The emergence of bookkeeping software allows entrepreneurs to gain peace of mind knowing the fact that their confidential files are in safe hands. Waiting for months to obtain information is already a thing of the past because the software gives entrepreneurs the ability to get real-time information. One of the stand-out features of bookkeeping software is its ability to bypass the long process that traditional bookkeepers used to attend to. It saves time because the essential data are encoded for future access. Since the software is fast, efficient and reliable, clients get an up-to-date report. Does this mean bookkeepers are already on the brink of extinction?
For clients getting all services in one tool, a bookkeeper will no longer be considered necessary. This is why more and more companies are discovering the potential of bookkeeping software when it comes to accomplishing any task at hand. However, this is not the end for bookkeepers because there are still other qualities that bookkeepers must develop so they remain unmatched even by the most advanced bookkeeping software.
A traditional bookkeeper can still compete with the modern advancements of technology and all it takes is an initiative to take their skills a step further.
In spite of the threat that bookkeeping software brings, a large percentage of these bookkeepers still remain unfazed by the competition. Is it possible to stay on top of the game when you have a more advanced competitor? The answer is yes. You can still compete without giving up what you learned as a bookkeeper. All you need to do is to upgrade your skills and never stick to bookkeeping basics. There is more to it than just dealing with QuickBooks. Learn how you can fix errors in the event information is incorrectly encoded.
The only time you need to consider bookkeeping software alarming is when you fail to analyse how every business works. This is why you have to be detail-oriented so you will know the importance of each bookkeeping task in a business. When you do this, it will be easier for you to profile your clients so you can provide service that is specific to their needs.
Exploring bookkeeping tools will help you familiarise yourself with its features. Take time to search for efficient software that you can use for collaboration. Asking feedback from your colleagues is also helpful and make sure you take note of the pros and cons of using the tool.
If you want to know more about the way bookkeeping technology works, joining a community where people share views on bookkeeping tools will help you gain the knowledge you need. In fact, these communities can become a valuable source of information.
Rather than focus on too many aspects of bookkeeping, stick to the one you can keep up with and introduce it to your clients. You can standardise the process much easier this way.
Bookkeepers still serve their purpose even in a world where technology develops at a faster rate. All it takes is to make plenty of room for upgrade and improvement to remain relevant to the bookkeeping industry.
Let’s face it, it is rather safer to stay within your comfort zone than tread upon an unfamiliar territory. After all, old habit dies hard. However, technology constantly evolves and the first thing that comes to mind when talking about it is cloud. Although using cloud-based software is an innovative way to handle your bookkeeping and accounting tasks, it is still frowned upon by traditional bookkeepers for fear of becoming a hapless victim of new technology. While there are enthusiasts who are drawn to new approach, making the switch may require more than just changing technology, it should start with changing mindset. Here are some common cloud accounting myths debunked.
It is necessary for every business owner to ensure that classified information is stored safely. Some say that cloud makes data prone to breaches and attacks because it is online. The first thing you have to keep in mind to avoid security threats is to check the cloud service provider’s options and features. No two cloud accounting services are created equal so you need to take your time in searching for the service which has increased level of security.
Due to the proliferation of cloud technology, many skeptics dub it as marketing hype. If you are going to check the benefits of cloud accounting, you will realise that it has indeed lived up to its hype. With its ability to store and integrate data, it becomes a valuable collaborative tool for increasing productivity and reducing manual tasks. If you to gain an accurate overview of your cashflow, you can always rely on cloud-based accounting software to update your information. Many business owners are already investing a vast amount of money in order to improve their cloud infrastructure because of its long term benefits.
Cloud accounting is not specifically designed for storing information because it can also provide a different approach to collaboration. In the past, it seems challenging to retrieve information critical to decision-making if you rely on spreadsheets. You are not 100% confident that the data you obtained guarantees accuracy. Anything that is stored in the cloud infrastructure can be updated regardless of your location. Even if you decide to check your financial data in the middle of the night, time is not going to be an issue. It saves you from being chained to your desk to manage a bookkeeping or accounting task.
Many small businesses have already adopted cloud accounting software. One of the reasons for the switch is the efficiency it provides especially in terms of data entry and reconciliation. These tasks can be time-consuming and they also demand accuracy. The cloud accounting software ensures these manual tasks are successfully done with ease. However, it cannot be denied that there are still small businesses that prefer to keep their legacy systems. The common reason is the unwillingness to adopt the new cloud culture.
