Group Certificates, Payment Summaries & Income Statements

The way we get our annual payment summary is changing!

Unless you are living under a rock, employers have not issued ‘Group Certificates’ for years. They were replaced by ‘Payment Summaries’, which are in turn, now being replaced by ‘Income Statements’.

Your year-to-date pay and super information is also available to you throughout the year in your ATO online services account accessed via myGov.

ATO advises that it important to wait until your employer finalises your income statement to make it ‘tax ready’ before you or your tax agent lodge your tax return. Most employers have until 31 July to check their employee’s income statement and finalise it for the year.

When your income statement is tax ready, you’ll receive a message to your myGov Inbox. Other information is usually pre-filled in your tax return by mid-August, such as information from private health insurers, banks, government agencies and so so. From then on, you or your registered tax agent can lodge your tax return using these pre-filled information.

 

If you need assistance with payroll, single touch payroll (STP) or anything else relating to bookkeeping and numbers, contact us today. We can help you to become conversant with STP and assist with liaising with your staff on their salary matters.

Segregation of Duties

In a large business, it is typical to have a n accounting department which provides timely and accurate financial reports, where internal controls are put into place to ensure accurate financial records and to protect a business from fraud. However, smaller businesses which have fewer employers who wear a few hats, are more susceptible to employee fraud.

A simple process to reduce the risk of fraud is known as segregation of duties (or separation of duties. It involves ensuring that it is not one person who fulfills ALL bookkeeping or accounting functions. The payables and receivables processes must be split among a few staff to deter fraud and errors. This introduces a system of checks and balances into the business.

If the same person handles payment of invoices and recording the transactions, that person will find it easier to misappropriate money and then record numbers that cover up that misappropriation. That person may create a fake bill, then pay the bill while actually pocketing the funds themselves. They then record a payment to the vendor in their books, which covers their tracks.

However, when duties are separated such that one person processes the financial transaction and another records that transaction), it reduces the probability of fraud occurring. This is because 2 staff will have to collaborate to perpetrate the theft which substantially decreases the likelihood of that happening.

 

Download our eBook for more tips on how to reduce the risk of fraud in your business. If you need assistance with bookkeeping or anything else relating to numbers, contact us for assistance today. 

What You Need to Know about Single Touch Payroll

Single Touch Payroll (STP) requires businesses to report payments, such as, salaries and wages, pay as you go (PAYG) withholding taxes and superannuation information to the ATO, as and when they pay their employees.

STP is only a reporting mechanism, it will not affect the way payroll process and delivery to employees – but under the new system, employers will have to authorise STP reports to ATO.

This can be done through existing payroll software ( Such as Xero, QBO, MYOB). Payroll Software providers have updated their products to match this requirement of ATO.

What Hasn’t Changed

Payroll cycle will not change. Employers can still pay employees weekly, fortnightly or monthly.

Payment due date for PAYG withholding and super contributions will not change. However, businesses can choose to pay earlier.

Businesses are still required to submit Business Activity Statements (BAS).

Payroll staff must know about STP and ensure that:

  • Employees are paid correctly
  • Employees’ super entitlements are calculated correctly
  • Overpayments are addressed correctly

Accurate records including names, addresses, date of birth, etc. are maintained.

 

If you need assistance with payroll, single touch payroll or anything else relating to bookkeeping and numbers, contact us today. We can help you to become STP-ready before 1 July 2019!

Major Killer of Businesses: Lack of Basic Knowledge about Finances

Have a great idea for a new business start-up?

Or just commenced your start-up business?

Here are some wise words to ponder over:

“I believe the number one killer of most small businesses is a lack of money. The second biggest would be a lack of basic knowledge about finances. Most start-ups are seriously underfinanced and most initial sales projections are significantly over-estimated. The initial costs for a start-up can be staggering. Sales growth and turnover will, almost without exception, be far slower than expected. If you are going into a new business, go in with your eyes wide open. It’s no good once you’re half way in to realise that you really can’t afford it. Financially committed, with a half-setup or half-renovated business is no place to be.

Financial knowledge is essential. If you don’t have any skills in that area, hire some! Understanding how you can have money in the bank and still not be making a profit makes all the difference to survival. This means taking it easy on the personal toys, capital expenditure and renovations in the first few years. A big, unexpected tax bill or bad debt could wipe you out, so make sure you keep an eye on the finances.” – David Staughton

 

If you need assistance with forecasting, budgeting, cash flow management, bookkeeping, maintaining and understanding your financial records, contact us today. We can help you to make sense of the numbers and set up a plan to take control of your finances.

