How To Efficiently Move Your Business To The Cloud

Cloud solutions provide better mobility and easier collaboration.

Moving your business to the cloud can change the way you work. Aside from automating some repetitive and time-consuming tasks, collaborating with clients will also be easier. In the digital age, you need to adopt the changes in technology as they enable you to thrive in the long term.

Although cloud solutions may be completely new to you especially if you have been used to a traditional bookkeeping practice, the mere fact that you can boost productivity and get things done are great reasons for making the switch. When it comes to embracing cloud solutions, it is important that everyone in your workplace gets used to an online environment. Adoption should start with knowing what a cloud solution really is.

What is cloud solution?

Almost everyone has tapped into cloud technology. You might already be using it without realising it. Some examples of cloud technology include ShareFile, Dropbox and Microsoft Office 365. These systems allow you to access your data anytime, anywhere and from any device.

Cloud solutions for bookkeepers work in a similar way. You can even think of it as normal bookkeeping software except that the data is stored securely. Cloud technology uses cloud storage so you can maintain access to the data in the event your computer crashes. Whether you wish to access the data from a laptop or a smartphone, cloud technology will provide you access.

1. Hands-on experience is your best teacher

You will never know how cloud technology works unless you decide to learn the ropes. Sure, it can be challenging considering the fact that you came from a traditional environment, but this does not mean you will remain alienated by cloud technology. Most cloud software providers offer a free trial. Ask yourself about the difference between traditional and cloud-based bookkeeping. Find out if you can really do things in a different way. Knowing the plus points of cloud solutions will help you ease your way into using it and understand its benefits.

2. Introduce it to employees

Once you have fully embraced cloud technology, the next step to take is to roll it out to your employees. However, you have to keep in mind that not all employees will be ready for the migration process. Provide training to make employees as comfortable as possible with the changes.

Remember that learning does not take place overnight, but this doe s not mean you cannot succeed in adopting cloud technology, you just need to keep an open mind.

4 Tips About Reading Financial Report You Can’t Afford To Miss

Reading a financial report provides you information on the financial performance and condition of your business.

Just the thought of preparing a financial report is a challenging job let alone reading it. If you do not have any sound knowledge of bookkeeping, the numbers you see on the financial report will surely be foreign to you.

If you want to grow your business, you need to make sure that it is ready for the transformation. What better way to determine the financial health of your business than to read the financial report. Here are five tips to consider when reading a business financial report.

Decide what you are going to read

When you are reading a financial report, the first thing you want to know is how your business is doing. As the report contains lots of information, it can be very difficult to identify the section you should pay attention to. The report shows you the trend charts, financial statements, historical summaries and much more.

If you do not have the luxury of time to read the entire section, look for the highlights section. This section will give you a summary of the main developments of your business. You will also know the steps to take to improve your business.

Gain a basic understanding of accounting

While it is the job of your bookkeeper and accountant to prepare your financial report, this does not mean that you are no longer required to read the financial statements. You will still need to make a conscious effort to interpret these reports because they can play a big role in helping you decide of the direction your business will be taking.

Know your profit performance

There are many ways your business earns profit such as making sales and keeping expenses less than your sales revenue. You will be able to analyze profit performance by checking your sales revenue. Is it higher than the previous years? Do you know the gross margin ratio of your business? You will also have to keep in mind that judging profit performance should be based on general economic conditions.

Check your cash flow

Cash flow is important to business owners. Even if you are making a profit, this does not necessarily translate to having a steady cash flow. There are various ways a business can obtain cash, such as  selling off some assets, borrowing money or getting shareowners to put more money in the company.

What Happens To Non-GST Registered Businesses?

Goods and Services Tax (GST) is usually part and parcel of running a business. However, there is one lingering question that most business owners often ask: does my business need to register for GST?

A business with an annual turnover of $75,000 or more needs to register for GST and if it is less than that, you can choose to not register. The registration must be made within 21 days.

For ride-sharing drivers and taxi drivers, GST registration will be required regardless of the annual turnover. On the other hand, non-profit organisations have the option to not register even if they reach up to $150,000 turnover.

The registration process can be done online via Australian Business Register (ABR) website. The ATO website also provides you an option to register for GST.

The Implication of GST Registration

If you are going to register for GST, there will be an additional 10% charge which should be paid to the ATO. For example, if you charge $50 for your goods or services, the customer will be charged $55. You pay the additional $5 to the ATO.

If you make a purchase of business supplies, you will also be charged 10% in GST. This can be claimed back as a credit. It is important to note that you need to account for the GST, you have collected on your sales, minus the credits on your purchases. Your transactions must reflect on a business activity statement.

If your business has a turnover of less than $75,000, you will given a choice of registering for GST. This is applicable for business spending extensively on supplies. This enables the business to claim the GST credits back.

