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How much does it cost your business when the record keeping falls away?

Posted by   |   December 17th, 2015   |   Categories: Business Fundamentals

One of the intriguing things I notice from time to time are clients who are their own worst enemies. They’re happy doing their books, even if they are not 100% sure the transactions they’re entering in Myob is absolutely correct.

But what happens when they enter a transaction they have to get absolutely right, realise after they have posted that it’s not right and can’t leave it to the accountant to fix it at years end?

This is what happened to a new client of mine. Let me explain….

I was asked by an accountant to help a client bring their books up to date.The client had not lodged their last two BAS’s. It was explained to me by the client that they had messed up a pay run in April and didn’t know how to fix it.

The client’s internal administrator continued to enter other transactions for the next two quarters except the payroll, not wanting to create a larger mess. The penalties of two missed BAS lodgements and not lodging the PAYG Annual Summary on time are high, but what troubled the owner more was not knowing the company’s cash flow position. He knew he had to pay the GST and PAYG for two quarters but was unsure what the amount was. He didn’t know whether his business had enough money in the bank to cover his obligations.

Finally, six months after entering the messed up payroll transaction in Myob, the owner discussed the missed lodgements with his accountant. The accountant took it upon himself to find someone with expert knowledge of Myob to untangle the mess. All is well now, but the moral of this story is not to leave your books in such a state, as your business health depends on accurate and up to date record keeping.

How New Technology is Changing the Role of The Business Owner & Bookkeeper

Posted by   |   September 08th, 2014   |   Categories: Business Fundamentals

How New Technology is Changing the Role of the Business Owner & Bookkeeper

Technology is changing what bookkeepers do for their clients, along with HOW they do it.

As online bookkeeping is rapidly becoming the norm, working with business owners in the virtual world… or headed in that direction, the role of the bookkeeper and business owner is in the process of some major changes.

A large part of bookkeeping has been to do “intelligent” data entry so that financial records are accurate. But with the improvements in electronic information processing, much of this is being done by computer programs via the web instead.

Think about how banking transactions can be downloaded directly to your accounting software. Or services like ShoeBoxed can scan paper receipts and categorize expenses for you.

And finally, there are new programs emerging that bring all the financial data together, using the Internet, to feed into the bookkeeping records automatically… from banks, suppliers and client sales, using online accounting programs like Xero.

What does this mean?

Entering data into bookkeeping software is something that will eventually be nearly eliminated (or at least greatly reduced). Does that mean the role of the bookkeeper will also be eliminated?

No. But WHAT bookkeepers can actually do for their clients… and the value they provide… is starting to shift dramatically. They are moving from entering financial information efficiently and intelligently to get it into the bookkeeping records to managing the financial data flow and interpretation of it. They are facing a unique opportunity to assist their clients with getting the real VALUE from what their financial information means for their business. This prepares them for more productive meetings with their accountants for tax and business planning.

In other words, they are growing into the role of assistant / consultant with their clients to help them get the BENEFIT of their financial information for managing business. This is MUCH more valuable than simply doing the clerical work of keeping records updated after the fact so taxes can be filed. Their services are becoming more present and future focused.

And THAT is a VERY good thing for both the bookkeeper and their clients… Be aware that they are coming, and they are taking hold rapidly. Bookkeepers need to pay attention to how their existing clients are reacting to and embracing new mobile / online technology. Small business owners are changing HOW they operate because of the major advancements in mobile and online technology coupled with affordable applications… this includes how they get their bookkeeping done.

So the question is, if these changes are coming – whether we like them or not – what will the bookkeeper do to prepare for it now, and how will it affect the way they provide YOUR bookkeeping services in the near future?

As for the BUSINESS OWNER having control over some or all the entering of transaction, how will this affect their understanding of what is happening in their business from a management reporting perspective. There is a great opportunity for business owners to obtain a much deeper understanding of what their management reports are saying because their bookkeeper has now become a trusted advisor or consultant to your business.

I’d love to hear your thoughts, complaints, excitement, or any other reactions you have to where bookkeeping is headed and how it is changing the roles of bookkeepers and their clients in the months and years ahead.

Please leave your thoughts and comments below.

6 Tips for great Business Record Keeping

Posted by   |   August 31st, 2014   |   Categories: Business Fundamentals

The following list is very important to consider if you are

  • thinking of starting a business
  • The owner and responsible for keeping the business records
  • responsible for managing the records of small businesses; for example, you are the bookkeeper or a tax agent

Tip 1  Legal Requirement

 

black-boardIt’s a legal requirement that you must keep good records. The law states you must keep

business records for

– for 7 years after they have been prepared or the transaction completed, whichever occurs latest

– in English or a type of form that can be accessed and understood to determine the amount of tax you need to pay

– Capital Gains records for assets that depreciate over long periods of time

– You have a choice whether to store records in either paper or electronic form

– It can be as simple as using an exercise book or commercial cash book that can be purchased from a newsagent or stationery store.

