It’s that time again, out with the old and in with the new. I have to admit that June is my favourite time of the year work wise because I get to do so much archiving, filing and purging of documents for myself and my clients. It’s the perfect time to set up new systems, new software packages and to reinvigorate your business with new ideas, budgets and forecasts. The potential of your business is only limited by YOU!

If you have employees, now is also the time to ensure your payroll is up to date so you can issue payment summaries to everyone by 14th July. You’ll need to report to the ATO your PAYG withholding annual report which can be lodged via paper or electronically by 14th August. For more information about payment summaries, please visit the ATO website.

Tonight I have my ranty pants on. I don’t lose my temper often but when it comes to money, don’t mess with me!

I have a (now ex) client who owes me money in the thousands. This ex-client used to be a friend so I gave her the benefit of the doubt and every opportunity to pay what she owed me before decided to send it to the debt collector. In cleaning out the office we found a pile of receipts belonging to the ex-client so we posted it to her. The ex-client did a ‘return to sender’ without even looking inside the envelope. This screams to me of irresponsible behaviour and it makes me so glad that she isn’t a client or a friend anymore. I don’t condone her methods of business management or how she would run up huge bills around Melbourne then stick her head in the sand to ignore paying them. She ignores all calls, all emails and now it looks like the post too, just to get out of admitting she made a mistake and owes someone (ME!) money.

What I have learnt from all this is to not mix clients and friends and to send debts to the debt collector sooner. It’s hard chasing your own money but it has to be done. I didn’t start my business to fund someone else’s laptop!!

And to all my lovely clients who pay their invoices on time – we truly love you and without fabulous clients such as yourself, Tilda Virtual wouldn’t be where it is today!!

One of my favourite features of QuickBooks is the ability to do Sales Receipts. Sales Receipts allows you to record the invoice and the payment at the same time!

As promised, here are the steps to record PayPal fees in QuickBooks.

1. Create a new item: Click on Lists > Items > Add new item > Give it an item name that makes sense (I used PP Fee) and allocate it to an expense account called PayPal fees.

2. Create your Sales Receipt: Click on Create Sales Receipt > enter the sale information as you would normally > On the next line insert the item for PayPal fees and enter the fee as a minus figure as per below > Check the deposit to account, if you have PayPal set up as a bank account then this sales receipt will need to be deposited to the PayPal bank account. > Click Save & Close.

So there you have it! Nice and simple, not only are you able to enter the sale for the full amount, but entering the PayPal fee is simple too. Entering your PayPal sales via this method certainly makes reconciling the bank account much easier for your bookkeeper.

So there are a few different ways you can record PayPal fees on money received into your PayPal account but here is my preferred method of recording the transaction.

1.  Create your invoice: Click on Sales > Enter Sales > and enter the sale as you would normally, then click record.

2.  Receive Payment: Enter the payment details for the full amount BEFORE the fee was taken by PayPal but make sure you allocate it “Group with Undeposited Funds”

3.  Record Deposit – Part One: This is where the fun stuff starts. Go Banking > Prepare Bank Deposit > select your deposit and tick it > Click on Deposit Adjustment > enter the amount of the PayPal fee, the date and allocate it to a relevant expense account. In this example we have created a new expense account and have called it ‘PayPal Fees’. Side note: in tracking your PayPal fees you can see if it’s worthwhile or not setting up a merchant account. There is also no GST on PayPal fees either (Australia only). > (If you have PayPal set up as another bank account make sure you deposit to the PayPal account and not the cheque account like I have in the example below.) > Click record.

4.  Record Deposit – Part Two: Now that you have the adjustment entered you’ll be able to see that the total deposit amount has been adjusted too. In recording your PayPal fees this way you’ll clear out the total amount of the client invoice and record the PayPal fees at the same time.

So there you go! Nice and simple. My next post will be for the QuickBooks users out there who also need to know how to record their PayPal fees.

If you’ve been thinking of changing over to QuickBooks from another package or from the not so trusty spreadsheet, now is the time to do it.

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Contact me today to order your new software!

Cashflow can make or break a business and it’s something we as business owners don’t do very well.

So what is cashflow exactly?

Quite simply, cashflow is the movement of money both in and out of your business over a certain period of time. So if your cash is flowing out of your business and not back in at roughly the same rate, very quickly your business will run out of cash to pay it’s bills and you’ll be out of business.

So how can we manage our cashflow?

One of the first things we do here at Tilda Virtual Services with a new bookkeeping client is to take a look at the Aged Receivables report. We try to determine the accuracy of the report, the total amount outstanding and the periods in which the amounts fall. This report alone will tell us if the business is controlling it’s aged receivables effectively to remain solvent.

To manage your cashflow you will need to create an Aged Receivables Procedure. You need this procedure to make sure the relevant people within your business know when and how to follow up outstanding invoices. You need it to know how you will manage your cashflow.

Think about how you supply your product or service. Is it project based or ongoing? Do you have repeat business or are your clients/customers purchasing only the once? These questions will assist you in deciding on what trading terms suit your business. For example: let’s say you are a website designer who works with clients once only on a project basis. Your trading terms may very well be 50% deposit and 50% on completion. Or let’s say you are a Virtual Assistant who has some project based clients but the rest are ongoing repeat projects. You may decide to invoice once a week/fortnight or monthly depending on when your own bills and liabilities are due and that they are due 7 days from date of invoice. Once you have determined what your trading terms are, you are ready to move onto the next step in creating your AR Procedure.

