Tag: Xero daily reconciliations

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Using Excel for Client Databases

Excel does great CRM

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Managing large amounts of client and business data is not only possible, but also something you can learn fast and with ease with the help of our comprehensive range of online Excel training courses – covering all skills levels.

MICROSOFT EXCEL IS THE most widely-used spreadsheet application in modern computing. It’s ubiquity means most people use Excel on a regular basis, despite never having had any formal training in its many, many, MANY functions.

While updating the content for our Excel training courses recently, we were reminded of just how powerful Excel remains, and in particular, how useful it is for small businesses.

With its 2013 release, Excel got a serious update, which made it the perfect application to create and manage client and customer databases. Although there are many CRMs available on a subscription that provide the same functions of a database created in Excel, just in a more visually appealing format, they often lack reporting and analysis functions, requiring you to export your data in a Excel sheet anyway.

Flat file databases

Excel’s original ‘flat file’ database still remains the easiest and most basic database to set up and manage, and depending on your business and how you’ll use your database, a flat file database may be all you’ll ever need. If set up correctly, a flat file database will allow you to easily import your customer data into Word, your accounting software, an email marketing service, and so forth.

Relational databases

A relational database is a database that’s structured to recognise relations among the information stored in them. Microsoft offers a relational database program, called Access, which is available with Microsoft Office Professional or higher, or can be purchased separately.

Alternatively, you can create your own relational database in Microsoft Excel, providing you have the 2013 version or newer. When Excel got its update in 2013, it became easier to link charts and cells and to perform searches — all essential features if you’re working with large amounts of business data.

Correct Excel set up is crucial

Once Excel has been set up, it’s as easy as it is powerful to use. Of course, the key is to set it up correctly, so you can avoid errors or having to re-enter large amounts of data to make the format suit another third party software application.

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Creating and managing databases is included as part of our Advanced Microsoft Excel training courses — and you receive access to ALL OF OUR COURSES, including ALL SKILLS LEVELS for ONE LOW PRICE. You can even start your Excel journey with our FREE Beginners’ Excel Course Workbook. Read more about our beginners’, intermediate and advanced Excel training courses on our website, or enrol to start learning by 5pm tomorrow!

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Learn Microsoft Excel from scratch or brush up your Excel skills, at your own pace, with our affordable Excel online training courses — where you get THE LOT (that’s 9 courses in total) for ONE LOW PRICE — everything included! Volume corporate discounts are available and our courses count towards CPD Points.

 

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What to Do When You Have More than One Income Stream

Why it’s important to track your income streams

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It can be easy to lose track of separate income streams; Excel is a great tool for monitoring which work your income is coming from.

IF YOU’RE AN INDEPENDENT contractor, or you’re a full-time employee about to start up a side business, then you need to be able to keep a good track of all your income streams. There are a couple of reasons for this and both of them relate to tax.  Continue reading What to Do When You Have More than One Income Stream

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A Close-Up Look at a Listed Company and How it’s Performing

We show you what financial data really reveals

how to read financial reports
There’s more to profit and loss than meets the eye: Sometimes a company’s losses outweigh its revenue, but it doesn’t mean that company is in a bad position.

AS A BUSINESS OWNER you’ll need to run regular financial reports (never more so than at the end of financial year) to ensure your business is in good shape. Understanding what each element of a financial report means is critical to your business’s financial health.

You’ll learn to run and interpret financial reports in our Xero, MYOB and Quickbooks training courses, but we’re just going to look at a couple of areas of most importance.

Close up: BuyMyPlace’s financial results

BuyMyPlace is an ASX-listed service that allows property owners to sell their properties without a real estate agent. Because it’s a publicly-listed company, they have to make all of their financials public too.

As such, we got hold of their most recent financial results for the first half of financial year 16/17.

It’s not the most detailed financial report, probably because the company itself is still in its early stages — there’s actually a good argument against early stage ventures listing on the stock exchange, but that’s fodder for another post.

Revenue vs. losses for the period

The good news for BuyMyPlace is that its revenue increased 129 percent on the prior comparative period (PCP) to $1 million for H1 FY16/17, up from $133,518 in H1 FY15/16.

That’s an impressive leap in revenues in just 12 months, however, the BuyMyPlace financial results also reveal that the business made an even greater loss of $1.7 million, an increase of 1205 percent on the PCP.

A closer look at the report shows that, while the losses increased more than a thousand percent, it was due to an increased investment in marketing and advertising — principally on TV spots which totalled $517,723 compared with $98,578 the year prior.