– If you choose the electronic form, you need to be familiar with accounting principles and how the software calculates and treats the information

Tip 2  Sales records

– sales invoices, including tax invoices

– sales receipts

– credit card statements

– cash register tapes

– bank deposit books and account statements

Tip 3  Purchases/expenses records

– Bills or Supplier invoices, including tax invoices

– purchase receipts which include an ABN

– cheque butts and bank account statements

– credit card statements

– records showing how you worked out any private use of something you purchased

Tip 4  Records relating to payments made to your employees

– tax file number declarations and withholding declarations

– withholding variation notices

– worker payment records

– PAYG payment summaries

– annual reports

– superannuation records

– records of any fringe benefits provided

Tip 5  PAYG Withholding records

– records of any amounts withheld from payments where no ABN was quoted

– a copy of any PAYG withholding voluntary agreements

– records of voluntary agreement payments

– PAYG payment summaries

– PAYG payment summary – employment termination payments

– annual reports

Tip 6  Records relating to your fuel tax credits

– records of fuel acquired

– records of eligible and ineligible fuel use

– records of claim calculations

– records of any loss, sale or disposal of fuel!

 

Reference: Australian Taxation Office

If you need further information or would like assistance with your bookkeeping,

please visit myobtrainer.com.au

When A Client Wants To Do Their Own Books…

Posted by   |   August 31st, 2014   |   Categories: Business Fundamentals

Have you found that the economy is causing some of your clients to take a hard look at reducing expenses? Is that making them consider the idea of doing their own bookkeeping?

If so, don’t panic. As a bookkeeper, there is actually a golden opportunity here, if we look a little deeper.

The first reaction most business owners have when they see a sudden (or not-so-sudden) dip in income, is to tighten their belts. And unless they are aware of the true value of your services, they may target their outsourced bookkeeping expense for elimination. “It’s just simple data entry,” they may think.

Of course, we bookkeeper’s know that accurate bookkeeping involves far more expertise than simple data entry. But sometimes our clients don’t fully realize that.

What To Do About It

Before I show you how you can turn this into a golden opportunity, let me tell you what NOT to do.

Don’t sound devastated when your client breaks the news. If you sound rattled and scared to lose their business, that will only make them not want to discuss alternatives with you. (They likely feel awkward talking to you about it already.)

Instead, step into the role of consultant and explore whether this change truly is the best option for your client’s business success. To do this effectively, you MUST get out of your own way!

DON’T worry about losing the client. Really. This will likely turn out to be a good deal for you whether the client wants you to continue doing the bookkeeping or not!

Focus fully on your client’s welfare for the moment.

DO look for how you can assist your client to make the best possible decision for his / her success. You will stand out from the “typical” freelancer in this situation. And you will be setting yourself up for success.

Here’s why.

If, in fact, it truly would be a wise decision economically for your client to do the books on his/her own (although, most often, this is simply not the case), some training is definitely going to be needed. Maybe a lot of it. Aren’t you in the best position to provide that training?

Even after the client has been adequately trained (and the client isn’t overwhelmed by what it really takes to get the books done right), s/he will probably need ongoing support. This service alone could actually save the client from making a big mess that will cost much more to clean up in the long run.

You could even offer to do the bank reconciliations and/or set up a regular review of the books on a monthly or quarterly basis, just to make sure everything stays clean and up to date. The client may find this an invaluable service that won’t break the bank.

This type of arrangement is good for your bottom line too because your fee as a trainer and consultant should be at a higher rate than what you’re charging for basic monthly bookkeeping services.

Positioning Yourself As A Consultant

The most important factor in pulling this kind of transition off is to really listen to your client and hear where the pain is coming from. You want to provide highly valuable solutions that your client will appreciate.

If your client really does want you to continue doing the books, but they are simply looking to cut overhead, offer suggestions for where else in their business they might cut some fat that will provide short-term as well as long-term results. Show them how to find these opportunities in their financial reports.

I’ve seen clients whose sole reason for taking back the books was to save money. But they had no desire whatsoever to keep track of their finances. So they soon found themselves in hot water because their bookkeeping records quickly became a disaster. And then, of course, they had to pay big bucks to have their accountant clean up the mess at tax time. Not smart.

Save your clients from this pain and offer a great solution that works for both of you! (Remember: Win-Win)

So whether they keep you as their bookkeeper or not, help your clients to avoid the penny-wise-and-pound-foolish mindset by showing you really care about their success. If needed, help them tighten the belt (as well as identify ways to pull in more revenue) by transitioning to the role of business consultant.

As a valued advisor to your clients, you will make your services indispensable, increase your rates, and hold on to top-notch clients for life.

Who knew the tight economy could turn out to be such a blessing in disguise?

Maintaining proper payroll records

Posted by   |   June 26th, 2014   |   Categories: Business Fundamentals

I know the end of the financial year hasn’t occurred but its a good idea to start thinking about it. And one of the things that needs to be seriously considered is your business’s payroll record keeping.

 

I know it sounds easy to keep records regarding employee details, pay and leave. You can keep these records either electronically or in a handwritten format.

 

But here’s the thing. You have to keep these records accessible for seven whole years. If a stern looking officer from the ATO taps you on the shoulder requesting certain documents, can you lay your hands on them pronto.

 

You can store handwritten records in archive boxes or somewhere in the office. But for computerised records, you’re best to archive data either to a CD, memory stick or in the cloud.

 

I always advise my clients to store their records off-site. Importantly, if there is a password connected to the memory media, make sure it’s close by. Can you imagine the nightmare if you had changed the password on your accounting software in later years and couldn’t open the backup copies from previous years because the passwords are different. It happens!

 

If you need to discuss how to maintain payroll records, please contact info@bookkeepingconcepts.com.au

 

Get Started today, get in contact with us now to discuss your MYOB Training needs no obligation
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