Tag: daily reconciliations in Xero

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New Financial Year, New Financial Habits

Help us help you get your business financials set up right

account set up with xero online training learning course
Taking time to set up your accounts correctly at the outset and recording your reconciliations regularly will save you time, money and a nasty, aching headache!

SO WE’RE INTO THE new Australian financial year. With the start of each financial year comes the chance to right last year’s financial habits and avoid repeating them again. You know what they say about people who repeat the same actions over and over again expecting different results …

If you had a crazy end of financial year, try starting off the next 12 months (well, 11 now, can you believe it!) on a positive footing, with these good financial habits.

Check your accounting software is set up correctly

Something that causes businesses and their owners countless headaches at tax time is accounting software that’s been setup incorrectly or not set up completely. Transactions that are coded wrong or bank feeds that are connected to the wrong account — or too few accounts — can leave you in the middle of a bookkeeping nightmare come June 30.

Spend some time sorting this out, or employ a bookkeeper to get you set up correctly. It’s worth that little bit of extra time now to get it right, truly!

Aim for daily reconciliations

Reconciling your business accounts regularly is important for a number of reasons, fostering good habits being chief among them. You may not need to reconcile your accounts each day, but it’s certainly a lot easier to find 10 or 15 minutes two or three times a week, rather than two or three hours once a month. The most often you do your bookkeeper the more unlikely it is that you’ll leave it pile up, eventually requiring costly rescue bookkeeping. You’ll also have a much better picture of your business’s performance with current accounting data.

Monitor cash flow

Positive cash flow is the marker of a healthy business. Negative cash flow is not. There are plenty of seemingly profitable businesses suffering negative cash flow that threatens to put them out of business. Don’t let yours be one of them. Create your own cash flow forecast reports in Excel or use a cash flow forecasting or expense app to determine if you’ll have enough money in the bank to meet your ongoing commitments (which includes paying yourself a living wage to meet your personal commitments).

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Our cloud accounting training courses will show you how to set up your accounting software correctly. Learn how to use Xero, Quickbooks or MYOB with our online training courses and be able to invoice customers on time, reconcile your account and run financial reports, including cash flow statements. Visit our website for more information.

cashflow reports in xero and excel

Xero for less…

Our Xero online training courses include EVERYTHING for ONE LOW PRICE. Furthermore, if you select our Lifetime Membership option, you’ll have LIFETIME access to our ongoing course updates. All EzyLearn courses are accredited by the Institute of Certified Bookkeepers (ICB) and can be counted towards Continuing Professional Development (CPD) points. Find out more about our Xero online training courses. 

 

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Why Your Business Needs a Bookkeeping Procedures Manual

Documenting procedures helps keep your bookkeeping up to speed

bookkeeping procedures manual rescue bookkeeping work
Rescue bookkeeping is not ideal – it’s often expensive and shows you’re not in control. A bookkeeping procedures manual will outline what bookkeeping needs to be done, when.

IN A PREVIOUS POST we talked about how to tell when you need rescue bookkeeping, which is basically when a business is behind on its bookkeeping by three months or more and the deadline is looming to lodge their activity statements.

Rescue bookkeeping work costs more than having your bookkeeping taken care of regularly, because it’s often messy and there are no procedures in place to manage the bookkeeping efficiently.

What’s a bookkeeping procedures manual?

bookkeeping procedures manualA bookkeeping procedures manual clearly identifies the regular tasks and activities your bookkeeper needs to take each week, fortnight, month or quarter to ensure your bookkeeping is kept up-to-date. This not only gives you the peace of mind that your bookkeeper is staying on top of your books, but it also helps you to understand what’s going on with your business.

If you require regular P&L statements or balance sheets, having a procedures manual to clearly outline how frequently they’ll be created helps you to stay on top of your business’ financials.

A typical procedures manual will include:

  • Simple steps that are easy-to-understand and succinct
  • Tasks are written up in a step-by-step style, so they can be followed logically
  • References, links or examples are included to help readers understand
  • Contain a number of formats — written steps, flow charts or checklists.

Rather than leaving your bookkeeping to the last minute, so you’re always operating your business in dark, organise to have bookkeeper create a procedures manual to regularly take care of your business’s bookkeeping.

We Can Help You Find a Good Local Bookkeeper

find a local bookkeeper

We have bookkeepers, BAS agents and accountants located across Australia, available to help businesses in need of rescue bookkeeping work. Visit our online bookkeeping directory, National Bookkeeping, to find a suitable and experienced person available to work in your area, or able to work anywhere in the cloud. Alternatively, if you are a bookkeeper looking to expand your client list or find contract work, you can register and become part of our network for free. 

Go to National Bookkeeping for more information, to see our rates or to request a quote.

Online bookkeeping accounting training courses for CPD points

EzyLearn Excel, MYOB and Xero online training courses count towards Continuing Professional Development (CPD) for bookkeepers and accountants. We’ve been an accredited training provider of the Institute of Certified Bookkeepers ever since the organisation started in Australia. Find out how CPD points can be of benefit to you.

 

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When Does Your Bookkeeping Need Rescue Work?

