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End of Financial Year Guide for Small Business

End of Financial Year Guide for Small Business


To take advantage of all the deductions and tax minimisation strategies available to your business you need a clean set of up to date accounts


We would like to draw your attention to some of the key items that need to be addressed in order for your accountant to minimise your tax.


Accounts to Reconcile


  • Bank & Credit Card Accounts

Reconcile statement balance to 30 June.


  • Clearing Accounts

Clearing accounts should have a zero balance at the EOFY.


  • Petty Cash

Petty cash needs to be counted and reconciled to balance as at 30 June. Ensure all receipts have been entered into your accounting software and reconciled to a petty cash tin held by the business.


  • Undeposited Funds

This account should reflect the amounts un-banked as at 30 June.


  • Suspense Accounts

This should only be used as a holding account until you have certainty where to allocate the transaction. Ensure this is cleared out as at 30 June.


  • PAYG Withholding

The balance reflected in this account as at 30 June should be the amount left to remit to the ATO.  This usually would be 3 months (last quarter Apr – Jun).


  • Salaries & Wages

Prior to producing payment summaries to staff you need to ensure that the gross wages in your payroll report agrees to the balance in your profit & loss for the year and also agrees to the total sum of payment summaries produced.


  • Superannuation Payable

The balance reflected in this account as at 30 June should be the amount left to remit to the Super funds.  This usually would be 3 months (last quarter Apr – Jun).


  • GST Liability

The balance reflected in this account as at 30 June should be the amount that is payable/refund to the ATO.  This usually would be 3 months (last quarter Apr – Jun) if on quarterly BAS.  It’s always a worthwhile exercise to prepare a spreadsheet of what was lodged with the ATO and what your accounting system shows.  This will pickup any differences throughout the year that haven’t been picked up.


  • Accounts Payable

Make sure your Accounts Payable Summary report agrees to your Balance Sheet Accounts Payable or Creditors balance at 30 June.


  • Accounts Receivable

Make sure your Accounts Receivable Summary report agrees to your Balance Sheet Accounts Receivable or Debtors balance at 30 June.


  • Inter-company Loans

If you operate multiple entities and they borrow and loan money to each other you want to ensure that these loan amounts are reflected in both company accounting files. One company will have a DR balance and the other company should have the same amount but a CR balance.


  • Inventory

If your business tracks and stocks inventory you will need to run an inventory valuation report as at 30 June.  Make sure the balance on this report agrees to your Balance Sheet Inventory or Stock on Hand figure balance.


Things to Consider


  • Bad Debts

If you are on an accrual basis, you will be paying tax on the invoices you issue for the financial year, regardless if paid or not. Review your debtors list prior to 30 June and write off those invoices you know won’t be paid to avoid paying tax this year on money you will not likely ever receive.


  • Deferring Income

If cash-flow permits you may want to reduce income for the year by deferring some of your June invoices until July.


  • Accrue Expenses

Accrue expenses before 30 June, these including stationary, office supplies, repairs, computer supplies, etc.


  • Employee Superannuation Contributions

If cash-flow permits ensure all employee and employer superannuation contributions for your June quarter superannuation owing are made prior to 30 June to secure a tax deduction as superannuation is only deductible when paid.


  • Prepayment of expenses  (Small Business only)

If your cash flow allows, you should consider making advance payments for expenses over the next 12 months (e.g. Rent, insurance, advertising). If you are eligible for the small business concessions, you can claim an immediate deduction for such prepayments – obtain advice from your accountant


  • Capital Purchases for Assets less than $20,000

If your business is a small business entity (Proposed at turnover of less than $10m) depreciating assets valued at less than $20,000 are immediately deductible provided they are acquired and installed ready for use on before 30 June. – If cash-flow permits you may want to upgrade your computer equipment for an instant write-off

The balance of the general small business pool is also immediately deducted if the balance is less than $20,000 at 30 June 2017.


  • Repay Director Loans

Repay director loans (i.e. amounts borrowed from the company) to the extent possible prior to 30 June to minimise any Division 7A loan balances outstanding and thereby minimise any dividends required to be paid as income to shareholders – obtain advice from your accountant


  • Investment Property Deductions

If you own a rental property, consider arranging a depreciation report to allow you to maximise the depreciation and building write off deductions for your investment property.


  • Accounting Software Upgrade

Why not use the start of a new financial year to evaluate your accounting software.

Questions to ask yourself:

1. Is the system giving me the information I need to operate my business most effectively
2. Am I desk bound to my software
3. Would I gain benefits from having a cloud mobile application like QuickBooks Online
4. Has my business outgrown my current accounting system and need to look at something like JCurve
5. Can my Accounts Payable processes be automated using software like Receipt Bank
6. Do I need to make an appointment with a cloud accounting adviser like Contact


Please note the following information is factual only and does not constitute advice or recommendation.

Should you have any questions regarding the above please do not hesitate to Contact our office.

Phone: 1300 884 722

Email: info@allthatcounts.com.au

 

 

Dear Hard-Working Business Owner

You seem to be doing all the right things, you work hard and you look after your clients, yet … your business is still … well, pretty damn ordinary!

