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Canberra Bookkeeping & Business News

Get the latest news affecting your bookkeeping in Canberra

3 Benefits Of Moving To The Cloud

If you are a small-business owner embracing traditional bookkeeping for years, adopting cloud technology is like treading upon a very unfamiliar territory. However, like a man setting foot on a new place for the first time, you need a compass to prevent being lost.

Cloud technology may not be something you can learn overnight, but migrating to this technology can give you more benefits than you know. In the past, bookkeepers have to spend hours managing invoices, receipts and bills. With a vast range of organisation tools and technologies you can use today, you can reduce the headaches of manual tasks.

Using cloud-based software, or also referred to as Software as a Service (SaaS) provides you access to technology where you can store and access your data conveniently via Internet connection. The primary concern of business owners who are accustomed to traditional bookkeeping is the lack of proper training when it comes to using cloud-based tools. However, embracing cloud technology does not really mean you are going to completely abandon traditional technology. Today's cloud-based software ensures that the transition will be as smooth as possible.

1. Enable employees to collaborate
Your team members do not have to be physically present to collaborate on a project. Since cloud-based software enables everyone to access the project without worrying about the location, checking an invoice or adding expense receipts anytime, anywhere and from any device will no longer be a problem.

2. Easily Identify Discrepancies
The success of many small businesses depend on the relationships with distributors and vendors. One issue that may catch the attention of a distributor or vendor is when a bill has not yet been paid. Questions will be raised and these can greatly affect the relationship that has already been established. With cloud tools, bookkeepers can verify discrepancies to find out if a bill has been missed or paid. Verifying these discrepancies preserves vendor relationship.

3. Reduce manual tasks
The best part about using cloud tools is that you can access documents from any device. Since the documents are integrated with other cloud-based tools, team members will find it easier to access much-needed information. Manual data entry will also be reduced.

Cloud-based software makes it easy for small businesses to collaborate, verify discrepancies and reduce manual tasks. This provides owners more time to focus on other aspects of the business.  Some cloud software providers offer a trial version so reluctant businesses can give cloud technology a try before completely embracing it.

Financial Report: This is What Professionals Do

The financial report allows business owners to get essential information about the condition and financial performance of a business.

Being a business owner is not an easy task. You have to monitor your financial activity regularly and seize every opportunity to invest. However, these two important tasks will require prying into a financial report.

Bookkeeping is a task a business owner often avoids. Which is why they hire a bookkeeper to spare themselves from the headache.  Even if you already have a bookkeeper to deal with your financial statement, it does not mean you are off the hook.  You are a business owner. You need to know how things are going with your business. This means you should know how to interpret a financial report.

So breathe, clear your mind and read...

Known What To Read

A financial report contains a plethora of information. Since it is the summary of the health of your business, you will be presented with information you wish or you do not wish to obtain.

Decide what to read.

For instance, if you want to know whether or not your business is making a profit, read the profit and loss section. Allow your bookkeeper to discuss the strengths and weaknesses of your business before you proceed with asking for some sound recommendations.

If you wish to get a copy of the financial report's simplified version, you can ask your bookkeeper to provide it. However, you have to keep in mind that this shortened report will not give investors and investment managers a clear idea of your business.

Gain Basic Understanding of your Financial Statements

The balance sheet, income statement, and statement of cash flows are considered the core of your financial report. You cannot make sense of your financial statements unless you have a rudimentary understanding of your financial statement. If you know nothing about your financial statements, interpreting them will be a daunting task.

Check Profit Performance

You will know your business generates profit if it is making sales. It should also keep expenses which are less than sales revenue. Reading the sales revenue is the best place to start in determining the profit performance of your business.

Do you know the gross margin ratio of your business?

If you were to compare the current sales revenue with the previous year's, have the figures increased or decreased?

Compare Cash Flow From Profit

Cash flow is an important component of your business. It should continuously flow to maintain liquidity. Your cash flow will be used as your source of capital to grow your business.

You do not just make profit as you also need to generate cash flow. Cash is obtained from selling off some assets, borrowing money or getting shareowners to put money in your company.

Heed Signs Of Financial Distress

You will need to know how the solvency of your business looks. Do you still manage to pay your bills on time?

Analysing solvency involves searching for signs of financial distress. Failing to identify these signs can have a serious impact on your business.

Look For Any Possibility Of Fraud

Fraudulent activities can affect your business. It may only be noticed if the company is already losing thousands or worse, millions. If you are presented with a revised statement, you need to ask an explanation from your accountant or bookkeeper. All too often, restatement is due to the fact that the original financial statements were based on fraudulent bookkeeping or accounting.

Financial reports can be somewhat conditional, but it is an important source of information so investors are  informed about executive changes, economic trends, business takeovers and much more.

