Business Fraud Prevention

Small and big businesses alike are vulnerable to fraud. Blank cheques and fake invoices are evidences of fraud.

As a business owner, the first step to preventing fraud starts with knowing the methods employees use to execute a fraudulent activity. Stealing can be done in many ways and one of which is by placing inventory in garbage bins as a way of hiding stolen objects. Employees can resort to this extreme and desperate measure to steal.

Another cause for concern is when you see a bank statement addressed for a friend or a bookkeeper, but not your vendor. Sure you can consider one mistake as due to incompetence, but if it happens habitually, you know that something is cooking.

Ways Fraud is Committed

A business owner may think that bookkeepers just do not know what they are doing, but there are telltale signs that you should look out for to determine if there really is a case of fraud. If a bookkeeper takes time off, and cannot deliver monthly reports, you know that you need to conduct an investigation. It is very unlikely for bookkeepers to not have the ability to match accounts receivable and accounts payable to the balance sheet considering it is their job.

Not generating an updated financial report raises questions because this is one of the important tasks that a bookkeeper should carry out regularly. There can be some lame excuses such as faulty software or the lack of resources to reconcile a bank account.

How to prevent fraud?

Bookkeepers must be given deadlines as a way of preventing unusual activities. Reports must be delivered to you after month-end and reviews must be done on a monthly basis.

It would also be helpful if you separate bookkeeping duties of your business. Assign a person to enter the bills, and another for paying the bills. There should also be an evidence of financial transactions made. For instance, employees should attach cheques to invoices so you can monitor where the money is spent. Do not forget to sign all your checks as well.

You will also have to perform physical inventory checks. It is important for employees to be aware that you are monitoring transactions. Ask questions and get regular updates from your bookkeeper. It is easy to overlook these things if you remain complacent about your business activities. Do not wait for the time when you have to look over your shoulder as paranoia has already feasted upon you. If you suspect that your employees are engaging in fraudulent activity, act swiftly before matters could get worse.

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.

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.

What Can Businesses Do With Late Payments

An unpaid invoice blurs the lines between collapse and survival. It cannot be denied that late payment is an ongoing problem for many businesses. More often than not, business owners find themselves chasing clients to make them pay, but despite the effort, things are always easier said than done. When clients take longer to pay the bills, it can greatly impact the firm’s cash flow. As a result, it will not be easy for businesses to invest in their operations.

It is no secret that late payment has been considered a problem for many years. If businesses do not have the ability to maintain a steady cash flow, they always end up borrowing money. The problem is, repaying the money owed may not be easy. The good news is, there are still some techniques that businesses can use to meet this challenge and to ensure that firms that owe you money will be able to pay you back.

Require upfront payment

One approach businesses can use to avoid late payments is to require upfront payment. Many companies may expect credit terms to be part of the service and when you take this approach, they may choose not to do business with you. Make sure you set the company’s expectations before requiring upfront payment.

Act promptly when chasing overdue

Be sure to act promptly when chasing the debt once it becomes overdue. If the credit terms are 30 days, you can start to chase the overdue account by issuing a reminder on day 31. The reminder should clearly state when the payment should be made. You can pass the debt over to a reputable debt collection firm if payment is not received by your deadline.

Late payment fees

You can also apply a late payment fee for clients who have failed to settle their debts. However, you need to take a few things into consideration. You need to make sure that the terms and conditions adhere with any legislation or regulation that applies to the industry or business. However, you need to keep in mind that this move may have a negative effect on customers. As a business owner, you need to be prepared to lose customers.

When you face late payments it is important to state your terms and conditions and this only be specified on the initial invoice so your clients will know when you expect to be paid. When dealing with a late payers, you have to ask yourself if you are still making money of this client. If you are losing money, it is about time to let the client go.

Is There A Way To Keep Your Tax Bill Down

Paying taxes is every business owner’s obligation. Miss a payment and you will get yourself into hot water with the ATO. This is something you do not want to happen. Tax may be deemed as a complicated subject matter because of the responsibilities you need to fulfill. However, it is actually much simpler than you might think. If you are going to do your own research, you will come to realise that there are still ways you can keep your tax bill down.