This resulted in an 80 percent increase in the number of listings on the site (that is, the number of people using BuyMyPlace to sell their home), while order value increased 27 percent (people who were choosing more expensive packages).

BuyMyPlace is in good health

Although this business recorded losses that outweighed its revenue, BuyMyPlace is still in good financial health.

The report also shows that it has over $4 million in cash and cash equivalents, and only a little over $600,000 in liabilities. Although the liabilities have increased, it’s not due to taking on any additional debt — indeed, BuyMyPlace has paid down all of its loans — but was instead due to a 786 percent increase in staff salaries and, as a consequence, an increase in staff provisions and benefits — i.e., sick and annual leave.

Strategy for future growth

Not many homeowners actually want to sell their properties themselves — one estimate puts it at around 7 percent of the total number of homeowners. However, most people do want greater clarity around how the process works (including fees and commissions) — even if they still want assistance selling their homes.

Perhaps realising this, or perhaps in response to increased competition in the fixed-fee real estate services (see: Purplebricks, Settl, etc), BuyMyPlace also launched its own full service package, giving homeowners access to a real estate agent to sell their home for a fixed fee.

This will enable BuyMyPlace to capture a greater volume of homeowners, who are looking for a low cost alternative to sell their homes, but who don’t want to do it entirely themselves.

The other strategy for growth: increasing listing depth revenues.

At some point, BuyMyPlace will stop growing its market share. Or, in other words, the market of people looking for a low-cost option to sell their home will be tapped out.

But as a business, and as a publicly listed one, BuyMyPlace will need to keep growing its revenue, not merely keep it steady. It’ll need to do as other real estate services, such as REA Group and Domain have done, and increase listing revenue depths, by selling more expensive packages to customers.  

BuyMyPlace will need to find additional value it can sell to customers, without necessarily increasing its own expenses to do so — or putting up its prices, which a business can usually only do once it’s cornered about 65 percent of the market, and BuyMyPlace is a long way off that yet.

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That’s a lesson for every business owner out there. And it’s something we cover in our online Business StartUp Course.

You’ll learn how to run and understand the financial reports for your business in our Xero and MYOB training courses. You can also learn about strategies for business growth in our Business StartUp Course. Or for more information, visit our website.

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Learn Microsoft Excel from scratch or brush up your Excel skills, at your own pace, with our affordable Excel online training courses — where you get THE LOT (that’s 9 courses in total) for ONE LOW PRICE — everything included! Volume corporate discounts are available.

 

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Keeping Tabs on those ‘Little’ Monthly Expenses

Why Excel is Great for Keeping Track of Your Spending if You’re Self Employed

excel online training course using excel for monthly expenses sheet
That take away coffee that you buy each morning should be added to your business expenses sheet; even if not claimable it shows where your money is going.

WHETHER YOU’RE ABOUT TO start your own bookkeeping business, or whether you work as an independent contractor (even if you’ve been doing this for a while), it’s really important to know how much you’re spending each month.

Your Xero, MYOB or QuickBooks accounting software will help you with some of this, but the very best way is to create an expense or spending sheet in Excel — which we teach you how to do in our Excel training courses — as this gives you a far more detailed look at your expenses and spending.

Not all your expenses are 100% business ones

Sometimes you can’t claim 100 percent of your expenses as business ones — the costs of running your car, home internet, rent, utilities, etc — but you should nevertheless keep track of your spending on these items because it will affect your cash flow.

That’s why keeping an Excel spending or expense sheet is a good idea for contractors and home-based business owners. You don’t want to enter your home internet into your accounting software as a business expense, if only 30 percent of it is used for business purposes, but you still need to keep track of it, so you can manage your cashflow.

Monitor frivolous spending

One of the things we love about using Excel to track your expenses and spending is that every little expenditure is right there, in plain view.

This isn’t the case with Xero or MYOB or other accounting software. Your expenses are hidden away, and you have to run a report to get a good breakdown on where your money is going.

Not so with Excel,. If you buy a coffee every morning, it’s right there, in a category you can label as “coffee”.

Now, we’re not saying that coffee is frivolous. Far from it. Many of us need coffee just to function (!) but there are lots of small things we spend money on every day, week, month that add up. When you’re self-employed you need to keep an eye on these “little” things.

Sometimes, you’ll find that you’re spending lots of money each month on subscription services that you’re not even using. Eliminating $15 a month here and there makes a big difference.

Create as many categories as you need

That’s the other great thing about using Excel to track your spending: You can create all the expense categories you like.

Of course, not everyone wants to track each and every expense right down to their last bag of jelly beans — that actually would be a little ridiculous — and for most the most part, you can lump your groceries into a category for discretionary spending, but there are some things you might want to separate out — movie tickets, money spent on lunches and dinners, and so forth.

