When you’re running a small business, engaging the right support to help you fulfil your tax obligations and keep your business in good shape is vital. But the terminology used can sometimes be confusing. Quite often you’ll hear the phrases: tax agent, BAS agent and accountant used interchangeably but the perception that they all do the same thing is wrong. There are important differences between the roles and it’s important to understand them so that you get the right support. So what is a BAS agent and what is the role of a tax agent and accountant and how do they differ?
What Is A BAS Agent?
So let’s start with a BAS agent. As we highlighted in a recent blog, BAS Requirements For Small Business, it stands for Business Activity Statement and it is used to report on and pay several different types of taxes including Goods and Services Tax (GST) and Pay As You Go (PAYG) instalments. A BAS agent is therefore authorised to prepare and lodge a BAS return on a business’ behalf and provide advice on your day to day business taxes, primarily limited to your GST and PAYG obligations.
Regulation for BAS agents was introduced in 2010 to ensure that contract bookkeepers, who had traditionally assisted small business owners with their GST and PAYG, were appropriately qualified to offer this support. Following the amendment of the Tax Agent Services Act, to become a Registered BAS Agent you need to have 1000 hours of experience in providing these services, have professional indemnity insurance and pass the ‘fit and proper person’ test. This set in place a distinction between the role of a bookkeeper who may be doing data entry and bank reconciliations for example and someone qualified to prepare your BAS statement. Many bookkeepers had to complete or update their knowledge, primarily around GST legislation, to continue offering this service.
While this isn’t quite as detailed as the requirements for a Registered Tax Agent, it means that those completing your BAS have a level of experience specific to these needs and are legally accountable to the Tax Practitioners Board. A good BAS agent can prove invaluable to your business as they can make it so much easier for your accountant to offer sound advice based on an accurate picture of your business financials.
What Is A Tax Agent?
The role of a tax agent is a little different to this. Tax agents are more specialised and qualified in tax law. Providing they are registered with the Tax Practitioners Board they are licensed to prepare and advise on a broader range of tax issues including but not limited to an income tax return and they are suited to working with growing businesses. When it comes to doing your business taxes, they will review all your annual income and expenses and ensure that you get all the relevant tax deductions available to you. Keeping your business tax liability at a reasonable level is critical when you’re running a small business. A good tax agent is therefore essential as they take away the pressure of needing to understand the ins and outs of your tax liability, what you can claim as expenses and deductions and what you can’t.
So how do these roles differ from that of an accountant?
What Is The Role Of An Accountant?
An accountant is the heavyweight when it comes to managing and growing your business. A good accountant will perform a number of critical roles for a business including (but not limited to) ensuring that you are operating under the right business structure, helping you with strategic planning, financial management, tax planning, wealth and risk management. A good accountant will be your trusted business advisor, keeping you on track and explaining the implications of your key business decisions to maximise for business and financial success.
So whereas a BAS agent and a tax agent are both involved in dealing with lodgment and compliance, the role of the accountant is to help you take a longer-term view of your business and to help set you up to achieve your business goals. While an accountant should effectively be able to perform both of the above roles, their level of expertise to advise on a much broader range of issues means that their hourly rate is typically higher. This means you are better off engaging the right professional for the right job. Each professional performs a unique but important role, depending on the needs of your business and working with all of them at the right time ensures you are covered in terms of both compliance and business growth.
And what if you can find a bookkeeper who is also a BAS agent and Tax agent and who works directly with professional accountants and business advisors? This is the ideal scenario for a business owner as you can essentially get it all done in one place! And that’s exactly how we’re set up at Numera! Having your bookkeepers and accountants working hand in hand is the best solution for a business owner as you can be sure everyone is working on the same page, seamlessly.
If your business needs support with BAS preparation and lodgement, don’t hesitate to give us a call on 07 3002 4880. The team at Numera are both Registered BAS agents and Registered Tax agents and we have experience with all the major accounting software packages, including Xero BAS, MYOB, Quickbooks and Reckon. With significant experience across a wide range of industry sectors, we are able to support you with all the standard bookkeeping services as well as advising on the most appropriate accounting method for your business.
Whether you’re an established business or you’re just setting up your first small business, developing good bookkeeping habits will stand you in good stead when it comes to understanding how your business is performing. Keeping track of your income and business expenses, regular invoicing and management of your payroll are all part of the job. So what processes should small business owners put in place to keep things in good order. Here are 5 top bookkeeping tips for small businesses:
1. Choose The Right Accounting and Bookkeeping Software
Investing in an accounting software program can make a world of difference for small businesses trying to manage their bookkeeping. It’s worth having a good look at the various options available. Among the most popular packages are MYOB, Xero, Reckon and Quickbooks but there are many more out there.
Many small business owners now choose cloud or online accounting packages as they enable you to work on your data from anywhere that you have internet access. It also means that your accountant and bookkeeper can work on files remotely and simultaneously.