With technology gaining traction on small businesses, cloud accounting software will have a full impact on various business processes. Even when the bookkeeper still handles the data processing work, less time is required to finish the task.
The common misconception of adopting cloud accounting software is that it completely eliminates the human touch from any bookkeeping tasks. The truth is cloud accounting software provides a chance for traditional bookkeepers to increase the number of clients because the tasks that used to take hours can now be done in minutes. It is also a chance for bookkeepers to redefine their role. That said, they need to focus on higher-end functions. These functions include review, regular reporting, interpretation and more.
The changes that are taking place in bookkeeping technology is also a great chance for bookkeepers to re-shape client perception. In the past, clients view bookkeeping services as merely taking care of their tasks and making a payment for the services. Bookkeepers can change this perception by letting clients realise that they can gain financial peace of mind by engaging the services of a bookkeeper.
How to expand traditional bookkeeping services
1. Payroll is probably one of the most complex minefields for clients. It often takes a large chunk of their time because the details need to be accurate. This is a service that can be offered by a traditional bookkeeper. Aside from enabling the client to save time and money, bookkeepers will also reduce the risk of non-compliance.
2. Good debtor management ensures a steady stream of cash for clients. Bookkeepers are the ones keeping the business on its feet as they can identify the clients having trouble collecting their own debts.
3. Software consulting is also beneficial to clients especially when adopting cloud accounting software. Even traditional bookkeepers undergo training so they can make use of the advances in bookkeeping technology. These bookkeepers can also provide sound advice on the cloud options available to the clients.
An unpaid invoice blurs the lines between collapse and survival. It cannot be denied that late payment is an ongoing problem for many businesses. More often than not, business owners find themselves chasing clients to make them pay, but despite the effort, things are always easier said than done. When clients take longer to pay the bills, it can greatly impact the firm’s cash flow. As a result, it will not be easy for businesses to invest in their operations.
It is no secret that late payment has been considered a problem for many years. If businesses do not have the ability to maintain a steady cash flow, they always end up borrowing money. The problem is, repaying the money owed may not be easy. The good news is, there are still some techniques that businesses can use to meet this challenge and to ensure that firms that owe you money will be able to pay you back.
One approach businesses can use to avoid late payments is to require upfront payment. Many companies may expect credit terms to be part of the service and when you take this approach, they may choose not to do business with you. Make sure you set the company’s expectations before requiring upfront payment.
Be sure to act promptly when chasing the debt once it becomes overdue. If the credit terms are 30 days, you can start to chase the overdue account by issuing a reminder on day 31. The reminder should clearly state when the payment should be made. You can pass the debt over to a reputable debt collection firm if payment is not received by your deadline.
You can also apply a late payment fee for clients who have failed to settle their debts. However, you need to take a few things into consideration. You need to make sure that the terms and conditions adhere with any legislation or regulation that applies to the industry or business. However, you need to keep in mind that this move may have a negative effect on customers. As a business owner, you need to be prepared to lose customers.
When you face late payments it is important to state your terms and conditions and this only be specified on the initial invoice so your clients will know when you expect to be paid. When dealing with a late payers, you have to ask yourself if you are still making money of this client. If you are losing money, it is about time to let the client go.
Once you hire staff for your business operation, you need to make sure that you know the details of payroll. Employing someone is not as simple as having a verbal agreement. There should be a fair amount of initial preparation including business relations and business processes. There are many challenges that business owners face when hiring employees, here are the most common.
Superannuation only applies to ordinary time earnings However, superannuation can be applied to commissions, bonuses, loadings and allowances. For contractors that are sole traders, it is also important to make a payment for superannuation depending on the working arrangement’s nature.
Some business owners may consider a worker as a contractor simply because of invoicing and their services are only used sporadically. However, ATO will still consider the employee for superannuation purposes. Using the online contractor decision tool, the ATO will determine if superannuation still applies to the employee. It is important to pay superannuation on time to avoid penalties. The director can also be held liable for any late super, which is not paid for by the company.