3 Fraud Prevention Techniques Every Business Should Employ

Many businesses are losing money because of fraudulent activities. While simply looking at the reports will not easily allow you to spot any fraud, prevention and detection are still essential to reducing loss. There are various types of fraud that can take place in the workplace. They are broken down into three categories: financial statement fraud, asset misappropriation and corruption. Financial statement fraud refers to schemes which involve intentionally omitting or misstating information in the financial reports. It is either the bookkeeper hides liabilities or inflates assets. Asset misappropriation is the type of scheme in which an employee exploits the company's resources. Corruption refers to extortion, bribery and even conflict of interest. In corruption, employees use their influence when doing business transactions only they can benefit from.

1.Inconsistent Financial Report

If you see omissions or misstatement of financial information, this is a sign that something is wrong with your financial statement. While mistakes can be committed every once in a while, committing errors deliberately becomes a fraudulent activity as it is done on purpose. It is important that you review your financial statement regularly so you will know if your bookkeeper is tweaking any essential information on your report.

2. Incorrect Bookkeeping Procedures

Correct payroll guidelines and procedures must be observed. If they are resistant to change and insist on keeping old procedures, the financial and payroll records from previous years must be investigated for any incorrect or misleading information.

3. Misfiled Paperwork

It can be frustrating when you cannot find any essential business records such as deposit slips, payroll records and supplier correspondence. These records should be kept as they are going to be necessary for keeping track of your financial transactions. If they mysteriously disappear, you know that your bookkeeping has got some explaining to do. 

Fraud Prevention

It is important for every business owner to create a reimbursement and expenses policy. For instance, billing your credit cards directly to your company must not avoided. bill them to the employee instead. It is also important to prepare an expense report for each employee and all receipts must be turned in for any business-related transactions. You should also set a daily limit as this will help you control the amount of cash employees spend. This policy imposes stricter rules that will enable you to monitor expenses effectively.  

Aside from the reimbursement and expense policy, you should also review financial records. These records should be complete, if any of the records are missing, you should ask your bookkeeper or the person in charge for explanation. Checks and balances must also be strictly implemented.                                  

What Does A Business Financial Statement Tell You

Your income statement is going to tell you a lot about the financial strength of your business. Aside from your income statement, the cash flow statement and the balance sheet are also very useful tools. Although bookkeepers and accountants are often the ones taking care of these statements, it is still essential for a business owner to gain basic understanding of these statements.

Cash Flow Statement

It is important for your business to have enough cash to stay afloat. Businesses often fail because of problems with cash flow. This is because cash may not always flow into your business. You can have a profitable business but still face cash flow issues. It is easy to identify whether or not your business is making a profit by merely referring to your income statement, but it does not give you details of the missing or delinquent payments. Business owners maintain a cash flow statement to gain a better understanding of the flow of cash in and out of your business. The update is done on a daily, weekly or even monthly basis. In determining your cash balance, you need to calculate the operational cost, asset investments and financing.

The operational costs will give you a clearer picture of the cash you are generating before taking the cost associated with investments or financing into consideration. The asset investments refer to the inflows and outflows from sales and purchases of long-term business investments which include equipment, property, assets and securities. The financing refers to the cash you receive from line of credit, business loan or the sale of stock.

Balance Sheet

The balance sheet shows the business assets, liabilities and equity of your business. Most likely than not, investors focus on your income statement, but the balance sheet can be used as a starting point for knowing the fiscal health of your business. The balance sheet shows you the summary of key financial information on a specific date or period of time. The balance sheet provides you a view of current and long term debt, asset management, net value of your small business and the comparative data where you can see changes in accounts receivable/payable, equity, inventory, retained earnings and cash.

Income Statement

The income statement is also referred to as a profit and loss statement. This is a useful too because it provides an overview whether or not your business is going well. The income statement also gives you a break down of the revenue generated and the expenses incurred. You will know you have a well-maintained income statement if it provides details of the profit of your business and the steps you should take to increase profitability.

5 Bookkeeping Habits Savvy Business Owners Adopt

When you decide to put up a business, the learning process will be never-ending. To some, a surviving business is enough, but without a long-term plan, your company will eventually join those businesses diving in a cesspool of debts. Romanticizing about happily ever after in running a business is not going to get you anywhere unless you develop smart habits that will keep your business thrive.

1. Leave tax returns to bookkeeping professionals

Have you ever found yourself being pulled in different directions to ensure your business do not take a nosedive? There are aspects of your business that you need to leave to professionals and one of which is preparing tax returns. It is important to outsource this task to someone who has the expertise because they are the ones who have trained financial eye. They are also well-versed when it comes to the ins and outs of tax deductions.

2. Understand what is happening with your business

Although you have bookkeepers and accountants to take care of your reports, this does not mean you should go entirely hands-off. You still need to actively participate in reviewing reports. That said, gaining basic understanding of business numbers is essential. Some of the information you should learn include trend in expenses, accounts receivable, profit and profit per customer. 

3. Choose reliable software

In the age of technology, it is imperative for every business owner to bring the right software into business. A good system will enable you to generate reports in minutes and ensure that the reports contain accurate information. Ask for recommendations from friends who have the same businesses as yours.

