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 Does The Future Of Bookkeeping Look Like

Many small businesses have already adopted cloud accounting software. One of the reasons for the switch is the efficiency it provides especially in terms of data entry and reconciliation. These tasks can be time-consuming and they also demand accuracy. The cloud accounting software ensures these manual tasks are successfully done with ease. However, it cannot be denied that there are still small businesses that prefer to keep their legacy systems. The common reason is the unwillingness to adopt the new cloud culture.

With technology gaining traction on small businesses, cloud accounting software will have a full impact on various business processes. Even when the bookkeeper still handles the data processing work, less time is required to finish the task.

Is this the end of traditional bookkeeping services?

The common misconception of adopting cloud accounting software is that it completely eliminates the human touch from any bookkeeping tasks. The truth is cloud accounting software provides a chance for traditional bookkeepers to increase the number of clients because the tasks that used to take hours can now be done in minutes. It is also a chance for bookkeepers to redefine their role. That said, they need to focus on higher-end functions. These functions include review, regular reporting, interpretation and more.

The changes that are taking place in bookkeeping technology is also a great chance for bookkeepers to re-shape client perception. In the past, clients view bookkeeping services as merely taking care of their tasks and making a payment for the services. Bookkeepers can change this perception by letting clients realise that they can gain financial peace of mind by engaging the services of a bookkeeper.

How to expand traditional bookkeeping services

1. Payroll is probably one of the most complex minefields for clients. It often takes a large chunk of their time because the details need to be accurate. This is a service that can be offered by a traditional bookkeeper. Aside from enabling the client to save time and money, bookkeepers will also reduce the risk of non-compliance.

2. Good debtor management ensures a steady stream of cash for clients. Bookkeepers are the ones keeping the business on its feet as they can identify the clients having trouble collecting their own debts.

3. Software consulting is also beneficial to clients especially when adopting cloud accounting software. Even traditional bookkeepers undergo training so they can make use of the advances in bookkeeping technology. These bookkeepers can also provide sound advice on the cloud options available to the clients.

Payroll Challenges Most Small Businesses Face

Once you hire staff for your business operation, you need to make sure that you know the details of payroll. Employing someone is not as simple as having a verbal agreement. There should be a fair amount of initial preparation including business relations and business processes. There are many challenges that business owners face when hiring employees, here are the most common.

1. Superannuation Obligations

Superannuation only applies to ordinary time earnings However, superannuation can be applied to commissions, bonuses, loadings and allowances. For contractors that are sole traders, it is also important to make a payment for superannuation depending on the working arrangement’s nature.

Some business owners may consider a worker as a contractor simply because of invoicing and their services are only used sporadically. However, ATO will still consider the employee  for superannuation purposes. Using the online contractor decision tool, the ATO will determine if superannuation still applies to the employee. It is important to pay superannuation on time to avoid penalties. The director can also be held liable for any late super, which is not paid for by the company.

2. Pay Slips and Record Keeping

It is mandatory for business owners to keep records of receipts for a period of 7 years. The records that should be kept include the pay records, leave records, hours worked super contribution, payment details and others. These records must be handled with confidentiality. When it comes to pay slips, employees must receive them within one working day of pay day. In case the employee is on leave, certain information must be included.

3. Taxing Correctly

These days, small business bookkeeping software makes it easy for employers to calculate employees’ tax. However, the software is not capable of correctly taxing unusual payments such as commissions, terminations and bonuses. If these are not properly reviewed, it can lead to either overtaxing or undertaxing employees. For unusual payments, the tax must be calculated manually.

4. Default Superannuation Fund

It is mandatory for employers to provide a choice of superannuation to workers whether they are employees or applicable contractors. In case the worker does not select a fund, superannuation contribution must be paid somewhere. The default fund will be used to make a payment. It is the employer that selects the default fund.