Pay Superannuation Contributions

It is important for employers to make a payment of superannuation contributions withing 28 days of the end of the quarter. For instance, all June quarter superannuation contributions must be paid by June 30. Doing this can accelerate your tax deduction. You should also keep in mind that the only way a tax deduction will be available is if you have actually paid the contributions, cleared them in the business bank account and the employee’s have received super fund before June 30. It is also necessary to pay any other outstanding amount before year-end.

Pay Bonuses To Your Employees

You have to put a properly executed bonus plan in place if you intend to pay bonuses to your employees. This plan should be executed by June 30 so you will be able to claim the deduction this year. A deduction will be available for employee bonuses if you have incurred the expense before year-end. No deduction will be available if your organisation failed to calculate or authorise the amounts of any bonuses.

Write Off Bad Debts

Insolvency can really hurt a business, but it can be inevitable. If this happens, you can write off a debt for the tax deduction to be available. Bad debts are the ones left unpaid. This is considered to be an allowable deduction so long as it was included as assessable income in a previous or current income year. What you can do is go through your debtors list for you to find out if there are any that you believe cannot make a payment. You need to write off those debts by June 30 so you can claim the deduction this year. You will also have to keep a written record as proof that the debt has been written off.

Pre-Pay Business Expenses

Another way you can get a tax deduction is when you consider pre-paying business expenses. For this deduction, the expenses must cover a period of no more than 12 months. The expenses included in this category are the insurance premiums, internet and telephone services, rent or leasing charges and more.

The Benefits Of Lodging Your Tax Return Online

Filing your tax returns in a timely manner should be observed to avoid penalties and fees. You can also get a good impression from the ATO if you do not fall behind your schedule. Tax returns cover the financial year from July 1 to July 30. The due for lodgement of tax returns is by October 31. There are various ways you can lodge your tax return and the most convenient and easiest way is by using MyTax. Since MyTax is web-based, you have the option to lodge your tax return from any device be it your computer, tablet or smartphone. Make sure you have a myGov account linked to the ATO to use this option.

Why Lodge Online

  • By late August, the information from your bank, employer and government agencies will be pre-filled and what better way to do this than to opt for the online option.
  • When it comes to protecting your sensitive information, myTax uses online banking encryption to ensure that your information is safe from data breaches.
  • Regardless of the time you wish to lodge your tax return, myTax is available 24/7.
  • You can also get your refund within 2 weeks.
  • Even sole traders can take advantage of myTax because it is available for all individuals who wish to lodge their tax return online.

The upgrades and features to expect in 2016 include:

  • fully integrated tools and calculators
  • ability to amend or lodge prior year returns
  • myDeductions data automatically loads into your return
  • new online tools to records capital gains and depreciation
  • helpful messages that will guide you through lodgement

Pre-filling your online tax return

Pre-filling your tax return means partially completing the tax return by automatically loading information through myTax. The information you will find in your pre-filled tax return are the current year information from the organisations that report to the ATO. These usually include government agencies, employers and banks. The data from your previous tax returns and account activity are also supplied.

You can review your pre-filled information and supply any missing details. You can also update incorrect details. The purpose of pre-filling is to make the process of lodging your tax return easier. It also ensures that the information is complete and accurate. Once you report organisations report to the ATO, the pre-filling information will be available within a couple of days. The information is made available by early August.

Pre-filling is beneficial because it enables you to resolve discrepancies before you decide on lodging your tax return. Checking tax returns for any discrepancies is important because the ATO checks that the information you have provided matches the information your report on your tax return.

Common Superannuation Mistakes

If you are running a small business, one of the most essential employment obligations you should fulfill is the superannuation. Aside from paying super contributions for eligible employees, it is also considered a key incentive area for your employees. One of the best practices to follow so you can prevent problems with superannuation is generating report of bulk payments and regular pay cycle. When you have already paid the super contributions, you need to process and maintain the employee records related to superannuation. However, there are still instances when business owners fail to follow the correct process. Here are the common mistakes often committed when it comes to complying with superannuation laws.