4. Document essential bookkeeping processes

Aside from gaining basic understanding of business numbers, documenting bookkeeping processes is also the best practice to follow. Noting the processes prevents confusion and answer questions. Once you know how bookkeeping works, it will not be difficult for you to spot errors as you already have an idea what could have gone wrong.

5. Keep receipts

Keeping expense receipts is another good habit a business owner should adopt. It enables you to keep track of your expenses and determine which direction your business is heading. While credit card purchases generate receipts and monthly statements, cash expenses need to be monitored regularly. These days, you can download accounting app that will give you the ability to take pictures of receipts as you go. This will help you track your expenses without keeping the paper copies.

How to Minimize Bookkeeping Costs

How to Minimize Bookkeeping Costs

Every business owner knows that managing an enterprise takes a lot of time and money, especially when it is just at the beginning stages.  When it comes to bookkeeping costs, however, this doesn’t have to be the case.  In this article, let us take a look at three possible ways in which you can minimize your bookkeeping costs.

1. Keep everything organized.

The simple task of keeping all your records organized can go a long way in reducing your bookkeeping costs.  The more details you have regarding each transaction, the easier it will be for your bookkeeper to do his or her job.  Whenever you pay a bill, take note of all the details involved, such as the date and method of payment.  This is particularly useful especially if you are handling more than one account.  Likewise, if you provide only invoices and not the payment receipts themselves, bookkeepers will not be able to record these until the transactions show up in your monthly statement.

In any case, it would be a wise idea to ask your bookkeeper directly how he or she wants you to present your transaction details.  This way, you are able to provide them with all the information that they need to keep your records updated.  Hence, by being organized, you are able to work efficiently with your bookkeeper, regardless of whether you are paying them an hourly rate or a fixed monthly fee.   

2. Separate your business accounts from your personal accounts.

Do not make the mistake of using a personal account for your business; otherwise, this will only make your records complicated and confusing for the bookkeeper to work with.  Moreover, whenever you are paid in cash, avoid the temptation of keeping some of it for yourself.  Instead, deposit it directly into your business account.  By doing so, you are able to avoid problems when the bookkeeper is matching your account deposits.  Again, this cannot be emphasized enough: keep your personal and business accounts separated.

3. Utilize a document management system.

In the olden days, business owners would store receipts in a file or a shoe box, which is then brought out when the bookkeeper comes.  The problem is, there are times when a receipt is misplaced or records suddenly get damaged in a fire or flood.  You can avoid this problem by utilizing a document management system.  This enables you to save a copy of your records, which can be accessed by you or your bookkeeper anytime.  There are many document management systems available that allow you to save your financial documents online safely and securely.  They are a great way of organizing and managing all your financial transactions, making things easier for your as well as your bookkeeper.

Keeping your records organized, separating your business and personal accounts, and utilizing a document management system are just some of the ways in which you can minimize your bookkeeping costs.  In this manner, you are able to save money and increase your returns in the process.

How Does Technology Change Small Business

There are many aspects of your business operation that the new technology is changing. Regardless of the aspects, one thing is for sure: the advances in technology have no signs of going slow any time soon. Some businesses have already chosen to embrace the current technology and they have made a great decision because they have already reaped the rewards, while those who choose to keep a legacy system have been left behind.

Cloud Technology

Bookkeeping technology will not be complete without embracing cloud technology. It indeed changes everything by making expansion, collaboration and mobility possible. Gone are the days when organisation fear data loss once computer crashes because now, everything can be accessed using a mobile device. You do not have to be chained to your desk because collaboration happens anytime, anywhere. One of the advantages of using cloud technology is its ability to access resources even outside of the office. While this was still possible in the past, it was an expensive and time-consuming endeavor.

The Proliferation of Mobile

Technology has made it easy for people to find local businesses, shop or share experiences on social media. It is imperative for businesses to improve their online presence by ensuring that the website is also mobile friendly. Most customers would rather use their mobile device for web browsing because they can take it anywhere.

BYOD (Bring Your Own Device)

Business owners and employees are more productive with the use of smart devices. This is because they do not have to be in the office to collaborate or attend in meetings. Even when they are out in the field, they can still be flexible by working remotely.

Collaborate and connect

In the digital age, everything is connected easily. Even in workplaces one does not have to be physically present to stay involved in group meetings. In fact, there are tools that enable collaboration. Regardless of your location, you have the freedom to edit or work with the team. You do not have to worry about working together because everyone stays connected.

Location is no longer an issue when it comes to collaborating on a project. With the new technology, a small business can achieve mobility and flexibility. This is also advantageous to bookkeepers as they do not have to conduct a daily meeting to find out about updates because it can be done using these modern advances in technology. Technology has indeed taken most businesses to the next level.

Does Your Business Face These Payroll Challenges?

Your employees are also the lifeblood of your business because they are the ones dealing with existing and potential clients. As a business owner, it is important that you are well-versed with the details of your employees' payroll. That said, they need to get a fair amount for the service they have rendered. There can be numerous problems associated with payroll. This is why no employers can afford to make mistakes because it is the employees' money that is at stake.

