Can Business Fail Because Of Bad Bookkeeping?

Bookkeeping may appear to be a small contributing factor to the success or failure of your business, but since keeping books involves keeping your cash flow in check, knowing you have enough money on bank to sustain the growth of your business gives you greater peace of mind. There are business owners who remain complacent about their business because of the profit obtained. However, a profitable business does not guarantee a steady flow of cash. Profit and cash flow are separate entities. So how can bad bookkeeping hurt your business?

1. It creates credit problems.

Small businesses need to borrow money from creditors to keep the company alive. Once approved, you need to make sure that you have the ability to repay debts in a timely manner or as agreed. Only a savvy bookkeeper will enable you to pay your debts without shouldering late fees and interest rates. Credit problems can cause you to settle for less favorable payment terms and suffer the loss of credit. It will be difficult for you to regain the trust of your suppliers and vendors if this happens because you failed to keep an accurate record.

Keeping track of your cash flow is also your bookkeeper’s responsibility. You should know when your receivables will arrive and when your bills should be paid.

2. It leads to legal problems.

Improper deductions and late or unpaid taxes are reasons why small businesses are faced with legal problems. If your funds are not enough to pay creditors, there is also a great possibility that you will be sued especially if your bookkeeper is not familiar with tax policies. A good bookkeeper provides annual bookkeeping procedures so you can handle your payroll, sales and income taxes.

3. It causes you to lose sales and profits.

If you always miss payments or fail to pay your bills on time, it results in losing access to vendors and suppliers. It is easy to lose sales when you cannot provide the service or products your customers are asking for. If it takes time for your company to deliver goods, this alone can cause your clients and customers to find other businesses that can provide their needs. It will be difficult for customers to go back to you if they have already used a new company.

4. It decreases opportunities.

When you need to reduce debt or increase your marketing, accepting opportunities to grow your business has to take a backseat. This happens when you have less money because your bookkeeper has failed to provide accurate financial reports. If you do not ensure accurate bookkeeping, you will also lose the ability to run your business efficiently.

Bookkeeping Made Easy: The 5 Essential Tools You Need

Business owners, both large and small consider bookkeeping as a major task in keeping the business on its feet. When it comes to numbers, accuracy is important because one wrong entry can result in bookkeeping catastrophe. In terms of making bookkeeping easy, one thing that comes to mind is using some high-end tools. However, with today’s technology, there are many ways you can operate your business without dreading bookkeeping, thanks to these 5 simple but useful tools:

1. Google Drive/Dropbox

These days, many businesses are using cloud technology because it provides freedom and flexibility to workers. Business owners have the ability to access and edit files on any device with Dropbox or Google drive. They do not need to set an appointment with the bookkeeper because the information they need can be accessed using cloud technology. As compared to using desktop programs, cloud allows you to back up your data safely.

2. Smartphones/laptops/ tablets

Since the technology offers more flexibility to workers than ever before, it seems easy to get things done without necessarily being physically present. With your smartphones and other mobile devices, you can manage your bookkeeping files anytime, anywhere and of course, on any device. In the past, these devices were only meant for playing games, texting and calling friends or loved ones. At present, many people consider these devices as a clever way to keep track of everything including your bookkeeping files.

3. Bookkeeping websites

You can come across a wealth of information if you are going to visit bookkeeping websites. The ATO for instance, will provide you dates you can lodge payments and file tax returns.  The website provides tools such as a tax calculator so you will know the amount you are going to pay. Forms are also available on site.

4. Bookkeeping software

If you wish to monitor your financial activities or track your business data, Xero, Quickbooks Online and other bookkeeping programs are the way to go. The software will make it easy for you to run your business. You can also minimise the risk of fraud as you can easily spot irregularities before they become a business nightmare. Any changes made to a financial statement can be traced within the software’s transaction history.

5. Project management software

If you want to collaborate with your workers regardless of your location, project management software will help you get things done. These tools enable you to track the amount of work done and when they are done. For business owners on the go, the software can help you keep things organised.

Is Automation A Threat To Small Businesses?

