Keep Fees Down
Talk to us about scoring your bookkeeping procedures. We've developed a "scorecard" - we can show you how we rate your procedures, and what impact that will have on your fees!
There are a number of simple things you can do. Consider these:
- Keep separate bank accounts for business and private purposes. Worrying about bank charges is false economy. It's best to use chequebooks containing not less than 100 cheques and large duplicate deposit books. Not lots of small ones that get lost.
- Use separate business and personal credit cards.
- Bank all cash and cheques received. Don't take out any cash to pay business expenses or pay yourself a wage. Tracking these can get difficult.
- Make clear on your bank statements or in your data entry any non-income bankings - funds you've put in, the sale of an asset etc.
- Pay all expenses by cheque as much as possible. Bpay or other electronic methods are fine as well. If you pay expenses in cash, you will often forget to record the amount. Consequently, you will overpay your tax and GST. Some persons do not like receiving cheques with their name on the cheque. In such a case, you can make the cheque out to "Cash". If you do pay cash, be sure to keep a running list, with the corresponding tax invoices filed in the same order.
- Check all suppliers' invoices before paying them. Make sure the goods have been received or the service rendered before paying. Use an "OK" stamp, or "approved" or something similar. Pay bills systematically - on the same day every week, fortnight or month. You'll get a better understanding of what needs to be paid when. And maintain two filing systems, one file is for paid invoices and the other for unpaid invoices. Write on each paid Statement or invoice the date of payment and relevant cheque number or payment method.
- Enter in your diary or calendar all the statutory due dates for payment of BASs, superannuation, company tax etc. You won't always get a reminder.
- Raise an invoice promptly for all goods sold on credit or not paid immediately . Make clear the terms and conditions.
- Keep proper wages records. This will mean keeping a wages book. or using a software package. This is required by law, e.g. Workchoice. Bring yourself up to date with the rules, e.g. payslips within 24 hours. Make sure that you have registered with the Tax Office as an employer.
- Don't get too excited about frequent flier points. There's more bookkeeping work when a business pays everything by credit or debit card.
- A little bit of effort at the time makes a huge difference later on. So, no more blank cheque butts or mystery deposits. Make sure all source documents are filed such that anything can easily be retrieved. The more systems and the less memory, the better.
- Talk to us before any major transaction. Don't be surprised if we disagree strongly about what a salesperson has told you about GST!
Did you buy MYOB or Quicken to save money? And did it? Are you disappointed because fees increased - after all the time you put into it?
You have a computer, you're in small business and, rightly or wrongly, you feel that your accountant is ripping you off. Advertisements convince you that you do not have to be an accountant, that bookkeeping with XYZ software is easy, It saves time.
Reality is a lot different. It's a situation we come across too often. Were you advised to buy a package? How do you know its suitable? What training in bookkeeping have you had? If you can't balance manual books, you won't understand what the software does. Do you understand what a bank reconciliation does? What GST training have you had? We find some clients pick it up quite easily. Others, unfortunately, never will.
If GST is the main motivation for buying accounting software, you're not using its features properly. You can run your business with modern packages. You take control of your own finances. You should be able to know instantly how your business is travelling. Modern software is very capable.
Let's look at a couple of common problems. Number one: tracking where the money came from, and were it went. Without basic bank reconciliations, that's impossible. Bank reconciliations are not simply a matter of looking at each cheque and deposit to see if the bank agrees with what you have. They will show if something has been missed , double counted, or incorrectly entered in tracking where the money came from, and where it went. A bank reconciliation is essential, and the most basic step.
Number Two: Understanding the reports. Some clients believe that if there's no cash in the bank, there's no tax or GST to pay! Wrong, regrettably. Your outgoings could include a reduction of a loan or an existing overdraft, purchases of plant or equipment or, even more extreme, land or buildings. And money you've taken out, which you've forgotten how much.
Number Three: Not understanding, & not using the Assets or Liability accounts. If these aren't mathematically right, the profit & loss statement you produce will be mathematically wrong.
Number Four: Incorrect GST allocations. We thought we'd seen every mistake possible, but still something new comes up. Too often the data entry is left to a receptionist or other junior with no training whatsoever. The result is, its quicker for us to redo completely, than fix client data entry one by one.
Number Five: Not understanding that finalised reports are finalised reports, and shouldn't change. All too often we come across a mistake that's been "fixed" by a client - by going back & altering a prior month or prior year. Or worse, deleting old records. Modern software is perhaps too flexible. Never ever delete, always reverse & re-enter. And talk to your accountant about how to fix those mistakes. How to enter them so they come through in your Current Business Activity Statement (where permissible). Its very frustrating to find the data file that we've reconciled & fixed has changed! A lot of time is wasted trying to find what's going on.
Number Six: Multiple copies of the same data file. This is really prevalent now, with data files going back and forth on email. We often find that data entry is made to an old copy, not one we've corrected. So, its re-re-entry time again..
Number Seven: Changing entries we've made: We understand clients may not understand what we've done, but why change it? Or delete it without asking us? It may not be "wrong"!
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