Things Every Business Owner Should Know About Their Bookkeeping And Finances
As a business owner, it’s likely that there’s a lot on your plate besides your bookkeeping and business finances.
You’re busy managing customers, keeping up with your marketing and doing the day-to-day tasks involved in running your business. And, when you’re wearing all the hats, it can be tough to find the time to sort out your numbers and manage your cash flow (especially if numbers aren’t your thing).
However, the reality is that there are some core things you need to know about your bookkeeping and finances, to ensure your business is compliant and profitable.
To help you narrow down where to prioritise your precious time and headspace, we’ve put together some of the bookkeeping essentials you need to know.
1. Simplify your bookkeeping: keep business and personal accounts separate
Whilst it can be tempting to mix your personal and business finances together, it’s important to separate them from day one.
Why?
Firstly, for some business structures having separate business accounts is compulsory.
Secondly, as your business grows it will become increasingly difficult to accurately track your business income and expenses, leading to headaches and potentially costly mistakes at tax time.
Once you have separate accounts for your business finances, make sure to keep records of every transaction that happens within your business (including keeping records of all receipts and invoices).
2. Use a bookkeeping process to track your business expenses
In the early days of your business, it may feel difficult to predict exactly what your expenses will be. However, spending some time recording each expense you know (or can anticipate) will help you to understand your running costs, and keep track of your tax deductible expenses.
Many of the day-to-day costs involved in generating income and running your business are tax deductible. However, purchases that are just for you, or are only partially used by the business, can’t be claimed or claimed in full.
If you’re unsure about the expenses that are appropriate to claim, you can find out more information from the Australian Taxation Office, or an accounting or bookkeeping professional.
3. Structure your business finances to account for tax payments
As a business owner, you’re responsible for paying tax on your business earnings. It’s important to budget a portion of your income towards tax expenses to avoid expensive surprises at the end of the financial year.
Depending on what is right for your business situation and the tax bracket that you sit within, putting aside a percentage of each sale into a separate ‘tax payment’ account means you avoid the stress of trying to come up with the money when your tax bill is due.
4. Know the basics of bookkeeping and business finances
Even if you decide to use an automated accounting software or outsource your bookkeeping to a professional, it’s still helpful to understand the basics.
Whilst professional support can reduce your risk of running into tax problems, it’s always best if you also understand the basics of your tax obligations.
There’s plenty of resources online covering different business structures and their legal obligations. The information relevant to you and your business will depend on whether you’re registered for GST, paying corporation tax, and the structure of your business. For example, registered companies have different taxation rules to sole traders or partnership structures.
Having a basic understanding of the tax rules that relate to your business could save you from serious fines and penalties.
5. Regularly review your financial reports
Whether you keep manual records or use cloud-based accounting software, make sure you have a way to run reports that can give you a clear snapshot of your finances at any point in time.
Running bookkeeping reports monthly ensures all outstanding customer invoices are paid, and any gaps in your records are addressed.
You might also want to run in-depth reports at the end of each quarter to identify growth or loss trends in sales, follow up on outstanding money you’re owed, and gain valuable data that can inform your business plan and goals for the next quarter.
6. Outsource to a professional bookkeeping services professional
Managing your bookkeeping and business finances is crucial to the health and compliance of your business.
Yet, it’s also time intensive and there’s a lot of complex information to understand. That’s why many business owners choose to invest in experts to manage their business bookkeeping.
Bookkeeping professionals live and breathe everything business finances, and thanks to the help of automation tools their services are often more affordable than you might think.
Outsourcing to an experienced bookkeeper can offer several benefits, including:
- Freeing up your time and energy to focus on what you do best
- Ensuring your books are always up to date and organised
- Meeting all compliance requirements, including BAS and tax obligations
- Peace of mind knowing that your business finances are in experienced hands.
7. Get professional help
If you’re ready to streamline your bookkeeping and finances, finding the right fit in business bookkeeping services can be a game changer.
Maree’s Mobile Bookkeeping provides a complete Bookkeeping, BAS Lodgement and Payroll Service for small business owners. As we work virtually, we service business owners from anywhere in Australia. From bookkeeping services through to payroll services, we’re here to help you take control of your bookkeeping and compliance functions so that you can focus on growing your business.
To find out more about how a professional bookkeeping service can save you time and money, phone Maree today on 0429 363 047.
Why Payroll Is Critical To Get Right
Payroll, or the process of managing employee wage payments, is a critical task for all businesses to get right.