The common misconception of small businesses is that they are not required to adapt to technology changes in order to survive. However, no one is spared from digital evolution. In fact, changes happen at the speed of light. Before you can adapt to the changes, the fast-paced technology will unveil another innovation for you to embrace. As enterprise or large businesses continue to search for innovative ways to remain competitive and relevant in the business, small businesses keep on struggling with handling the workload.

This is because they require additional people to get the job done. When automation enters the picture, it seems that small businesses continue to avoid it. They are plagued by the fact that they have to change the way things are done. These businesses are focusing on the perils of this new technology without realising that the good still outweighs the bad.

The first thing that will come to mind when talking about automation is artificial intelligence. Small businesses fear that robots will replace humans when it comes to carrying out tasks. The truth is, automation is a breath of fresh air for these businesses. There are more reasons to love automation than despise it.

1. It eliminates repetitive task.

How many times have you found yourself doing the same thing over and over again? A task which could have been completed in just a matter of days, may still be the same task you will be doing in the next couples of weeks. These tasks include sending invoice to customers, managing inventory and managing accounting and payroll. If these tasks are automated, more serious tasks can be delegated to employees.

2. It easily manages your team.

Automation makes it possible to manage virtual teams as you no longer have to require their physical presence when collaborating with them. More often than not, small businesses have employees from other countries, involve working remotely. When you manage teams from across the globe, automation will help you keep track of your the task’s progress. They can easily check their smartphones or any mobile device for updates on assigned task or upcoming meetings.

3. It ensures employee satisfaction and retention.

A small business will never grow without its employees. Automation ensures that your employees’ level of workplace satisfaction is increased. Since automation reduces human errors, it will be easier for business owners to identify employee productivity. There are also some automated tracking tools business owners can use to promote trust and transparency in the workplace. These tools will enable employees to tally the total hours they have worked.

Save Time, Automate Bookkeeping Processes

The past years have introduced automation to small businesses. Although there are still a few companies embracing traditional processes, 2016 has been a year of bookkeeping automation. Aside from saving time, you can also reduce stress with automation. You reduce manual processes and keep human errors to a minimum. If you used to spend hundreds of grueling hours for doing tasks such as tax preparation and expense reports generation, these tasks will no longer be such a pain. Babysitting your books to ensure that the information is accurate will be history. However, you need to take note of the essential tasks that should be part of the automation bandwagon.

Payroll

Small business owners consider payroll taxes as administrative burden. This is because the staff has to spend 10 hours per month managing payroll. That is 120 hours or even more a year. When your system has the ability to calculate payroll taxes, you create paychecks instantly and avoid tax penalties. You can even set Payroll up so you can integrate it with your bookkeeping software.

Inventory

Taking inventory consumes a large chunk of your time. All of the wasted time can be corrected by automating inventory management. Automating this task can help you generate invoices, pack list, minimise inventory errors, speed up the order process and create sales reports.

Expense Reporting

Submitting reports on time is essential to every small business owner because missing out on generating expense report can result in creating tax and bookkeeping problems. Automation streamlines the process of expense reporting as employees are given the ability to use mobile devices so receipts are recorded in just a snap. Automation is a time-saver because you can generate reports automatically and even integrate them with your travel booking so you can ensure that your travel expenses comply with your company policy.

Invoicing

If you rely on making a mental note when keeping track of customers who has and has not paid you, oversights can happen. It will result in cash flow problems, which will eventually pose a threat to the company’s financial stability. Keep in mind that cash flow is the lifeblood of your business. If you keep on losing track of your invoices, your company will run the risk of bankruptcy. An automated bookkeeping system enables you to sustain sufficient cash flow. You will also have a detailed record of your invoices so you will know the customers who have already made a payment.

Signs Your Bookkeeping System Is On The Right Track

Many business owners consider bookkeeping as a stressful task because aside from dealing with numbers, you will have to make sure that you keep financial reports in check. Although bookkeeping is a least favorite task, it does not excuse business owners from ignoring this one essential task. For small business owners, it is easy to get sidetracked by the goals you want accomplished that bookkeeping often takes a backseat. Although hiring someone to do the job will do the trick, you still need to make sure that the job is done properly. There are 4 signs your bookkeeper is doing a good job.

