The Economics of Small Business

The Importance Of Accounting In our Society

Accounting is the career for men and women who set their sites on top positions in industry, management, government, and general business. Accounting is a basic need of every businessman. It’s so important to our society. None of the business organisation can operate without is. They are there-somewhere-in every business. In small businesses, people use pen, ink, and skill to keep records. In a large business, modern accounting machines are used to operate. Men and women are directing these machines in the accounting process.

Wise businessmen enter business must have some accounting knowledge.   Accounting is a vital element of a business. It records the way business has grown and, after analysing figures, suggests the way it should go in the future. Fortunes are gambled on the advice of accountants.  Accounting expands each time a new store, a factory, a filling station, or a school goes up, whether in a large city or a small town. In today’s society, the demand for good accountants far exceeds the supply.

As our country has expanded, business and industry have become more and more complex, so control here is very important. And control depends on a great deal of the bookkeepers and accountants who can analyse figures and advise management on what should be done. They are using more scientific ways of changing money, figuring change, and collecting sales taxes. Moreover, department stores and other companies now have plants and offices widely scattered throughout the country. A new set of bookkeepers and accountants is needed at each branch.

I know there are many managements supervisory, and junior or senior executive positions are being filled by people who started as accountants because accountants have the knowledge of methods and finance and comprehension of the fundamentals of business, more employers prefer employees with some knowledge of bookkeeping and accounting.  

Cyber Security

Companies must be aware that cyber risks can arise from within the business and employers may want to review how well-informed staff is of company’s policies and procedures, thereby putting into practice cyber security measures.

Cyber security measures include:-

  • periodically changing the password
  • logging out of systems when they are not in use, mainly when using remote access
  • implementing constant awareness of the types of cyber attacks that may occur, and how to report them

Employers must make sure that updated information security policies and procedures incorporated in the latest standards.

Employers  can draw on a range of recognized strategies and standards, including the following:-

  • Australian Signals Directorate (ASD) which is an intelligence agency in the Australian Government Department of Defense. ASD has created  Strategies to mitigate targeted cyber intrusions, particularly the four highest-ranked mitigation strategies, which address around 85% of standard cyber risks;
  • International Organization for Standardization (ISO), an information security standard and International Electronically Commission (IEC), an information security standards: ISO/IEC 27002, titled Information technology – Security techniques – Code of practice for information security management.

Employees must be made aware on a constant basis of the different types of Cyber attacks and how cyber attacks occur. An internal or external HR seminar can structure Cyber security information for the company based on the following:-

Who carries out Cyber Attack:-

  • Employees and other insiders
    They are considered the most likely source of an attack and may be motivated for ideological or personal reasons, or for financial gain.
  • Lone individuals
    They commit fraud or small-scale breaches. However, they may have the potential to create significant disruption as an individual hacker.
  • Corporate espionage
    Cyber attacks included espionage by competitors, suppliers and trusted third-party service providers. Hacktivists They are motivated by political, ideological reasons and use technology to facilitate criminal conduct in a coordinated and systematic way.
  • Organised crime
    Financial benefits motivate organized crime and use technology to facilitate criminal conduct in a coordinated and systematic way. State-sponsored activity Attacks from this source are often highly resourced. They may focus on espionage, whether for commercial, political or ideological motives.

http://download.asic.gov.au/media/3062900/rep429-published-19-march-2015-1.pd

Hacking Technique:-

Manipulating the behavior of computer devices, network connections or connected systems for their end use (e.g., cracking passwords to access a computer). Identity and data theft Information harvested through a range of methods, including:-

  • phishing (getting access to personal details or money by pretending to be a trusted source)
  • card skimming (information copied from the magnetic strip of a debit or credit card),
  • or through social media.

Hacking results in data breaches, where theft or compromise of personal information, particularly of staff or customers, to use or sell on the black market. Hacking can also result in denial of service. Attempts to make a computer device, system or network resource (such as bank or payment system) unavailable to its intended users through, among other things, overloading it with computer traffic, ‘malware’ or a virus. http://download.asic.gov.au/media/3062900/rep429-published-19-March-2015-1.pdf

  1. Malware, short for malicious software.
    Malicious software to infect a person or organization’s computer, computer system or network—for example, through the use of ‘trojans,’ viral attacks spread via email, spyware, spam, and adware—enabling the perpetrator to monitor online activity or cause damage to the computer, system or network. © Australian Securities and Investments Commission March 2015 Page 46 REPORT 429:
  2. Unauthorised access
    The unauthorized access of a computer device, computer system or network to obtain information (e.g., through cracking passwords)
  3. User tracking
    Spying on a person or entity (e.g., tracking calls, emails, pictures, and messages, mainly through mobile technologies).