As a small business owner, it’s likely that you’re currently handling payroll yourself, but as your team grows, investing in professional payroll services will save you a lot of time and help you avoid the unexpected costs and hefty penalties that come with getting your payroll wrong.
In this article, we explain the essentials any business owner needs to know about payroll.
1. The critical role payroll plays in your business
If there’s one area of your business to get right, it’s payroll.
Not processing payroll correctly can affect the morale and trust of your employees, who are relying on reliable and timely access to their wages.
Payroll errors can also impact your compliance and have a negative impact on your business’ reputation and financial stability.
2. So, what does payroll compliance mean?
As outlined by government regulations, a business meets payroll compliance by:
- Making accurate payments and deductions to its employees
- Providing employees with a detailed payslip showing the minimum requirements as outlined by the Fair Work Australia laws
- File and pay withholding taxes on time to the Australian Tax Office (ATO)
- For larger businesses: file and pay payroll tax to the relevant state authorities on time
- File and report STP to the Tax Office on time
- Pay other deductions – such as superannuation contributions by the due dates
- Keep payroll records for at least seven years.
3. Common mistakes to avoid when processing your payroll
Doing payroll to the level required these days can be complicated and time consuming, especially if you’re not a trained payroll services professional.
With so many legal requirements to keep track of, we often see the same payroll mistakes happening, including:
Incorrect wage payments
As an employer, you’re responsible for ensuring that your employees receive the correct wage payments, including all relevant entitlements under their award or employment agreement. This includes any overtime, penalty rates and allowances.
You can find comprehensive information about pay rates and entitlements via the Fair Work Australia website, including their pay calculator.
Incorrect leave accruals
This often occurs when a new employee is set up in the system.
When setting up your employees, remember that leave accrual only applies to full time and part time employees and part time employees need to be set up with pro-rata leave entitlements.
One other step to prioritise is ticking the option for annual leave to be paid out upon employee termination – this will ensure the final payslip calculates the leave owed.
Incorrect or late superannuation payments
Including:
- Incorrectly calculating super or missing key situations where super is payable, such as for contractors, people under 18, and sometimes for shift loadings and leave loading
- Not setting up a default employer super fund (or sometimes setting one up but having the incorrect type)
- And, not paying superannuation by the quarterly due date.
Being clear on these steps, or investing in a payroll services professional, can help you avoid some of the most common payroll mistakes.
4. What happens when you make a payroll mistake?
Payroll is such a critical process for businesses to get right, and unfortunately the consequences for payroll mistakes can be both costly and have a negative impact on your business, including:
- Being audited by the ATO
- Receiving penalties and paying interest for superannuation underpayment
- Receiving penalties and paying interest for late superannuation payments
- Issues with cash flow due to incorrect employee wage payments and trying to catch up by paying them back pay
- Fines from Fair Work Inspectors.
5. How to reduce payroll errors and set yourself up for clear and efficient payroll processing
If you’re feeling a bit daunted by all there is to know and get right with your payroll, these simple tips can help to streamline the process for you.
Payroll processing tips:
- Before you start your payroll processing, it’s essential to make sure you have all the necessary documentation and details prepared and readily available. Taking some time to do this first can save on costly mistakes
- Setting up a system that tracks all the payroll hours worked will give you clarity and confidence that all employees are paid accurate and timely wages
- And last but not least, make sure you clearly communicate wage details with each of your employees so they know how much they will be paid and when to expect their paycheck.
6. How outsourcing payroll to a payroll services professional benefits businesses
With payroll playing such a critical role in the health of your business (and being a time-intensive activity), many business owners choose to invest in experts to manage their payroll.
Because payroll service providers live and breathe payroll (and thanks to the help of automation tools), their services are often more affordable than you might think.
This can be a great investment in healthy payroll, and can give you more time back to do what you do best and the peace of mind of knowing that your payroll is in experienced hands.
Depending on who you choose, many payroll professionals can support you with:
- Working out pay (including benefits and reimbursements)
- Deducting employee income taxes
- Sorting out other deductions such as retirement contributions
- Paying employees
- Maintaining your payroll records, and
- Filing taxes with the ATO.
7. Get professional help
So, if you’re ready to spend less time worrying about whether your payroll is accurate, finding the right fit payroll services support can be a game changer.