1. You get regular updates of your financial reports

One thing that can get your business into trouble is when you are clueless about how it is doing. You may have thought it was doing well based on your predictions, but your high hopes vanish into thin air the moment you check your financial reports. It is easy to assume that your company is taking the right direction, but if financial reports are not delivered in a timely manner, you will never see the big picture. A trustworthy bookkeeper has the ability to provide you updated balance sheet and income statement.

2. You have time to focus on running your business

A good bookkeeper can take care of invoicing, record-keeping and other tasks associated with bookkeeping. As a result, you will have more time on your hands to focus on other things you deem essential to the growth of your company. A reliable bookkeeper will keep you worry-free as you no longer have to enter data. They will take care of this task for you.

3. You do not fall behind your payment schedule

Unpaid bills and taxes can pile up and take a toll on your business. It happens when your bookkeeper does not provide you detailed financial statement and records that will remind you when your bills are due. Aside from reminding you to settle your payment, bookkeepers will also track clients who owe you.

4. You gain peace of mind

Knowing the financial health and performance of your business is important as this can give you an idea of the goals you need to set. Is it time to move forward or reassess your strategies? When your bookkeeper does a great job of taking care of your financial reports, you will be able to have plenty of time to focus on other important things. You will never have to worry about missing a payment or chasing clients who owe you. Your bookkeeper can also give you recommendations based on your financial report.

What Should Business Owners Expect In 2017?

Business owners have already witnessed a significant transformation in the industry and these changes will continue to shake up the system in 2017. Whether you are still embracing traditional bookkeeping systems or moving towards a more advanced approach, it is worth knowing the latest technological trends that will make day to day tasks much easier for business owners and bookkeeping professionals.

1. Many businesses will move to the cloud.

The cloud technology has made it possible for many businesses to become more fluid than ever. With its ability to provide instant access to users regardless of their location, it now seems easy to collaborate in just a few clicks. Back in the day when businesses rely on hard-drive, it was difficult to change your bookkeeper. With the emergence of cloud technology, switching becomes a breeze. However, moving to the cloud technology is not enough to make a difference. It is also important that your cloud technology provider is also reliable.

As business owners realise the benefits of moving to the cloud technology, bookkeeping professionals must also be flexible. Since this is already the age of the paperless, more and more businesses are expected to move to the cloud in 2017.  It is inexpensive and convenient and it provides more flexibility to business owners as they can access the information at any given time.

2. Social media will play an important role in collaboration.

It cannot be denied that social media has been influential to many people these days. Aside from sharing information, it is also a great venue for collaboration. If you are in the process of building your brand, social media will also be instrumental to raising brand awareness.

3. Artificial intelligence in the workplace

If you have a small business, artificial intelligence is going to be a practical application. It is no longer surprising that businesses rely on chat bots to serve customers. A bot is also used for collecting information as it saves time and it is able to assist prospects and existing customers with general queries.

4. Business owners will be served properly by bookkeeping professionals.

The year will bring efficiency and flexibility to clients as brainstorming becomes possible. While technology has previously paved the way for collaboration to be easier, these changes have no signs of slowing down. They create a positive impact on business owners as they can view income statement and balance sheet without worries. These changes to how bookkeepers work will continue to thrive. Some business owners choose to embrace it while others ignore it.

Is The Future Of Bookkeeping Still Bright?

In the age of paperless where digitisation is as precious as gold, has traditional bookkeeping lost its luster? When the thought of streamlining your bookkeeping processes by going digital, it is easy to cringe at the thought that you will no longer need traditional bookkeepers. These days, more and more businesses are moving towards the cloud because of the benefits they reap from it. Sure it has its own flaws, but the range of benefits still outweighs them.

However, not all companies are ready to embrace cloud technology. There is still a small fraction of businesses more comfortable in using bookkeeping systems the old fashion way. Some business owners are also reluctant to learn about the modern advances in technology that they prefer to outsource the job to someone.

