Hi all, happy Friday again. It has been a busy week at Leader Accountancy. We are currently working on our clients’ interim accounts for FY2015 and getting them ready for their tax planning sessions before the end of the financial year. If you are still waiting for your FY2014, maybe you should change your accountant!)
If any of the following has happened or will happen in your business or personal life, book your tax planning session, now:
|Capital Gain||You have made a capital gain from the sale of property or shares. (IMPORTANT: Please note that the critical date for capital gains tax is the CONTRACT DATE, NOT settlement date.)|
|Business Profits||Your business profits are higher than usual.|
|Bonus Payment||You have received a bonus payment.|
|Dividends & Investment Income||You have received larger dividends or investment income than usual.|
We can recommend a number of strategies that can reduce your tax for each of these situations, but you need to contact us immediately to allow enough time to put these strategies in place.
Here are the 10 things you need to know.
1 Find the right Accountant
Xero is not new any more, but not all accounting firms have fully implemented it.
Xero provides a tax and practice management system to accounting firms. If the accounting firm has fully integrated the whole platform, it will maximise the internal efficiency of their business and have more time available to serve clients for all their business needs.
If your accountant doesn’t use Xero in their own firm, they will not be able to answer your Xero technical queries,and worse will spend extra time rekeying your data into their system. Guess who will pay the bill?
PS: Yes, we are 100% on Xero!
2 Discount code
We love discounts. Xero encourages new users by giving them a period of free access when starting. Xero gives all my new clients a two months free period. This gives plenty of time to get up to speed.
3 Confirm your Chart of Accounts
Xero is no different from other accounting system – setup is very important. One of the most important elements is the Chart of Accounts for your business.
From an end user point of view, the chart of accounts will help you to categorise all the expenses and income. It is very hard to change after you start using it. A good chart of accounts will fit your business needs and allow more meaningful reports to be produced. It is the key structure of your accounting system.
Xero has a standardised template, it is a good starting point, but please always invest some time to customise it to your needs.
If you are changing over from an other system like MYOB, you can directly use the previous chart of accounts, but the changeover can be a good opportunity to sit down with an accountant to do a bit of a clean-up.
More importantly, you may notice later, as part of the chart of accounts, there is a field called “report code”. It is the key info accountants use to feed data into financial reporting and the tax return system. If this is setup correctly, all your Xero live data will fit into reports with a single click! Sadly, Xero didn’t standardise this field, so all accounting firms will have different preferences to some degree. Again, talk to us before locking in the choice.
Timing of when you first start using Xero is important. Getting the timing wrong can cause you extra costs to amend it later.
If you are converting from MYOB or QuickBook, use the Xero free conversion service, it will bring full transaction records from your last financial year and the current financial year . Yes, free! But make sure you still on top of your bookkeeping and payroll requirements during the process. Book a meeting with your accountant to put a small project together to keep these requirements in check, it will save you from grief later.
If you are new business owner, do it NOW. According to Xero’s research, Xero is the number one choice of new business owner.
5 Bank feed
The most time-saving function I like in Xero is the automated bank feed. You receive you bank statements from your bank every month or every quarter, now, in your accounting system!
As long as you separate your business account from your personal expenses and make sure all income and expenses are going through the account, no deduction will be missed. Xero will also remind you to record any missing transaction.
But, you have to set it up first. Different bank have different requirements and processes. Follow the help centre instructions for your bank. It may take up to two weeks to get it fully functional. It is a one-off process.
After your bank feed is active, make sure you check it when you first use it. There may be a gap between the last manual import and the current bank feed. Simply import all missing dates and you are ready to go!
Make sure you have a logo handy when you are setting up your Xero account. Xero will allow you to put them on your invoices and pay slips. You can even create your invoice template to match to your marketing manual.
The introduction of the placeholder function will make it even easier. Nothing can stop you from being creative.
7 User access
Xero is rolling out a few changes on user access control. Think about who you want give access to your Xero account and what you want to allow them to do.
If you want a staff member to do data entry only, give them “Invoice Only”.
If you want a manager to have a look at the report, give them “Read Only”, yes, to be safe.
Xero help information about this is here.
8 Add-on and automation
Xero is a platform for your accounting records, but we still need to feed data into Xero. To manage and let your business take off, go to Xero Market Place for software that can automate your business processes.
For example, you are a furniture wholesaler, use the Unleashed module to manage your purchase orders, sale orders and inventory. All you need to do is set up a staff member in Unleashed, it will automatically update revenue, inventory and accounts payable for you without anyone needing to log into Xero.
Then, after a few months, if you had decided to open up a retail store in Brisbane, and you need a POS, go to Vend! Vend will not only produce sales report for you in Xero, but it will also communicate with Unleashed to see how much stock you have and when to place new order! No more data entry!
Do you have a few bad or slow payers? Leave them to DebtorDaddy! It allows you have different tones and wording for different customers.
9 Repeating Invoices
If you have a contract, like rent, it doesn’t matter if it is income or expenses, just set it the payment in Xero as a repeating invoice. Xero will automatically send the bill to customer or remind you to make next payment.
Xero spent a lot of resources to make your payroll easier. You can file a new employee’s tax file number declaration in Xero that submits it to ATO directly. No more paper posting but you still need to keep the signed copies in file.
THe ATO introduced SuperStream last year. You simply make a payment through BPay and a report is sent to the super fund to let them know the additional info ATO required. Xero Premium version will do it for you automatically. Follow the instructions to set it up.
These are the top 10 things you need to set up and get right before starting to use Xero. Too much information? Give us a call, we will work it through with you or do it for you. Easy!