It’s also worth noting that some accounting and bookkeeping firms specialise in one or two packages. So if you are looking for advice on which accounting software will best suit your needs, it’s best to look for advisors who work with all packages. The team at Numera have experience with all the major packages and can offer independent bookkeeping tips and advice about which software will best suit your needs.
And it’s worth remembering that you can claim the monthly software subscription costs as a business expense.
2. Keep Business And Personal Banking Separate
If you are a new small business owner, one of the top bookkeeping tips is to set up business bank accounts straight away. Make sure that all business transactions are processed through these accounts so that you can easily see day to day expenses and income.
Once your business is up and running it can be much harder to untangle your business finances and get a clear view of your financial data and cash flow in your bookkeeping and accounts.
If you or your bookkeeper are spending time processing personal transactions it’s a waste of time and resources. If your personal finances are mixed up in the business financial data, they will have to be entered into the bookkeeping software and coded to drawings. If you are paying a bookkeeper to do this, it can add unnecessary costs to your bill.
It’s also a good idea to set up a business savings account to set aside money from your business earnings to pay your tax obligations. You may also want to consider applying for a business credit card.
3. Understand Your Tax Obligations
Taking some time to understand your tax obligations may not sound that exciting but it’s definitely one of our top bookkeeping tips for small businesses. You would be amazed at how many small business owners, many of whom have been in business for a long time, don’t fully understand their business tax requirements and how they differ to individual income tax.
Make time to understand the basics such as when your small business is required to register for GST and what your BAS reporting requirements are. That way you can feel confident that you staying compliant with ATO rules and guidelines.
And it’s not only about understanding how much tax you may be liable for. Keeping accurate records of your spending and business expenses can also ensure that you get any tax deductions that you may be entitled to.
4. Learn The Most Valuable Bookkeeping Reports
Most good bookkeeping and accounting software packages allow you to easily generate a wide range of reports to help you understand how your business is performing. However, they are only useful if you actually understand what they’re telling you.
One of our top bookkeeping tips for small businesses is to invest some time in learning which bookkeeping reports are the most valuable for your business.
The accounts receivable report and balance sheet are among the most important accounting reports for your small business. Start by spending some time getting familiar with these and build your financial literacy from there.
5. Know When To Outsource To Professional Bookkeepers
As a small business owner, you have a million and one things to do every day. Making enough time to stay on top of your bookkeeping might be just a step too far, particularly as your business starts to grow. Knowing when to engage the services of a professional is another of our top bookkeeping tips for small businesses.
A good bookkeeper can help your business in so many ways. Keeping accurate financial records will make life much easier for your business when it comes to remaining compliant with ATO requirements, such as BAS reporting, as well as helping you get meaningful advice from your accountant.
At Numera Bookkeeping Services, we provide more than most traditional bookkeepers. With significant experience across a wide range of industry sectors, we are able to support you with all the standard bookkeeping services as well as BAS preparation and lodgment, accounting software support for packages including Xero, MYOB, Quickbooks and Reckon as well as payroll outsourcing and accounting support services.
Work with the Brisbane bookkeepers you can trust. Give us a call today on 07 3002 4880 or email firstname.lastname@example.org to find out how we can help your business.
The end of the financial year (EOFY) can be a really busy time for small business owners. As well as managing the day to day running of your business, you may also be thinking about year-end bookkeeping and accounting tasks, how to ensure that your financial records are in order and how to minimise your tax liability before June 30. To help you prepare we’ve put together an EOFY bookkeeping information checklist for small business.
EOFY Bookkeeping Information Checklist
- Ensure that your Business Activity Statement (BAS) lodgements are accurate and up to date for the year to date.
- Pay your superannuation guarantee (SG) contributions by July 28 and ensure that your contributions are accurate and up to date for the year to date. If you have prior quarters outstanding, it’s best to contact your bookkeeper or accountant for advice as soon as possible.
- Reconcile your payroll and superannuation accounts.
- Reconcile your GST accounts.
- Prepare and lodge your Q4 BAS by July 28.
- Ensure your GST and PAYG withholding accounts are reconciled to the June BAS.
- If you are not yet reporting to the ATO via STP, prepare PAYG Employee Payment Summaries after the last payroll of the year is processed and ensure they are given to employees by 14th July. You will also need to lodge your Annual 2019 PAYG Payment Summary with the ATO by 14 August 2019 to avoid penalties.
- If you are already reporting to the ATO via STP, you are exempt from providing payment summaries to your employees and from lodging a PAYG payment summary annual report for the amounts you’ve reported through STP as long as you undertake the finalisation declaration by 31 July 2019.
- If your business carries stock complete a stocktake of inventory by 30 June.
- Review your Aged Creditors and Aged Debtors and write off any bad debts.