What happens to non-GST registered businesses?

Businesses that are not required to register for GST should not collect GST on sales or claim GST credits on the goods that have been purchased. Since you have not registered for GST, your business should only issue normal invoices. Unlike invoices issued by GST registered businesses, normal invoices do not include tax invoice. It does not also indicate that the invoiced amount includes GST.

As a non-GST registered business, you can also claim the full cost of your business purchases. This already includes any GST. It will be a tax deduction on your income tax return.

You cannot claim a GST credit if you receive an invoice for goods or services you have purchased from a non-GST registered business. This is because the invoice will not be considered a tax invoice.

5 Things Bookkeeping Can Do To Your Business

For a small business, bookkeeping may be considered unnecessary unless you want something done immediately. This is why many business owners have missed out on realising the benefits that good bookkeeping provides. If you are not sure whether hiring a bookkeeper is a good idea, think about your cash flow. Since it is the lifeblood of your business, you cannot go on with any business ventures without it. It is important that you have a healthy understanding of your cash so you will know the steps to take in increasing your cash flow. Here’s why hiring a bookkeeper is beneficial to your business.

1. Tax season becomes simpler

For most business owners, tax season can be a stressful time because it involves preparing reports. You will pay the price for not hiring a bookkeeper during tax season because the reports demand accuracy. It is important that you are equipped with correct financial reports and this will only happen if you have an accountant or bookkeeper to provide what you need easily and quickly.

2. You can make informed decisions

You will be unsure of the road you are going to take if you have no idea about the strength of your business. With good bookkeeping, you will be able to obtain real time information so you can make informed decisions especially when it comes to grabbing an investment opportunity.

3. You can think strategically

It is difficult to create a strategic plan if you do not have the ability to think beyond this week. A good bookkeeper can help you think strategically so you can prepare for the things ahead.

4. You will understand what is happening with your business

When your books are not properly organised, there will be essential things that remain unknown to you. You may have cash coming in but if you have no idea of what is happening, the future of your business will also be blurry. Your bookkeeper gives you an extra set of eyes so you will be able to identify if there is any fraudulent activity  or potential opportunities to watch out for.

5. You get the right results

Even if you are using bookkeeping software, there can still be some aspects of bookkeeping that you need to leave to the expert: your bookkeeper. You can get the results you want as your bookkeeper can dig deeper into essential journal entries, bank reconciliations and chart of accounts. The results go as planned because your bookkeeper ensures that you are in the right direction.

3 Types of Fraud That Can Have A Negative Impact On Your Business

When it comes to managing your finances as a business owner, you should not go completely hands-off. This is because signs of fraud can be easily detected if you take the time to check your financial records. Fraudulent activities can affect your business causing you to lose a vast amount of money. There are three types of fraud you need to avoid as they can definitely hurt your business if they go unnoticed.

1. Over-ordering fraud

If you have a client who would routinely order and receive supplies from your company, there should  be something you need to look into especially when you see that the client is already over-ordering supplies even when it is considered unnecessary. The client may return supplies in exchange for a gift card and take the remainder in cash. You will never know the amount of cash stolen especially if this fraud has been ongoing for one year. This type of fraud can be avoided if you are going to do the right thing from the start. You have to keep in mind that bad employees can ruin your company. If your employees are not well-compensated, they would feel as though it is just fair to steal or engage in a fraudulent activity.

2. Payroll Fraud

Have you ever noticed that your payroll account has not been reconciled to your time-keeping system? Payroll fraud is perhaps one of the most common types of fraud you need to prevent as it can cost you thousands or worse, millions of cash. For instance, you may see your company record where two employees and their manager were working massive hours. Of course, they are paid a ton of overtime for it. However, something is not right because the timesheets revealed the discrepancies. Before you realise you are a victim of payroll fraud, the money is already gone. Payroll fraud can happen to any business owner. When a figure is left unchecked, it can easily go unnoticed. You may check the records and still feel that you are keeping clean records, but as the fraudulent activities progress, you will come to realise that there are irregularities you need to investigate.

3. Double Check Fraud

This is the type of fraud that is hard to catch. Even if you are the type of business owner who looks at the financial statement frequently, you will never suspect any fraudulent transaction because the figures seem reasonable. However, the amount can add up very quickly because of writing double checks on a monthly basis. You can only detect this fraud if you decide to change your bookkeeper. The new person will notice that the bank account has not been properly reconciled in months. This is where multiple payments in the same month occur. Have an outsider check your books and reconciliations annually at random times so you can check  some discrepancies.

Costly Bookkeeping Mistakes When Using Accounting Software

It is common for business owners who take care of bookkeeping tasks to commit mistakes. Some may not be too serious while others can be quite costly. These costly mistakes are usually committed when using accounting software.