Even if you have not used cloud-based software, this does not necessarily mean you should shy away from it. In fact, it can be a new opportunity for bookkeepers because it reduces errors and promotes accuracy. Even if going digital provides convenience to most business owners, bookkeepers are still required to ensure that essential business information is recorded correctly.

The Role of Bookkeepers in the Age of Paperless

Business owners may have the tendency to join the digital bandwagon without thinking about its implications. While cloud accounting software may sound promising, it does not mean you should completely eliminate bookkeepers from the process. Bookkeepers are not just meant to carry out simple data entry, but clients may view things from a different perspective. As a bookkeeper, it is important to know the client’s pain points to find out how both of you can benefit from cloud technology.

Bookkeepers need to demonstrate how cloud accounting software works. They should also explain to business owners how cost-effective it is to hire bookkeepers instead of doing the process themselves. Training is required to understand the system. There are bookkeeping intricacies that a business owner may need to learn.

How Can Bookkeepers Survive?

  • Learn new skills that will enable you to adapt the changes. Start building on your IT skills and find out how you can learn about networking, solutions and other strategies as they can also be beneficial to your growth.
  • Get familiar with cloud accounting software by watching online training, attending events and attending local training sessions. It is also going to be a huge help if you are going to use the technology yourself.  This way, you will be able to know how each feature works.

 

Why Give Importance To PAYG Payment Summary

All business owners have their own fair share of financial reporting woes and calculating payments for tax filing can be a nightmare. You may try avoiding this obligation, but it is part and parcel of running a business. You can be faced with numerous obligations as a business owner but you should always keep an eye on your PAYG (Pay As You Go) payment. Just because you have forwarded the payment does not necessarily mean you are off the hook. There will be instances when you need a copy of the payment summary and when it is not available, you will have a difficult time running through the payments you have made.

PAYG Statement

PAYG has two important tax topics: Pay As You Go Installments or PAYGI and Pay As You Go Withholding or PAYGW.  PAYGI refers to the tax installments that business owners make to the ATO. PAYGW refers to the tax you collect from the employees, payees and workers. As a general rule, employers or business owners are required to provide a summary to payees showing the amount withheld and the payment made based on the financial year.

The Importance of PAYG Payment Summary:

It provides a detailed summary of accounting information.

A summary of payment also includes relevant information of each payee. The tax numbers, tax liabilities, salary and earnings can be found in the summary. If the payee needs this information, it is available for access anytime. You may also need this information for generating financial report in the future and you don’t have to spend too much time harvesting this information.

It provides an easier process of filing taxes.

The tasks involved in filing taxes can be long and tedious. Aside from doing all the calculations, you have to make sure that the numbers are correct. You may have to redo the task once the data you encoded are incorrect. If organizing employee and accounting information takes a large chunk of your time, the summary of PAYG payment makes the process a walk in the park. The information you need for filing taxes is already available so you don’t have to enter them manually.

You generate reports faster.

Generating reports will be more efficient when you have a record of the payment summary. The process that used to take hours or even days to complete can be significantly reduced once you have PAYG payment summary. When less time is spent for generating reports, you can pay attention to other tasks without necessarily compromising on the quality of information that is present on your financial report.

Information on the payments made is clarified.

There can be a time when payees will ask for a copy of the payment they made and the payment summary will serve as proof. In case there are payment disputes, all you need to do is to refer to the summary for any clarifications. You can also spot irregularities or incorrect entries if you have a summary of the report. It will also help your payees understand why the deductions were made. When everything is recorded, you can remove any doubt and they are updated for under or over-payment.

Why Entrepreneurs Need To Understand Their Finances?

Many business owners find themselves diving into a dark cesspool of financial loss due to poor financial management. This is why engaging Perth bookkeeping services is deemed essential even for small businesses. When your business takes a turn for the worse, it means you are not paying serious attention to some of the financial aspects of your business such as bookkeeping, raising capital, accounting and cash flow management. These things are so easy to overlook if your business is enjoying its profits.

However, when bills start piling up, you will realise that you do not have enough to survive financial hardships. Even if you are the kind of business owner who is comfortable handling daily operations, overlooking the financial aspect can be bad for your business. Some may think that financial management is an intimidating task that requires special skills, but it can be learned.