- Check any amounts held in suspense accounts.
- Collate your receipts.
- Update your asset register if you have purchased new assets.
- Reconcile all your accounts to 30 June including all business bank accounts, petty cash accounts and any other accounts you may have in your accounting software.
- Make sure you are ready for Single Touch Payroll (STP) and the July 1 deadline for all business entities, if you are not already reporting using STP. Again, your bookkeeper or accountant can assist you with getting set up so contact them immediately to avoid falling behind.
Aside from ensuring your financial records and accounts are all up to date, there are also a couple of other areas that you may want to consider before the all-important June 30 deadline to potentially reduce your tax liability:
- Pre-purchase insurance, memberships or subscriptions for an immediate deduction.
Remember that the threshold for instant asset write-off now stands at $30,000. If you purchase an asset (new or second hand) costing less than $30,000 and it is used or installed ready for use from 3 April 2019, you can claim a deduction for the business portion. Different thresholds apply for assets purchased before that date:
- from 29 January 2019 until before 7.30pm AEDT on 2 April 2019, the threshold is $25,000
- before 29 January 2019, the threshold is $20,000.
There’s a lot to think about as a small business owner. Remember that a bookkeeper can help your business in so many ways. If you require any support with BAS preparation and lodgment and keeping your payroll in order, Numera Bookkeeping Services have a team of experienced bookkeepers available to help. Work with the Brisbane bookkeepers you can trust. Give us a call today on 07 3002 4880 or email email@example.com to find out how we can help your business.
Keeping accurate financial records is fundamental to the efficient running and ultimate success of your business. Most business owners make use of accounting software and the support of a good bookkeeper to help keep them on track and ensure that all transactions are recorded in a timely manner. But what accounting approach should you use? Essentially there are two methods of accounting but what’s the difference between cash and accrual accounting?
The Difference Between Cash and Accrual Accounting
You might be wondering why choosing the right accounting method is so important for your business. The key to understanding the difference between cash and accrual accounting lies in the timing of when revenue and expenses appear in your financial reports.
Cash Accounting Explained
Typically cash-basis accounting is used by smaller businesses who prioritise simplicity. Using cash-basis accounting a company records expenses and income as the cash is actually paid out and received.
There are some advantages to using cash-basis accounting such as:
- It’s easier to keep a track of your cash flow
- It’s suited to smaller businesses that mostly handle transactions in cash
The major disadvantage of the cash method is that it doesn’t capture money owed to you or that you owe to others so it can be difficult to get an accurate picture of how the business is performing financially. Take a business which delivers training funded by various different governments and receives lump payments on a few occasions a year. Using cash-basis accounting it is extremely difficult to track the health of this business because they either have ample cash or have been incurring expenses for which they are yet to receive payment.
So What Is Accrual Accounting?
Accrual accounting, whilst a little more complicated, is much better suited to larger businesses or businesses who don’t get paid straight away.
Using accrual accounting you record expenses and sales when they take place as opposed to when cash is paid or received. For example using Accrual accounting our training business would apportion lump payments throughout the year depending on when the actual training was carried out. Now income and expenses are matched and the business has a true picture of their financial position.
A word of warning though, if you are using accrual accounting you need to keep an eye on your cash flow because any issues won’t necessarily appear in your financial statements.
How To Decide Which Accounting Method Is Right For Your Business
As we’ve highlighted the type of business you are running will be an important factor in deciding which is the most appropriate accounting method. While accrual accounting may require more work, technology and decent accounting software can make this far easier. This is also where the support of a well trained, experienced bookkeeper will pay dividends. As we highlighted in our last blog exploring how a bookkeeper can help your business, they will be able to help keep your records up to date and save you time and money. And if you want to introduce accrual accounting into your business, you simply need to ask your bookkeeper to start providing you with accrual accounting financial statements.
At Numera Bookkeeping Services, we provide more than most traditional bookkeepers. With significant experience across a wide range of industry sectors, our Brisbane bookkeepers are able to support you with all the standard bookkeeping services, including BAS preparation and lodgment, as well as advising on the most appropriate accounting method for your business. We can also support you in choosing the best accounting package for your business: Xero, MYOB, Quickbooks and Reckon.
Speak to the team at Numera Bookkeeping Services to make this happen. Work with the Brisbane bookkeepers you can trust. Give us a call today on 07 3002 4880 or email firstname.lastname@example.org to find out how we can help your business.
When you first started out in business you probably had all good intentions of managing as much of the business as possible by yourself. Maybe you were trying to keep your costs low or you felt that you needed to be in control of all of your financial information. Whatever the reason, generally there comes a time for all small business owners when they realise that they need assistance to keep things running smoothly, particularly when it comes to record-keeping and transactions. So why use a bookkeeper? We’ll outline 3 ways that they can help your business to thrive. There are many different professional support services available for business owners and, as we covered in our last blog post, there is a difference between bookkeeping and accounting. While they are different services, they are actually complementary and for your business to run smoothly you ideally need both. You may have already engaged a good accountant to help advise you on ways to grow your business, how to stay tax compliant and minimise business costs but why use a bookkeeper too?