These things tend to add up, and if you want to keep an eye on them, separating them out is the easiest way to do that.

Back to those business expenses

Each fortnight or month or however regularly you complete your bookkeeping, you can easily add in those business expenses into your accounting software — or your bookkeeper can.

Remember, if you spend $60 a month on internet, but only 30 percent of its use is for business purposes, you should only add $18 a month as a business expense in your accounting software. In your Excel expense or spending sheet, however, you’ll put the full $60 in, as you need to have the money in the bank to cover this expense each month.

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You can learn how to create and manage your expenses or spending in our Excel training courses, where you’ll be able to create your own spending or expense sheet. Visit our website for more information.

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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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Marketing for When Your Business Strategy Changes

Where lead generation services are useful

lead generation services
Using a dedicated lead generation service can be more useful than advertising but the quality of the leads may be questionable.

CHANGING YOUR BUSINESS STRATEGY to include additional services will require an additional investment in marketing if you are to make this successful. In terms of simply paying money to advertise your additional services, as you’re probably already aware, advertising doesn’t always yield immediate results. Therefore you might consider spending money on a lead generation service.

We cover how to account for marketing and lead generation costs in our Xero training courses, which includes a new workbook that looks at what to do when your business strategy changes. Continue reading Marketing for When Your Business Strategy Changes

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When Your Business Strategy Changes

There are websites that make it easy to change your business name

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Having a plan rather than changing your business strategy in an ad hoc fashion, ensures greater success of your business going forward.

PLENTY OF BUSINESS OWNERS change their business strategy, but what makes this successful? We say, above all, planning and a willingness to change the ordinary operations of your business. In a new workbook contained in our Xero training courses, we take you through the steps you would take in Xero to affect a change in business strategy.

In this blog post, we’re going to look more generally at some of the things you might need to do if you were making a change to your business strategy — even before you would start making these changes in your accounting software.

Business name change

A change of business strategy and direction may warrant a business name change. As a basic example, a builder who begins offering plumbing, electrical, and handyman services should change their business name from John’s Building Services, for example, to John’s Building and Home Maintenance Services.

If considering a business name change, visit the ASIC website. There you’ll be able to register a new business name and make sure one you’re thinking of doesn’t already exist. ASIC doesn’t allow you to update or change your business name, but provided you’re operating your business under the same structure — i.e., sole trader — there’s no limit to the number of business names you can register and assign to your ABN.

In April this year, the business.gov website launched a new Business Registration Service, which although still in Beta, allows you to easily and quickly apply for a business name, ABN, company, and tax registrations for free. At the moment it’s only available for new businesses — whether they’re sole traders, partnerships, companies or joint ventures — but it’ll soon be rolled out to existing businesses, trusts, and superannuation funds.

Registering for GST

Many contractors don’t register for GST because they do a combination of contract work on their ABN and TFN. Provided their business doesn’t generate $75,000 per year or more, they won’t have to register for GST, even if they do earn more than that by also working as a contractor on their TFN.

If the change in business strategy means your business is going to generate substantially more than $75,000 per year, or even if your suspect it may get close to it, you should register your business for GST.

You can register for GST via the ATO’s Business Portal. Registering for GST does mean your business will need to lodge regular business activity statements. This is additional compliance that can yield fines for late or inaccurate lodgements.

If you’d like to try and defer registering for GST for as long as possible, run a profit and loss statement in Xero and compare your current revenue with the estimated additional revenue your new business strategy will generate.

If there’s good, safe margin between your projected income and the $75,000 GST threshold, you can hold off.

You can learn what you need to implement the financial side of your changed business strategy, plus how to run profit and loss statements, complete and lodge business activity statements and much more in our Xero training courses. For more information, visit our website.

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At EzyLearn you can choose from a range of XERO online courses, depending on your skill level — or you can access ALL courses for ONE LOW PRICE. All our 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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EOFY: Remember to Deduct Your Prepaid Expenses

The Cut-Off for Claiming Deductions is Looming

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Dive deep into your claimable expenses and don’t forget all those smaller prepaid expenses like magazine subscriptions or domain name registrations – you can only claim all of these during the period in which they occurred.

WE’RE IN THE LAST QUARTER of the 2016/17 financial year, so now is the time to dive in deep and check you’ve included every single business expense — prepaid or otherwise — to ensure all your expenses are in order.

We’ve previously posted about writing off stock and inventory and the reports you’ll need to file your activity statements and tax returns: all of these you’ll learn how to run in our MYOB BAS Reporting and GST online training course or our Xero GST, Reporting and BAS training course.

