8 Tricky Situations (and What to Do Next) - dummies

8 Tricky Situations (and What to Do Next)

There are some often fraught realities of bookkeeping life you can avoid if you use MYOB: Multiple businesses rolled into a single (often struggling) enterprise, the chaos left behind by previous bookkeepers, debt owing to the tax office, budgets that never come true, and much more besides.

When faced with these kinds of tricky situations, you can rely on a blend of technical MYOB advice, bookkeeping know-how and an inner shining-knight-to-the-rescue inclinations.

Dealing with 2 or more businesses, all rolled into one

Do you ever wonder how your business makes its money? Maybe you do lots of different kinds of work, and although you suspect not all of this work is profitable, you’re not sure what’s profitable, and what’s not. Happily, your days of wondering can now be over, because with job and category reporting, you can discover what you’re doing right, and what you’re doing wrong.

MYOB offers two ways to analyse income and expenses:

  • The first way is to use job features to track the profitability of every job your business undertakes, whether these jobs be contracts, stages of a project, or work for specific clients.

  • The second way to analyse profitability is to divide your business into profit centres, using category features. Categories often work well if you have a business that has several different locations, or operates different bank accounts for different divisions.

    Jobs Categories
    Transactions You can allocate a single transaction to more than one job You can’t allocate a single transaction to more than one category
    Balance Sheets You can’t print a Balance Sheet for each job You can print a Balance Sheet for each category
    Budgets You can create budgets for individual jobs You can’t create budgets for categories
    Assets You can’t track the movement of assets for each job You can track the movement of assets for each job
    Warnings You can set your preferences so that you get a warning if you forget to add a job code to a line of a transaction You can’t set your preferences so that you get a warning if you forget to add a category code to a transaction
    Controls You can’t set your preferences so that a transaction will only be recorded if every line has a job code You can set your preferences so that a transaction will only be recorded if it has a category code
    Headers You can have header and detail jobs You can’t have header and detail categories
    Linking to customers You can link jobs to specific customers You can’t link categories to customers
    Linking to expenses You can link expenses to jobs so that they can be flagged for reimbursement when onbilling customers You can’t link categories to expenses for onbilling

Feeling confused? You can use jobs to analyse the profitability of individual cost centres, projects or ventures, but use categories to track the profitability of distinctly separate business enterprises or locations.

Making a silk purse from a sow’s ear

Have you inherited a bookkeeping job from someone who was actually a compulsive hoarder, and who expressed this trait by creating an Accounts List in MYOB that includes every account you could ever imagine?

Maybe you’ve even arrived at the next stage and decided to delete all those accounts that you no longer need. This is the point where you may hit trouble: Whenever you go to delete an account, MYOB refuses to play, saying that the account contains historical information.

In this situation, the way to get rid of an unwanted account is to combine it with an account that you do want. To combine two accounts, go to your Accounts List, select the account you want to keep (MYOB calls this your Primary account), and click Combine Accounts. In the Combine Accounts window that appears, select the account you want to merge (called your Secondary account) and click Combine Accounts one more time. Click OK to proceed. All done!

Tracking income and expenses from rental properties

Do you have a rental property investment as well as a business? If you want to keep track of everything in a single MYOB file, then you can.

Navigate to your Accounts List and look along the top. Can you see the tab that says Other Income and the tab that says Other Expenses? You can use these classifications to keep track of rental property income and rental property expenses. This way, you can still keep business income and expenses separate from your real estate investment.

Dealing with shares and dividends

Want to know how to record the purchase of shares and income from dividends into MYOB? The answer is short and sweet. Just don’t. To do so is like trying to chop down a tree using a penknife.

Instead, bank dividends into your personal account, and purchase new shares from your personal account also. Use a simple handwritten book or a spreadsheet to keep track of these transactions and supply a summary to your accountant at the end of each year.

Getting into debt with the ATO

This is the tricky state of affairs where you find you can’t pay your Business Activity Statement on time and you end up owing money to the Australian Taxation Office.