1. Payment Summaries

It is necessary for employers to tax employees correctly as they may end up getting more or less than what is due to them. Once payments are not set up correctly, it will reflect on the annual Payment Summaries. The sad part of this oversight is that the ATO will be one to benefit from the money that is supposed to be awarded to employees.

2. Employee's Tax

Since calculating employee's tax can be time-consuming, using small business bookkeeping software is a good idea. However, there are taxes that require manual calculation such as the unusual payments. These unusual payments include bonuses, terminations and commissions. Since they are calculated manually, the details need to be reviewed to avoid undertaxing or overtaxing employees.

3. Default Superannuation Fund

Employers must provide a choice of superannuation to employees. However, there can be cases when the worker does not select a fund and the choice will be left to the employer. The default fund is selected for making a payment and it is the employer who selects the default fund.

4. Record Keeping and Pay Slips

When it comes to keeping receipts, businesses are recommended to file them for a maximum period of 7 years. The essential records that should be filed include leave records, hours worked super contribution, pay records, payment details and many more. These records should be treated with confidentiality as they contain employee information. The employees should also have access to their pay slips within one working day of pay day. If the employee is on leave, the employer should include specific information.

5. Superannuation Obligations

Superannuation is specifically designed for ordinary time earnings. Superannuation can also be applied bonuses, allowances and loadings. Contractors who are sole traders should make a payment of superannuation based on the working arrangement's nature.

There are business owners who consider a worker as a contractor but this does not necessarily exemptt them from paying superannuation. The online contractor tool will be able to help you determine if the worker needs to pay the superannuation. You should also be aware of late payments because the ATO implements stricter rules for delayed superannuation payments. Even the director can be held liable for the company's late payment.

Four Reasons You Need Bookkeeping Software

Issuing invoices, managing cash flow and tracking expenses are integral part of your business. Due to the process business owners have to undergo, these tasks are considered to be an administrative nightmare. This is why people who want to make the bookkeeping system easier have switched to cloud-based software. This way, mundane and repetitive tasks are automated so labor-intensive processes become a problem of the past. If you have not yet considered bookkeeping automation, here are four good reasons to do so.

1. It streamlines payroll process

Bookkeeping demands accuracy especially when it comes to dealing with payroll. This requires time and patience because you need to make sure that the details are correct. Since it is your employees' salary that is at stake, you need to have a simple but intelligent automated payroll process so you will have the ability to streamline staff payment process. Financial manage tools such as QuickBooks Payroll software helps you calculate taxes in minutes. You can also integrate with QuickBooks Online for your accounting solution to be more holistic.

2. It enables you to review and manage stock items easily

Businesses require tracking, managing and even reviewing stock items. These tasks must be done on a regular basis to keep business on its feet. If you have an inventory management software, you will be able to scan and create product barcodes easily. This is because the software simplifies the process and ensures that the details are accurate. The software will also make it easy for you to manage all tasks using one software system.

3. It simplifies your invoicing system

Invoicing is another time-consuming task that needs extra attention. It involves chasing up unpaid accounts. If you do not have a streamlined bookkeeping system, it is easy to lose track of payments due. This is why you need to have an automated invoicing system that will enable you to schedule invoices to be sent automatically to the customers. The invoices can be sent individually or in batches. An automated invoicing system also stores your invoices in one place so you can easily identify the ones that are already overdue.

4. It integrates CRM

If you have the option to integrate a customer relationship management (CRM) system, it will be much easier for you to focus on other aspects of your business. If you always find yourself juggling numerous client accounts  and you find keeping tracking of communication a tedious task, using lead management software will help you keep an eye on your business so you can improve customer satisfaction. Once you automate your CRM processes, you can also give your employees the ability to use a mobile solution so collaboration does not stay within the portals of your workplace.

Five BAS Errors And Ways To Avoid Them

If you are a business owner, you are surely familiar with the process of preparing and lodging Business Activity Statements (BAS). When you prepare activity statements, do you think of it as a mere obligation you need to fulfill? If you do not have keen eyes on preparing these statements, you will have the tendency to open your doors to mistakes. Here are the common errors you need to avoid when preparing your activity statements.

1. Do not change your PAYG Income Tax Instalment unless you are advised by your bookkeeper or accountant

You might be having a notion that the ATO calculates your income tax amount in real-time, but they are working about one to two years behind. The path your business takes can also affect your income tax amount. If your business shrinks or grows, the first step you may take is to change or vary your income tax instalment amount. Before you vary your income tax amount, make sure you check with your accountant or bookkeeper. You can pay for fines and penalties for doing this.

2. Remember to lodge by the deadline

As a business owner, you need to take note of the important lodgement dates. For BAS, you need to lodge on the 28th day of the month and 28 February for the December quarter. You will get an extra month to lodge if you choose to lodge via a registered BAS agent. Be careful with late lodgement because the ATO will fine you $180 for each month that the BAS is lodged late. You can be fined for a maximum of five months.

