Bookkeeping Services
(what you need to know)
When seeking bookkeeping services , we believe it’s important to understand how to avoid costly mistakes and to understand the answers to these two important questions…
1) What Are the Services of Bookkeeping?
And…
2) What Exactly Does a Bookkeeper Do?
Let’s start with our…
Top 3 Bookkeeping Mistakes You Want to Avoid:
1) Annual Tax Review – Versus Quarterly Tax Review…
Lots of business owners get caught out with tax bills they weren’t expecting. This is because its very often an after-thought and its not calculated & recorded in the accounts as its building throughout the year.
Sure, instalments are often paid on your BAS but in many cases this is not enough, (& sometimes its too much). At Proactive Edge, we review your tax position at least every quarter, record an estimate in your accounts, & let you know so it’s never a surprise when your assessment comes.
We refer to this as - Provision for Company Tax – so you’re all covered.
It’s also relevant for PAYG payments
How To Successfully Vary Your PAYG Payments To The ATO…
PAYG payments are made in advance.
Any payments made in advance can be problematic. In the case of PAYG, the ATO set how much it is and it’s based on the last lodged tax return.
So its not always in synergy with how your business is tracking & what your tax bill will be for this year. This can lead to unnecessary, costly surprises and frustration.
That’s why we check it every quarter. If its way over or under, then we can vary it.
How?
On your behalf, we give the ATO a good reason and we advise the ATO on a more realistic figure.
2) Cash Reporting Versus Accrual Reporting
Accrual reporting: It really just means there’s more data being recorded so your profitability position is better understood leading to less surprises and more accurate decision-making.
Cash reporting may seem easier (and it is) – but it can end up being quite costly as a result. The time it takes it accumulate the info required for Accrual reporting is a cost that we believe most often has a great return
Here’s a list of some items not covered in cash reporting…
- The Cost of Annual Leave Liability.
- The Cost of Sick Leave Liability.
- The Cost of Long Service Leave Liability.
- Doubtful Debts.
- Accumulated Depreciation.
Not to mention…
There can be prepaid costs that don’t show up as a monthly cost. Examples of this would be…
- Prepaid Rent
- Prepaid Insurance,
- Work in Progress
- Prepaid Workers Compensation
- Other Prepayments
- And more.
We like to move income & expenses to the periods that they occur in, rather than leave them in the month they are paid.
This is especially helpful to…
- Know whether you are hitting your targets/forecasts.
- To understand what’s happening in your business much more accurately.
- Clearly make informed, smart decisions.
3) Mistakes & Omissions:
Unfortunately many bookkeepers see their role, in providing bookkeeping services, as simply transferring data from one place to another.
Because this lacks awareness of what these numbers actually represent mistakes and omissions can be frequent and the costs can be very high.
We’re not talking about incidental errors here. These are the types of mistakes and omissions that…
Mislead you into thinking you are in a better or worse position cash-wise or profit-wise than you really are.
Mean you are not charging enough to cover your costs & make a decent profit.
May cause an employee to go to Fairwork & complain.
May cost you in penalties, interest & reputation.
Will shock you, frustrate you, catch you out, cause stress & sleepless nights.
Whenever we provide bookkeeping services, we are sure to do so much more than log the transactions and move the data. We know the importance of these numbers.
We are trained to recognise nuances and inconsistencies that represent these sorts of errors and or omissions. We understand our role is not just bookkeeping. Those numbers are the evidence of where your business is at.
We’re adamant to be certain the data is not just properly recorded – that it is also properly assessed and the knowledge you need from this assessment transferred to you in a timely and professional manner.
Let’s now quickly answer those two additional questions…
1) What Are the Services of Bookkeeping?
The answer to this question varies depending on who you speak to. Let’s break it down into small pieces.
Let’s start by explaining what you should expect your Tax Agent/Accountant to do.
Tax Agents are more focused on the bigger picture than the detail, as well as tax compliance.
-They are usually not capable of performing a bookkeepers role, nor do they want to.
Bookkeeper’s records enable Tax Advisors to do their job.
Good bookkeeping enables Tax Advisors to do their job more efficiently.
The list of what a Tax Agent/Accountant does would include…
• Yearly Financial Reports for Tax Purposes• Yearly Tax Returns.
• Tax Planning & Advice.
• Periodical or Adhoc Financial Reviews & Advice.
• ASIC Record Keeping.
• Succession Planning.
• Super Audits.
2) What Exactly Does a Bookkeeper Do?
They are Detail Oriented and handle day to day tasks of recording & organising financial transactions.
They maintain complete records of all money that has come into and gone out of the business, in a consistent way.
Carry out instructions from the Financial Controller / Accountant.
Designed to generate data.
Good bookkeeping produces good data which is necessary for everything else.
Good Bookkeepers Can Become Great Bookkeepers
Under the Guidance of a Controller.
The List of What a Good Bookkeeper Does…
1) Post debits & credits.
2) Bank Reconciliation.
3) Produce Sales Invoices.
4) Accounts Receivable Management.
5) Accounts Payable Management.
6) Managing accounts email.
7) Pay bills
8) Payroll.
8) Employee Leave Tracking, Superannuation & Workers Comp.
9) Basic Reporting
10) Chase Debtors
11) Payroll Tax
12) BAS Agent Tasks / the BAS as well as IAS & TPAR
The Following are Typically Only Done if Under The
Guidance of an Accountant or Financial Controller
and this is what makes a GREAT Bookkeeper
We have found this to be incredibly valuable, perhaps even profitable for business owners. This then helps the bookkeeping service to pay for itself.
We believe this should be the goal – bookkeeping ends up being an accelerant to cashflow so it’s not seen as an expense, rather a tremendous cashflow asset to the business.
Once again, this is because we understand small business and would love to be your Sydney bookkeeper…
12) Provision for Leave payable entries.
13) Provision for Tax due entries.
14) Depreciation entries.
15) Entries for - Chattel Mortgage, Premium Funding & Prepaid Expenses.
16) Work in Progress
17) Keeping Debtors & Creditors in check.
18) Due Dates Monitoring - ASIC & Wkrs Comp, Insurances, Licences etc., Systems.
19) Review of Accounts & Troubleshooting Anomalies.
20) Aligning account file with Tax Agents year end financials (ie entering their adjusting entries so accounts are always accurate).
21) Supporting Recons & or documentation for everything.
22) Managing deadlines (Includes required Follow Up)
23) Project Reporting