Most business owners think that generating impressive sales is the most important aspect of every business. Unfortunately, you can have all the sales in the world and still fail at financial management. Sales do not necessarily guarantee business stability. There are still other factors that must be taken into consideration so your business will not take the wrong direction. Poor financial management should be taken seriously because it can lead to bankruptcy.

Signs your business has poor financial management:

Your money is not enough to cover all expenses.

Cash flow is essential in every business because it covers essential costs such as rent, insurance, payroll, utilities, phone and others. For you to pay fixed costs, you need to plan ahead and this involves analysing outstanding bills and accounts receivables. This is where your skills in negotiating with vendors and customers come in. When money comes in a timely manner, you will be able to cover your bills effectively. Cash flow gaps are also inevitable and every business owner should learn to manage them.

Unpaid Taxes

Paying taxes is part and parcel of managing a business. However, if paying your taxes is the least of your priorities, you will have more serious problems to face in the end. Never take your taxes for granted because it is as equally important as other factors that affect your business’ financial stability. Some entrepreneurs consider tax time painful, but when you know how to estimate your tax payments, you will have nothing to worry about.

Not keeping expenses as low as possible

Businesses that are going well are usually contemplating expansion. While business growth is a good sign of progress, the failure to anticipate expenses for future projects can hurt your business. You may have enough to sustain your business, but overlooking future problems can deter you from making new investments. In order to keep your expenses as low as possible, you need to learn the art of cost management. When you keep your costs low, your business is more likely to be more profitable.

For every business to prosper, it is essential that a business owner is good at financial management and this is where Perth bookkeeping services come into play. You can’t let others do this task for you because the success of your company will greatly depend on how you manage your business. While there are people that are responsible for doing the accounting and bookkeeping, you are still responsible for understanding what is going on. You will be responsible for making vital financial decisions that can either make or break your business.

Tips For Avoiding ABN Cancellation

If you are operating a small business, one of your responsibilities as a business owner is to make sure that it generates profit. Once ATO deems your business to be more of a hobby than an enterprise, ABN or Australia Business Number will be cancelled. If your business has also violated the terms and conditions of setting up a business and you are no longer operating your business you are most likely to have your ABN cancelled as well.

There are ways to avoid ABN cancellation and as a business owner, you need to make sure that you have a viable plan and effective business management. Even if you are running a small business, you can still make sure that it is going to be in good hands if you consider hiring a bookkeeper.

A bookkeeper prepares the financial statement and report so business owners will have an idea where their business is going. A bookkeeper also gives business owners peace of mind knowing that their business has enough to survive. Although having enough is not a proof that your business is going to be profitable, you will have an idea of the aspects that you still need to improve.

A bookkeeper prevents ABN cancellation by ensuring that you have a steady cash flow. While watching over your cash flow is not deemed be-all-and-end-all of running a business, ensuring that your cash flow is not in danger can help you maintain its stability. With the help of your bookkeeper, your assets and actual liability are going to be separated so you will know the sum of money that goes to your business savings account. It is also easy to determine whether or not you are making a profit or a loss once your financial statements and reports are organized.

You may also have to take various financial factors into consideration

• Reconnect With Your Associates
When it comes to networking with people, you need to make sure that you have a continuous or ongoing process. Consider reconnecting with your business associates as you can get advice from them especially when it comes to creating viable action plan.

• Build New Connections
Aside from reconnection with your associates, you should not also forget to build new connections. Make sure you have two or three acquaintances that you can build a good working relationship with. You should give importance to community as it can serve as your strong system of support especially for tough times.

• Assess Your Goals
If it has been a year since you opened a small business, make some assessment if you have achieved all of the goals you set. If there are goals which you have not accomplished, determine the factors that deterred you from accomplishing those goals.

• Re-Evaluate Your Spending Habits
Unnecessary purchases can also affect your business. Assess your spending habits and if you find out that you made purchases on impulse, try implementing new measures so you can prevent unnecessary spending. You may also speak to your bookkeeper for recommendations. With these simple changes, your business can make a difference.