With so many options with bookkeeping (also called accounting) apps, I decided to write up an Easy Comparison Table listing the features, prices, pros and cons of four of the most talked about apps in Australia for keeping accounting records. No matter where you may start, you can always switch to another app as you grow your business – the top 3 apps Xero, Quickbooks and MYOB offer conversion services from other apps making the transition smooth.

While there is no one size fits all, I do prefer and recommend Xero and Quickbooks to most of my clients. For DIY bookkeeping, I would recommend Wave (if you aren’t registered for GST and don’t intend to) or Quickbooks Online if you intend to registered for GST when you reach the $75k turnover threshold as Quickbooks has an integrated GST centre so turning on GST is simple.

For business owners that want a robust accounting system with a vast array of 3^rd party apps integrations, Xero is the clear winner and my first choice for a growing business.

Click on the Table below to open in a new window

Even though the Goods and Services Tax (GST) has been in operation for 20 years, despite its best efforts to educate the general public, the Australian Taxation Office (ATO) is still receiving Business Activity Statements (BAS) containing many errors. Most of these errors relate to the over-claiming of GST input tax credits but in general, can be attributed to a misinterpretation (or lack of knowledge) of GST legislation.

Below is a list of some of the most common errors business owners make when preparing the BAS.

1. 1. Setting up your accounting software with incorrect tax codes: If you do not set up your Chart of Accounts with the correct tax codes from the start, this will result in sales, purchases and payroll being processed incorrectly. This will also mean that the resulting figures you use to prepare your BAS will be erroneous. We advise that you get your BAS agent to set up your tax codes BEFORE you start using the software.
2. 2. Claiming ITCs on the BAS without possessing an actual tax invoice (self-explanatory).
3. 3. Using incorrect accounting method: You are either registered for GST under the cash basis or the accrual basis. Using the wrong accounting basis when preparing the BAS will result in incorrect figures being reported. If you don’t know which accounting basis to use, check with your BAS agent (hint: the accounting type can also be found on your BAS).
4. 4. Failing to report GST received on some government payments: Some government grants and incentive schemes are inclusive of GST. Be careful to check if this is the case before reporting the income on the BAS.
5. 5. Failing to report/charge GST on the sale of business assets: If you are registered for GST and you sell a company vehicle or equipment, you must include GST as part of the sale price. There are some exceptions – check with your BAS Agent for more information.
6. 6. Sole traders and partnerships not apportioning ITCs on expenses which are used both privately and for business: These entities should be determining the business usage percentage of items like motor vehicle, telephone, internet, rent, power, gas etc. Small businesses with an annual turnover up to 2 million also have the option to work out their business usage at the end of the financial year rather than on each BAS.
7. 7. Incorrectly calculating instalment income for PAYG: If you do not understand how to calculate the PAYG income tax instalment amount, you must seek professional advice. There is a special calculation used to arrive at this figure so check with your accounting professional if you are unsure.

8. 8. Incorrectly claiming GST on the following items:

   1. * Bank Fees: There are two main types of bank fees – general bank charges like monthly/annual fees and merchant banking fees. General bank fees are input-taxed, so no GST to claim there but merchant bank fees do attract GST. Note, PayPal merchant fees are GST free, however eWay merchant fees are subject to GST – be careful!
   2. * Interest Income: Interest income does not attract GST because it is an input taxed sale.
   3. * A tax invoice that includes a mixture of GST free and GST-inclusive items.
   4. * Overseas Software Apps: Many apps don’t include GST so you’ll need to check their website for more info. Examples of some Apps that include GST include G-Suite, Dropbox, Microsoft Office, Adobe Systems Pty Ltd (Ireland in AUD), Canva, Deputy, Envato, Hootsuite.
   5. * Motor Vehicle Registration: In Queensland, the vehicle registration is broken up into 2 parts: Registration Fee, CTP Insurance. Only the CTP Charge includes GST; the other components are GST Free. Similar scenarios exist in other states (check with your local roads and motor vehicle authority for more information).
   6. * A car bought for more than the luxury car limit: Each year the ATO provides the luxury car limit and the maximum amount of GST which can be claimed. You cannot claim the entire amount of GST on the purchase a luxury vehicle. Go to this ATO web pagefor the current figures for this financial year. The unclaimable GST amount will form part of the cost of the car for tax depreciation purposes (request advice from your accountant about this issue).
   7. * Government charges: GST is not included in land tax, council rates, water rates, ASIC filing fees or insurance stamp duty.
   8. * Purchases that are GST free: Items such as basic foods, overseas exports and some health services are GST free.
   9. * The full cost of an insurance policy: Most insurance policies include a stamp duty component. This is exempt from GST but the rest of the policy includes GST. Check your renewal notices as some also include extra fees and charges which may or may not include GST. It is important to note that GST credits can be claimed on the full amount of an invoice relating to workers compensation insurance.
   10. * Recharges: Recharge purchases for items such as MYKI, CityLink tolls, mobile telephones etc. are GST free. The GST is not accounted for until the recharge purchase is redeemed.
   11. * Gift cards: These are GST free and like recharges, the GST is not accounted for until the cards are used to purchase goods.
   12. * The full amount of some telephone bills: Always check your telephone bill before assuming that GST is attributed to the total amount – some companies can include GST free items in their bills.
   13. * Wages & Superannuation: Neither of these items attract GST. Wages should be reported at W1 and tax withheld at W2 on the BAS. Superannuation is not included on the BAS at all.
   14. * Donations: Donations are GST Free.
   15. * Entertainment expenses: Seek the advice of your accountant before attempting to claim ITCs on entertainment costs such as meals, Christmas parties, gifts for clients etc. There are special rules for each business type in relation to entertainment and it is possible that fringe benefits tax may become involved.
   16. * The sale/purchase of vouchers: The supply of a voucher does not attract GST. GST only applies once the voucher is redeemed. This is to prevent double taxation of supplies.
   17. * Hire purchases and chattel mortgages: If you account for GST on a cash basis and you purchase goods under a chattel mortgage arrangement, you may claim the entire ITC at the time the borrowed funds make full payment for the chattel. For hire purchases entered into after 1 July 2012, you may claim ITCs up front instead of waiting for each instalment period. It is also important to note that after 1 July 2012, all components of a hire purchase supply including interest and associated fees will be subject to GST. If you account for GST on an accrual basis, you may claim the full amount of GST on the purchase made under either a chattel mortgage or hire purchase agreement.
   18. * Security deposits: GST credits on security deposits can only be claimed when either one of these things occurs: the deposit is forfeited or it applied towards the total cost of a purchase. Otherwise, the deposit is not subject to GST.
   19. * The purchase of second hand goods from a charitable organisation: These items are GST free.
   20. * The purchase of second hand goods from other sources: If you purchase a second hand item from a GST registered business, you may claim full ITCs on your next BAS. However, if you purchase these items from a private seller or non-registered business, there are special rules that apply so check with your BAS Agent.

   Developing good record keeping habits will go a long way towards avoiding many of the above mistakes. However, the best way to ensure that your BAS is prepared correctly is to engage the services of a BAS Agent. These professionals have a much better understanding of the accounting behind the above business expense scenarios than most business owners. It only makes good sense to engage a professional to do it for you!

   Hay Accounting Group Accounts are registered BAS Agents and Jodi has 20 years of experience in GST bookkeeping with all types of entities. We can process and lodge your BAS for you. For a free consultation and appraisal of your bookkeeping needs, please click on this link: 

•    https://calendly.com/hayaccounting/free-discovery-call

Some business owners might be hesitant to outsource their business bookkeeping and hand over their finances to an “outsider”. But the reality is, it might be one of the smartest business decisions you could make.

Being a busy business owner who’s focused on bring the money in and managing your huge to-do list, you probably don’t have the time, nor the expertise that’s required, to do your own bookkeeping. In fact, unless you’re a bookkeeper, you probably find it down right boring! What you really want is a monthly report that tells you how your business performed so you can decide what you need to focus on next month.