Maree’s Mobile Bookkeeping provides a complete Bookkeeping, BAS Lodgement and Payroll Service for small business owners. As we work virtually, we service business owners from anywhere in Australia. From bookkeeping services through to payroll services, we’re here to help you take control of your bookkeeping and compliance functions so that you can focus on growing your business.
To find out more about how a professional bookkeeping service can save you time and money, phone Maree today on 0429 363 047.
Why The New Financial Year Is Always The Best Time To Get Your Finances And Bookkeeping In Order
The new financial year is always the best time to get your finances and bookkeeping in order. In this article, we explain what bookkeeping things you need to consider for the new financial year.
1. Ditch The Spreadsheets And Get The Right Bookkeeping App
One of the main reasons some businesses fail is because they don’t have a good bookkeeping system. With the right bookkeeping, you’ll receive enough warning if it looks like your business might run out of cash.
Using the latest bookkeeping software is the most efficient choice. The most popular bookkeeping apps include Xero, MYOB and Quickbooks, which you can trial each one for free and see what works better for you.
The new financial year is the perfect time to switch to a bookkeeping app so by the time this financial year is over, you’ll have a full financial year worth of data.
2. Make Sure Your GST And Other Registrations Are In Order
The new financial year is a good time to assess if you need to register for GST.
You must register for GST if:
- Your business has a GST turnover of $75,000 or more
- You provide taxi or limousine travel (including ride-sourcing services like Uber, GoCatch, Didi or OLA) regardless of your GST turnover
- You want to claim fuel tax credits for your business, regardless of your GST turnover
Other registrations you may need include:
- Tax File Number (if you’re operating as a partnership, trust or company) – required
- Australian business number (ABN) – recommended
- Pay as you go (PAYG) withholding – required if you employ staff
- Payroll tax – required in certain circumstances
- Fringe benefits tax (FBT) – required in certain circumstances
3. Get Your Bookkeeping Processes In Order
Do your bookkeeping weekly no matter how busy you are. If you genuinely cannot keep up, you are far better off to outsource the bookkeeping to a professional to keep on top of.
Regular bookkeeping means that your BAS preparation and lodgment will be much easier to keep on top of too. Make note of the BAS lodgment and payment due dates and pop these into your calendar so you won’t forget to lodge on time: https://www.ato.gov.au/Business/Business-activity-statements-(BAS)/Due-dates-for-lodging-and-paying-your-BAS/
Your financial reports are only useful if your bookkeeping is up to date and accurate, so don’t let this get out of hand. Make sure your bookkeeping is done weekly (minimum) so you can see the financial state of your business at a glance.
4. Review Your Financial Reports Regularly
It’s important to keep a close eye on your business performance. Good accounting software will let you quickly generate useful reports, such as:
- Profit and Loss Reports – these show your company’s income, expenses and profits over time.
- Balance Sheet Reports – these show assets, liabilities and equity
- Accounts Payable and Accounts Receivable Reports – these show how much money is owed by, and to, your company.
5. Keep Your Business And Your Personal Finances Separate
This is essential if you want to understand your business cash flow and forecast how it might change. Mixing your business and personal finances can leave you uncertain about business performance. If you continue to combine your personal and business transactions, you’ll end up doing unnecessary bookkeeping for your personal transactions, as these still need to be processed in order to balance your bank account at month-end.
6. Get Your Cash Flow In Order And Build A Cash Reserve
Access to cash will make or break your business. The ultimate step to managing cash flow like a pro is to build a cash reserve. A cash reserve provides the cushion you need to manage unexpected events. It also gives you the confidence and finances you need to grow your business. It’s not always possible to build a large cash reserve. But if you do, it can insulate you from the economic cycle and the whims of banks and other lenders. It will also let you take advantage of opportunities when they present themselves.
7. Get Professional Help
Doing bookkeeping and payroll to the level required these days can be complicated and time-consuming. Plus there are a lot of legal requirements, which means there are serious risks to getting things wrong. For these reasons, many business owners prefer to leave it to the experts. It can free up their time and give them extra peace of mind.
In addition, professional bookkeeping services providers are often able to do your bookkeeping at a lower cost than you may realise, as they use software to automate many of the tasks involved.
Expert bookkeeping and payroll services are worth their weight in gold. When you find the right outsourced bookkeeping and payroll service, you’ll spend less time thinking about your bookkeeping and more time doing what you do best – running and growing your business!
