Veechi Curtis

Cheat Sheet / Updated 04-07-2022

A great bookkeeper cares that the financial statements make sense and gets upset when something doesn’t balance or stuff goes missing. They also feel responsible when it comes to getting customers to pay on time. A good bookkeeper, in other words, is worth their weight in gold. This Cheat Sheet summarizes what you need to know to be an excellent bookkeeper.

Article / Updated 03-26-2016

How do you picture your bookkeeping business? Are you content pursuing a small, home-based, part-time business, or do you want to grow your business to become a self-sustaining enterprise, independent from you? Bookkeepers tend to follow one out of three different paths with their business (or occasionally all three paths, one after the other): A simple owner-operated business providing bookkeeping services. This kind of business has no employees and the owner often works part-time hours. An owner-operated business where the owner does most of the bookkeeping services but employs some casual or part-time assistance to help with office admin. A business built by the owner that has a life of its own, where employees or subcontractors provide the bulk of the bookkeeping services, and the owner is more in a management role. Ultimately, the owner may even seek to create a franchise. Which path do you want to take? Small owner-operated businesses can provide huge flexibility — you may have major family commitments or a day job that takes up much of your time. However, building a business so that it can operate without you is the only way forward if you want to generate profits that aren’t directly dependent on you and the hours that you work. To grow your business, try to give the visionary spirit within you some room to breathe. Spend time thinking about how you can grow your business and create something that has a life of its own. Define what it is that makes your business different. Maybe clients come to you because of your accounting software skills, maybe you have specific skills in a particular industry, or maybe you have a strong shopfront location. If you can figure out why you’re successful, and measure how much difference this strategy makes to your business, you’re well on the way to being able to replicate your success and grow your business. Keep pushing yourself to think of your business as being separate from you. Instead of thinking about how much time you have available and whether you can take on any new clients, start thinking about how to build your business until you have so much work that you have no option but to take on employees. Instead of rushing from job to job, spend time analysing the way you work and what you do best. Another thing to consider is consistency. Consistency is one of the secrets to business expansion. To guarantee consistency, you need to set up procedures and documentation. Checklists, complaints procedures, customer service procedures, email templates, good presentation and standardised rates are all part of creating a consistent experience for your customers. The transition from owner to entrepreneur can be really exciting. Do you have a specific financial goal or a certain time frame? If not, spend some time thinking what this goal might be, and then building your business plan around this goal. Freedom from the shackles of the daily grind provides an opportunity to do the other things in life that have only been dreams up until now. Good luck!

Article / Updated 03-26-2016

So you’ve made a mistake on a Business Activity Statement (BAS) that you’ve already lodged with the tax office. Don’t despair! Correcting this kind of mistake is surprisingly easy. Usually, the best approach is to simply adjust your next activity statement, adding or subtracting the Goods and Services Tax (GST) to the boxes where the amounts belonged in the first place. However, you’re only allowed to make an adjustment in this way if you meet certain conditions If you reported for GST on sales incorrectly or overclaimed for GST paid on purchases. You can only fix these kinds of mistakes on current activity statements if you do so within 18 months of the period in which that mistake belonged. In addition, if the mistake (or the net combined value if you’re correcting more than one mistake) increases your GST payable, the limit to the value of your final adjustment must be $10,000 or less (assuming you have a turnover of less than $20 million). If you underclaimed for GST paid on purchases. If you didn’t claim for GST on a purchase, then you can fix this mistake on a current activity statement if you do so within four years from the date of that mistake. Happily enough, there’s no limit on the value you can claim. The benefit of correcting GST errors on a current activity statement (as opposed to lodging a revised BAS for a previous period) is that you’re not liable to any penalties or interest on underpaid amounts. So how do you adjust a current activity statement for a mistake in the past? Imagine you realise that you missed claiming the GST on a supplier invoice. The invoice was for $1,100, including $100 GST. All you have to do is add $1,100 to the value that you already have in G11 (non-capital purchases) and add $100 to the value you already have in 1B (GST on purchases). The same principle applies if you make a mistake with a customer invoice, except that you adjust G1 (total sales) and 1A (GST on sales). If you need to lodge a revised activity statement, by far the easiest method is to lodge this revision online, assuming you’ve registered with the ATO online portal. (And if not, don’t delay — go to Australian Taxation Office and follow the prompts for online registration.) Alternatively, you can phone 13 28 66 to obtain an activity statement revision form through the post.

