Considerations for a Business Engaging a Bookkeeper

Considerations for a Business Engaging a Bookkeeper

The bookkeepers do the bulk of the day to day work, while accountants and tax agents are involved in big-picture planning and end of year tax obligations. The bookkeeper will efficiently touch every transaction business is engaged in, while the accountant is looking mainly at reports and accounts rather than the accuracy of individual transactions.

The bookkeeper creates and maintains the general ledger, which is the basis of the company’s management accounts. All businesses benefit from quality management information, the balance sheet and income statement,  on which to make the right decisions.

The balance sheet can describe a moment-in-time view of your business. You get a quick snapshot of what’s going on in your company’s world.

The following are a few of the  tell-tale signs you might identify if your numbers are out of balance:

  • Negative Balances
  • Misapplied Payments.
  • Rising Debt-to-Credit Ratios.
  • Rising Debt-to-Credit Ratio
  • Opening Balance Equity.

The income statement shows one a summary of income and expenses and indicates how profitable the business has been over a period. It reflects income and expenses over a month, quarter or year, whereas the Balance Sheet represents a moment in time.

Doing the bookkeeping yourself can increase the risk of problems and mistakes. Common DIY issues are:-

  • Incorrect claiming of GST resulting in penalties or needing to amend a BAS
  • A late or inaccurate payment of superannuation resulting in fines and interest
  • Invoices or inventory  problems going unsolved
  • Correct employee entitlements not taken care of
  • Inaccurate management reports resulting in not having an unclear picture of the business performance
  • Late lodgement of BAS resulting in interest charges

www.icb.org.au/out/?dlid=30043

You can expect a competent bookkeeper to establish and maintain the following for the company:-

  • chart of accounts,
  • customize templates,
  • complete monthly journals, prepare
  • BAS,
  • run management reports.

Bookkeepers would be able to handle the bulk of transactions including the following:-

  • Accounts Payable,
  • Accounts Receivable,
  • Payroll,
  • Inventory,
  • Reconciliation of relevant accounts.

Benefits of engaging an employee bookkeeper

  • Bookkeepers would be in a position to assist with any accounts or payroll matters requiring attention which prevents the buildup of accounting problems or payroll issues.
  • Bookkeepers would be  in a position to work on many projects and varied tasks as required by the business
  • Bookkeepers would be in a more significant opportunity to know and understand your business in depth and detail
  • Bookkeepers become the loyal employee is to your business
  • Bookkeepers are in a permanent position to liaison between suppliers and industry
  • A bookkeeper can be the goto person for staff concerns

An employee bookkeeper will often have other tasks they are expected to perform, which may have nothing to do with bookkeeping. For example, you may also require administration, reception, and sales. Therefore a bookkeeper’s role must be made clear by the employer before being employed, be it bookkeeping, and accounts or all the other positions. For example, employers may realize that you would be better off hiring an administration person with bookkeeping skills in addition to a contract bookkeeper for half a day per week.

If you require someone to attend to accounts on a daily basis, you will employ a bookkeeper.

 Bookkeepers will analyze the data

Bookkeepers are in a better position than AI-driven analytics to analyze data and create reports that will assist the business to know what is going which will enlighten the owners as to how well the company is doing on a monthly or annual bases.

– Bookkeepers reports will include 

  • P&L this month compares to the prior period
  • YTD earnings this year to the same YTD earnings last year.
  • How the bank balance compares to creditors
  • How the debtor balance compared to sales
  • How cash flow be more comfortable if a few more debtors paid that little bit quicker

Bookkeepers have always been the ones that make sure the company complies with Government requirements, and how to meet their needs in a practical business manner. Bookkeepers viewed as:-

  • The expert record keepers
  • The business process experts
  • The regulation interpreters
  • The advisers to business on how to meet their requirements and compliance.

Bookkeepers will advise Employers about Singel Tough Payroll STP progress

22 software providers supply payroll products to around 80 percent of Australian employers who employ 20 or more employees. The majority of these 22 payroll software providers are so far indicating they will have an STP product ready by 1 July 2018, although there is flexibility available for those that may need more time.

MYOB http://help.myob.com/wiki/display/ar/Single+Touch+Payroll+reporting

“Single Touch Payroll functionality will be delivered into MYOB products throughout the first half of 2018.”

Reckon https://www.reckon.com/au/single-touch-payroll/

“All Reckon software with payroll functionality including Reckon One, Accounts Hosted, Reckon Accounts, and Payroll Premier will be STP-enabled and ATO compliant by 1 July 2018.

XERO https://www.xero.com/blog/2017/11/single-touch-payroll-au-payroll/

Intuit QuickBooks

“Our developers are busy coding away to ensure you remain STP compliant before July 1.”

GovReports http://www.govreports.com.au/STP/

Employers must now be in a position to understand what their software is doing. The employer must find out from their Accounting  Software company has an extension of a start date from the ATO for STP.  For the employer to be able to use the STP efficiently the employers need clean up their employee’s data as each employers’ Superannuation obligations for each employee is now reported with each payrun, and that the superfunds will be indicating whether the super has paid. Assess whether there is any Super accrual or payment shortfall from history, and plan to correct any issues (before the ATO detect any problems).

It is advisable at this stage for employers to upload the ATO Checklist and ATO Fact Sheet.

https://home.messagexchange.com/products/single-touch-payroll-stp/

Bookkeepers employed as BAS/ Tax Agent

A bookkeeper who regards themselves as BAS/ Tax Agents must register as a member of the Tax Practitioners Board – TPB which is an independent statutory body responsible for regulating tax agent services. The Tax Practitioners Board aims to assure the community that tax practitioners (tax agents and BAS agents) meet the appropriate professional and ethical standards.

As a member of the TPB, the bookkeeper is obliged­  to withhold the Code of Conduct of the TPB which includes:-

  • must act with honesty and integrity
  • operate lawfully in the best interest of the employer
  • must disclose any information relating to the employer’s affairs to a third party without the employer’s permission
  • must not lodge anything they know or suspect to be incorrect.

To verify that the bookkeeper is a certified BAS/Tax agent and thereby is eligible to be a member of the TPB  employers are encouraged to google the employee by searching the following site  – https://www.tpb.gov.au/registrations_search. This site contains registration details of registered and deregistered tax and BAS agents and tax (financial) advisers and is register on a daily basis.

Bookkeepers will help upgrade accounting systems

Bookkeepers will help you, the employer(s), integrate effective accounting systems. Created by using online accounting software which dispenses with the need for two copies of data. By upgrading the companies accounting software, Bookkeepers will be in a position to upload data into a Cloud format, and a single ledger will be able to be created which will cut down on duplicating and both the bookkeeper and employer will have access to the accounts.

The software company stores the data files and no longer by the business owner for an accountant. Only those that have authorization can view and edit the file no matter where data located. All that is required by authorized personnel is an internet connection, a computing device, and a username and password. Software companies call this a single, collective or unified ledger.

The importance of establishing online accounting results in reducing paperwork, improves communication, understanding of business processes, and saves time and money. What is very important when choosing a cloud-based accounting package is to make sure the cloud provider has adequate security which brings in the high level of awareness of cyber risks within businesses.

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