Now it’s time to to think about how long it is between the supply of product/services to the time you get paid. If you supply a product/service on the 1st the month but invoice monthly on the 31st with trading terms of 30 days from date of invoice, effectively you are waiting 60 days+ to get paid. Does that seem right to you to have to wait that long to get paid? Can you see how if you changed how often you invoice and reduce your trading terms, you’ll get paid quicker?

You also need to think about when you’ll start to follow up overdue invoices. Do you call them on day 8 of your trading terms to find out when you’ll be paid? Do you send a reminder letter? Do you send a statement? Once you have decided on the sequence of events, write it in your Aged Receivables Procedure. Don’t forget to create the templates, phone scripts and record keeping forms to add with the procedure. They are all important elements of your new procedure.

Once you have done all the hard work of figuring out when you’ll invoice, how long until the invoice is due, when you follow up overdue invoices then start to actually do it, you should start to see an immediate difference to your bank balance. The idea here is to make sure your invoices are getting paid regularly and on time to make sure you can pay your own suppliers.

If you need assistance in creating your Aged Receivables Procedure, contact me today. I have templates for sale that you can use and I can coach you through the process. Don’t wait until your suppliers are hounding you for money before you start managing your cashflow. Start today and see the huge difference it makes to your business.

You recently decided to finally hand over your bookkeeping to a professional so you could spend more time on your business. Good for you!

You’ve done the hard work in finding your bookkeeper either through networking or through a referral from a friend. You’ve met with prospective bookkeepers, spoken to them about what they can do for your, how it will be done, what the end result will be and how much it will cost and now comes the hard part… handing over.

I can’t tell you how many times I’ve heard “I’ve just got to catch everything up before I hand it over to you”. If I had a dollar for every time I heard that phrase, I could probably semi-retire!

The whole reason why you’ve decided to hand over your bookkeeping is because it’s taking up too much of your time to get it done or because your really really bad at it.

If you attempt to catch up your bookkeeping before you hand it over, odds are that you are creating more work for the bookkeeper which is going to cost you more money.

Typical issues I see with new client bookkeeping:

• Bank account doesn’t reconcile so therefore you ‘fudge’ the bank fees;
• You entered a cheque but can’t find it so you enter it again;
• Your customers have paid you too much so you’ve ‘fudged’ the payment
• Insert your own mistakes here.

If I can educate business owners on one thing it would be to NOT catch up their bookkeeping before handing it over. Doing a little bit of repair work or forensic bookkeeping is ok but if a client’s books are that bad I’ll often say no. I can’t do it for you because it will cost you too much money to fix.

Most business owners don’t realise just how important keeping their bookkeeping up to date and correct actually is. They’re too busy in the day to day aspect of their business that they underestimate the importance of bookkeeping.

So please, on behalf of all the bookkeepers in the world, DON’T catch up your bookkeeping, just hand it over! Your cheque book will thank you!

1. They ask questions
2. They refer back to GST legislation for verification
3. They’re experienced
4. They know double entry accounting and can troubleshoot anything in your software program of choice
5. They ask questions (yes this is a deliberate double up)
6. They’re happy to liaise with your accountant on your behalf
7. They give you all the reports you want and need in a timely fashion
8. They give you regular backups of your datafile and have an OCD approach to backing up their own network/computer
9. They’re a member of a bookkeeper association
10. They’re continually looking to improve their skills and knowledge

Unfortunately, not all business owners will find a great bookkeeper on their first try because not all bookkeepers are great. There are some who are ok, good even, but not great. In any industry you’ll find people marketing themselves when they don’t have the skills to back it up. and bookkeeping is no different. Fortunately for business owners, the new Tax Agent Services Act will help them to weed out the bad from the great.

For more information about the new Tax Agent Services Act, please visit the Tax Practitioners Board.

As published in the BAS Service Provider Edition 33 – February 2010

From the 2010-11 income year the Tax Office’s record-keeping product, e-Record will no longer be available.

The product has been reviewed and found to no longer be compatible with current commercial record-keeping systems. It would also need to be redeveloped to keep up with technology and new business directions.

Version 6.2 is the final version of e-Record and is available for download until 30 June 2010.

For more information, see E-Record withdrawal.

Of course, if you’re looking for an alternative, we recommend the following software packages:

[wpsc_products product_id='3']

[wpsc_products product_id='15']

On 23 October, the Assistant Treasurer announced the new national Tax Practitioners Board (TPB).

The TPB replaces the existing six state Tax Agents’ Boards. It will be responsible for overseeing the registration and regulation of tax agents and BAS agents under the new tax agent services regime, which is anticipated to come into effect from early 2010.

Imminent – new laws for BAS service providers

The final Bill of the new tax agent services regime passed by Parliament contains generous transitional arrangements, including a six month period where BAS service providers can notify the TPB to transition to registration.

The TPB will be responsible for overseeing the new regime and will contact you directly with information if they have your email address.

For information on how the new TPB and laws affect you, go to the TPB website at www.tpb.gov.au

Reprinted from the BAS Service Provider Newsletter – Issue 32