you will know which ones are unpaid or late. 

The Benefits Of Good Bookkeeping

The Benefits Of Good Bookkeeping

Operating a small business is not an excuse to ignore bookkeeping services because in the long run, you will need to grow your business and having a bookkeeping professional you can rely on will give you peace of mind and help you assess your business performance. If you have not considered hiring a bookkeeper yet, here are the benefits you can reap from having a professional take care of your  books. 

1. Handle payroll easily

Payroll management is time-consuming because it demands accuracy. Incorrect deductions and payments can trigger ATO and may even call your attention so you can give some explanation for the wrong entry. Only a knowledgeable person can put a systematic process in place so you will have nothing to worry about during tax time. A reliable bookkeeper will help you check deductions and payments. Any irregularities will also be addressed before it creates bookkeeping chaos. 

2. Timely bill payments

Delays in paying the bills can be frustrating especially when you do not get regular reminders for bills that are due. While you may not always pay complete attention to your monthly bills because of other obligations, this does not mean you should set your payment obligation aside. In your absence, a bookkeeper will help you make timely payments so you will not shoulder late fees and penalties. Your bookkeeper will also constantly remind you when your payment is due. 

3. Generate reports in real time

Financial reports tell you how your business is doing. It provides you an overview whether or not you should grow your business. It is also where investors, creditors and supplier base their decision. If financial reports are not generated in a timely manner, it will be difficult for you to find out if it is time to expand your business. Your bookkeeper will give you access to updated reports on a regular basis so you do not have to keep on guessing about your financial standing.

4. Prevent interest payments

When it comes to operating your business, bank reconciliation must not be set aside because it is as equally important as other aspects of your business. Bookkeeping professionals will make sure that you prevent any additional interest payment by handling your accounts payable and accounts receivable. This way, you will know what you real balance is. If you have a bookkeeper to take care of this task, making additional interest payments will be a problem of the past. 

Reasons Poor Bookkeeping Should Not Be Ignored

Reasons Poor Bookkeeping Should Not Be Ignored

Bookkeeping is an essential task of every business because even when a company is profitable, it is also important to keep your cash flow in check. There are bad bookkeeping practices that can hurt your business especially when there is lack of proper record-keeping. If you still do not give importance to bookkeeping, here are some reasons you should pay attention to it. 

Missed Opportunities

Bookkeeping enables you to take your business in a more positive direction such as expanding your business. However, when you fail to pay attention to bookkeeping, you will have to prioritise other obligations such as reducing debt as you do not have enough money for business growth. 

Late Payments

Paying your debts late is often due to poor bookkeeping. Instead of using your money for other more important things such as paying your vendors and suppliers, the money is spent on interest rates. You will also have to suffer the loss of credit and less favorable payment terms set by suppliers and vendors. This is because late payments can affect your credit reports and scores. It is important to keep accurate records so you will know if you have enough cash flow to pay your bills. 

Decreased Sales and Profits

You can lose access to suppliers and vendors if you fail to make timely payments. The same is true when you pay the wrong amounts or miss payments. When you do not have the things you need to offer your goods or services, you will also lose sales and customers will not wait until the goods become available. They will look for another company that will be able to fill their needs. 

Legal Problems

You may underestimate the negative effects of bad bookkeeping, but it can also lead to legal problems in the long run. If you have unpaid or late taxes and improper deductions, your company might be sued for these costly mistakes. It is essential for a bookkeeper to be well-versed with tax policies so they can properly handle sales, payroll and income taxes. Tax experts will also be able to deduct expenses correctly.

Inaccurate Financial Reports

You will know how your business is performing if you have accurate financial reports because this is where you check your budgets, cash flow, balance sheets, receivables and payables. If you do not have accurate bookkeeping, you will not be able to run your business efficiently. Your financial reports will also help you check and address any discrepancies that can create a snowball effect on your business. 

5 Important Tools To Make Bookkeeping A Breeze

5 Important Tools To Make Bookkeeping A Breeze

Bookkeeping can be a bane to business owners if proper system is not put in place. While you are trying to keep up with bookkeeping, other tasks can distract you and may even be reasons for you to forget about bookkeeping unless you are already reminded by your late tax payments. Late fees and penalties can hurt your business especially if it happens frequently. Since bookkeeping is an essential task, you need 5 important tools so ensure a stress-free bookkeeping process. 