A qualified and professional bookkeeper can help your company to thrive and let you focus on what YOU do best. So let’s start with the 3 Big Benefits that outsourcing your bookkeeping can give you.

1. You Save Money

I feel obliged to point this out: you will save money. You’re not just saving time when you employ someone to do your bookkeeping for you, you are directly saving money. Because great bookkeepers have one job – dedication to your finances – they ensure that all your financials are taken care of all year round. A good bookkeeper will not only have your reports ready, but they will give you a complete run down of what areas your business needs help in financially so you know what to focus on regularly without needing to analyse the reports yourself. This is particularly important before the end of the financial year because with accurate reports, you can get tax planning done before it is too late!

2. You Get a Team 

You get a group of professional individuals who are constantly reviewing each others’ work – a checking system that you’d have to pay extra to employ on your own. It can be a lot for a single person to stay on top of and manage ever changing compliance laws, but a team helps ease the burden while giving you multiple sets of eyes to ensure the accuracy of your business bookkeeping.

Having a team also ensures that your finances run smoothly even when someone quits. Because your records are kept by a team of professional bookkeepers using specialised bookkeeping software and technology, you won’t ever have to worry about your finances being jeopardised if an employee quits. Another well trained qualified and professional bookkeeper will take over the management of your bookkeeping ensuring a seamless transition. So you get a team looking after your finances for the price of one.

 3. You Get The Latest Technology 

Technology is also constantly updating and when it comes to handling your finances, you don’t want to fall behind on the times or you risk damaging your business.  You get access to the best software like Xero and QuickBooks and other resources that will provide you with timely and accurate business reports when you need them. The technology that backs these accounting systems ensures the security of your information and organisation of your business records to meet the compliance requirements of the Tax Office. We are experts in many apps and can help you streamline not only your bookkeeping function, but other areas of your business.

If your business is affected by COVID-19, you may be eligible to access the JobKeeper payment to assist you to be able to continue paying your employees.

Employers can choose to participate in the scheme and then nominate all the employees they are entitled to claim for. An employer can choose not to participate in the JobKeeper payment.

Eligible employers

Employers are eligible for the JobKeeper payment if all of the following apply:

• On 1 March 2020, you carried on a business in Australia or were a not-for-profit organisation that pursued your objectives principally in Australia.

• You employed at least one eligible employee on 1 March 2020.

• Your eligible employees are currently employed by your business for the fortnights you claim for (including those who are stood down or re-hired).

• Your business has faced either a  

1. o 30% fall in turnover (for an aggregated turnover of $1 billion or less)
2. o 50% fall in turnover (for an aggregated turnover of more than $1 billion)
3. o 15% fall in turnover (for ACNC-registered charities other than universities and schools).

 • Your business is not in one of the ineligible categories.

Calculating turnover

The turnover calculation is based on GST turnover. This applies even if an entity is not registered for GST. There are some modifications, including disregarding GST grouping where two or more associated business entities operate as a single GST group.

You can apply the basic test even if you are not registered for GST.

Sole traders

Sole traders can be eligible for the JobKeeper payment if their business has experienced a downturn according to the eligibility criteria.

Business owners actively engaged in their business

Other businesses in the form of a company, trust or partnership can also qualify for JobKeeper payments where a business owner (a shareholder, adult beneficiary or partner) is actively engaged in the business, or a director is actively engaged in the business. This is limited to one entitlement for each entity even if there are multiple business owners or participants.

How to determine a fall in turnover

You only need to satisfy this requirement once – you don’t need to retest your turnover each month. However, you will be asked each month to tell us your current and projected turnover.

At the time you enrol in the JobKeeper Payment scheme, you need to confirm that your business in a relevant period has had, or is likely to have, a:

• 30% fall in turnover (for an aggregated turnover of $1 billion or less)

• 50% fall in turnover (for an aggregated turnover of more than $1 billion), or

• 15% fall in turnover (for ACNC-registered charities other than universities and schools).