Reasons To Use A Bookkeeper:
Reason #1: Saves You Time And Money
Most business owners are time-poor and the task of keeping accurate financial records, ensuring all transactions are recorded, usually gets deferred until it becomes absolutely necessary e.g. the BAS is due or it is tax time. Engaging a qualified bookkeeper saves you the time of having to review all your transactions, particularly if you have put off the task for a few months.
You will also save money in the longer term as a good bookkeeper will help ensure you pay bills on time, avoiding interest and late payment fees. They will also streamline your current business systems and processes, ensuring your financial records are in top shape and your business running as efficiently as it can be. Having accurate financial records can also help you get credit from banks or other lending organisations, should you need it AND it will help your accountant spend less time dissecting your data and more time using the data to offer valuable insights to help you grow your business.
Reason #2: Allows You To Focus On Growing The Business
As the business grows so does the paperwork and record-keeping. Most business owners reach a point where they realise that they are spending too much time every week chasing payments, reviewing supplier invoices or processing their payroll. A bookkeeper can take on all these tasks and more and free up your time to focus on the things that will help your business to grow.
How much time have you spent in the last week trying to keep track of your sales, payments, purchases and receipts? And if you haven’t been doing this regularly, it is obviously going to be a big job when you get around to doing it and take a substantial chunk of your time to reconcile all of your transactions. How much more effective would you be if you were focusing on the thing you really love: your business?
Reason #3: Gives You Peace Of Mind
You can’t be an expert in everything. Ensuring your business is complying with the latest tax regulations outlined by the ATO and ASIC, such as ongoing changes to superannuation law, is one area where you really should be engaging the services of professionals. Engaging a well-qualified bookkeeper will help you stay out of hot water with the ATO and give you the peace of mind that all monthly, quarterly and annual deadlines are met for BAS, tax, and superannuation and your business is compliant. And if you have fallen behind a bookkeeper can also help bring your lodgments up to date and work with the ATO to manage existing debt and get your business running efficiently again.
At Numera Bookkeeping Services, we provide more than most traditional bookkeepers. With significant experience across a wide range of industry sectors, we are able to support you with all the standard bookkeeping services as well as BAS preparation and lodgment, accounting software support for packages including Xero, MYOB, Quickbooks and Reckon. If you need the services of a local accountant, our referral partners, MGI South Queensland are on hand to offer more detailed accounting advice. Work with the Brisbane bookkeepers you can trust. Give us a call today on 07 3002 4880 or email email@example.com to find out how we can help your business.
If there’s one question that we get asked more than any other, it is: what’s the difference between bookkeeping and accounting? Many business owners, particularly when they first start out, are unclear about the distinction and what role a bookkeeper can play in the business. There is however, quite a clear difference and the value that both professional services can bring to a growing business shouldn’t be underestimated.
By way of a simple definition, bookkeeping handles the recording and organisation of financial transactions and data. Bookkeepers are primarily focused on the day-to-day management of the financial data in a business including recording purchases, receipts and transactions. Accounting is the analysis and interpretation of that data. Accountants use this data to look at the bigger picture, analyse the overall financial situation and look at the impact on the business.
Traditionally bookkeeping generally takes care of:
- Data entry
- Bank reconciliations
Accounting is usually responsible for:
- Analysing business performance
- Taxation management
- Financial statements and reports
Essentially, accountants rely on the quality of data generated by bookkeepers to help business owners make critical decisions about the management of their business. It’s also true to say that the lines between bookkeeping and accounting are becoming a little more blurred. The development of online accounting and bookkeeping software packages means that some of the processes that may have been previously undertaken by an accountant may now be done by a qualified, experienced bookkeeper. This can include things like the generation of financial statements, which many software packages now facilitate.
Many business owners may start out trying to manage the day to day financial data for their businesses and come to realise, as the business grows, that it takes a considerable amount of time and focus to stay on top of this. A good bookkeeper will prove invaluable in taking this pressure off. As the business grows further most business owners recognise that the advice of a good accountant is needed to help them decide what the data is telling them.
At Numera Bookkeeping Services, we provide more than most traditional bookkeepers. With significant experience across a wide range of industry sectors, we are able to support you with all the standard bookkeeping services as well as BAS preparation and lodgment, payroll outsourcing services, advice on the selection of accounting packages and software training. If you need the services of a local accountant, our referral partners, MGI South Queensland are on hand to offer more detailed accounting advice. Work with the Brisbane bookkeepers you can trust. Give us a call today on 07 3002 4880 or email firstname.lastname@example.org to find out how we can help your business.