Article / Updated 03-26-2016

One of the big changes in accounting software in the last couple of years (whether cloud-based or desktop-based) has been the introduction of bank feeds and bank rules. These two features combined can serve to automate an enormous amount of data entry. With bank feeds, all transactions appear automatically in your accounts, without you having to enter anything. With ‘rules’, these transactions are also coded automatically to the correct accounts. All you have to do is approve the way the software allocates each transaction. This figure shows how the concept works. (This example uses Xero, but the principles are similar whatever software you use.) On the left side, you can view all the transactions from the bank statement the moment you log on. On the right side, you can see how Xero ‘guesses’ how these transactions should be allocated. Credit: Screen capture from Xero used with permission. © Xero Limited and affiliates, 2014. Xero® is a registered trademark of Xero Limited. Xero does this by applying bank rules that the bookkeeper sets up as they go along. In the figure, for example, the bookkeeper has created a rule stating that all payments made to MCO Cleaning should be allocated to Cleaning Expense. All you have to do in this scenario is review the transactions and either click OK if Xero has guessed how to allocate the transaction correctly, or edit the transaction allocation if necessary. You can see the crucial role that bank rules play with this kind of bookkeeping. With this in mind, here are some tips to help you get bank rules working the way they should: Take care when naming bank rules and name rules so you can find them easily in the future. For example, with rules for bank withdrawals, it’s a good idea to include both the supplier name and the type of expense. With most software, you can usually choose between creating a rule that runs on one bank account only, or that runs on all accounts. Unless you have a good reason otherwise, set up your bank rules so that they run on all accounts. Usually it works best to create rules directly from the bank reconciliation of bank feed approval screen. This way, the software second-guesses what the settings for this rule should be. Try and keep rules broad, rather than really precise. For example, a rule that says any payment that contains the word ‘Telstra’ should be allocated to Telephone Expense is going to work in more situations than a rule that looks for the exact phrase ‘Telstra Account 092834’. Remember that rules can do a lot of the hard work for you. For example, most software allows you to split transactions across multiple accounts meaning that you could, say, allocate 80 per cent of your Telstra payment to Telephone Expense and the remaining 20 per cent to Personal Drawings. Check all your general ledger accounts have the correct default GST tax codes applied to them. Otherwise, depending on the software, your bank feeds may automatically post to an account with the wrong GST allocation. Bank feeds import data in slightly different ways, depending on the bank. For example, the bank feed from one bank may show a payment to a supplier with the supplier’s name in the Description field, but another bank feed may show the supplier’s name in the Payee field. Avoid creating a rule for each scenario, but instead create a rule that codes all payments that have the supplier’s name in either the Description or the Payee field to the relevant expense. Keep an eye out for duplicate rules. Duplicate rules can confuse how transactions are allocated. Bank rules aren’t perfect! Don’t blindly accept how your accounting software allocates each transaction but instead, double-check how rules are applied and ensure that the right accounts are selected, every time.