How to calculate a fall in turnover for the first fortnight starting 30 March 2020

To work out your fall in turnover, you can compare either:

• GST turnover for March 2020 with GST turnover for March 2019

• projected GST turnover for April 2020 with GST turnover for April 2019

• projected GST turnover for the quarter starting April 2020 with GST turnover for the quarter starting April 2019.

How you choose to project your fall in turnover is not dependent on whether you report a quarterly or monthly BAS, though you can do that if it is easier. The turnover calculation is based on GST turnover. This applies even if an entity is not registered for GST. There are some modifications, including disregarding GST grouping (where two or more associated business entities operate as a single GST group).

You can satisfy the fall in turnover test in two ways:

1) If you work out that you qualify for JobKeeper payments for the first fortnight because your turnover has declined by the relevant amount, you remain eligible and do not need to keep testing turnover in following months. However, you will have ongoing monthly reporting requirements.

2) The Commissioner of Taxation also has the discretion to set out alternative tests that can establish your eligibility when turnover periods are not appropriately comparable (for example, if your business has been in operation less than a year). We will provide more information soon about alternative tests

Your eligible employees

Your employee is eligible under the JobKeeper Payment scheme if they:

• are employed by you (including those stood down or re-hired)

• were either a  

1. o permanent full-time or part-time employee at 1 March 2020
2. o long-term casual employee (employed on a regular and systematic basis for at least 12 months) as at 1 March 2020 and not a permanent employee of any other employer

• were at least 16 years of age on 1 March 2020

• were an Australian resident as at 1 March 2020 within the meaning of the Social Security Act 1991, which requires that they reside in Australia, and are one of an Australian citizen, the holder of a permanent visa, or a Protected Special Category Visa Holder [More information about these requirements can be found from the Services Australia website under residence descriptions]. Your employee can also be an Australian tax resident who is a Special Category (Subclass 444) Visa Holder. Employees who are not permanent residents of Australia must notify you of their visa status to allow you to determine if they are eligible.

• were not in receipt of any of these payments during the JobKeeper fortnight  

1. o government parental leave or Dad and partner pay
2. o a payment in accordance with Australian worker compensation law for an individual’s total incapacity for work

• agree to be nominated by you (see Nominating employees).

You cannot claim for any employees who either:

• were first employed by you after 1 March 2020

• left your employment before 1 March 2020

• have been, or have agreed to be, nominated by another employer.

Casual employees are only eligible if they were employed by you on a regular and systematic basis for at least 12 months at 1 March 2020.

If you decide to participate in the JobKeeper Payment scheme, you must nominate all your eligible employees. You cannot choose to nominate only some employees. However, individual eligible employees can choose not to participate.

If your employees have multiple employers, they can usually choose which employer they want to nominate through. However, if your employees are long-term casuals and have other permanent employment, they must choose the permanent employer and cannot nominate you. They cannot be nominated for the JobKeeper payment by more than one employer.

Nominating employees

The design of the JobKeeper scheme is that all eligible employees are paid the minimum of $1500 per fortnight and that the employer claims for each of these employees. Employers are not meant to pick and choose between their eligible employees.

Before you enrol to receive JobKeeper payments, you need to notify each eligible employee that you intend to nominate them as eligible employees under the JobKeeper Payment scheme.

You must tell those employees that you have nominated them as an eligible employee to claim the JobKeeper payment. They must agree to be nominated by you by completing the JobKeeper employee nomination notice and returning it to you for your records. To assist, you may also choose to create your own employee nomination notice where it is not practical to have each employee complete and return the notice to you. This will allow you to use your own portal or communication channel to obtain this information.

The nomination form does not need to be provided to the ATO, however employers are required to keep a copy of the completed form as part of their record keeping obligations under the law.

The process for nominating eligible business participants (for example, a partner in a partnership, an adult beneficiary of a trust, or a shareholder or director of a company) or sole traders is different.