1. Smartphone/mobile device

Technology offers flexibility to business owners by making traditional bookkeeping a thing of the past. Today, it is easier to manage your bookkeeping files in just a few taps. Gone are the days when mobile phones are only intended for texting or calling. Technology has brought business management to the next level by making it easier for business owners to check information, delegate task and even conduct a regular meeting. The best thing about smartphones is that it breaks the cliche of 9 to 5 jobs. You can collaborate even without being physically present. 

2. ATO website

Have you ever wondered about the deadline for filing tax returns? ATO's website is going to be your friend as it provides information you need to ensure you do not miss the deadline. It provides online forms, tips, instructions and other important reminders so you prevent incurring late fees. It is your one-stop shop for your bookkeeping needs. You can also utilise its online tools such as the tax calculator, which enables you to find out about the amount you are going to pay come tax time. 

3. Google Drive

Everyone prefers to store files in the cloud instead of using desktop programs. This is because it is convenient and flexible. With cloud storage such as Google Drive or Dropbox, it will be easier for you to access financial report anytime, anywhere and even on any device. With this ability to access important information, you can review income statements and balance sheets in real time. The cloud storage also allows you to back up your data safely. 

4. Project Management Software

Location often restricts workers from collaborating. With project management software, you will be able to brainstorm with your workers without being in the same location. The software allows you to keep things organised so you will have the ability to track the amount of work you have done. 

5. Bookkeeping software

Bookkeeping software programs such as Xero makes it easier to track your financial report and even minimise fraud. Every transaction can be traced through transaction history so you will be able to know if a financial statement has been altered before you lose vast amount of cash. 

Is Your Business Threatened By Automation?

Is Your Business Threatened By Automation?

Automation is considered a buzzword in the digital age. Many businesses are viewing it as an innovative way to get things done. As large businesses continue to open their doors to technological evolution, small businesses are seemingly in doubt of what is in store for them. Most of these businesses are not yet ready to embrace digital transformation. The clouds of doubts and fears are hindering SMBs from moving forward. The million dollar question is: Should small businesses be threatened by automation? 

To find out whether automation is boon or bane, let us look at how things were done in the past decades when Internet was not yet in the picture. Everyone saw that big corporate lump, dragging workers to the desk of doom: the manual tasks. As businesses searched for strategies to survive in the concrete jungle, the era of paperwork brought burden, making it hard for employees to carry out each task. Managing payroll was not easy for bookkeepers as they need to ensure accuracy, or sometimes numerical precision. 

In the past, reducing manual tasks was as tough as defying gravity. You had to be chained to your desk to finish the task. If you had to review your reports, this would mean coordinating with your bookkeepers and accountants. If there were discrepancies in the information, you must start from scratch by reviewing the process. You cannot enjoy the freedom of flexibility in the era of paperwork. 

Now comes the age of paperless. Everything can be done in an instant sans the error. It makes life complicated and stress-free. Imagine reviewing your financial statement while dealing with other business endeavors. If you want additional information, you will simply ask your bookkeeper to communicate with you via collaboration tools. The best part is your bookkeeper is a thousand miles away from your location and yet this factor does not affect the way you do business. 

And yes, the manual task! Everyone dreads sitting for hours just to get out of an intricate maze of bookkeeping. This is something one would most likely fear because it can be a sick cycle as you go around in circles. Automation reduces your workload without running the risk of compromising quality. What you used to tackle in days can be done in minutes. Speed is coupled with accuracy to ensure employee and customer satisfaction. 

For small businesses that have not yet realised the potential of automation in making day to day business obligations easy, fast and convenient, now is the time to give automation a chance to streamline processes. 

Why You Need To Automate Your Bookkeeping Processes?

Why You Need To Automate Your Bookkeeping Processes?

Manual processes consume most of your time because you need to ensure that the information is correct and accurate. However, many businesses do not have enough time to focus on bookkeeping tasks that it often ends up taking a backseat. If you do not give priority to your bookkeeping task, you will face a number of problems such as falling behind your tax payments. Penalties due to late payments can hurt your business. There are many ways you can automate your bookkeeping processes with cloud technology. Automation allows you to spend less time on bookkeeping tasks without running the risk of exposing sensitive information to errors, data breaches and intrusion. 

