Get into the habit of doing your bank reconciliation

When it comes to bank reconciliation, it’s important to get into the habit of doing it often. Putting it off can mean bad things for your business records! 

What is it?

Bank reconciliation keeps your bookkeeping accurate and can help lower your tax, alert you to fraud, and allow you to track costs.

It involves a comparison of your sales and expense records against the record your bank has.

Saving time

It can take a lot of time to do it manually, so you may want to consider using software. Most banks can send transaction data directly to accounting software like Xero through a secure online connection.

However if you do bank reconciliation, do it often.

The longer you go without doing it, the longer it will take to catch up.

It won’t just be that you have more transactions to do, it will take longer per transaction, because you’ll have a harder time recalling the details.

So, schedule the time to do it every week or even every day. And set up a system that makes it quick and easy to grab the records you need.

Talk to us, we can help.

Getting your business records ready.

There is a lot to deal with at the end of the financial year, so it's good business to get your 2019 records in order before you get stuck into the next tax year!

What records do you need to have ready?

• Have you bought or sold assets? If so, you need full details of acquisitions and disposals.
• Have you taken out a new loan or other finance? You must have details of the finance arrangements and statements of monies owing at 30 June.
• Check that any bonds or deposits paid or received have been allocated correctly.
• Have you prepaid for insurance or other large business expenses that need to be apportioned to the following financial year? Make note of the portion applicable to the current financial year.
• Do you carry stock? If so, did you perform a full stocktake at 30 June (unless you qualify for the simplified trading stock rules).
• List any bad debts to be written off or pursued.
• Do you have loans with related entities? You need to reconcile the loans to and from each entity to ensure the same value is reported in the accounts of both entities.
• Ensure that all payments to company directors have been correctly captured.
• Review your debtors and creditors (accounts payable and receivable). Is the list current and accurate?
• If contact details of business owners and key personnel have changed let us and your accountants know.

There may be other matters to discuss such as capital gains, vehicle usage, private usage apportionment or superannuation.

Remember you need to keep all your business records for seven years, so store everything securely and where possible electronically for safety and ease.

Talk to us today about how we can help you get your records ready for your accountant. 

Employee Payment Summaries are due soon - for the last time!

The end of the payroll year will be here sooner than you think! We can help make the process easier by reviewing and validating your payroll figures prior to issuing payment summaries by July 14.

Once you start reporting under Single Touch Payroll, you will no longer be required to issue a Payment Summary. Your final payment summary to employees is due 14th July. After this date your employees can access their income statement through the ATO via myGov.

You’ll have two weeks from the end of the payroll year to issue your payment summary so it’s worthwhile preparing now to make the process easy.

Here’s what you will need:

Payroll Ch​​​​ecklist

• Make sure you have all the necessary details for all employees, both current and any who have terminated throughout the year. The essential information is full name, date of birth, address, tax file number, and an email address if you are sending payment summaries electronically.
• Review any terminated employees. Is the correct termination date recorded in your software? Are there any Employment Termination Payments (ETPs)?
• Review allowances paid to employees and check which ones are required to be reported separately.
• Review salary sacrifice payments to superannuation for Reportable Employer Superannuation Contributions (RESC) amounts.
• Check any Reportable Fringe Benefit Tax (RFBT) amounts that should be included.
• Do you plan to email payment summaries to employees? If so, advise employees of your intention to provide electronic versions and make sure the email address is secure and private. The electronic version must be non-editable and preferably generated directly from your payroll software.

Verify Your Payroll Numbers

It’s important to verify payroll figures before issuing payment summaries, in order to minimise the chance of errors and having to re-issue at a later date.

Once the payroll year is finalised at 30 June, you can then focus on analysing the payroll amounts for each employee and cross-checking against the numbers in your profit and loss accounts.

The end of the payroll year will be here sooner than you think! We can help make the process easier by reviewing and validating your payroll figures prior to issuing payment summaries.

Remember, this is the last year you will need to issue payment summaries. 

From 1 July, all employers must report to the ATO using Single Touch Payroll (STP).

Do you need more information about STP? We can help you set up your payroll ready for STP reporting.

Employing casual workers

Having access to a casual workforce can be a great way for your business to manage busy periods while keeping ongoing costs low. Before you jump at the opportunity, it is important to understand the rules.