Mistakes To Avoid According To The ATO

  • Missing the due dates
  • Failing to understand when super should be paid for workers
  • Failing to pay the required amount of super for employees
  • Failing to pass on the employees TFN to their super fund
  • Error recovery

These Mistakes Can Be Avoided By Following These Rules:

  • Be sure to calculate income correctly
    Super Guarantee contributions are based on the income of your employees. This is why you need to see to it that their income is calculated correctly. Since the contributions are set as a percentage of regular Ordinary Time Earnings, it is important to note that shift loadings, paid leave, allowances and commissions are included in the regular wage of the employee.
  • Avoid influencing an employee’s choice of fund
    You are not allowed to make changes to the employee’s choice of fund unless you hold a Financial Services Licence. The employee will be the one to find out how to join a fund or get product information. If the employee needs additional information about their choice of fund, you simply direct them to government websites so they can make a comparison of different super funds.
  • Pay your employees’ superannuation guarantee
    Any eligible employees must have a compulsory contribution or Super Guarantee contribution, which is paid directly to employees nominated super fund. It is the employer’s obligation to make Super Guarantee contributions. It is a percentage of the employee’s regular income. As of 2015/16, the Australian Government has set the rate at 9.5% of regular income.

Superannuation Cut-Off Dates

When paying superannuation contributions, an employer must also take note of the cut-off dates. Contributions must be paid at least four times a year. For the 1st quarter covering July 1- September 30, the cut-off date will be on October 28. for the 2nd quarter covering the period October 1 to December 31, the cut-off date will be on January 28. For the 3rd quarter covering January 1 to March 31, the cut-off date will be on April 28. For the 4th and final quarter covering April 1 to June 30, the cut-off date will be on July 28.

Tax Deductions Your Business Might Have Overlooked

Even in businesses, old habits die hard and when left unchecked, they can create a ripple effect on the most critical area of your business. When running your business, you need to see to it that you are sharper and smarter. The expenses you incur is often claimed as deductions. However, deductions for domestic or private expenses are not considered valid for claims. There are also some other expenses that are excluded. This is why you need to check the following as you may have overlooked them come tax time:

Prepay Expenses

Prepaying your expenses is one reason for overlooked tax deduction. Prepaying your expenses can be done to cover a time-frame, which should not exceed more than one year. The purpose of prepaying expenses is to bring forward your operating expenses before each financial year ends. Some examples of expenses you can prepay are insurance, training events, travel expenses, rent, phone and others.

Employee Deductions

Your employees’ salaries, bonuses, wages and even commissions taking place before the end of each financial year can be deducted. This can be done even if you have not physically made the payment to your staff by that date. The said payment still counts as work performed within the specified financial year despite the wages and salary not appearing in the PAYG payment summary of the employee until the next financial year.

Accounting and banking expenses

Bookkeeping, accounting and activity statement preparation are considered the most common deductions you make when running your business. Common deductions may also include marketing and general advertising costs. However, bank fees and charges are still overlooked.

Stock and Inventory

Everything counts with tax deductions and with that said it is important to check your stock and determine which ones are damaged or obsolete. Make sure you write it off or write it down because this practice will create a great impact on the trading stock’s value and your profit margins. Make sure you consider how to value your stock trading every financial year because there might be a possibility that you will be entitled to a tax deduction especially when your opening stocks have already exceeded the closing stock.

Bad Debts

Bad debts and financial loss can also be overlooked. As much as possible, you should speak to your financial advisor so you can discuss the steps you need to take to minimise the impact of the loss. Make an attempt to recover bad debts. You can also document the debt as evidence and your financial advisor can help you with the process.

It is imperative that you keep track of the tax laws and regulations as they change frequently. You can prevent issues with filing your tax claims if you aware of these changes.

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.