Mistake #1. Creating Complicated Chart of Accounts

Do-it-yourselfer business owners tend to create complex chart of accounts by including unnecessary information, which can be both time consuming and hard to read. Two or three page report is an indicator that you are putting unnecessary things on your Profit & Loss account. When creating a report, you need to keep it simple by reviewing how you list your accounts. For instance, individual accounts for expenses must be consolidated. You can classify them as motor vehicle expenses. If you intend to make changes to your Chart of Accounts, make sure you run it by your bookkeeper or accountant.

Mistake #2: Changing Historical Transactions

Once you have completed month end or quarter end period and lodged BAS, making changes to historical transactions must be avoided unless you inform your bookkeeper or accountant about it. The changes you make can create serious problems. One example is when you record a purchase of an item including GST. Eventually, you discovered that a mistake has been made after the month end has been completed. Since the item was purchased privately, it should not include GST. This means that the business owner should pay back the GST claimed for the item. Be sure to follow your bookkeeper’s advice when making changes. Most accounting software has an option to lock the period at a certain date to prevent changing historical transactions. This deters you from making any unnecessary changes to the transactions.

Mistake #3: Using Incorrect Tax Codes

There can be a number of situations in which a business owner can use the wrong tax codes such as purchasing goods and services from overseas sources, insurance, vehicle registration expenses, legislations and so on. Your supplier should provide you a tax invoice, which shows the actual amount of GST that is payable. If you are purchasing goods or services from overseas countries that show tax on the invoices, make sure you consult with your bookkeeper.  These non-Australian businesses are not considered eligible for claiming tax. In case you are unsure if there is GST on your purchased item, you can simply create a tax code called QUE GST Query at 0%. This way, you will be able to record the transaction and ask your bookkeeper or accountant to review the entry.

What To Do With These Financial Statement Red Flags

As a business owner, you need to take the time to review your financial statement. While you may not possess an uncanny ability to spot red flags in an instant, gaining a basic understanding of your financial statements is enough. This way, you will easily identify any discrepancy that can create a negative effect on the financial health of your business.

Incomes that are non-operating

If you want to earn the trust of your creditors and investors, they need to see consistent income in your financial statement. The income must be from continuing operations. However, if income is obtained from other sources such as one-off sales, gains from the sale of investment and gains from the sale of fixed assets, this should be a cause for concern.

These revenues are considered non-operating and may not be valuable because the possibility that this revenue will not reoccur is strong. You can identify non-operating income as it is stated separately from operating income. It is found on the income statement. If the operating income decreases, this only means you should double your efforts into revenue sources that will not disappear.

Low Cash Flow Patterns

A profitable business does not mean having enough cash. A company needs to make sure that the cash is also flowing into the business to gain the confidence of investors. If you are falling behind your loan repayments or not collecting receivables quickly, it only means that you have poor cash flow patterns. When it comes to spotting cash flow patterns, pay attention to net income. If the net cash flow is low compared to net income, this can be another sign of a financial crunch.

Fixed Assets Disposal

It might be necessary to sell equipment every once in a while especially when it is not performing well, but if you used the cash for short-term expenses or to pay your debts, this can be a warning sign. The only exception is when the proceeds are reinvested into the business. Disposals of fixed assets can be an obstacle to your operating revenue. Disposals are found on the balance sheet. It is necessary for a business owner to be aware of the reason for selling the fixed assets. The disposals need to be significant and that said, an explanation of the reason for selling the fixed assets must be prepared.

Increasing Inventory

An increasing inventory may mean two things: you are expanding your offerings or you have products that are not selling. If the latter is the reason for the increasing inventory, there is a higher risk of spoilage. Make sure your inventory percentage is not higher than the prior years as this only denotes that you still have some inventory sitting on your shelf.

What You Need To Know About Cash Flow

Even the most profitable companies can go broke if they fail to manage cash wisely. In running a business, cash is critical and it is not about generating profits. When you think about how much it would cost to make the product and what the company can sell it for, profits will surely come to mind. Profits are not tantamount to cash as  you do not spend them in a business. You spend cash. If you do not have enough cash to pay your expenses, you can put your business at great risk. Your working capital determines your business health. It is important that you have a proper business plan that enables you to become well-prepared in managing your cash and profits.

1. Sales do not determine a steady cash flow.

Even if you are making the sales, it does not necessarily mean that you have the money to pay the expenses you incurred. If you incur the expense, assuming that you have already made a payment for them can get your business into trouble. Inventory is often bought, paid and stored until customers purchase it hence it becomes the cost of sales.

2. Generating profits do not mean you have enough cash.

Bills cannot be paid with profits. Even if you regularly pay your bills and your customers don’t, it can still take its toll on your business. Even if you are making profits, you still cannot make any money from it.