Read our latest blog on the importance of getting automated and using the latest cloud technology available.  Would love to hear your thoughts on this 🙂

https://www.linkedin.com/pulse/dear-hard-working-business-owner-lielette-calleja?trk=mp-author-card

How to Run Your Business with Apps

   Apps That Count

Did you know that the majority of Australian small business owners are lagging well behind their Asia-Pacific competitors when it comes to innovation and automation, according to research recently published by CPA Australia?

Strangely though, Australia is also renowned for being at the forefront and one of the most advanced countries in online accounting technology which clearly highlights that small business owners are not taking advantage or sourcing the right talent pool.

Are you one of those businesses who would like to explore the world of online applications, also known as apps?  Would you like to know what some of the benefits are by introducing online apps that could potentially increase your productivity?

One of Australia’s leading small business online accounting specialists and Intuit ProAdvisor, All That Counts, believes that Australian business owners are just unaware and not informed of the tools that are available to them to help build, grow and automate their business. Many business owners still believe that growth equals increased headcount, and are reluctant to grow.

All That Counts uses its expertise to clearly identify the pain points that small business owners experience and go about to address those pain points by matching the right applications (apps) that will improve their client’s business operations. It’s not just about the numbers and the accounting system. People drive the numbers and people require the right tools to keep the heart and soul of a business pumping.

All That Counts Director, Lielette Calleja, stated, “I understand that online technology is an opportunity for SMB’s to embrace, and an opportunity for bookkeepers and accountants to take the client relationship to the next level. It’s about providing value and not just have them look at us as the person that tells them how much BAS or Tax they need to pay. We want them to look at us as a trusted source who understands the big picture of their business and that we are in a position to influence, guide and educate them on the world of apps that will improve their business operations – automation must become the rule rather than the exception”

Online technology may replace data entry and some compliance related activities, but it’s no replacement for the relationship a client builds with a trusted business advisor.

Let’s say a business is experiencing difficulty in their collections process, an automated collections app like AR Collect, Debtor Daddy or IODM would be ideal to address their cash flow problem. In the old world you would need to hire a collections person to email statements, copy invoices and make phone calls.  In the new world with apps you can set your statements to be automatically emailed, reminder letter, legal action and SMS reminders – some of the systems can be customised to suit your needs.

Now, what if you had a business that billed out time and required staff to submit timesheets? Hello TSheets!! This is an app that allows staff and contractors to submit timesheets via their smartphone which automatically populates the payroll hours in QuickBooks Online as well as creating an unbilled activity for sales.  This app works great for professional services who bill by time.

Let’s look at some real time case studies that All That Counts have undergone with their clients using QuickBooks Online:

Case Study 1

We work with a number of Printing Franchisees doing their bookkeeping using traditional desktop accounting applications.  As part of our roll out to move their accounting to QuickBooks Online we saw an opportunity to automate the data entry for the high volume of supplier invoices. We implemented Receipt Bank which is an app that extracts the key information from their bills and receipts, removing the need for manual data entry. Receipt Bank then publishes the data to QuickBooks Online. Receipt Bank has saved us approx. 8 hours per month for these particular franchisees. The added benefit is when the invoice is published from Receipt Bank to QuickBooks Online it attaches the invoice to the transaction.  Accountants don’t have to ask us for copies of invoices as they can access them directly from the accounting file.

Case Study 2

A few months ago we were approached by the owner of a 30 Childcare Centre location. They were frustrated with how long it took them to do rostering and payroll for their 200 employees.  They had spoken to many other consultants who provided them with industry solutions but none of the systems actually linked to their accounting system.  After conducting our own due diligence on the systems they were trailing we were confident in recommending KeyPays Soft Clock app.  We worked closely with the team from KeyPay as we transferred all 200 employees into the new payroll system that also came with an inbuilt award interpreter for the Childcare Industry.

Within 3 months we had all 30 sites up and running and trained with the Soft Clock app.  Our client has managed to save 2 days per week with the implementation of this app.  This equates to an annual saving of $50K.  We have now been asked to roll it out for any other new centres moving forward.  An app like this means that a business can grow rapidly without having to resource it within. The integration with QuickBooks Online also enables the client to report profit & loss statements by locations for each centre with very little effort.

Case Study 3

This case study is more about our approach and validates when we say the people drive the numbers and what a true trusted advisor is.

We were recently contacted by an Engineering company who was in desperate need for a bookkeeper 2 days per week.  Part of the scope was to move them away from Desktop to QuickBooks Online.  They had approx. 13 accounting data files which were all saved in different locations and different versions.  It was an absolute nightmare!

The client had recently put together a new bonus scheme for his team and we soon realised that there was no way he could honor those bonuses as he didn’t have the reporting tools in place to measure their performance.

Upon further review we found out that they were also using an outdated desktop project management system.  They had no way of identifying if they were making or losing money on jobs and what resources were being utilized.

We quickly put the brakes on the accounting system and suggested we get the operations in order first.  The company is expecting major growth and we believed the priority was to do our research and source a new online workflow management app that would integrate with QuickBooks Online.

Needless to say client was thrilled with our approach.  The bookkeeper role is now 1 day per week and we have since placed an experienced systems accountant to re-engineer the processes around the new technology. This will also eliminate the data entry a typical bookkeeper would do in the old world.

Switching to QuickBooks Online and Apps Is Seriously Easy

If you would like to explore the wonderful world of apps why not take advantage of our free online offer by calling us on 1300 884 722 so we can arrange a free download for you.