3. Not reconciling your GST and PAYG back to the balance sheet

There are instances when you need to make changes to a transaction or tax rate but when a BAS has already been lodged, the changes will not reflect on the reports. You can only identify alterations if you compare quarterly reports to the balance sheet accounts. You need to engage the services of your accountant or bookkeeper to reconcile PAYG and GST.

4. Failing to identify whether your accounts should be on the cash or accrual basis

Once you register for GST with the ATO, you need to know whether you will be using the cash or accrual accounting method. In theory, a turnover of less than $2 million should select the cash method, but this may not always be the best option. For small businesses, the accrual method is the right choice to consider because it can assist with cash flow.

Ways Of Enhancing Your Bookkeeping System

In a world where everything is rapidly changing, you need to act fast as a business owner so you can continuously enjoy quality and timeliness in your workplace. One aspect that you need to pay heed to is your bookkeeping system. This is why you need to take advantage of the proliferation of technology. Before bookkeeping software came to existence, bookkeeping was a labor-intensive process as you need to spend a large amount of time to carry out a task. This includes entering transactions and even reconciling bank statements. All of which can be time-consuming as you need to make sure that the information you enter is error-free. In today's new technology, bookkeeping processes can be done in a matter of minutes.

Project Management Tools

Aside from preparing financial statements and reconciling accounts, your bookkeeper must also know how to interpret numbers and provide recommendations to key stakeholders. Technology will be vital in this process. This is where project management and time tracking tools come in. They allow bookkeepers to monitor workflow to find out if there is any inefficiencies in the workplace. These tools also enable business owners to find out about customers who generate the most revenue. You will also need inventory management tools so you can bring data together and answer questions about budget and goods. This tool can also provide you a way to analyse customers by geography, industry and the products they purchased.

Bookkeeping Platform

These days, one-size-fits-all approach will never work because each business has different goals to accomplish. Choosing bookkeeping platform that can be customised is ideal for businesses. With these platforms, you will have the ability to add new features and functionality. There are application programming interfaces that allow pieces of software to share and communicate data so you can integrate point of sale, online and mobile payments systems, email marketing and customer loyalty programs.

Cloud Computing

When it comes to discussing the future of bookkeeping and accounting, cloud computing will always come to mind. Cloud computing is widely used for reducing the turnaround time of bookkeeping. These services are helpful when it comes to giving bookkeeper real-time information. There are services that have the ability to extract key data from receipts and pull statements and bills into a secure hub. These details are published into cloud-based accounting software. With this ability to provide real-time information, it is possible to reconcile most accounts. It will be easier for business owners to collaborate with bookkeepers and accountants this way.

Choosing Bookkeeping Software For Your Business

When it comes to going digital, you need to make sure that your bookkeeping system keeps up with the changes as well. The main purpose of using bookkeeping software is to streamline the processes so you can boost productivity and performance. This is why it is essential to choose the kind of software capable of bringing speed and accuracy into your bookkeeping system. While features of software can be pretty overwhelming, not all of them can be beneficial to your business. Make sure you are keen on choosing the software that suits your needs. There are affordable versions of bookkeeping software but there is no guarantee that you will be able to maximise the software's benefits. Make sure you choose the ones that can give you affordability and quality.

It is not easy to choose the right software for your business so you need to make sure that you follow the correct search process. Keep in mind that as you grow your business, the way you carry out your daily task including bookkeeping must keep up with the changes as well. Here's how you can find the right software for your business needs.

1. Research About Bookkeeping Software

It is hard to make a decision about the software to consider if do not know much about bookkeeping software. It is imperative to do a research so you will know the software that provides your needs. Start talking to your competitors so you will know about the software they are utilising. Your bookkeeper and accountant might also give you some suggestions that you can use to narrow down your selection. Once you have come across a possible option, check if they have a trial version.

2. Know the software that suits your needs

There are two software options for you to choose from: generic and industry specific software. When it comes to choose bookkeeping software, you need to see to it that you know which one works for you. There are some features that you need to take into consideration for you to decide if you should choose stick to generic software or opt for industry specific.

3. Analyse your budget

Aside from the features, you will also have to consider your budget as a deciding factor, but this does not mean that you should skimp on your bookkeeping software. Choose the software that comply with your business requirements. Never choose the software that offers you the lowest price because you might save money, but not get the result you are looking for.

4 Bookkeeping Tasks You Need To Automate

While it might seem to be surprising, nearly half of today's small businesses still do not use automate essential bookkeeping processes to reduce repetitive tasks. If you are one of the businesses that still spend hours preparing expense reports, you may need to embrace automation to carry out your bookkeeping task efficiently. Here are four bookkeeping tasks that need automation.