Reasons You Need To Automate Your Business

1. It streamlines business processes. 

Have you ever been stuck in one particular task because your company is still keeping manual processes? Some bookkeeping tasks require you to dedicate additional time and effort to ensure that the data is correct and free of errors. With cloud technology, you will be able to make this objective possible as it simplifies your workplace by providing advanced solutions making staff management a breeze. 

2. Collaborating with workers will be easier. 

In the past, you need to be chained to your desk to collaborate with your team. Automating processes with cloud technology will make it possible for you to collaborate without necessarily requiring the physical presence of your workers. Whether they are from a different location or using a different device, it will never be possible to brainstorm. You will also know the task's progress and coordinate with your team if some strategies are not working. 

3. Reviewing expense reports can be done in real time. 

The problem with paper statement is that you have to wait for your bookkeeper to submit the report before you go over the information. Automation makes it easy for you to review your expense reports so you will be able to identify whether or not your business is doing well. In turn, you will be able to plan ahead and grow your business. 

4. You can prevent fraud before it affects your business. 

Fraudulent activities can go unnoticed if you do not have a system to track activities in real time. Having access to your financial information will make it easier for you to spot irregularities before they can wreck havoc on your business. With cloud technology, keeping up with your bookkeeping records will never be a challenge.

5 Ways Bookkeeping Can Hurt Your Business

5 Ways Bookkeeping Can Hurt Your Business

The only time bookkeeping gets major attention is when something goes wrong. As stressful as it may seem, bookkeeping is an integral part of your business. Habitually ignoring invoicing, record-keeping and other bookkeeping-related tasks can hurt your business. Costly disaster occurs when you do not pay regular attention to your business. There are five ways bad bookkeeping can hurt your business. 

1. Losing Receipts For Small Transactions

Although keeping receipts may not seem like an essential bookkeeping task, you can meticulously track your expenses by keeping receipts even for small transactions. If you generate financial reports, it will be easier to track transactions and find out where your money went when your receipts are intact. 

2. Not Keeping An Accurate Financial Report

If your business is doing well, you may find it redundant to review your financial report. However, there are sudden changes in the business industry that can take a toll on your business. Due to the lack of knowledge, it is already too late to discover that your business is going haywire. Even if you are on the right track, you still need to be on top of everything by making sure that the financial aspect of your business is up to date. 

3. Failing To Categorise Expenses

You might think that your expenses are one and the same regardless where you are spending them on. This is one mistake that can ruin your business especially when the time comes that you need to generate your financial report. Your bookkeepers should make it a point to update your records by categorising your expenses. This way, you will be able to know how you are spending your money. 

4. Treating All Expenses As Immediate Expenses

Your office supply expenses should not be necessarily booked as immediate expenses. You should know the difference if you want to avoid ruining your business. You should be aware of the items you are spending your money on. 

5. Ignoring Books Reconciliation

Bank reconciliation is one of the most ignored tasks that have a negative impact on your business. Fraudulent activities go unnoticed because of leaving confidential data open. The only to check irregularities and discrepancies is when you reconcile books every month. 

While these bookkeeping tasks may seem minor to small business owners, ignoring them can have a serious effect on your business. Since your cash flow is the lifeblood of your business, it is  imperative to keep track of your expenses. 

The Reasons Oral Advice Documentation Is Essential

The Reasons Oral Advice Documentation Is Essential

Once oral advice is given by an expert and based on professional standards, it is easy to overlook one most important thing: documentation. You may not appreciate its importance today, but you will in the future especially if you are already dealing with professional liability claim.

Everything must be put in writing otherwise, defense will be considered weak. In fact, there are many cases regarding the failure to document oral advice and it resulted to a costly mistake. It does seem very trivial if you don’t dig deeper into it but once you are put in a situation where you need to present strong evidence that the discussion between you and the consultant really took place, the documentation will definitely suffice.

What are the key items that should be present in your documentation?