It is mandatory for business owners to keep records of receipts for a period of 7 years. The records that should be kept include the pay records, leave records, hours worked super contribution, payment details and others. These records must be handled with confidentiality. When it comes to pay slips, employees must receive them within one working day of pay day. In case the employee is on leave, certain information must be included.
These days, small business bookkeeping software makes it easy for employers to calculate employees’ tax. However, the software is not capable of correctly taxing unusual payments such as commissions, terminations and bonuses. If these are not properly reviewed, it can lead to either overtaxing or undertaxing employees. For unusual payments, the tax must be calculated manually.
It is mandatory for employers to provide a choice of superannuation to workers whether they are employees or applicable contractors. In case the worker does not select a fund, superannuation contribution must be paid somewhere. The default fund will be used to make a payment. It is the employer that selects the default fund.
There are cases when payments to employees are not taxed or set-up correctly. This only implies that you are taxing a worker for a payment, which is considered tax free. The employee may not get a refund even especially if it is reported incorrectly on the annual Payment Summaries. The money that is supposed to be awarded to employees will end up going to the ATO if correct payroll is not set up.
Paying taxes is every business owner’s obligation. Miss a payment and you will get yourself into hot water with the ATO. This is something you do not want to happen. Tax may be deemed as a complicated subject matter because of the responsibilities you need to fulfill. However, it is actually much simpler than you might think. If you are going to do your own research, you will come to realise that there are still ways you can keep your tax bill down.
It is important for employers to make a payment of superannuation contributions withing 28 days of the end of the quarter. For instance, all June quarter superannuation contributions must be paid by June 30. Doing this can accelerate your tax deduction. You should also keep in mind that the only way a tax deduction will be available is if you have actually paid the contributions, cleared them in the business bank account and the employee’s have received super fund before June 30. It is also necessary to pay any other outstanding amount before year-end.
You have to put a properly executed bonus plan in place if you intend to pay bonuses to your employees. This plan should be executed by June 30 so you will be able to claim the deduction this year. A deduction will be available for employee bonuses if you have incurred the expense before year-end. No deduction will be available if your organisation failed to calculate or authorise the amounts of any bonuses.
Insolvency can really hurt a business, but it can be inevitable. If this happens, you can write off a debt for the tax deduction to be available. Bad debts are the ones left unpaid. This is considered to be an allowable deduction so long as it was included as assessable income in a previous or current income year. What you can do is go through your debtors list for you to find out if there are any that you believe cannot make a payment. You need to write off those debts by June 30 so you can claim the deduction this year. You will also have to keep a written record as proof that the debt has been written off.
Another way you can get a tax deduction is when you consider pre-paying business expenses. For this deduction, the expenses must cover a period of no more than 12 months. The expenses included in this category are the insurance premiums, internet and telephone services, rent or leasing charges and more.
Filing your tax returns in a timely manner should be observed to avoid penalties and fees. You can also get a good impression from the ATO if you do not fall behind your schedule. Tax returns cover the financial year from July 1 to July 30. The due for lodgement of tax returns is by October 31. There are various ways you can lodge your tax return and the most convenient and easiest way is by using MyTax. Since MyTax is web-based, you have the option to lodge your tax return from any device be it your computer, tablet or smartphone. Make sure you have a myGov account linked to the ATO to use this option.
Pre-filling your tax return means partially completing the tax return by automatically loading information through myTax. The information you will find in your pre-filled tax return are the current year information from the organisations that report to the ATO. These usually include government agencies, employers and banks. The data from your previous tax returns and account activity are also supplied.
You can review your pre-filled information and supply any missing details. You can also update incorrect details. The purpose of pre-filling is to make the process of lodging your tax return easier. It also ensures that the information is complete and accurate. Once you report organisations report to the ATO, the pre-filling information will be available within a couple of days. The information is made available by early August.
Pre-filling is beneficial because it enables you to resolve discrepancies before you decide on lodging your tax return. Checking tax returns for any discrepancies is important because the ATO checks that the information you have provided matches the information your report on your tax return.
If you are running a small business, one of the most essential employment obligations you should fulfill is the superannuation. Aside from paying super contributions for eligible employees, it is also considered a key incentive area for your employees. One of the best practices to follow so you can prevent problems with superannuation is generating report of bulk payments and regular pay cycle. When you have already paid the super contributions, you need to process and maintain the employee records related to superannuation. However, there are still instances when business owners fail to follow the correct process. Here are the common mistakes often committed when it comes to complying with superannuation laws.
