This Cheat Sheet summarizes what you need to know to be an excellent bookkeeper.
This step-by-step bookkeeping checklist should help you sleep easy at night knowing that you have done what you needed to do to get your books in tip-top shape.
Ensure you set up bank feeds for every account.
At least once a month, reconcile every bank account against bank statements.
Look for pre-dated or future-dated transactions.
Eat a family bar of chocolate in one sitting (oh yes, and clean up the debtors list).
Sweep through the creditors list.
Check tax codes on all transactions.
Reconcile your GST liability accounts.
Give inventory the once over.
Reconcile all payroll liability accounts.
Scan transaction reports for weird stuff or mistakes.
Read through the financials and check they make sense.
Understanding account types
Understanding the difference between account types is the secret to coding transactions correctly. Here’s the cheat’s guide to understanding the difference between assets and liabilities, equity and income, bananas and apples.
Current asset: Anything that a business owns that can realistically be converted into cash within the next 12 months.
Non-current asset:A physical asset such as office equipment, land, buildings, computers or motor vehicles, that isn’t expected to be converted into cash within the next 12 months.
Current liability:An amount owed by the business that is due within the next 12 months, including scary stuff such as credit cards.
Non-current liability: Anything you owe that isn’t due to be paid out within the next 12 months, such as hire purchase debts or bank loans.
Equity:The ‘interest’ that shareholders or an owner has in the business, including both capital contributed and the profit or loss built up over time.
Income:Money generated from sales to customers or returns on investments.
Cost of sales:What it costs in raw materials, supplies or production labour to make the goods that you sell (also called cost of goods sold or variable expenses).
Expenses:The day-to-day running costs of your business, including things like advertising, bank charges, computer consumables, diamond rings, electricity, motor vehicle expenses, rent, telephone expenses and wages. (Just kidding about the diamonds.) Expenses are sometimes also called fixed expenses or overheads.
Stay up to date to meet tax deadlines
Forget birthdays, anniversaries and Christmas and instead, punctuate your diary with a list of tax deadlines. Here’s a summary of the deadlines that every Australian bookkeeper needs to know about in order to stay out of trouble.
|Business Activity Statements
|Monthly payments: 21 days after the end of each month.
Quarterly payments: 28 days after the end of each quarter, except
for the December quarter, where the deadline is February 28
|Annual withholding declaration
|28 days after the end of each month or quarter, depending on
|PAYG withholding tax
|21 days after the end of the month for monthly payments, or 28
days after the end of the quarter for quarterly payments
|February 14. Remember chocolates, red wine and roses or
terrible consequences may ensue
|28 days after the end of each reporting period, with the
exception of the November period, when the deadline is 15 January,
and the March period, when the deadline is 7 May
|PAYE tax and KiwiSaver
|20 days after the end of each month
Know your debits from your credits
Understanding debits and credits is a tricky business. (How did accountants get to be so warped, you may wonder?) Don’t sweat, with this table you can get your debits and credits spot on, every time.
|To increase this account
|To decrease this account
What's included in a financial statement
With a bit of practice, understanding financial statements is easy. Think of your Balance Sheet reports as a set of before-and-after photos, with your Profit & Loss report telling the story of what happened in between.
Balance Sheet report: Provides a snapshot of the value of assets, liabilities and equity at any point in time
Profit & Loss report: Summarises income, expense and net profit over a specified period of time
Statement of Cash Flow: Examines the cash flows in and out of a business
Trial Balance report: Lists the debit and credit balances of all general ledger accounts at any point in time
Prevent employee fraud with smart business practices
How do you prevent employee fraud in the workplace, and how can you be sure that nobody has their hand in the till? Like double cream and crash diets, keep bookkeeping tasks and the handling of cash or business assets completely separate. This includes
Authorising online transactions via internet banking
Working on a cash register and taking cash
Receiving payments from customers
Balancing cash registers at the end of the day
Accessing assets, such as business inventory
Calculate GST in the blink of an eye
Even with a calculator close to hand, a few shortcuts to help you calculate Goods and Services Tax (GST) are real handy. The whole business of dividing by 11 or multiplying by 0.15 can get very ugly indeed.
|To calculate how much GST to add
|Multiply by 0.1
|Multiply by 0.15
|To add GST to arrive at a total price
|Multiply by 1.1
|Multiply by 1.15
|To calculate how much GST is included in a price
|Divide by 11
|Multiply by 3 and then divide by 23
|To calculate how much the price was before GST
|Divide by 1.1
|Divide by 1.15
Register as a BAS agent in Australia
In Australia, if you’re a contract bookkeeper providing BAS services, then you must register as a BAS agent. The penalty for providing BAS services without registering ranges from a not insignificant $43,000 for an individual to a whopping $212,500 for a body corporate.
A BAS service includes any bookkeeping activity related to GST or PAYG, including configuring tax codes in accounting software, coding tax invoices, generating employee payment summaries or preparing Business Activity Statements
You don’t have to register as a BAS Agent if you’re an employee receiving wages or you only do basic bookkeeping data entry based on explicit instructions provided by the client or by their tax agent.
For details about registering as a BAS Agent page, visit the Tax Practitioners Board website.