Cyber attacks brought on through unintentional participation:-

  • Money laundering
    Transferring money (g., the proceeds of crime) through online payment systems or e-cash facilities to make it legitimate. Financial consumers or entities may be unaware that their accounts or networks used as a form of laundering money.
  • Online fraud
    Illegal attempts to access personal details or financial information through phishing and email scams (e.g., money transfer requests).
  • Pharming or ‘drive-by’ attacks
    Web attacks occur where a user visits a malicious webpage which in turn infects without conventionally downloading a file, or re-directing users from legitimate websites to fraudulent ones. ‘Ransomware’ Attackers threaten the encryption of files or removal of data and files unless money paid.

Cyber attacks are brought on by indirect measures resulting from the following:-

  • ‘Social Engineering’
    The psychological manipulation of people into performing actions or divulging confidential information on or about an information system.
  • Third-party providers
    The poor cyber resilience of third-party providers such as business partners, service providers, contractors, and suppliers, or weaknesses that can arise from sharing networks and data—including offshoring and outsourcing.
  • System vulnerabilities application or technological weaknesses
    Failure or delays to update software or information controls (e.g., continued use of the Microsoft XP operating system, which no longer offers IT security support and updates).
  • Operational systems
    Lack of resilience of physical infrastructure that supports the information system, such as power generators and servers.
  • Use of virtual platforms (i., cloud) and portable devices Increases the risk of access to confidential information if appropriate protections are not in place.
  • Weak access protections
    Poor access protections may make it easy for employees or hackers to get inappropriate access to confidential information.

The need to build cyber-security skills in non-technical disciplines, so cyber resilience integrated into the core business must be adhered to by all employers and staff on a regular basis. Employer and employee’s cyber security awareness, correct compliance with security protocols will increase the company’s security measures to cyber attacks.

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.

Employer must consider getting HR assistance.

As an Employer, please be aware of the following HR questions:-

  • Which recent awards are the employees governed by?
  • How can we dismiss this employee?
  • Can we make this employee redundant?
  • What rate should I pay my apprentice?
  • Do I have to pay personal leave without a medical certificate?
  • My business shuts down over the Christmas period, can I force employees to take leave?
  • Ex-employee suing for unfair dismissal or discrimination, what to do?
  • Do I have to pay annual leave loading?
  • Can I deduct money from an employee’s pay for broken equipment?
  • Can I pay an annual salary above award?
  • Do I have to pay casual loading or can I pay above award instead?
  • Do I have to allow an employee to cash out leave?
  • Can I make an agreement with the employees to work 42 hours per week without paying overtime?

For small to medium companies who do not have an HR division within the enterprise to help resolve and answers pertaining to management and employees, there are HR companies to whom you can outsource all your HR requirements. Outsourcing enables the business the opportunity to manage staff issues. This type of outsourcing will help businesses to accomplish peak performance without the overheads involved in hiring an in-house Human Resources team.

It is crucial to choose an HR company that is well versed in a variety work related issues and consists of advisors who are experienced and qualified HR and employment relations professionals. HR companies can assist employers of small, medium and micro businesses to reduce the risks of expensive and damaging employee claims, and substantial fines and penalties by providing the necessary information required which is in full compliance with Australian employment laws.

An area where most managers do not have much experience in is in mental health. Mental health is the third leading cause of disability burden in Australia.  Major depression accounts for more days lost than any other physical or psychological disorder. The workplace must provide a safe haven and prevent discrimination for mental health from festering. Managers can contact an HR company of their choice as a source of help as to gaining the right approach to use to help employees and make employees aware of the support that is available to them through the company.

For the companies who are looking to outsource the HR division here are a few names to look into.:-

http://www.populus.com.au/outsourced-hr-services/

http://www.workforceguardian.com.au/features/exiting-processes/

http://www.cartec.com.au/?gclid=CNeXmI3xgtQCFYKTvQodIQEHHA

Selective Recruitment – a reason to help.

Helping people is the fundamental reason I became a Recruiter. I understand that people are constantly looking for ways to ease the stress and busy lives that come with running a business. The questions that companies are asking themselves about using a Recruitment Agency is:-
– What can the Agency do for them?
– How can the Agency solve their most urgent problem?
– How can they trust the Agency?
– Why should they choose a particular Agency over other businesses offering a similar
service?

So, to those forward thinking companies who would like to fix or improve their financial setup, let  Selective Recruitment find you the right person based on the following approach:-

Continue reading “Selective Recruitment – a reason to help.”

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