Article / Updated 03-26-2016

If you are the bookkeeper responsible for recording employee pays, then it’s inevitable that before long, you’re going to have to deal with an enquiry from an employee about their pay. Some enquiries may be quite routine in nature, but others can be more complex. Remember that payroll can be very sensitive and in some situations, employees may even perceive any mistakes that you make as being personal. Your job is to not take any criticism to heart, but instead remain calm and tactful. If you’re in any doubt as to what’s the right course of action, seek the advice of your manager. The other thing about dealing with payroll enquiries is that you have to be right across the detail of each employee’s award. Ensure you always have a copy of the latest version close to hand and if there are any clauses you don’t understand, seek advice from Fair Work Australia. With all of this in mind, here’s how to deal with a payroll enquiry. If an employee queries their pay, make a note of their enquiry as well as the date. If you find there’s a mistake, particularly if you’ve underpaid, make a payment for the shortfall as soon as possible. Document any payroll adjustments, along with notes about what action you’ve taken, and contact the employee to advise them of what you’ve done. When recording your adjustment, note that some software allows you to delete employee pays and re-enter them. However, if you’ve already paid an employee and given them a pay slip, you’re best not to delete the pay that related to that pay slip. Instead, you’re best to make an adjustment in the employee’s next pay, or do a completely separate pay for the adjustment. Also, some software accrues leave with every pay transaction. If you make a one-off adjustment for a pay, chances are this adjustment doesn’t accrue extra leave. Make sure you override the leave settings so that the employee’s leave isn’t affected. Don’t be too disheartened if you make a mistake. Payroll is complex and detailed, and you’re only human. (Hopefully, at least!)

Article / Updated 03-26-2016

This step-by-step bookkeeping checklist should help you sleep easy at night knowing that you have done what you needed to do to get your books in tip-top shape. Ensure you set up bank feeds for every account. At least once a month, reconcile every bank account against bank statements. Look for pre-dated or future-dated transactions. Eat a family bar of chocolate in one sitting (oh yes, and clean up the debtors list). Sweep through the creditors list. Check tax codes on all transactions. Reconcile your GST liability accounts. Give inventory the once over. Reconcile all payroll liability accounts. Scan transaction reports for weird stuff or mistakes. Read through the financials and check they make sense.

Article / Updated 03-26-2016

Even with a calculator close to hand, a few shortcuts to help you calculate Goods and Services Tax (GST) are real handy. The whole business of dividing by 11 or multiplying by 0.15 can get very ugly indeed. Australia New Zealand To calculate how much GST to add Multiply by 0.1 Multiply by 0.15 To add GST to arrive at a total price Multiply by 1.1 Multiply by 1.15 To calculate how much GST is included in a price Divide by 11 Multiply by 3 and then divide by 23 To calculate how much the price was before GST Divide by 1.1 Divide by 1.15

Article / Updated 03-26-2016

Understanding debits and credits is a tricky business. (How did accountants get to be so warped, you may wonder?) Don’t sweat, with this table you can get your debits and credits spot on, every time. Account Type To increase this account To decrease this account Asset Debit Credit Liability Credit Debit Equity Credit Debit Income Debit Credit Expenses Debit Credit

Article / Updated 03-26-2016

Understanding the difference between account types is the secret to coding transactions correctly. Here’s the cheat’s guide to understanding the difference between assets and liabilities, equity and income, bananas and apples. Current asset: Anything that a business owns that can realistically be converted into cash within the next 12 months. Non-current asset:A physical asset such as office equipment, land, buildings, computers or motor vehicles, that isn’t expected to be converted into cash within the next 12 months. Current liability:An amount owed by the business that is due within the next 12 months, including scary stuff such as credit cards. Non-current liability: Anything you owe that isn’t due to be paid out within the next 12 months, such as hire purchase debts or bank loans. Equity:The ‘interest’ that shareholders or an owner has in the business, including both capital contributed and the profit or loss built up over time. Income:Money generated from sales to customers or returns on investments. Cost of sales:What it costs in raw materials, supplies or production labour to make the goods that you sell (also called cost of goods sold or variable expenses). Expenses:The day-to-day running costs of your business, including things like advertising, bank charges, computer consumables, diamond rings, electricity, motor vehicle expenses, rent, telephone expenses and wages. (Just kidding about the diamonds.) Expenses are sometimes also called fixed expenses or overheads.

Article / Updated 03-26-2016

How do you prevent employee fraud in the workplace, and how can you be sure that nobody has their hand in the till? Like double cream and crash diets, keep bookkeeping tasks and the handling of cash or business assets completely separate. This includes Authorising online transactions via internet banking Working on a cash register and taking cash Receiving payments from customers Balancing cash registers at the end of the day Accessing assets, such as business inventory