Maree’s Mobile Bookkeeping provides a complete Bookkeeping, BAS Lodgement and Payroll Service for small business owners. As we work virtually, we service business owners from anywhere in Australia. From bookkeeping services through to payroll services, we’re here to help you take control of your bookkeeping and compliance functions so that you can focus on growing your business.
To find out more about how a professional bookkeeping service can save you time and money, phone Maree today on 0429 363 047.
Maree Punzet | Maree’s Mobile Bookkeeping | 0429 363 047
You didn’t go into business to do your Payroll and Bookkeeping, BUT WE DID
Removing the $450 per month threshold for super guarantee eligibility
It was announced on 11th May 2021, part of the 2021-22 Federal Budget that the Australian Government announced it would remove the $450 per month threshold to expand coverage of super guarantee to eligible employees, regardless of their monthly pay.
‘The change is now law by the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Act 2021External Link with royal assent on 22 February 2022.
From 1 July 2022, employers will be required to make super guarantee contributions to their eligible employee’s super fund regardless of how much the employee is paid.
Employees must still satisfy other super guarantee eligibility requirements’
Did you know employers will need to check their payroll and accounting systems have been updated for super payments made after 1 July 2022 to ensure they correctly calculate their employee’s super guarantee entitlement.
I am sure many employers have not been updated, if you need help in this area, please give me a call direct on 0429 363 047.
Maree Punzet | Maree’s Mobile Bookkeeping | 0429 363 047
You didn’t go into business to do your Payroll and Bookkeeping, BUT WE DID
Is your business avoiding its debts?
As a consumer, you may or may not know someone that has been affected by a dodgy business that has shut down to avoid paying its debts.
We have seen this happen quite a bit over the last few years.
The business may seem to just disappear off the face of the earth, overnight, only to pop up under a different company name.
This as we know is called ‘phoenixing’ and it’s ILLEGAL.
It’s been around for many years and illegal phoenix activity happens in many different industries. The worst is many subcontractors and / or supplies are left unpaid and businesses may be forced to shut down.
Did you know the ATO has a taskforce called ‘Phoenix Taskforce’ whereby they work with other federal, state and territories to detect, deter and disrupt illegal phoenix businesses?
There are a few red flags to watch out for such as
- Companies providing unusually low quotes or tenders
- Company directors who have previously been involved with liquidated entities
- Changes to the company’s name and directors, but the manager and staff remain the same
- Companies requesting payments to be sent to a new company
- Told that your last contract won’t be paid, unless a new contract is signed, usually this is done under a different company name from the 1st one you began having dealings with.
If you suspect anything illegal, please contact the ATO and/or
- fill out a tip-off form online or complete it in the contact us section of the ATO app
- phone us on 1800 060 062
- email us at phoenixreferrals@ato.gov.au
Maree Punzet | Maree’s Mobile Bookkeeping | 0429 363 047
You didn’t go into business to do your Payroll and Bookkeeping, BUT WE DID
Is COVID and shutdowns affecting your business?
With the many businesses that I do bookkeeping for, some have been affected, but the majority haven’t, during COVID and the many shutdowns.
I think because many business owners have had to either pivot or look at different ways to operate their business, either by having staff work from home, or look at different options in the way they operate their business.
I am not taking it away that many hundreds of businesses have closed completely due to the lockdowns in Australia. But it does show the resilience we have in Australia and as Australians, that even a virus or shutdowns, won’t stop us from managing and operating our businesses.
I would be interested to hear your thoughts; how have you managed your business during all the lockdowns in Australia.
If you need any bookkeeping assistance, don’t hesitate to contact me anytime.
Maree Punzet | Maree’s Mobile Bookkeeping | 0429 363 047
You didn’t go into business to do your Payroll and Bookkeeping, BUT WE DID
Changes to Casual Employment and what it means for Employers
Employers will now have to give every new casual employee who commences with their company what is called Casual Employment Information Statement, in short (CEIS), either before, or as soon as possible after they start their new job.
A employer does not have to provide the CEIS more than once in any 12 month period, if the casual employee starts at different stages or times throughout the 12 month period.
The CEIS was first published this year on 29th March 2021 and updated on 20th May 2021.
The updated version provides more information about the definition of a casual employee and minor changes to information about casual conversion.
You can download the CEIS statement here.
Download the Casual Employment Information Statement (PDF 296.4KB) (DOCX 50.1KB).
Employers can give the casual employees the CEIS in person, by mail, email, emailing a link, emailing a link to a copy of the CEIS, by fax or by another method, as long as it is received.