If you’re 3 months or more behind, call in help!

find rescue bookkeeper
Hmmm, so much to do, so little time…

WHEN IT COMES TO YOUR BUSINESS ACCOUNT KEEPING, unless you’re a bookkeeper, bookkeeping is probably your least favourite thing. However, it’s also a fundamentally important part of running a business.

We provide business people with a number of courses in Xero accounting software and we know firsthand that, aside from the legal requirement to lodge regular activity statements, keeping your bookkeeping up-to-date also helps you run a more successful business. This is because it allows you to run regular balance sheets, profit and loss statements and many other financial reports that’ll give you a clear picture of how your business is performing.

However, not every business owner has the procedures in place to manage their bookkeeping regularly. It’s ok, it’s not your fault — you were meaning to, but you were busy running your business and time marched on. Now you have to lodge an activity statement, and you’ve just realised you haven’t done any bookkeeping for three months!

When you need rescue bookkeeping

If you have three months or more of bookkeeping to do before you can lodge an activity statement, then you’re in need of a bookkeeper who can perform rescue work. Some of the common bookkeeping problems rescue work covers includes:

  • Bank accounts or credit cards that don’t reconcile with statements
  • Old un-presented transactions in the bank account or credit card
  • Trade debtors and trade creditors don’t balance with the balance sheet
  • Dealing with outstanding invoices and bills that have already been paid, but still showing as outstanding
  • Incorrect previously lodged BAS
  • Incorrect information showing in payslips, tax tables, super guarantee contributions calculations, payment summaries, etc, due to payroll systems being set up incorrectly
  • Unreliable inventory figures.

Not all bookkeepers are able to take on rescue work, because it’s lumpy and it requires them to perform a lot of work in a short space of time, which can conflict with their other regular bookkeeping work.

Rescue bookkeeping is often more expensive

Because rescue bookkeeping requires a lot of manpower in a short period of time, it’s often a little more expensive than have your bookkeeping attended to on a regular basis. In most cases, you will be asked to prepay for a minimum of 10 hour’s work or however long it’s estimated it will take to get your bookkeeping up to speed.

Do you need help with rescue bookkeeping work?

find a local bookkeeper

We have bookkeepers, BAS agents and accountants located across Australia, available to help businesses in need of rescue bookkeeping work. Visit our online directory of local bookkeepers and bookkeepers who work ‘in the cloud’ at National Bookkeeping for more information. Here you will be able to see the different bookkeepers’ rates or request a quote.

Online bookkeeping accounting training courses for CPD points

EzyLearn Excel, MYOB and Xero online training courses count towards Continuing Professional Development (CPD) for bookkeepers and accountants. We’ve been an accredited training provider of the Institute of Certified Bookkeepers ever since the organisation started in Australia. Find out how CPD points can be of benefit to you.

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How to Make a Capital Purchase That Won’t Affect Your Cash Flow

A Chattel Mortgage Can Help Keep Your Business Cashflow Under Control

chattel mortgage learn xero online training course
A chattel mortgage can tide your business over without having to dip into savings.

In our Xero Daily Reconciliations Course, you’ll learn how to set up a chart of accounts, among other things such as running balance sheets and Profit and Loss (P&L) statements. For the most part, daily transaction reconciliation is pretty straightforward, until you get to a capital purchase, which, if it’s over $20,000 or was purchased prior to May 2015, needs to be dealt with differently.

In most cases, when a business purchases major assets, such as a motor vehicles, it’s known as a capital purchase, which is made via a loan. There are two types of loans the business can take out: a hire purchase loan or a chattel mortgage.

Buying assets on hire purchase

This is an agreement between you and the lender to acquire a motor vehicle. During the hire period, the lender legally owns the car and you pay regular instalments to the finance company. For tax purposes you can claim depreciation, running costs and interest paid against your business income. When you pay off the loan in full, legal ownership is then transferred to you.

Buying assets on chattel mortgage

Chattel mortgage is essentially a mortgage over goods to be financed. Chattel mortgage is classed as a cash sale in that the goods automatically become your property on purchase and the finance company takes a mortgage over the chattels.

Just as a hire purchase you can claim depreciation, running costs and interest paid, against your business income. The chattel mortgage allows businesses to claim the full input tax credit from GST incurred expenses immediately (next BAS statement).

Chattel mortgages are more popular

Chattel mortgages became popular when BAS and GST was introduced, because businesses could claim the GST at the time of purchase, whether they ran a cash system or an accrual accounting system. Plus, under a chattel mortgage, the allowable depreciation and interest payment are also tax deductible.

How capital purchases affect cash flow

If a business doesn’t take out a loan to make a capital purchase, it will have to dip into its savings, which can adversely affect cash flow, especially on big ticket items. Taking out a chattel mortgage, however, helps to keep cash flow under control because the business can borrow the funds (and claim the interest back as a tax deduction) without any major impact on cash flow. You will also then be able to factor the repayments into your monthly forecast projection.

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You’ll learn how to record an capital purchase, whether it’s been bought on hire purchase or a chattel mortgage, in our Xero Daily Reconciliations Course. You can find out more or enrol today.