For general questions, documentation consists of basic notes will do. However, the key items or elements must still be present in this documentation. The first item that must be included in the documentation is the date that the discussion happened. This is one of the most important things that should not be overlooked along with the name of the participants.

Aside from the name and date, the facts, advice and recommendations must also be present. If there are tax or accounting considerations, it must be included as well. If the advisor or consultant requested a follow up from client, it must be put in writing as well.

What about unsolicited advice?

When it comes to client’s business operations, unsolicited advice may be considered necessary especially if it will make room for the improvement of the company’s work flow and enhancement of the system. This usually falls under general advice and the discussion will only be documented in firm working papers.

However, for more serious matters, especially if the advice will create a huge impact on client operation, the documentation must be accurate and concise. The key elements should not be forgotten because if there are some allegations against the consultant, the documentation is going to be instrumental.

Consulting Engagements And Its Special Considerations

If extensive discussions between the consultant, client and third parties took place, all of the essential information must be notated. However, the client or the consultant must keep in mind that the advice should be treated with confidentiality and should not be shared to a third party as there may be a tendency that the third party will claim reliance on the information that was provided.

The working papers must have the documentations of the discussions, the parties involved and the date it was held. Confirming the oral advice in a written report must not also be forgotten.

Documenting oral advice must not be taken lightly especially if it will impact client operation. The damage will be irreparable if you allow oral advice to go undocumented. Just imagine the chaos it will bring if you failed to document important advice. When disputes are taken to court, the advisors will be pay such a high price for their negligence to document the advice. Even if advisors or consultants have claimed they provided advice to the client, the statement will not be acknowledged unless the documentation is presented.

Techniques For Making Timely BAS Payment

Techniques For Making Timely BAS Payment

When it comes to managing your business, ensuring timely BAS payments is an obligation you just can’t afford to miss. Some business owners find themselves under the cashflow pressure, trying to make sure that they don’t delay payments. For small businesses, you can keep your compliance costs to a minimum if you opt for quarterly payment. However, you still need to be very careful when choosing your repayment plan and you should understand the risks involved.

How to lodge BAS payment with ease?

1. Set up payables account that can attract higher interest.

The bank account you set should also be linked to your transaction account via internet banking. Make sure the account obtains a higher interest rate than the account you use for your transaction. The money stays in your account for up to three months and this is considered a term deposit account. Make sure you have a separate account for your business and treat the account you set up as payables account only.

2. Ensure regular payables amount transfer.

Depending when bookkeeping is done, the bookkeeper should not forget to reconcile to the bank transaction listing as soon as the report is released. The report should include the total of your liabilities such as the GST liability, PAYG withholding payable, Superannuation payable and other payables that are applicable to your business.

You should ensure that the balance in your bank account is accurate. Which is why, the total amounts  indicated on the report should be for the current period. Your bookkeeper will inform you in case there is an Income Instalment Amount or also referred to as PAYG Instalment amount. If the Income Instalment Amount is present, it should be divided by the number of weeks in the quarter.

Once you have calculated the total amount of liabilities for that quarter, the next step you have to take is to transfer the amount to your payables account. Make it a habit to check your account’s balance every week. This is the best practice to follow as it prevents paying too many debts all at once. If necessary, top it up so you can ensure that the account keeps the exact amount you need when your payables are due. Complete your bookkeeping every month and make sure the amount for your payables are available.

3. Get the amount for your liabilities from the payables account you set up.

You can also get your payment for superannuation and BAS from the payables account you have set up. Make sure that the payable account’s balance should be in proportion to the amount of your liability to the superannuation funds and the ATO.

This simple and basic procedure can save you from incurring penalties and extra charges for delayed payments. You also ensure that your liabilities are separated from your business funds. Liabilities are considered debts that your business has already incurred and must be paid when they are due.

Your cashflow won’t suffer when you employ these basic techniques. When you have a payables account, you don’t have to worry when your liabilities come due. It will remain in your account until your payment schedule.

Signs You Need To Rethink Your Spending Habits

Signs You Need To Rethink Your Spending Habits

One of the responsibilities of a business owner is to make sure that money is spent wisely. It is an unwise move to spend without a plan because this can lead to overspending. For businesses to obtain the best possible return, it is important that you spend the least amount of money. You should keep your budget in check and opt for the most cost-effective technique that can help you make a profit.