If you are unsure of these changes or need to know any more information, please do not hesitate to give me a call.
Maree Punzet | Maree’s Mobile Bookkeeping | 0429 363 047
You didn’t go into business to do your Payroll and Bookkeeping, BUT WE DID
The COVID Rebound
Can you believe it’s been 12 months already of the 1st case of COVID. In Australia we faired pretty well compared to the rest of the world.
We are definitely in rebound mode, for many business owners, it’s survival. Some have been able to grow leaps and bounds, pivot, while others have relied on the Jobkeeper payments and still could close.
But the outlook looks to be that Australia business is on the rebound.
There has been new consumer confidence in the market, people seem to have more money, they are spending on homes, cars, holidays locally and interstate because they can’t spend that money on overseas holidays.
So there are a couple of things to think about with this rebound which is:
1.Cashflow
Look at your business and review exactly how much it needs to survive and what timeline.
2. Documentation
Document everything, if you are not already, look at streamlining your processes. Start reviewing your costs in pre-crisis revenue and margin to post crisis.
3. Inventory
As Australia is starting to reopen borders, early movers building inventory soon may benefit from pre-surge prices.
4. Prepare to Hire
I know that sounds crazy, but can you afford to add staff now or not. Do you have a HR person to help, look at identifying job descriptions, start dates.
5. Work with the best Bookkeeper
Now this one is a given, you need to talk to me. A good bookkeeper will save you a lot of $$$.
So remember, we are coming out of this pandemic and it’s exciting to see Australia rebound and show the rest of the world, how tough and resilient we truly are.
Maree Punzet | Maree’s Mobile Bookkeeping | 0429 363 047
You didn’t go into business to do your Payroll and Bookkeeping, BUT WE DID
We are a full service, insourced Payroll and Bookkeeping business that puts money back in your pocket and saves you time to work in/on your business this makes good financial sense!!
The most common accounting errors all small businesses should avoid.
What do you think Number 1 would be, can I hear you….yes, your right?
BAD BUDGETING.
Bad budgeting might sound cliché but budgeting can make or break any business. A budget needs to give you a clear idea of how your business is tracking, whether you are breaking even or making a profit.
The next one is UNDERSTAND THE DIFFERENCE BETWEEN EMPLOYEES AND CONTRACTORS.
Hiring staff can sound exciting, when you tell your friends and family, I’m hiring staff because my business is going well. There are many pro’s and cons to both. Hiring an employee or a contractor has massive differences in terms of insurance, payroll tax, legalities and when it comes to staff who are actually employed by you, then you need to review if you need this help temporarily or on a long-term basis. Remember contractors are businesses themselves, they invoice you for the hours spent on the agree job.
The next one is NO ORGANISATION OR PAPERWORK.
It is so important to make sure your paperwork is in order, especially when it comes to tax time. Have a checklist of tasks to complete and keep your paperwork organised, legally you might hold files either digitally or physical for seven years in Australia
Oh, this one I see way to often MIXING PERSONAL FINANCES WITH BUSINESS
Many businesses say they don’t have a separate bank account for their business and that is a risky situation. Mixing up financial accounts for their business is difficult when you are trying to sort out your personal expenses (which are not tax deductible). Unless you are a sole trader, opening up a separate business account and not mixing business and personal expenses is a good idea, though I do suggest sole traders to separate the two as well.
The last one is NOT HIRING A BOOKKEEPER OR ONE AT ALL.
Many small businesses think that it will cost the earth to outsource, but there are so many benefits to outsourcing help, from saving time doing the books, hiring someone that knows the ins and outs of business finance, they will get to know your business and help you achieve your goals and address any weak areas in your budgeting or cash flow. They will keep you organised and your documentation will be correct and in order. Lastly, they take away the stress out of money management.
If this resonates with you, give me a call on 0429 363 047.
Maree Punzet | Maree’s Mobile Bookkeeping | 0429 363 047
You didn’t go into business to do your Payroll and Bookkeeping, BUT WE DID
We are a full service, insourced Payroll and Bookkeeping business that puts money back in your pocket. Our team works like a full-time employee and part of your business when it comes to processing your Payroll and bookkeeping, but without the cost or other concerns full time employees bring. When compared to a full-time employee, we give you all the benefits and more but save you around $60,000 a year in costs, makes good financial sense!!
Top 6 Bookkeeping Tips
