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.

7 Common Xero Set-Up Errors

Xero was founded in a Wellington studio apartment by Rod Drury and his personal accountant when they felt that traditional desktop accounting software had become outdated and decided to create a modern cloud-based product. Xero‘s global headquarters are still located in Wellington. [Source: Wikipedia]

Xero has quickly become very popular for bookkeeping and accounting. It is ideal for small business owners who require something that is easy to use. Not only that, Xero has an extensive online library of training resources, videos and tutorials.

Having said all of the above, a newbie to Xero may find it daunting to  set it up and use it initially. Here are 7 common mistakes our firm encounters when we are engaged to tidy up incomplete Xero set-up are:

  • Incorrect set up of chart of accounts.
  • Incorrect tax rates for various expense accounts eg. ASIC fees and bank fees are GST-free.
  • Not setting up bank feeds for all bank accounts. Paypal accounts are commonly forgotten.
  • Not using bank rules for repetitive transactions.
  • Errors in inventory set-up, eg. not tracking inventory.
  • Wrong selection of financial settings eg. ‘accruals basis’ instead of ‘cash basis’ for BAS.
  • Incomplete set up of employee details for Pay Runs

 

Fortiz Bookkeeping partners are certified Xero advisors who can assist you with set-up of Xero for your business and train you on how to use Xero. Contact us for assistance today. 

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.

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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