Bookkeeping For Your Business

Financial data analyzing. Counting on calculator.

Often, the importance of a business’s financial record can be undermined. Many people think that the success of a business lies at the end of the production line and hinges upon effective marketing methods but that’s only partially true. A successful business strikes a balance among all the departments of the business but places a strong emphasis on solid financial management. Here, we’re talking about managing the efficient financial recording of accounting transactions for the typical small business. Continue reading

Outsource Bookkeeping & Accounting

In today’s world of continual cost cutting and innovation businesses are trying to determine how they can successfully reduce overheads, increase profits and deliver a better product or service than last year to stay ahead of the competition.  One way businesses are achieving this successfully is through the principle of outsourcing.

Outsourcing has penetrated nearly every major identifiable business department in the western world whether it be sales, customer service, advertising, production and even bookkeeping, accounting and financial management. Continue reading

Bookkeepers Role in Business

When you think of a bookkeeper, what probably come first in your mind are numbers, mathematics and accounting. Typically a bookkeeper performs many accounting and even administrative tasks on a day to day basis. The accounts a bookkeeper manages maybe for small individual businesses or large corporate businesses. But when we break it down beyond generalizing what is a bookkeepers role in a business? Read on to find out.

Bookkeepers maintain financial records, which include bank and credit card account balancing and updating to make certain that all deposits and payments are reported accurately. Bookkeepers need to allocate payments which have been received by customers against the invoices for which the payments are applicable on the debtor’s ledger. Cash and cheques are then deposited at the local financial institution for the company. Statements are then usually issued at the end of the month to ensure customer records remain verbatim with the company’s records. Lastly any overdue invoices are followed up with customers for payment to ensure the company maintains a high level of liquidity.

Bookkeepers often serve as a liaison between the sections or departments of a company, interacting with department heads to ensure that payroll information is provided in a timely and accurate manner. Payroll is then executed by the bookkeeper who keeps track of employee entitlements where applicable, the right amount of tax is withheld and superannuation guarantee is calculated in accordance with Australian workplace laws. Payments are then submitted to the bank in accordance with the payroll calculations and payslips are issued to employees. Superannuation is also required to be paid either on a monthly or quarterly cycle depending upon what the employer has nominated.

Bookkeepers will often maintain the creditor’s ledger for a company in order to accurately determine what is owed by the company to suppliers at any point in time. Once an invoice is received, the bookkeeper will determine whether the invoice is legitimate by liaising with the individual responsible for purchasing the goods or services or matching the invoice against internal paperwork. If the invoice is legitimate it will then be recorded in the accounting system for payment at the determined time. Payment is then issued as required an a remittance advice is then issued to the supplier to close the invoice or account.

Bookkeepers ensure that inventory levels in the accounting software reflect the amount of inventory which the company possesses by liaising with the warehouse to stay on top of anomalies and errors. Often inventory adjustments will be required due to dispatching errors, receipting errors and breakage. This is important as the purchasing officer needs be aware of current stock levels in order to reorder in the right amount of time to receive the goods for sale and the sales department also need to know how much stock is on hand in order to facilitate sales.

Bookkeepers are often responsible for calculating and managing the GST, Fuel Tax Credits, Wine Equalisation Tax, Fringe Benefits Tax, Payroll Tax, Pay As You Go Withholding Tax and Business Income Tax Instalments where these taxes are applicable. This is vitally important for the business as miscalculations can involve under or overpayments of the relevant taxes and incur interest and other penalties from the taxation office.

At a higher level bookkeepers are responsible for the collation and preparation of financial statements for their superiors in order to keep a handle on the financial matters of the business. This typically involves the following reports:

–          Ageing Debtors Report

–          Ageing Creditors Report

–          Profit & Loss Statement

–          Balance Sheet

–          Cash Flow Statement and Or Projection

–          Budget

These reports are vital to ensure the longevity of the business and increase in performance capability in an ever increasingly competitive marketplace.

Bookkeepers are the financial backbone of a company and as such it is important that you engage a knowledgeable and experienced bookkeeper for the industry you are in. This will ensure that you pay the minimum you need to in taxes but also remain compliant from the taxation offices point of view. Employees are paid properly but not overpaid and entitlements are calculated correctly. All money is received from invoices which are issued. Suppliers are not overpaid but also paid in a timely manner to ensure supply. Inventory levels are tracked correctly to help reduce internal theft and fast supply to customers.

What To Look For When Applying For A Business Loan

Applying for a business loan and receiving final approval can be a lengthy process, but it can make a substantial difference between keeping your own business operating and shutting it down which certainly makes the whole process worthwhile. The exact time for approval can vary depending on the type of business loan you are applying for, its complexity, and the timeliness of the borrower providing the information. The amount of a loan may also differ depending on the needs, profitability, and credit history of the business. The good news is the fact that most of the loan providers require the same information and documents from business loan applicants. Below are the usual documents and prerequisites for a business loan application.