Reassess your spending habits if:

There are obvious indications of overspending

Businesses are more likely to make a profit if they earn more than they spend. However, since it is inevitable to spend money, you just need to make sure that you are spending wisely. Unnecessary expenses can really hurt the financial aspect of your business so before you consider taking out money, see to it that you know where the money is going. Even if your business is profitable, you still need budgeting help so you will be able to keep track of your financial activity.

Your list of obligations remains unresolved

It is frustrating to find yourself not getting a list of things done even when your funds keep depleting. If this is always the case, you need to rethink the way you spend as there might be some underlying factors that cause you to overspend and deter your business from growing. Your creditors and business associates should not lose faith in you, but if you continue to have more losses than profits, you are more likely to lose their trust.

Important bills often remain unsettled

When it comes to your finances, important bills should not be overlooked as they are also an important component of your business. Taxes and other bills must be paid in a timely fashion especially the ones with the nearest due date. You should also consider bills that benefit you the most such as your credit card bill. Once payment with your credit card bills are paid you will be able to use the funds again when needed.

You consider petty cash a nightmare

Your petty cash can be one of the reasons for an unbalanced account at the end of each week or accounting period. If you have already checked your major expenses and you are still clueless about the root cause of the problem, you may need to take a look at your other expenses. There are some reasons your expenses are unbalanced and one of which is the failure to reconcile your petty cash with the rest of your finances. It can be such an issue especially if you are not sure what went wrong. However, if you know how to budget your money, you can spend it without having to worry about overspending.

Some problems that lead to losing one’s business include financial mismanagement, which could have been avoided if budgeting has been kept in mind. It is easy to lose track of your financial activities if you deem your business to be profitable. However, unpaid bills, unbalanced account and financial troubles can create a negative effect on your business when it is left unresolved.

Reasons Tax Systems Can Impede Your Business Growth

Reasons Tax Systems Can Impede Your Business Growth

When your business is headed in a direction that is completely different from what you hoped for, you might want to check one aspect of your business that might have been the sole reason for its stunted growth. As you take your business to another level, the stakes are also becoming higher. If you remain unfamiliar with the tax system, getting close to achieving your business goals may seem to be impossible. The tax system is full of complexities but understanding their importance and functions can help your business reach its full potential.

Payroll Tax

The payroll tax is one aspect of your business that you have to take seriously especially small businesses. When you fail to comply with the payroll tax requirement, it can trigger havoc and may cause serious problems including losing your business. Worse, you can't get away with the government if you fall behind your tax obligations. This is why, you need to take action or you will find yourself out of business. Payroll tax does not take time to add up and it will be much harder for you to pay. Instead of using your money to invest in much bigger business ventures, you will end up paying a large chunk for your tax debt.

Goods and Services Tax

<p>Goods and Services Tax (GST) is considered compulsory if your business meets the annual projected turnover. Once you have registered For GST, you will be provided with Australian Business Number (ABN). If you have ABN, people will not hesitate to deal with you. The downside of GST is that you are required to pay the purchases, which are essential for running your business.</p>

Restructures

Business restructures are inevitable as it is the only way you can make plenty of room for growth. However, the process that comes with it is complicated. You will also need to explore an effective business structure that comes with a caveat. When changing to a more effective structure, you need be prepared for CGT liabilities.

Small Business Definition

A small business provides you complete access to small business concessions, but you cannot just pass yourself off as a small business without meeting the requirements. Once you expand your business, these small business concessions will also be forfeited.

Without a doubt, the tax systems and other factors can greatly affect your plan of making your business grow. This is why you need to think how you can restructure your business without having a hard time dealing with these impediments. Make sure you know the ins and outs of your business if you really want a business operation that is smooth sailing. Tax systems can either make or break your business. In fact, you can be in an unfamiliar territory when you don't know the outcome of making a big move towards business growth. There are also other factors that can stunt your business growth and you need to learn how you can make some improvements without allowing your business to get affected by the tax systems. The road to growth may be difficult to tread but the journey will be easier once you get close to your business goals.