Expenses reduce your taxable income

We all know this, but remember, they can only be claimed for the period in which they occurred. If you forget to claim a major business expense in the financial year that it occurred, you can’t make it up by claiming it the next year.

It’s really important you thoroughly check your credit cards and business accounts to make sure you’ve accounted for each expense. The final quarter of the financial year is also a good time to make any purchases for your business, because you can claim them straight away.  

Prepaid expenses are often forgotten

what are some claimable expensesMagazine or journal subscriptions, domain name registrations, business name registrations, car registrations, website fees, insurances — collectively they add up, but they’re also the easiest to forget.

These deductions are often prepaid and may not come up on your radar and may certainly not show up on your final quarter bank statements.

Make a list and check it twice

Over the next month or so, make a list of all of your expenses as you think of them. This makes it easy to spot them when you’re going through your bank and credit card statements and checking them against the expenses in your accounting software.

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Learn how to run the reports you’ll need for EOFY with our MYOB BAS Reporting and GST online training course or our Xero GST, Reporting and BAS training course.

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Want to make your business presentations and publications more eye catching? 

Gone are the days of excruciatingly dull PowerPoint slide presentations. Nowadays PowerPoint is the hidden gem used to generate animations, videos, movies, advertising and graphics. It’s a great ally to the marketer or social media person in your organisation.

This creative program can also be used to conjure up the most beautiful and modern pictorial slides to enhance any presentation or induction. Find out more about our 2016 version PowerPoint courses. 

 

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EOFY: Organise Your Reports and Records

We Show You The Reports to Generate Now for End of June

profit and loss statements P&Ls
Now’s time to take stock of the reports that need to be generated to keep you GST and tax compliant.

THE LAST QUARTER OF the 2016/17 financial year is upon us, so now is the time to organise your reports and records; including Profit and Loss Statements, Accounts Receivable and Payable, PAYG and Super payments. We’ve previously written about writing off stock and inventory and getting your business expenses in order. In this post we’ll take a look at the reports and records you’ll need for EOFY, which you’ll learn how to produce in our MYOB BAS Reporting and GST or Xero GST, Reporting and BAS training courses.

Profit and loss statement

Depending on the structure of your business, you may be legally required to include a P&L statement with your tax return or activity statements. Your tax agent will be able to advise you if your business will be required to file a P&L, which  requires all of your bookkeeping to be up-to-date before you can run it.

Even if you don’t have to file one with your activity statements or tax returns, it’s still a good idea to run a P&L for your own sake. A P&L statement identifies whether your business has made a profit or loss and which accounting period these occurred.

Accounts receivable, payable

Find out who owes money to your business and to whom your business owes money. This is obviously part of the credit management process, which any good business will have in place already, but it’s a good idea to keep a steady eye on what’s coming in and what’s going out as EOFY approaches.

PAYG, superannuation

The end of each quarter brings a lot of PAYG and superannuation reporting, but EOFY brings a double whammy of activity statements tax returns and PAYG and superannuation compliance. You’ll need to run these reports so your bookkeeper can complete the payroll component of your returns.

Inventory stocktake

If you sell goods, you’ll need to complete a stocktake of your business’s inventory so that any missing stock can be written off, and to ensure you’re starting a clean slate for the new financial year.

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Learn how to run the reports you’ll need for EOFY with our MYOB BAS Reporting and GST online training course or our Xero GST, Reporting and BAS training course.

Xero online training course

At EzyLearn we offer 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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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.

 

 

 

 

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Use DropBox to Store Your Tax Records Digitally

In a previous post I suggested it’s a good idea to create a digital filing system for your business receipts and tax records. Storing tax records digitally is not just a space saver — it’s also an efficient way to share information with your accountant and bookkeeper, especially if you’re working with a remote bookkeeper, as it’ll speed up the process.

Our Xero Bank Reconciliations and Journal Entries Course will also show you how to record these transactions in Xero. 

Continue reading Use DropBox to Store Your Tax Records Digitally
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How and What Kind of Receipts Do You Need to Keep?

Xero course online receipt keeping

Online Receipt Keeping is the Way to Go

A HUGE PART of reconciling your bank account involves coding business expenses or purchases. You then need to keep a record of those expenses in the event you’re ever audited.

Our Xero Bank Reconciliations and Journal Entries Course covers how to code an expense or purchase in Xero, and it’s important to also store your receipts and get them to your bookkeeper if they’re working remotely.

Many people have used Dropbox to capture images of receipts but there are even better ways. Continue reading How and What Kind of Receipts Do You Need to Keep?