Payroll

For small business owners, payroll taxes are considered to be the company's biggest burden. More often than not bookkeepers spend 10 hours or more per month for managing payroll. This means that bookkeepers spend a total of 120 hours per year just for managing payroll. However, the number of hours you spend for payroll taxes can be reduced when you automate your payroll. Aside from cutting down your bookkeeping load, you can also create instant paycheck and calculate payroll taxes.

Expense Reporting

Failing to submit expense reports on time is a violation of company policy. These variables will definitely cost you money and may even create bookkeeping and tax problems in the end. When you automate expense reporting, you can be sure that you will have a streamlined bookkeeping process. The best thing about automation is that you will have the ability to use your mobile devices to automatically snap pictures of your receipts. You can also automatically generate reports and integrate them with your travel bookkeeping to ensure that your travel expenses comply with company policy.

Inventory

It may take days to take inventory but you can cut back on this wasted time by simply automating your inventory management. When you integrate your inventory management with your bookkeeping software, you will have the ability to automatically create sales report, pack list, reduce inventory errors, generate invoices and speed up the reorder process.

Invoicing

You can easily lose track of the individuals you paid and the ones you haven't if you do not have bookkeeping software to automatically generate invoices. Oversights can happen all the time and this can give you a headache as it can result in losing money and cash flow problems. Make sure you use bookkeeping software so you can generate invoices that you can print or email. While waiting for the payment to come in, your bookkeeping software can provide an automated system so you will be able to sustain sufficient cash flow. This will also allow you to work in conjunction with your bookkeeping software so you can select an outstanding invoice and request corresponding funds over a specific period of time. Automating your invoicing system can ensure that the payment is deposited into your account as early as the next day.

Bookkeeper Mistakes That Greatly Affect Your Business

Some businesses are doomed to fail due to mistakes which are left uncorrected. These mistakes may be simple, but they can great affect your business if you do not take the time to talk to your bookkeeper to find out what really is going on. Some bookkeeping tasks may be repetitive while others require extra time due to their complexities. One thing is for sure though: failing to finish the task can create a ripple effect on your business. There are reasons a bookkeeper may commit mistakes: inefficiency or lack of resources. Whatever the reason, it is important that you and your bookkeeper see eye to eye so you will know which direction your business is heading.

1. Not monitoring cashflow

Cashflow is essential to your business because it is an indicator of your future business plans. A key part of this role is ensuring that your debtors pay you promptly and your bills are also paid on time. Your bookkeeper should pay attention to metering the cash out and getting the cash in. If the bookkeeper is not paying attention to these things, your business can end up insolvent. It is important that your bookkeeper completes debt collection, invoicing, receipts, purchases, purchase orders and bank reconciliations. Mistakes with cashflow monitoring can be avoided if your bookkeeper regularly updates you with the current cash position of your business. Your bookkeeper should also help plan for the cash requirements for any business development you are planning.

2. Not cooperating with your accountant

Although your bookkeeper is not as qualified as your accountant when it comes to correctly handling everything, it is still important that your bookkeeper work with your accountant. There are financial aspects of your business that might be complex and your accountant may be needed to deal with the problem. Your bookkeeper must coordinate with your accountant to attend to responsibilities such as payroll and superannuation, compliance and coding. Make sure you enable strong lines of communication between your accountant and bookkeeper. When your bookkeeper complete tasks in a timely manner, more tasks will be accomplished.

3. Not keeping all receipts

For legal purposes, all your receipts and invoices must be filed and archived for at least 5 years. These will serve as strong evidence in case someone sues you. It can also support your case if you are going to use. The receipts and invoices are also going to justify any claims you make. Your bookkeeper should file your paperwork accurately and in a timely fashion. You can also go paperless so prevent losing important documents.

Why Time Is Essential For Bookkeepers?

Was there ever a time when you requested for an essential document from your bookkeeper only to find out that your request has fallen on deaf ears? Is your bookkeeper always missing deadlines without any valid reason? You might have been constantly reminding them about the importance of the task you assigned, but you are not hearing from them as though they have fallen off the face of the earth. These things may not matter to you but when you are always not getting what you are expecting from your bookkeeper, this raises a red flag and it should be a cause for alarm. Your bookkeeper might have a problem with time management and that is also the reason they cannot deliver.

When Time Management Becomes An Issue

You may be thinking that your bookkeeper has too many tasks on their plate, but this might not be true. There are still some reasons why your bookkeeper cannot keep up and one of which is the lack of time management. Why is time management so important? Is it really essential for bookkeeping? When it comes to bookkeeping time is going to be of essence. A bookkeeper should deliver your request as they are necessary for checking your financial report. The documents are needed to verify the information on the financial report. There might be some discrepancies on the report but if the bookkeeper has not presented any evidence that can back the report, it might be difficult to correct errors or irregularities.

One thing that can correct issues with time management is creating a to-do list. The to-do list must not only include the task but the amount of time required to finish the task. This means your bookkeeper knows the task that they need to prioritise. It is easy to put things off when your bookkeeper does not know which task is urgent and important. With a to-do list they will be able to get an idea of the tasks they need to complete on a weekly basis. You will also need a systematic approach so you can monitor your bookkeeper and help them get things done.