5. Payment Summaries

There are cases when payments to employees are not taxed or set-up correctly. This only implies that you are taxing a worker for a payment, which is considered tax free. The employee may not get a refund even especially if it is reported incorrectly on the annual Payment Summaries. The money that is supposed to be awarded to employees will end up going to the ATO if correct payroll is not set up.

BAS Errors You Need To Avoid

When it comes to preparing and lodging Business Installment Activity Statements (BAS), you might be unaware of the mistakes you have already committed. It is important to pay heed to these statements and make sure you avoid these common mistakes.

1. Selecting the cash method

Do you understand the implications of a turnover? Perhaps, you need to be aware of these things because they play a critical role when it comes to registering for GST with the ATO. If your business has a turnover of less than $2 million, you need to select whether you are going to use the cash or accrual accounting method. More often than not small businesses opt for the cash method, but this may not always be a good choice. For cash-based businesses that have no debtors and creditors to pay, the accrual method is a great option to consider. This option allows you to claim the GST back on purchases immediately. You will not hurt your cash flow this way. Make sure you update your bookkeeping system with this method and correct reports must be printed.

2. Not declaring the wage amount when preparing a quarterly BAS

If you are withholding more than $25,000 per annum in PAYG Withholding from your employees, the ATO will decide to move you to a lodgement cycle which is on a monthly basis. The advice will be done in writing. Once advised, you will need to lodge monthly Instalment Activity Statements (IAS) and quarterly Business Activity Statements (BAS). You should also take note of the lodgement schedule for GST and PAYG. GST must be reported once a quarter while PAYG should be reported once a month.

3. Varying your PAYG Income Tax Instalment without the accountant’s advice

When calculating your tax amount, the ATO is usually working about one to two years behind the actual amount you should be paying. You have to understand that circumstances can really change over these years especially when businesses grow or shrink. These circumstances may lead to changing your income tax instalment amount. You need to check with your accountant or bookkeeper before you consider revising the amount paid. If you choose to vary your instalment downwards without the advice from your accountant, you may end up paying fines and penalties.

4. Failing to lodge by the deadline

Take note of the lodgement dates so you will no risk falling behind. For BAS, you need to lodge on the 28th day of the month following the quarter except for the December quarter where the due date is moved to 28 February. For businesses lodging via a Tax agent or BAS agent, you will be given an extra lodge in addition to your lodgement date. Avoid late lodgements as the ATO will fine you $180 for each month of delayed submission of BAS.

Improve Your Bookkeeping System With These Techniques

These days, businesses have been more open to welcoming changes in workplace environment. More and more business owners have realised the potential of a mobile workforce to increase productivity by bringing innovation into your workplace. If you used to dread repetitive tasks because they are slowing you down, you need to adopt new and intelligent technology to change your business operations. There are three techniques you can employ so you can improve the overall performance of your business.

1. Improve your filing system

More often than not, business owners find themselves filing receipts and invoices to comply with the ATO. While this is the best practice to follow, the task may take long to carry out. You will need to file and manage receipts and invoices regularly to make sure that the essential documents are still intact. When filing receipts, use cloud-based programs so you will no longer have problems retrieving files when you need them. When you use bookkeeping software or cloud-based applications in filing your receipts, it will be easy for your people to access information from any device at any time.

2. Improve your information sharing capability

One reason that can delay the pace of your business operations is when  essential information is not available to your employees. When they have to go from one person to another just to get the information they need, the task can be really time-consuming. Instead of finishing the report in a day, you can end up dealing with it for days. This is why you need to improve the accessibility of your information so it will be much easier for your employees to coordinate with others in case you want to generate financial reports. When you integrate technology with your business, it will be much easier for your employees to collaborate. They can also access documents from their own mobile device. You can also increase productivity when your employees find it easy and convenient to access all the necessary information they need.