In this situation, the ATO sends you a statement every month showing how much you owe. In order for your accounts to make sense, you should include this liability in your accounts. Here’s how:

  1. Go to your Accounts List and create a new liability account called ‘Money Owing to ATO’.

    As the Account Type, select Credit Card.

  2. Go to Spend Money and record your Activity Statement payment as if you’re paying it in full.

    The general idea is that you split your payment across your GST Collected account, your GST Paid account and, if you have employees, your PAYG Withholding account.

  3. Before clicking Record, select Money Owing to ATO as your bank account in the top left corner.

    Recording a transaction in this way clears your GST and PAYG accounts back to the correct amounts and shows the ATO liability correctly.

  4. Whenever you make a payment against this debt, record this payment in Spend Money and allocate this payment to your Money Owing to ATO account.

  5. Reconcile this account in the same way as you would reconcile any other bank account.

You should reconcile this account every time the tax office send you a statement.

Keeping budgets on track

Budgets are as much a test of personality as they are an exercise in arithmetic and planning. Here are some tips to help your budgets hit close to the mark:

  • Consider the person (whether it’s you or somebody else) who is making up the figures. Are they an optimist or a pessimist? Depending on the answer to this question, adjust your figures accordingly.

  • Sales people are optimists (they wouldn’t survive in their jobs otherwise). Take their sales projections with a pinch of salt.

  • If you have lots of people working in your business, ask them for their input into the budget figures. The more involved everyone is, the more realistic and attainable the budget.

  • As soon as the first month has passed, compare budgets with actuals, using MYOB’s Profit & Loss Budget Analysis report. Do this every month to master the true art of crystal-ball gazing.

  • Always allow for unforseen expenses, especially if you’re doing a budget for a new business. Things always cost more than you think.

  • Consider carefully the timing of irregular payments, such as quarterly electricity bills, months with five pay weeks and annual insurance premiums.

Working with general journals

General journals are usually the domain of accountants, but if you’re serious at this MYOB game, sooner or later someone or other may ask you to record a general journal. Maybe you’re adjusting for depreciation, recording an end-of-year adjustment, or reallocating expenses from one account to another.

Here are some general tips for how to deal with this particularly tricky situation:

  1. Go to the Accounts command centre and click Record Journal Entry.

  2. Pause for a moment, and think carefully about the date.

    General journals are usually adjustments of one kind or another, and more often than not should be given a date other than the system date offered. Date the journal to match the period for which the adjustment is being made — if you’re doing a depreciation entry for November, date the journal as November.

  3. Record a detailed Memo.

    Explain what you’re doing and why.

  4. Debit one account or accounts, and credit one account, or several accounts.

    For each line, you can enter an amount in the Debit column or the Credit column — not in both. However, you can add as many lines as you like.

  5. Think about the tax codes for each line.

    Most general journals don’t affect GST, so the usual tax code is N-T. However, if you’re not sure, ask your accountant.

  6. Check that total debits match total credits.

    They do? Then the Out of Balance amount at the bottom should show as zero

  7. Click Record to complete your journal.

    The deed is done.

Managing foreign transactions

MYOB AccountRight doesn’t currently include foreign currency features. What are the solutions to this dilemma?

  • If you export goods to overseas but your sales are in Australian dollars, even if you export goods overseas, then you don’t need foreign currency features.

  • Similarly, if you purchase goods from overseas using Australian dollars, you don’t need foreign currency. For example, if you buy something using your Australian credit card, even if the price quoted was in US dollars, when the amount appears on your bank statement, this amount will already have been converted to Australian dollars.

  • If you haven’t already purchased MYOB, you can still opt for the old MYOB Premier Classic version, which did include foreign currency. The main downside is that this version doesn’t include bank feeds or cloud features however.

Last, before you do anything, contact MYOB Customer Service. The features in MYOB AccountRight change all the time.