With the increasing casualisation of the workforce in Australia, there is a large and accessible pool of eager workers. Many students and those re-entering the workforce are looking to fill a gap in their employment or gain valuable experience.

If you want to attract strong candidates to roles in the future, gaining a good reputation for treating your casual workers properly can set you up for success in the future. The right casual employee may even become an invaluable part of your business and be a great fit for a permanent role.

What is a casual employee?

The Fairwork Ombudsman defines a casual employee as an employee who

…does not have a firm commitment in advance from an employer about how long they will be employed for, or the days (or hours) they will work.

This also means that they are not obligated to commit to all work on offer from the employer.

How is a casual employee different from a part-time employee?

Unlike casual employees, your part-time and full-time employees have fixed contracts or guarantees of ongoing employment. This means they can expect to work regular hours. They also have entitlements, such as leave and must give or receive notice to end the employment.

Casual employees have no guaranteed hours of work. They usually work irregular hours, don’t get annual leave and can end employment without notice.

What are the employers’ responsibilities?

• To ensure employees are paid the correct rate. This may include an additional casual loading that replaces leave entitlements
• To pay superannuation if required. You can find out more about your obligations here.
• To follow the Fairwork Ombudsman guidelines if you make any changes to the terms of the employment. Examples would be requiring an employee to work for fixed hours or a fixed term
• Recognise that employees can ask for flexible work arrangements and paid parental leave after 12 months of ongoing employment.

Contact us to find out how we can help you set up the right structure for casual employees and look after your payroll needs.

Is your small business ready for Single Touch Payroll?

For employers with 19 or fewer employees, single touch payroll (STP) legislation will be coming into effect on the 1st of July 2019. Are you ready? Because it’s important to start preparing now.

You need to know what Single Touch Payroll is, what the changes mean for your business and who it affects. And more importantly, you need to know what to do to prepare, so that you will be compliant.

What is Single Touch Payroll?

For employers with 20 or more employees, you will already be familiar with STP, but if you are unaware, STP is the mechanism for sending tax and super information to the ATO directly from your payroll or accounting software every time you pay your employees. The legislation was passed in February this year to extend this to employers with 19 or fewer employees.

How to prepare your small business for STP and ensure compliance

Most popular payroll software companies will have the correct facilities ready to go, such as Xero and MYOB. We will have spoken to many of our clients already about STP, however, if you are unsure, talk to us.

There are a few things to be aware of you as you get ready to use STP reporting.

1. Check your software – you may need a software update or additional step added to your process
2. Ensure you have factored STP into your payroll process
3. Ensure your payroll compliance is up-to-date generally, including employee benefit, wage and super entitlements and maintaining accurate records

The first year of using STP reporting is a transition year and there will be assistance from the ATO. That means penalties for errors will not generally apply.

If you don’t think you will be ready by the 1st of July, you can apply for a deferral through the ATO. The ATO gives a list of possible reasons for deferring, including lack of internet coverage, or if further development of software is needed.

If you haven't already done so, talk to us about doing your preparation now to ensure you are ready by the 1st of July.

Do you have a home office?

If you have a home office for your business, you should be able to claim some of the costs involved in maintaining, owning and using your home.

It’s important to be aware of what you can and can’t claim, and the record-keeping involved in making a claim.

How does it work?

In order to claim, the space you use must be used primarily for your business.

This doesn’t mean setting up at the kitchen table from time to time, it means having a dedicated space that you work from.

If you are selling online and storing stock, you may also be using other spaces in your house for storage or stock maintenance. Or, if you are making or creating products, you may be using other areas like your kitchen or workshop.

Costs that you might be able to claim include:

• home office equipment
• repairs to the home office or work-related furniture and equipment
• cleaning expenses
• any other day-to-day running expenses for your home office.

You may also be able to claim the costs of some trips in your car if these are from your home office to other locations where you are carrying out business.

The ATO has developed a calculator tool, to help you better understand what you might be able to claim. View the tool here.

Keeping track of your costs

Make sure you keep a record of all your expenses. It’s important to keep your personal and business expenses separate. Consider using online accounting software so the paperwork is kept in good order.

We can help you review your home office expenses to make sure these are included when you claim.

Talk to us, we can help.