7 Bookkeeping Mistakes Businesses Should Avoid

It may be daunting as a small business owner, looking forward and not knowing what the future can bring. Many new businesses fail for simple reasons such as erroneous bookkeeping or inadequacies in budgeting, cashflow forecasting and financial management.

These are avoidable by taking simple steps and being smart with your finances. Here are some mistakes that you should avoid as a business owner.

1. Choosing to DIY bookkeeping

Unless you’re willing to put a lot of time and effort into maintaining your own books for your business, it might be better off for you to outsource your bookkeeping to a professional bookkeeper. Outsourcing your bookkeeping to a skilled bookkeeper will free up time for you to focus on your business.

A skilled bookkeeper can also go the extra mile and provide help with your financial planning or optimise the use of your bookkeeping software.

Maintaining your own books often results in errors which will take up time and money to fix further down the road.

2. Not recording and keeping receipts of expenses

 Don’t forget to keep record and receipts of small purchases, even those under $75 dollars.

Over time, the ATO may come looking for proof of these expenses when you make claims, so better to stay safe than sorry. Additionally, beware when making business purchases out of your own pocket because it’s easy to lose track of these.

Remember: When in doubt, keep the receipts!

There are plenty of apps and software which make it easy to scan and keep the receipts. Just ask your bookkeeper for suggestions.

3. Lack of communication with your bookkeeper, whether they are internal or external

Whether you have a bookkeeper as an employee or have outsourced the work to a bookkeeping/accounting firm, make sure you constantly communicate with them. Bookkeepers can only work with the data that you provide them. If you fail to mention expenses or payments for regularly used services, you may have serious issues later on. They need to know the ins and outs to be able to maintain your books for you.

4. Forgetting to reconcile bank statements

Reconciling bank statements is a simple task that involves comparing your bank statements and books to make sure the numbers add up. This will allow you know whether you have a hole in your records or whether you need to give your bank a phone call. Reconciling bank statements is a simple way to make sure you avoid mistakes with your account records.

5. Not having a backup of records

Cloud accounting software (eg. Xero) and cloud storage (eg. Dropbox and Google Drive) are backed up regularly by the service provider. However if you are maintaining records on your local drive, it’ll be a good idea back up your data regularly to avoid issues if your computer system crashes.

6. Mis-categorising your employees

Be aware of your employee types when filing for your taxes. Your responsibilities are different depending on whether a person is an employee or non-employee, such as a freelancer or a contractor. Be sure.

7. Combining personal and business spendings

A common recommendation for business owners is to set up a separate back account for your business. This way you can easily access information you need when you prepare your tax return. Having a separate account from your personal one will also help you to easily prepare a business management strategy when you see how your financial needs and profits line up.

 

Bookkeeping and finance management is a time consuming and often a frustrating part of business ownership. But it is ultimately essential if you want to succeed in your industry. Our team here at Fortiz Bookkeeping are friendly, passionate, and most of all, skilled bookkeepers. We would love to work with you to make sure you avoid these little mistakes and we’ll ensure your books are in tip top shape to help you succeed with your finances. Contact us today!

Basic Concepts that Will Help You Run a Profitable F&B Business – Part 3 of 3

As we mentioned in the past 2 blog posts, not everyone is trained in accounting or bookkeeping. Or to make sense of Balance Sheets and Profit & Loss Statements. However, knowing the basics of F&B accounting can help you understand your accountant or bookkeeper better and goes a long way to ensuring the success of your business. This month, we share the 3rd concept which we believe is important for you to grasp.

Concept 3: Cost-To-Sales Ratio

When analysing financial reports, an important fact to bear in mind is that there isn’t a single number on its own which can tell you everything you need to know about your business.

However, there is a ratio which is important for your business, and that’s the cost-to-sales ratio. Sometimes it’s referred to as the ‘efficiency ratio’.

Example: Food Cost-to-Sales Ratio = (Food Cost / Food Sales) x 100%

In the F&B industry, this ratio is approximately 1/3 but could range from 26% to 36%.

(Click here for more: Restaurant benchmarks.)

Why should you care about Labour Costs, Occupancy Costs & Operating Expenses?

Calculating Cost-to-Sales Ratio allows you to benchmark your F&B business with other F&B businesses without sacrificing accuracy. It gives you a good indication how your business is really faring.

So instead of seeing (scary!) high overheads/costs or deceptively encouraging high sales revenue on their own, the cost-to-sales ratio will give you a good idea of whether you have kept a tight rein on expenses.