3. Streamline your bookkeeping processes

It is necessary to enhance your bookkeeping system if you are struggling with your accounts payable processing. When you lose sight of your cash flow, BAS payments to the ATO may also suffer. Real-time bookkeeping must be encouraged, which can be done with the help of bookkeeping software. The software will help you determine the suppliers you need to pay and vice versa. Week payment schedule will not be forgotten if you have a streamlined business process. You can even pay off each bill before the due date.

How To Enhance Your Bookkeeping Process

While going digital does not necessarily mean jumping at every new technology on offer, you still need to act fast or you will end up left behind of businesses that have already used advanced tools to simplify bookkeeping processes. Bookkeeping has come a long way because of the existence of software and management tools. The software can reduce repetitive tasks and let you carry out a task easily. The software lets you reconcile bank statements and even generate financial report without worrying about errors. Here are some tools that can assist you in finishing your bookkeeping task.

Cloud Computing

Cloud computing is the future of bookkeeping and it is the first thing that comes to mind when it comes to reducing bookkeeping’s turnaround time. These services provide real-time information and they can also extract key data from receipts. The details you need are published into cloud-based accounting software and can be retrieved anytime you need them. You can also provide real-time information so you can reconcile accounts. Cloud computing enables you to collaborate with accountants and bookkeepers.

Project Management Tools

Interpreting numbers and providing recommendations to key stakeholders are also the responsibilities of a bookkeeper. Technology is going to be important in this process. If your bookkeeper to prepare financial statements and reconcile accounts with ease, project management and time tracking tools are going to be necessary. These tools will enable business owners to monitor workflow and ensure that inefficiencies in the workplaces are addressed. Aside from monitoring workflow, the tools can also help business owners find out about customers who are generating the most revenue. The management can bring data together and provide details of your goods and budget. The tool will help you analyse customers by industry, geography and the products they purchased.

Bookkeeping Platform

When it comes to bookkeeping, each business need to accomplish unique goals, and using one-size-fits-all approach will never work. When choosing bookkeeping platform, it is important to choose the platform that can be customised. Platforms that enable customisation let you add new features and functionality. You can also opt for application programming interfaces that let you share pieces of software and communicate data. These abilities will help you integrate mobile payment systems, point of sale and email marketing.

These tools have features that can address your business needs and help you accomplish your business goals. Make sure you know the software that can help you reap the benefits of bookkeeping technology.

The Benefits Of Cloud Bookkeeping

One of the most difficult parts of running your business is ensuring that your finances are on their feet. You try to keep track of your financial activities but you cannot get updates in real-time as there are other areas of your business you need to focus on. This is where cloud bookkeeping comes in. It has a lot of benefits to business owners such as eliminating time-consuming tasks so it becomes a problem of the past. Cloud bookkeeping has brought efficiency into every business because of its ability to automate manual tasks. As repetitive tasks are reduced, you will have more time to spend on other areas of your business. It gives you greater peace of mind knowing that you have attended to all essential areas of your business that you want to improve on.

1. Real-time financial information

Managing your cash flow is very important to your financial success as a business owner. When you manually carry out your day-to-day tasks, you miss out on having real-time insight into your finances. When you always lack timely financial information, you can surely break your business. With cloud bookkeeping, you will be able to have an auto-updated information of your company’s financial health. There is no need to wait for days to generate the information as the report can be generated in 24 hours.

2. Collaboration Becomes Easier Than Before

It is easy for bookkeepers and advisors to get the information they need when you adopt cloud solution. They can access the information whenever, wherever. As a result, collaboration is simplified and accountants and bookkeepers have greater control of their time.

3. Efficiently Assist Clients In Less Time

Automation alongside cloud bookkeeping can bring speed and efficiency into your company because it boosts your productivity. When it does not take so much of your time to support clients, more and more people will not hesitate to do business with you.

4. Updated Cloud Software Without Extra Cost

One of the best things about cloud software is that you can get updates without any extra cost. In the past, you need to purchase an update version of the software so you can continue to enjoy technology’s rapid development. Cloud software updates take place without any extra cost.