Mistakes Business Owners Make With Their Finances

Mistakes Business Owners Make With Their Finances

Even if you are a savvy business owner, you are still not immune to making bad decisions. It is part of running your business. You need to make mistakes so you will know what to do the next time you are faced with difficulties in your business. If you learn from the mistakes you commit, you will be able to manage your business wisely. Perhaps, the biggest mistake that a bookkeeper can make is handling business finances. Many business owners have already failed because of taking their finances for granted. If you fail hiring the right bookkeeper, your business will sure suffer from its ripple effects.

• Ignoring Feedback

If you want to open a business, you should also be open to criticisms. Although nobody wants to be criticized, you need to be open to feedback and advice. You need to listen to what the bookkeeper has to say about your business because it is one way for you to run a better business. With these few simple changes, you will be able to realize that your business takes a more positive direction.

• Failure To Keep Receipts

If you have the habit of throwing away receipts, you can also increase the risk of losing track of your expenses. This practice can be dangerous because you do not have any evidence of the money you spent. As a result, you will face bigger problems once tax season comes. Make it a habit to save your receipts in a file or give them to your accountant or bookkeeper for safekeeping.

• Not Sticking To A Niche

Marketing can be expensive but it is essential to your business. This is why you need to spend your marketing budget wisely. With that being said, you need to make sure you focus on a niche that your product can successfully accomplish and satisfy. If you commit to a niche, you should only concentrate on the target marketing of your niche.

• Not Creating A Budget

It is easy to make adjustments if you have made a budget. You can easily monitor whether or not you are losing track. If you do not have any financial road map, you will be totally confused of the progress of your business and this could mean throwing your money away.

• Running A Business Without Sufficient Initial Capital

If you want the road to establishing your business to be smooth-sailing, you need to raise your capital so you can open your doors to better business opportunities. Before you open your business, make sure you have enough capital and see to it that you are conservative in your estimates.

• Not Hiring A Reliable Bookkeeper

A bookkeeper is crucial to every business as you cannot take on everything yourself. When hiring a bookkeeper, make sure that they are qualified and know more than just basic accounting. When you mismanage your finances, your business can take a nosedive. If you hire a good bookkeeper, you will be able to get good recommendations based on their experiences. As a business owner, it is important that you regularly keep track of your finances. Regular business monitoring can help you determine where your business is going. It helps you change your bookkeeping habits and become keen on your finances.

Smart Tips That Business Owners Can Benefit From

Smart Tips That Business Owners Can Benefit From

Do you know the difference that keeping a financial system for your business makes? One of its major advantages is to help entrepreneurs avoid costly mistakes caused by just overlooking a single financial activity. Your business expenses must not be taken lightly if you don’t want to put it at great risk. A financial system should not be considered trivial because aside from being a time-saver, it can also help you develop a habit of ensuring timely payments.

Processes and systems play a crucial role in your business especially when you have so many tasks to attend to. It is easy to be off the track when you have some other things in mind. However, if you know how to handle your business’ financial aspect wisely, a steady flow of money will continue and you are less likely to face a major problem with the Australian Taxation Office.

Five bookkeeping tips entrepreneurs should consider:

1. Keep your invoices.

Pros: You make timely payments and prevent hurting your cash flow, which happens when you fail to pay the bills on time.

Process: Appoint someone for this bookkeeping task and make sure they know the process for issuing a second invoice, following up on the process through a phone call and checking if your business has incurred any penalties or extra fees for late payments. Once you send the invoice, make sure you have not fallen behind your payment schedule. The invoice does not give you a guarantee that penalties and other extra fees will not be imposed.

2. Put a portion of your money for paying taxes.

Pros: You encourage timely filing of tax returns and avoid penalties for late payments.

Process: Mark your calendar so you will know when your payment due date approaches. Make sure you set aside money so the payment will be settled on or before the due date.

3. Make sure deposits are recorded correctly.

Pros: You prevent out of the pocket business expenses especially when it comes to paying taxes.

Process: You can keep track of your financial activities with the use of a system. It can be a notebook or more advanced bookkeeping software. Regardless of the methods you use, make sure it does not defeat the purpose of keeping a correct record of your deposits. See to it that the deposits are only intended for your income. Depositing your personal savings, loans and revenue from sales into one bank account may cause costly errors in the end as you might confuse your deposits as part of your income.