A systematic approach allows your bookkeeper to develop a habit of planning. With this approach, they will be able to know which task will take a large chunk of their time. A problem with bookkeeping is not hard to deal with if you know how to correct it. A bookkeeper needs to be flexible whatever changes may take place in your organisation.

How Cloud Computing Can Benefit Bookkeepers And Your Business

Cloud computing has been around the past few years and from a buzzword, it has become an efficient system for businesses. These days, you can see more businesses moving to the cloud and this is due to the number of benefits it offers. Cloud computing refers to the storage of data and servers in data centres with the high levels of security. The data centres can be accessed by users who are connected to the Internet. For businesses, this paves the way for workplace environment to embrace mobility.

You will no longer have to be chained to your desktop as the information can be easily accessed using any mobile device. This means no matter where you are, so long as you have access to the Internet, you can gain complete access to the cloud and stay updated of your business activity. The best thing about the cloud is that you and your bookkeeper are granted access to the information from an unlimited number of computers. Such an access does not impact the performance so you continue to enjoy unlimited storage and processing capabilities.

Types of Cloud

There are different types of Clouds including personal, private and public clouds. With public clouds, you can access the data through Google, Facebook and others. Private clouds are for businesses that want to secure information in a hosted data centre while personal clouds allow you to access your personal information in one place. Personal clouds also give you the option to share personal information with others.

Benefits

Cloud computing reduces the cost for your business. There is no need to invest in additional computers because the information can be accessed by your bookkeeper or business consultant anywhere and from any device so long as there is Internet connection. Any employees who are given access to the information can access it so real-time collaboration and monitoring take place.

For your bookkeeper, you can easily track any business activities and provide immediate solution to problems that may arise. Irregularities are easily spotted as you have the option to collaborate with your bookkeeper anytime. You are not only making your business more flexible but you are also increasing accessibility. With this advantage, you reduce the chances of losing track of essential information that may put your business at risk. Cloud computing helps bookkeepers deliver information in real time. Once you are aware of your business activities, fraudulent transactions are prevented before the situation gets worse.

Mistakes That Can Endanger Your Business

A bookkeeper may be deemed unnecessary for small business but shouldering penalties and interest due to late payments will make you realise the importance of bookkeeping in your business. Making mistakes is inevitable and a fledgling company needs to keep records of every transaction to prevent problems from becoming serious especially when it is about taxes. The ATO can chase you due to expenses you have not indicated on your financial report.  While there are many mistakes you can commit as a small business owner, these mistakes are the ones you are most likely to commit.

Not Keeping A Record Of Expenses

Every transaction must be recorded so you can easily identify all the expenses you have incurred. Failing to record business-related expenses can spell trouble when it comes to paying your taxes. Avoid mixing personal with business expenses because this will give you a hard time figuring out which expenses are considered valid. Make sure reports are accurate so you will know if your business is still heading in the right direction. Once you know the expenses you incurred, it will be easy for you to make an adjustment. You will also know if it is time to grow your business.

Falling Behind Payment Schedules

Do you develop a habit of making a payment as you file your tax return? This is one mistake that business owners often commit and this can lead to penalties and interest. Make sure you pay your taxes on time and be mindful of the due date. You can trigger an audit from the ATO when you always fall behind your payment schedule. Late payments must be taken seriously because it can hurt your business and affect its growth.

Not Keeping Receipts

Entertainment and travel expenses that are business-related are hard to justify if you do not have any tangible evidence to present. During the audit, you will need to present documents and receipts to indicate that these expenses are indeed valid. Receipts must be given importance if you are running a business and if you need to indicate the business purpose of the transaction, make sure you keep a journal so it will no longer be a problem recalling when and how you incurred such expenses.

These mistakes can wreak havoc on your business if you do not have a bookkeeper to prepare accurate business report for you. Even if you have a small business, a bookkeeper can still help you in more ways than one because when the ATO makes an audit, you will not worry because your business is on the right track.

Four Questions To Determine The Financial Health Of Your Business

Do you keep track of your business’s financial health? One of the steps to take to find out if your business is doing well is answering some key questions. These questions will help you verify if there is a need for you to make some changes in your strategies. Assuming that your business is heading towards a positive direction can lead to a serious disaster as you do not have the figures to support your claims.

Are you ahead or behind on your monthly goal?

Hitting your monthly targets is one indicator that you are keeping your business on its feet. There are many ways to determine if you are ahead or behind on your monthly goals and one of which is comparing your month-to-date sales and expenses with your end-of-month goals. With this technique, it will be easier for you to identify if you are still on track.

Do you pay your bills in a timely manner?

It is also worth checking your accounts payable and cash balance. Just because a business is profitable does not mean there is nothing for you to worry about. Even profitable companies run out of cash. The good news is you can prevent falling behind of your payment schedule by ensuring that you keep an eye on both your major payables and monthly burn rate. This way, you will have the ability to pay your bills regularly.