Nominating yourself as a sole trader or eligible business participant

If you are a sole trader or eligible business participant, you can also nominate yourself.

Sole traders can complete the nomination process through ATO online services using myGov, or in the Business Portal or through a registered tax or BAS agent.

Eligible business participants can enrol using the JobKeeper eligible business participant nomination form.

Employees who were stood down or on long term leave

Employees who have been stood down from work under the Fair Work Act 2009 without pay may still be eligible employees as long as they were in your employment and met the eligibility criteria on 1 March 2020.

You will need to have paid them at least the minimum amount of $1,500 for each fortnight you claim for, to receive the JobKeeper payment.

Employees who have been terminated

If you terminated an employee after 1 March 2020, you can re-engage them and they will be eligible if they met the eligibility criteria on 1 March 2020.

If you want to claim the JobKeeper payment for employees you have re-engaged, you will need to:

• confirm they want to be re-hired and participate in the JobKeeper Payment scheme with you

• re-engage the employees you want to claim for

• ask them to complete the JobKeeper employee nomination notice (or your own employee nomination notice) and return it to you. You are required to keep this form as part of your record keeping obligations under the law

• start paying them a minimum of $1,500 (before tax) for each fortnight they are employed and you claim for.

You will only be paid a JobKeeper payment for employees from the fortnight they were re-engaged. You cannot claim retrospectively for employees you re-engage.

Example

Peta runs a retail business. Due to the effects of COVID-19, Peta decides to stand down her full time employee, John, on 20 March 2020. Peta meets the reduction in turnover test and decides she wants to receive the JobKeeper payment for John as an eligible employee for the fortnight beginning on 30 March 2020.

Peta needs to confirm that John wishes to participate and obtain a completed nomination form from him. Peta pays him at least $1,500 to be eligible to claim a JobKeeper payment for John in the fortnight.

After you have worked out you and your employees are eligible

If you meet the eligibility criteria and want to start claiming the JobKeeper payment on behalf of your employees, you need to start paying them at least $1,500 (before tax) per fortnight and continue to pay them for as long as you keep claiming.

Amount of JobKeeper payment

As an employer, you will receive a payment from us of $1,500 per employee per fortnight as long as you and your employees meet the eligibility criteria.

We will pay you for each eligible employee monthly in arrears beginning in May 2020. Payments will be made from the first week of May.

An employer will usually get $3,000 a month per eligible employee for the two fortnightly periods in that month.

Example of amounts paid to employers:

Payment date, Amount per employee

May             $3,000 (for fortnights starting 30 March and 13 April)

June             $3,000 (for fortnights starting 27 April and 11 May)

July             $3,000 (for fortnights starting 25 May and 8 June)

August     $3,000 (for fortnights starting 22 June and 6 July)

September   $4,500 (for fortnights starting 20 July, 3 August and 17 August)

October    $3,000 (for fortnights starting 31 August and 14 September)

As BAS Agents, we are authorised to enrol businesses into and manage ongoing JobKeeper reporting.  Please reach out to us if you need a hand.

Source: Australian Taxation Office: https://www.ato.gov.au/General/JobKeeper-Payment/

Information correct as at 22/4/20210

You can have a profitable business and still fail. In fact, the NUMBER ONE REASON FOR BUSINESS FAILURE is running out of cash.

5 signs you have a cash flow problem:
1) Unable to pay suppliers on time
2) Unable to pay your ATO obligations
3) Unable to make superannuation payments for employees
4) Customers not paying on time severely impacts you
5) Unable to draw a regular wage

5 ways to fix it:
1) Review customer credit terms & start charging for late payments
2) Move customers to shorter payment terms or upfront deposits
3) Negotiate a short-term payment plan with suppliers
4) Stop any excessive drawings from your business
5) Stop any unnecessary spending – if you don’t need it, don’t buy it
The best thing you can do to manage your cash flow is to implement a Cash Flow Budget. This will allow you to see where the issue is and how to fix it. Flying by the seat of your pants won’t change anything as you can’t fix what you can’t see.