4. Monitor expenses.

Pros: You are well-aware of your financial activity and it is easy for you to track legitimate expenses.

Process: Business expenses must be monitored closely and make sure you categorize your expenses. If you have just gone on a business trip, don’t forget to write down all of your expenses including lunches, air fare and other business events.

5. Create a plan for major expenses.

Pros: It helps you analyze your budget for future business plans and avoid overspending.

Process: For business improvements to be materialized, see to it that you plan ahead so you will know how much you are going to spend on it. Some business owners end up taking out a loan because of the failure to plan their major expenses. Even businesses have their ups and downs but you can still do something about it by keeping your company financially secure even when major improvements have to be done.

6 Reasons You Should Not Create Any Room For Bad Bookkeeping

6 Reasons You Should Not Create Any Room For Bad Bookkeeping

Managing your business takes skills that only a few businessmen could master. Perhaps, you have already been venturing into a type of business where you need to be keen on your finances. Without a doubt, bookkeeping is the heart and soul of your business. It is not just a task you need to complete so you can fulfil your tax obligations. In fact, keeping an eye on your financial records can save you from being dragged into a potential lawsuit. Some businessmen can be so careless that they pay little attention to the business' important aspect. 

If you have already developed the habit of putting all of your business' financial records in one chequebook, being confused will never come as a surprise. It can be a huge problem in the end, but if you see to it that your business transactions are properly sorted and recorded, you can easily track if something in your business process is not right. 

Reasons To Master Your Business' Bookkeeping Skills:

Provides better records. 

When you consider separate banking and ensure that the money intended for your business is not spent for your personal expenses, you will begin to notice that your bookkeeping procedures have also improved in the long run. As a result, you will be able to provide better records, which can create a positive impact on your tax return. 

Creates corporate veil.

If you intend to form a new corporation, one of the best practices you need to follow, especially when managing a small business is to create a separate chequebook.  This practice helps you identify that bookkeeping is your business's distinct entity and you avoid confusing your business funds for your personal funds. 

Automation Helps Business Owners Avoid These Bookkeeping Mistakes

Many small businesses fail because of poor financial health, linked to inefficiency in bookkeeping and accounting.

For small businesses to thrive, budgets must be tightly rationed and this will only take place if bookkeepers are keen on monitoring the financial activity of your business. You might have already heard of modern bookkeeping, which involves automation. Some small business owners still shy away from the idea of automating bookkeeping tasks because it has been thought to be intended for large companies only.

Automation is for everyone. It reduces manual tasks and minimises dependency on skilled manpower. Embracing automation helps you avoid these bookkeeping mistakes:

1. Delayed account reconciliation

Reconciling your books with the bank must be done on a regular basis and in a timely manner. Delayed account reconciliation can become a prelude to larger bookkeeping mistakes. Automation enables you to reconcile accounts easily and highlight discrepancies before bigger problems arise.

2. Failure to track expenses diligently

Your cash flow is the lifeblood of your business. Every transaction must be tracked regularly so you will know how much you are earning and spending. Automation ensures all expenses are tracked.

3. Fraud

Human interaction increases the chances of committing fraud and this is what automation is capable of reducing. Since losses due to fraud can create a huge impact on the profitability of your business, automation will reduce the dependency of your business on human beings and the opportunity to commit fraud will also be reduced.

4. Inappropriate deductions

Not deducting sales tax from a sale is a mistake bookkeeping professionals often commit. This is a costly mistake because not deducting sales tax will display a higher amount of sales.

5. DIY bookkeeping

Another reason automation is critical to business processes is when you prefer to perform bookkeeping task yourself instead of hiring a professional bookkeeper to do it for you. Automation can assist you in ensuring that all of your business expenses are tracked and books are updated regularly.

6. Losing track of the money withdrawn

Businesses maintain a petty cash reserve in preparation for minor expenses. However, you can easily lose track of the money you withdrawn from this reserve, thinking that it will not really affect your cash flow. Running a business means keeping track of cash flowing in and out of your business. If you consider automated bookkeeping, you can easily keep track of these expenses and update your records regularly.



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