Are you spending your money wisely?

Problems with your cash flow can have a negative effect on your business especially if you do not monitor your expenses. Make sure you closely monitor your monthly ongoing expenses and compare last month’s actuals to your projections. You will be able to generate valuable discussion once you keep records of your expenses.

Do you have enough cash?

It is also essential that you have enough cash to get to break-even as it is considered a major milestone that requires regular monitoring and adjustment. Some of the important things you need to close track include your net profit and business plan projections. You will be able to get a better picture of your business’s trend review your financial statement. One of the ways you can raise money is by cutting your expenses.

Answering these key questions will help you determine which direction your business will take. There is a big difference when you are completely aware of your financial standing because if you decide to grow your business, you can sleep soundly knowing that your business is on the right track.

The Importance Of Profit In Business

There is a risk involved in running a business. Making a profit is a reward for the risk that business owners have bravely taken. While making a profit is not just the only goal of every business, it is one reason a business operates.

The importance of profit:

1.    Efficiency indicator: One of the ways to measure the success of the business is to check the profit it has earned for a given period of time. Profit is considered as a yardstick that determines the business firm’s efficiency and earning capacity.

2.    Survival: It will be impossible for a business to survive without earning sufficient profit. Business owners consider profit as a source of income and it is also used for paying business expenses, salaries of employees and even buying raw material. Your business does not have a chance to survive if it is no longer earning a profit.

3.    Motivation: When you see your profit increase, you will be more motivated to strive harder and take risks. There is a direct relation between profit and risk. When the risk is higher, the profit is also higher.

Ways to improve your profit

Reduce your cost:Minimising direct costs can have a positive effect on your profit. This can be done by negotiating with your suppliers to lower the process or reviewing the processes and systems. Instead of sticking to the same supplier year after year, it is important to explore other options that can help your business minimise expenses. When you improve your procedures and methods by ensuring that they are systematic. Good systems help you prevent errors and save time and money.

Focus on profitability:Although increasing your profit may not only be your priority, it is worth focusing on profitability as it has a dramatic impact on other aspects of your business. Employees must also be aware of the importance and role of profitability in your business. Ask your bookkeeper and accountant how you can ensure you are monitoring the right indicators that will give your business a boost. When it comes to your team, make sure productive employees are rewarded because great pay is linked to effectiveness.

Make continuous improvements:Anticipating problems and adopting technologies that can enhance your company’s ability to make continuous improvements will do wonders on your profitability. Good planning is important in achieving your goals and making improvements. When measuring the effectiveness of your plans, set measurable targets and review your performance as a team. You are on the right track if you see improvements on your system.

Improve your turnover:Some of the known techniques that can increase your turnover include focusing your efforts on profitable customers, keeping your services or products up-to-date and maximising the value of your sales.  It has also been proven that businesses actively selling their products instead of just taking orders have increased their turnover and more likely to survive.

The Information You Should See In A Financial Statement

Although bookkeepers are the ones responsible for preparing a financial statement, it does not necessarily mean that business owners no longer have the right to know the information that must be included in it. There are instances when bookkeepers fail to provide the information that the business owner needs in order to determine if it is time to grow or expand your business. There are essential details that must be found in the financial statement for you to make sure that you are well aware of the financial standing of your business.

Income Statement

The Income Statement Report provides you an overview of the overall performance of your business. It provides you the details of profit and loss in a particular period. The income statement also provides you the profit/loss before tax, profit/loss after tax, income tax, expenses and revenue.

The Profit Before Tax is the amount of sales higher than the amount of cost that has been produced. Loss Before Tax is the amount of sales, which is lower than the cost to produce. When the report shows loss, it only means that the operation of your business is not doing well.

The Profit After Tax is obtained when you identify the income tax you are going to pay. The actual amount of profit or loss is computed if the applicable amount of tax is deducted.

The Income Tax refers to the amount of obligation that your business needs to pay to the government. This is determined by checking the country where your business is currently in operation. The Income Tax is determined from the tax rate obtained from a particular country multiplied against the Profit Before Tax.

The Expenses are the amount of cost to produce an item that will be sold. This can be referred to as the material used, bad debts expenses, depreciation, interest expense etc. The Expenses also help you determine if your business is spending on product improvement or investment. This is also the section that will tell you if you have given high salary or benefits to your employees.

The Revenue gives you the details of the amount of sales in a given period. There sales may come from the service fees or the sales price of goods. It will also depend on the kind of business an owner runs.

Balance Sheet

The Balance Sheet is where you can find the asset, liability and equity. The asset adds business worth and it provides significant information on the fixed assets, receivables, short-term and long-term investments and more. The assets are important because they tell you whether it is high time for your business to grow. It is also a reliable section that will tell you the business operation’s sustainability.  The liability is your business’ outstanding loan obligations.  The liability will show you the balances for bills payables, accounts payables and notes payables. The equity tells you if your business is ready for expansion. If you have high equity balance, it is a good indicator that you have kept your business on its feet.



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