3. Inventory can hurt your cash.

It is important to note that you need to build or buy your product before you can even consider selling it. Even if your products sit on your shelves, the suppliers are still expecting to get paid. This means the dollar you have in inventory is a dollar you do not have in cash.

4. Bankers do not like surprises.

It is necessary for you to plan ahead so you are well-prepared if a problem arises. If you go to the bank armed with a realistic plan and chart, the bank will have an idea of the financial health of your business. If ever you intend to take out a loan, the bankers will use the reports as basis for their decision. `With a steady cash flow, it will not be impossible for you to get an approval from the bank.

Being aware of these cash flow rules will enable you to make room for business growth. Due to the nature of cash flow, you will not grow complacent even if your business is generating profits.

5 Bookkeeping Habits That Make Business Thrive

Your finances must be regularly tracked if you are running a business. Otherwise, you can put your business at serious risk. If you want your business to survive and thrive, it is imperative that you have good bookkeeping habits.

1. Have a professional prepare your tax returns

Business owners are not only focused on one aspect of managing the business. This is why most savvy entrepreneurs choose to outsource work to ensure accurate results. If you have a trained financial eye, bookkeeping processes can be easily monitored. If there are discrepancies, bookkeeping experts can correct or improve the data before it reaches you. Preparing tax returns on your own may not be a good idea. It is because there are technicalities that you might not be fully aware of.

2. Document bookkeeping processes

It is also a good habit to document your processes. This way, you will be able to gain a better understanding how bookkeeping processes should run. As your business grows, you will also be able to prevent confusion as everyone is in the same direction. Good bookkeeping should be consistent.

3. Choose the right software

Never skimp on the bookkeeping program you are going to use because it can help you get things done in an accurate and timely manner. In choosing the right software, you should focus on your business needs. Sophisticated software that is not aligned with your business objectives will be a waste of money. Ask for recommendations and get ample training before deploying the new system.

4. Keep an eye on your reports

Although you need to hire a bookkeeper and accountant for your financial reports, this does not necessarily mean you should go entirely hands off. You still have to keep yourself involved by reviewing reports and checking what is going on with your business. You need to have basic understanding of business numbers including trend in expenses, profit, profit per customer, accounts receivable and many others. Knowing the basics of accounting can help you monitor the health of your business.

5. Keep receipts

You need to know how much you are spending on your business and keeping receipts should be considered a habit. If you are not mindful with your cash expenses, it is easy to get confused with business numbers. Receipts serve as your backup statement. Some business owners may even keep a notebook to log cash expenses they incur. You can also download accounting app which enables you to snap pictures of your receipts so you do not have to keep the paper copies.

Are These Cloud Accounting Myths Holding You Back From Using Cloud-Based Software

Let’s face it, it is rather safer to stay within your comfort zone than tread upon an unfamiliar territory. After all, old habit dies hard. However, technology constantly evolves and the first thing that comes to mind when talking about it is cloud. Although using cloud-based software is an innovative way to handle your bookkeeping and accounting tasks, it is still frowned upon by traditional bookkeepers for fear of becoming a hapless victim of new technology. While there are enthusiasts who are drawn to new approach, making the switch may require more than just changing technology, it should start with changing mindset. Here are some common cloud accounting myths debunked.

Myth #1: Cloud exposes data to hackers because it is online.

It is necessary for every business owner to ensure that classified information is stored safely. Some say that cloud makes data prone to breaches and attacks because it is online. The first thing you have to keep in mind to avoid security threats is to check the cloud service provider’s options and features. No two cloud accounting services are created equal so you need to take your time in searching for the service which has increased level of security.

Myth# 2: Cloud-based software is merely marketing hype.

Due to the proliferation of cloud technology, many skeptics dub it as marketing hype. If you are going to check the benefits of cloud accounting, you will realise that it has indeed lived up to its hype. With its ability to store and integrate data, it becomes a valuable collaborative tool for increasing productivity and reducing manual tasks. If you to gain an accurate overview of your cashflow, you can always rely on cloud-based accounting software to update your information. Many business owners are already investing a vast amount of money in order to improve their cloud infrastructure because of its long term benefits.

Myth #3: Cloud-based accounting software is only intended for storing data.

Cloud accounting is not specifically designed for storing information because it can also provide a different approach to collaboration. In the past, it seems challenging to retrieve information critical to decision-making if you rely on spreadsheets. You are not 100% confident that the data you obtained guarantees accuracy. Anything that is stored in the cloud infrastructure can be updated regardless of your location. Even if you decide to check your financial data in the middle of the night, time is not going to be an issue. It saves you from being chained to your desk to manage a bookkeeping or accounting task.