Xero online training course

At EzyLearn we offer many online training courses to help you up-skill and find employment.

Choose from our range of cloud-based online accounting software courses, to business start up and management courses, to marketing and sales courses, or update and further your skills in a range of Microsoft Office programs (Excel, PowerPoint, Word) or social media and WordPress web design. 

 

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Which Transactions Affect Balance Sheets?

Avoid Any Nasty Surprises: Balance Sheets Matter!

EzyLearn Xero Balance SheetA business’s balance sheet is a snapshot of its financial position at a particular period of time, which is not to be confused with a profit and loss (P&L) statement. Unlike a P&L, which just shows whether the business is making a profit or loss during a given period, a balance sheet, will eventually, show nearly every activity that has occurred within a business.

However, there are some transactions that will show up immediately. You’ll learn how to run a balance sheet in our Xero Daily Reconciliations Training Course, but we wanted to show you the transactions to look out for and why.

profit and loss statement xero online training course
A balance sheet reveals the nitty gritty of your business’ transactions.

The purchase or sale of assets

When an asset, such as a car, is bought, it will reduce the cash account and increase the fixed-assets account. Both of these accounts are listed in the asset portion of the balance sheet, however, cash is part of the current assets section and fixed assets are part of the long-term assets section.

When an asset is sold, the way the cash is accounted for is a bit more difficult. Here, both the asset’s book value and any accumulated depreciation are removed from the books at the same time that the cash account is increased by the sales price. If the sales price does not equal the book value, the difference is accounted for as a gain or loss on the sale of equipment. This gain or loss is recorded on the P&L statement.

Purchases on credit

When a business purchases supplies or inventory on credit, the business will debit the asset account (supplies or inventory) and credit the accounts-payable account. Almost always, accounts payable are considered to be current liabilities and are shown at the top of the liabilities section of the balance sheet.

Debt and lease arrangements

When a business issues debt or enters into a leasing arrangement, a liability must be recorded in the long-term section of the company’s balance sheet. For example, if a company issues bonds for cash, the company would debit cash and credit bonds payable in the simplest bond-issuance scenarios.

Capital-lease transactions affect the balance sheet in a similar manner. When entering a capital-lease arrangement, the business will debit a fixed-asset account to show that the company has taken economic possession of the leased asset. At the same time, the business will credit a capital-lease obligation account to show the offsetting economic liability.

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For a balance sheet to be correct, you must code each transaction correctly in your accounting software. Our Xero Daily Reconciliations Training Course covers balance sheets, and much, much more. Why not enrol today?

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Online bookkeeping accounting training courses for CPD points

EzyLearn Excel, MYOB and Xero online training courses count towards Continuing Professional Development (CPD) for bookkeepers and accountants. We’ve been an accredited training provider of the Institute of Certified Bookkeepers ever since the organisation started in Australia. Find out how CPD points can be of benefit to you.

 

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Basic Bookkeeping Reports in Xero: Profit and Loss

Learn How to Run a P&L Using Xero

Profit and Loss statement
Profit and loss statements should be run by businesses regularly and are required by law.

A basic, yet vitally important, report for every business owner is a profit and loss (P&L) statement. A profit and loss statement, as the name suggests, shows whether a business is running at a profit or a loss over a given period. We’ve written about why running multi-period P&Ls before in QuickBooks and MYOB is a good idea for businesses with inventory, but single period P&Ls are equally important for all businesses.

If you’re a bookkeeping newbie, a profit and loss statement, which sometimes goes by other names — income statements, earning statements, revenue statements, operating statements, statement of operations, or statement of financial performance — is a basic report you’ll learn to run in our Xero Daily Reconciliations Course. If you’re planning to work as a contract bookkeeper, you should get in the habit of running P&L statements for your clients regularly (if you’re a business owner, ask your bookkeeper to run them).

P&Ls are required by law

Depending on how a business is structured, it may be required by law to complete a P&L. A P&L shows how the revenue of the business is turned into net income by subtracting all expenses from income. They’re also useful for understanding a business’ net income, which helps with the decision making processes. A business will also need a P&L if they’re applying for a small business loan.

The contents of a P&L

profit and loss statements P&LsAlthough the process of running a P&L differ between accounting software packages, they usually all contain the same elements, depending only on the business itself. In the first section, the cost of sales is subtracted from the revenue, which highlights gross profit. The business’ operating expenses are then subtracted from the gross profit, which leaves the operating profit. Now, all of the non-operating revenues and expenses must be factored into account, after which the business’ profit or loss will be displayed.

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Because P&L statements are often used by a business’ owner to make financial decisions, to inform shareholders of the business’ performance, apply for a business loan, or as proof of income in the sale of a business, it’s important that you understand how to create one correctly. Our Xero Daily Reconciliations Training Course covers P&L statements, and much more. Visit our website to learn more or to enrol.

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online bookkeeping courses to earn cpd points

 

Did you know that EzyLearn Excel, MYOB and Xero online training courses count towards Continuing Professional Development (CPD) for bookkeepers and accountants?We’ve been an accredited training provider of the Institute of Certified Bookkeepers ever since the organisation started in Australia. Find out how CPD points can be of benefit to you.