Contact us today regarding a fixed monthly fee bookkeeping package that will suit your needs, and more importantly, free up your valuable time so that you can focus on building a profitable F&B business.  

Basic Concepts that Will Help You Run a Profitable F&B Business – Part 2 of 3

As we mentioned in last month’s blog post, not everyone is trained in accounting or bookkeeping. Or to make sense of Balance Sheets and Profit & Loss Statements. However, knowing the basics of F&B accounting can help you understand your accountant or bookkeeper better and goes a long way to ensuring the success of your business. This month, we share the second concept which is of importance to the success of your F&B business.

Concept 2: Labour Costs, Occupancy Costs & Operating Expenses

Labour costs, occupancy costs & operating expenses are various categories of expenses which you need to pay close attention to. 

‘Wait,’ you ask. ‘Why do you use confusing words like ‘labour costs’, ‘occupancy costs’ and ‘operating expenses’. Can’t you refer to them as wages, rental expenses and other expenses?’

Well, firstly, labour costs includes more than wages. It also includes superannuation, work cover, training costs, employee benefits, payroll taxes (if applicable), etc.

Secondly, occupancy costs includes more than rental expenses. It also includes council rates, water rates, utilities and insurance.

Lastly, operating expenses include everything else – from marketing and advertising to serviettes and cutlery.

Why should you care about Labour Costs, Occupancy Costs & Operating Expenses?

Besides cost of goods sold, these are the areas which you have opportunity to cut costs, and increase profits. Admittedly, the occupancy expenses and some operational expenses aren’t as easy to cut back on, and they usually make up a smaller portion of your overall expenses. However, you can keep a lid on costs by ensuring that you review the costs of various supplies and negotiate with your suppliers regularly.

Once you understand where funds are being expended, you can monitor it and make changes whenever necessary in order to save more of it. More savings means more profits in your pocket as the business owner.


Contact us today regarding a fixed monthly fee bookkeeping package that will suit your needs, and more importantly, free up your valuable time so that you can focus on building a profitable F&B business.  

Basic Concepts that Will Help You Run a Profitable F&B Business – Part 1 of 3

Not everyone is trained in accounting or bookkeeping. Or to make sense of Balance Sheets and Profit & Loss Statements. However, knowing the basics of F&B accounting can help you understand your accountant or bookkeeper better and goes a long way to ensuring the success of your business. Here’s concept number 1.

Concept 1: Cost of Goods Sold

Google search throws up heaps of confusing definitions of ‘Cost of Goods Sold’, so we don’t blame you if you don’t fully grasp the concept. 

Simply put, ‘Cost of Goods Sold’ refers to the total cost incurred when making a product for sale. An equivalent is ‘Cost of Sales’ which is the total cost incurred when providing a service.

You can calculate the cost of goods sold the hard way, eg. how many lattes you sold compared to the cost of raw materials to make it. (Note: Cost of goods sold does not include wages or utilities. It only includes the cost of the actual ingredients that make up the dishes or beverages on your menu.)

OR you can calculate the cost of goods sold using your accounting software (we highly recommend Xero, which connects to various apps), which will calculate cost of goods sold based on all expenses, adjusted for opening and closing stock.

Why should you care about cost of goods sold?

Cost of goods sold represent the cost of your food and beverage inventory, which directly ties to the profit you make per plate or cup sold. Keeping close tabs on this number will help you ensure that you have priced your menu correctly, which will ensure that you make a healthy profit on each plate of food or each cup of beverage sold at your restaurant.


Contact us today regarding a fixed monthly fee bookkeeping package that will suit your needs, and more importantly, free up your valuable time so that you can focus on building a profitable F&B business.  

Make Your Money Work for You

Are you a business owner who is always struggling to make ends meet? Are you wondering why your sales turnover is high but as soon as your customers pay you, the money goes out straight away to pay your suppliers and your staff. Then there’s hardly any left over to pay your taxes and BAS obligations to ATO, much less, to yourself.

You’re not alone. There are many other business owners in your shoes, also grappling with this issue of cash flow and money.

In his book, ‘You Call the Shots’, Cameron Johnson shares the following thoughts about making your money work for you.

One of the most important qualities of the most successful entrepreneurs is that they appreciate the true value of money and pay close attention to how they manage it. Good money management isn’t a minor detail; it’s often the difference between lasting success and the kind of success that quickly crumbles into failure.