5. Easily Back Up Data

When it comes to backing your data, you often find yourself delaying the process because the process is burdensome. Since cloud integrates your data, backup becomes automatic. In fact, it becomes part of your workflow so you do not have to spend too much time on the process.

4 Bookkeeping Tasks That Need To Be Automated

Although there are some businesses  embracing business automation, others are still left behind due to retaining traditional business processes such as bookkeeping. The tasks involved in bookkeeping can be long, tiring and tedious because you need to make sure that the information you enter is error-free. There are four essential bookkeeping tasks that need to be automated:

Invoicing

There are other areas of your business that you need to focus on and this can lead to losing track of the people you paid and the ones you haven’t. A bookkeeping software can get you covered because it automatically generates invoices. The bookkeeping software can prevent oversight, which usually happens when you do not monitor payments. Problems with invoicing are a serious matter because it can lead to losing money and cash flow issues.

Bookkeeping software that lets you generate invoices that you can email or print is definitely the way to go. Your bookkeeping software has an automated system that can help you sustain sufficient cash flow while you are waiting for your next payment. The software also gives you the ability to work in conjunction with your bookkeeping software so you can request corresponding funds or select an outstanding invoice for a specific period of time. Payments are also deposited into your account as early as the next day.

Payroll

Payroll taxes are often considered by small business owners as the biggest burden because of the grueling hours spent for managing payroll. Bookkeepers often spend 10 hours or more on a monthly basis for taking care of payroll taxes. In a year, bookkeepers are spending a total of 120 hours per year for this task alone. When you automate your payroll system, you can cut down your bookkeeping load and create an instant paycheck and calculate your payroll taxes.

Inventory

Taking inventory may take days but the time you spend on this bookkeeping task can be reduced when you decide on automating your inventory management. You can create sales report by integrating your inventory management with your bookkeeping software. The bookkeeping software can also help you generate invoices and reduce inventory errors.

Expense Reporting

Not submitting your expense reports is a company policy violation and these variables can also cost you money. Make sure you automate expense reporting for a streamlined bookkeeping process. With automation, you will be able to have the ability to use your mobile devices to take pictures of your receipts. You can also generate reports and integrate them with travel bookkeeping so you can keep track of your travel expenses.

Modern Bookkeeping For New Business Owners

Bookkeeping can be an entrepreneur’s pain point if there is no proper process put in place. While you can certainly resort to DIY bookkeeping, the result can be disastrous once you have lost track of the most important details that should be in your financial report. Mention the word ‘taxes’ and it will sure bring chills to any business owner. Aside from the physical pain for paying a percentage of your hard earned income, you will also have to ensure that you agree to the term and conditions so you do not trigger an audit from the ATO. There are some questions that may linger in your mind regarding taxes and not knowing how to solve them can create a negative effective on your business. This is where a modern bookkeeper comes in.

A bookkeeper will help you keep track of your expenses and identify which expenses are considered eligible for write-offs. They will also help you keep track of your income especially for payments coming in from various sources. While these tasks can be overwhelming, your bookkeeper will help you ensure that you will not be intimidated by taxes. When it comes to taking care of your taxes, you just need to take it one step at a time. First, you need to break down your income sources and break them into payments. Your bookkeeper will help you track the payment transaction as you go and track the every single expense that you incur while you operate your business. Once you have these two figures, the next thing you should do is to determine the net loss or profit of your business.

Your bookkeeper should also keep track of your working hours on a weekly basis as this can help you break down your hourly rate. Tracking these things on excel will definitely suffice, but it is also much better to track them using bookkeeping programs. When you have complicated rules, it is really easy to get overwhelmed. This is why it is best to personalise rules and simplify the process as much as possible.

You must also understand that there is no such thing as ‘one size fits all’ approach. Make sure you keep track of your taxes and do not consider a professional bookkeeper as an additional expense. Bookkeeping will no longer be a pain point of your business if you know how to make the process simple with the help of a reliable bookkeeper.