Form for Loan Application

Keep in mind that the application forms vary from lending institution to lending institution. However, lenders typically ask for the same information in your application. So you have to prepare for questions such as – what is the purpose of your application and where you intend to use the proceeds of your loan when received. Other questions may focus upon the assets the business possesses, credit history with preferred suppliers, existing business debts, the key members of the business’s management team, and the directors personal background. These questions need to be considered first before filling out the application form.

Resumes as Evidence

Some lenders may require supporting evidence to secure claims in a director’s resume that proves their experience in business management and the industry. This is crucial for business loans that are to be used for start up businesses.

Solid Business Plan

Submission of your business plan together with your application form is imperative in all types of loan applications. Your plan should cover your projected financial statements for specifics like cash flow, profit and loss, and balance sheet. Lenders will generally inquire into a director’s credit report, which can be a key determinant in the lenders issuance of a loan. It is advisable to ensure your credit report is clear of any red crosses before starting the application process.

Income Tax Returns

All lenders will request to see at least the last financial year’s tax return for the business as well as the director’s personal income tax returns. The lender will also likely ask to see a copy of the Australian Taxation Offices balances for the integrated client account as well as the income tax account for the business and possibly the director’s where applicable. This will help determine the applicants ability to service the repayments of the loan.

Financial Statements

Lenders may require directors owning a percentage of a business to provide personal financial statements pertaining to themselves. Statements will most likely be expected to include an income statement, bank statements, cash flow projection, and balance sheet that cover the period of a year

Accounts Payable and Accounts Receivable

Another general requirement of a business loan application will be the aged debtors and creditors of the business at the most up to date point in time possible. This is to understand the breakdown of your creditors and debtors which may determine further risks of the loan.

Collateral Guarantee

Collateral is always one of the primary concerns of lenders. Substantial collateral is a requirement for loans that involve higher default risk factors. It is not often that you will not be asked to provide collateral but if the business has strong financial statements, substantial assets and a current relationship with the lender this may not be required. However, whenever applying for a loan you should be prepared to offer some form of collateral as this is the rule more often than not.

Legal Documents

Lenders may also require you to submit pertinent documents like articles of incorporation, copies of contracts with third parties, and franchise agreements. An applicant needs to be prepared to be totally transparent in their business dealings as questions can sometimes be considered intrusive.

These requirements from possible lenders will serve as guidelines in order for an applicant to consider before beginning the loan application process.

A Bookkeepers Responsibility To Their Clients

Every Company requires a bookkeeper to properly function but the duties and responsibilities vested in a bookkeeper can vary from company to company depending on the size of the enterprise and the manner as to the distribution of duties among its employees. However, notwithstanding the type of company, bookkeepers deal with at least the mandatory facets of the financial record-keeping of a firm. Bookkeepers are part of a company’s accounting department or in smaller companies are wholly and solely the accounting department, who engage in the day to day execution of financial transactions and record keeping. Bookkeepers are even sometimes regarded by business and financial institutions as the backbone of an organization.

Among the typical tasks a bookkeeper would execute on a day to day basis are the management of payable and receivable accounts, update of profit-and-loss statements, balance sheet and trial balance, establishment of BAS and PAYG liabilities, reconciliation of bank statements, and recording of financial transactions. Bookkeepers are also often responsible for the recording and calculation of the payroll function and often are responsible for the process of transferring the funds to the employees.

Bookkeepers are generally the individuals responsible for coordinating and constructing a Company’s profit and loss statement over any given time frame. They therefore have to ensure that every account in the Chart of Accounts stays in balance on at least a monthly basis and properly investigate any financial transactions within the company that are not routine or appear out of the ordinary. By doing this a bookkeeper is able to be a balance and check for staff members and privileged stakeholders who may be out to defraud or embezzle funds or liquid assets of a company.

In executing the tasks above it is a bookkeepers responsibility and professional obligation to represent their company or employer by conducting themselves with a high standard of honesty and integrity when dealing on behalf of a company. A high level of confidentiality and discretion are required when dealing with the financial matters of a company as many issues that a bookkeeper may deal with are of a sensitive nature. But beyond this it is highly likely a bookkeeper will also be exposed to sensitive details of individuals within the company including staff and even the shareholders of a company and for this reason it is important that the individual entrusted with these privileges must be trusted to manage this information appropriately.

Bookkeepers are often called upon to provide expert opinions in regards to internal operations from a financial perspective primarily because they have the best understanding of the financial day to day operations of a company. A bookkeeper will often deal directly with the directors or shareholders of the company whilst the company is going through a contracted or expansive business phase as directors and shareholders need to keep their finger on the pulse at a greater level than usual as this is generally a more volatile time for the company.

Finally, it is important that a high level of communication between the bookkeeper and management exists as this fosters an environment for business success. At all times the bookkeeper is responsible to look out for the best interests of the business and not their direct manager as a managers view can sometimes become clouded by the opportunity of personal gain which presents itself when a high level of autonomy and resource is left at a managers disposal. For this reason it is important that a Bookkeeper has access to the directors or shareholders of a company.