New entrepreneurs often make the mistake of thinking that the purpose of building a business is to make money. But money isn’t an end to itself; it’s only a tool. At first it’s a tool to help you build and grow your business further. Later, once your business is off and running, it becomes a tool for building financial security and retirement. It also can become a tool for starting additional new businesses. The key point is that your money is a tool for accomplishing what you want to accomplish – and that only happens when you control it. If you take care of your money, your money will take care of you.If you don’t, it can enslave you.

If you want to successfully start and grow your own business, you need to have a firm grasp on basis money management skills. This is something you cannot delegate to people you hire, and even later, if your business grows large enough to warrant an accounting staff, all the really important financial decisions have to come from you – and you can’t make those decisions clearly unless you have a solid grasp of how your cash flow is running.

So many I know don’t think about how they’re managing their money or their credit.’ As soon as they get a pay cheque, they spend it. They find themselves with credit cards with a $5,000 limit, and the next thing you know, they’re paying the minimum payment – “Hey, it’s only $30 a month” and they’re $8,000 in debt. What they don’t realise is that by not being in control of their money, they’re letting their money control them – and that can have long range consequences.

That kind of debt is the entrepreneur’s worst nightmare.

The biggest problem in business today is that people spend more than they have; they let expenses grow more than income; and they try to become too big too fast. This is no different from the way so many people overextend their credit cards, just on a much large scale.

And here’s the thing: the basics of cash flow are simple. You don’t need a business course to learn this. You just need to be determined to stay on top of your finances and make your money work for you.’

 

If you need assistance with forecasting, budgeting, cash flow management, bookkeeping, maintaining and understanding your financial records, contact us today. We’ll help you to join the dots to make sense of the numbers and set up a plan to take control of your finances.

Benefits of Lodging Your Business Activity Statements (BAS) with a Registered BAS Agent

If you are running a small business and you’ve registered for an ABN (Australian Business Number) and for GST, then you might already know what a Business Activity Statement is. BAS forms are issued by the ATO and are sent to you automatically. You must lodge forms by the indicated due date and then make necessary payments to the ATO.

These payments may include some or all of the following:
* Goods and services tax (GST)
* Pay as you go (PAYG) instalments
* PAYG withholding tax
* Fringe benefits tax (FBT) instalments
* Wine equalisation tax (WET)
* Fuel tax credits

Lodging your BAS requires you to track your business income and expenses regularly and can be stressful for many business owners. So here are some reasons why it might be beneficial for your business to hire an agent to lodge your BAS for you.

Safe Harbour Provisions

A registered agent can act as a safe harbour for you when it’s BAS time. Thanks to safe harbour provisions, you as a client will not be at fault if your agent makes a mistake on your BAS claim. But if you make an error, you may be penalised and this may include more fines for you to pay.

Under safe harbour provisions, you are protected from these risks.

Required Code of Conduct

The Tax Practitioners Board (or the TPB) is the national board for ensuring that firms providing tax services to the public act according to a certain code of conduct. This means honesty and integrity in their services and full knowledge in BAS responsibilities and taxation laws. The TPB has got your back. If you have any problems with a hired agent, you can always call the TPB.

Strict Registration Requirements

Not just anyone can be a BAS agent. BAS agents have strict registration requirements which are outlined by the TPB. These include higher education, completion of specific courses on GST and BAS, and a minimum of 1,400 hours of experience in the past 4 years. If you work with a registered agent, you can be reassured that they tick all of these required boxes and that you are working with someone trustworthy and knowledgeable.

Continuing Professional Education

BAS agents are obliged to continue their education while they work. The TPB requires them to undertake CPE activities totalling 45 hours every three years in order for them to renew their registration with the TPB. This means hard work and dedication in order to keep their knowledge up to date.

Just a handful of CPE activities include:
* Completing tertiary courses
* Presenting research papers and presentations
* Attending seminars, workshops, and conferences
* Attendance to activities structured by the ATO and tax organisations

Continuing professional education means that BAS agents working with you are never behind on their knowledge on BAS and tax obligations and other important elements of your business.

More importantly, Fortiz Bookkeeping staff are CPAs, which means they have to fulfil 120 hours of CPE activities every 3 years, which is well in excess of TPB’s requirements.

Lodgement Date Privileges

Last but not the least, registered agents have extended due dates for BAS lodgement. If you lodge your own then you have to lodge and pay by the due date, but your BAS Agent gets extra time, which allows them more time to work with you and get your lodgement right.

If you need assistance with your quarterly or monthly BAS lodgements, contact our registered BAS agents here at Fortiz Bookkeeping regarding our fixed monthly fee packages. We can take the stress out of your hands, which frees up your time so that you can focus on running your business.

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