When paying superannuation contributions, an employer must also take note of the cut-off dates. Contributions must be paid at least four times a year. For the 1st quarter covering July 1- September 30, the cut-off date will be on October 28. for the 2nd quarter covering the period October 1 to December 31, the cut-off date will be on January 28. For the 3rd quarter covering January 1 to March 31, the cut-off date will be on April 28. For the 4th and final quarter covering April 1 to June 30, the cut-off date will be on July 28.
When it comes to preparing and lodging Business Installment Activity Statements (BAS), you might be unaware of the mistakes you have already committed. It is important to pay heed to these statements and make sure you avoid these common mistakes.
Do you understand the implications of a turnover? Perhaps, you need to be aware of these things because they play a critical role when it comes to registering for GST with the ATO. If your business has a turnover of less than $2 million, you need to select whether you are going to use the cash or accrual accounting method. More often than not small businesses opt for the cash method, but this may not always be a good choice. For cash-based businesses that have no debtors and creditors to pay, the accrual method is a great option to consider. This option allows you to claim the GST back on purchases immediately. You will not hurt your cash flow this way. Make sure you update your bookkeeping system with this method and correct reports must be printed.
If you are withholding more than $25,000 per annum in PAYG Withholding from your employees, the ATO will decide to move you to a lodgement cycle which is on a monthly basis. The advice will be done in writing. Once advised, you will need to lodge monthly Instalment Activity Statements (IAS) and quarterly Business Activity Statements (BAS). You should also take note of the lodgement schedule for GST and PAYG. GST must be reported once a quarter while PAYG should be reported once a month.
When calculating your tax amount, the ATO is usually working about one to two years behind the actual amount you should be paying. You have to understand that circumstances can really change over these years especially when businesses grow or shrink. These circumstances may lead to changing your income tax instalment amount. You need to check with your accountant or bookkeeper before you consider revising the amount paid. If you choose to vary your instalment downwards without the advice from your accountant, you may end up paying fines and penalties.
Take note of the lodgement dates so you will no risk falling behind. For BAS, you need to lodge on the 28th day of the month following the quarter except for the December quarter where the due date is moved to 28 February. For businesses lodging via a Tax agent or BAS agent, you will be given an extra lodge in addition to your lodgement date. Avoid late lodgements as the ATO will fine you $180 for each month of delayed submission of BAS.
There are many decisions that starting a new business entails and one of which is whether you register for GST. There are businesses that automatically register for GST, but some businesses are not aware that registration is optional. However, for businesses with annual turnover of $75,000 or more, GST registration will be mandatory. For turnover less than this, GST registration will be optional. The option to register will depend on cash flow and administrative implications of your decision.
The cash flow implications if you decide to not register for GST would mean selling prices will be effectively 10% cheaper than the registered competitors for a turnover below the $75,000 threshold. You can also charge the same price as your competitor to enjoy a healthier profit margin. You also have to keep in mind that there are businesses that may not be sure about buying from those that have not registered for GST because of deeming their credibility questionable. This will also affect your sales. Some businesses prefer to purchase from businesses that have registered for GST as a way of claiming the GST back.
You also have to take the administrative requirements into consideration because GST registration means additional administration work. You will also have to report to the ATO on a quarterly basis. There are two distinct roles you need to remember once you have registered your business: the running of the business and acting as a tax collector for the ATO.
You will need an Australian Business Number (ABN) when registering for GST and it can be done in three ways: online via Business Portal, by phone and through your registered BAS agent or tax agent. You will be notified in writing of your registration details once you complete the registration process. It will also include the date your registration is effective.
When you decide to close or sell your business, you need to cancel your registration within 21 days. Cancellation of GST registration is also necessary if your business structure changes. An example of this is when you change your business from partnership to a company.
YOu may also cancel your GST registration if your GST turnover is below the compulsory registration threshold, unless you:
> are an Australian resident who serves as an agent for a non-resident that is required to be registered or registered for GST;
>are a taxi driver;
>represent an individual who is registered or bankrupt;
>are a business that is in liquidation or is registered for GST