Your accounting file is now a critical tool in your business. It is where you prepare invoices, record bills to pay, keep a record of your stock and pay employees wages and superannuation.
You can also monitor the performance of your business, prepare your Business Activity Statement and tax return.
And, more recently, determine your claims for Job Keeper, Cash Flow Boost, Job Maker, Job Saver, and Disaster payments.
Your accounting file can also be used to obtain reports for finance, insurance, due diligence, and other commercial assessments. Whether you use Xero, QuickBooks, MYOB, or some other accounting system, it must meet your needs.
In this blog, we explain common reasons your accounting file may not make sense to you. We also outline steps you can take to ensure it helps you understand and improve your business.
Six common reasons why your Xero QuickBooks or MYOB file may not make sense
- Not using all systems and tools correctly. Review your accounting file to identify systems you are not using or not completing correctly. If needed, seek help or training to overcome any problems.
- Old transactions and balances need tidying up. This could include bank accounts not reconciled, debtors’ balances not paid in full and creditor balances already paid. Ask your accountant to review your file, identify and suggest the most efficient way to fix any problems, and reconcile accounts.
- Journal adjustments you don’t understand. Year-end Journal adjustments may create an error in other accounts, or your Xero, QuickBooks or MYOB file does not reconcile with your Year-end Financial statements. Ask your accountant to reconcile your accounting file to your financial statements and agree on the appropriate adjustments with you.
- Not sure what reports to run and what they mean. Establish standard reports that you can run weekly, monthly, quarterly, and annually to keep abreast of your business performance. Ask your accountant if they provide a mentoring program, ideal for non-accountants to get the best from their accounting software.
- Not sure what you should be looking for. Your accounting system should help you monitor the performance of your business. Your accountant should be working with you to establish budgets for your business, so you can identify the good financial results and those that are not meeting targets, and suggest strategies for continuous business improvement.
- Your accounting file doesn’t reflect your real profit. Accounting files clouded with tax adjustments and tax concessions like instant asset write-offs and excluding non-taxable income hide and understate your real profit. These adjustments should be made in your tax returns. This ensures your profits are reflected accurately for finance, business mergers or sales, insurance assessments, and other commercial assessments. Understating profits can have a material impact on your business. Tax planning should be managed in your tax return.
Is your accounting system meeting your needs?
At AP we ensure all our accounting work is completed on our client’s Xero, QuickBooks or MYOB file, live and ongoing.
- Whether our clients use Xero, QuickBooks or MYOB, the accounting file is our client’s file, not ours. We simply have approval from our clients to ensure it is up to date, accurate, and meets all the ATO requirements regarding record keeping.
- We do not enter mysterious year-end journal adjustments that are impossible to understand or reconcile.
- When your bank, finance broker, or ATO ask for information your accounting systems always reconcile with year-end financial statements and tax returns.
- We don’t create messy journal adjustments in your accounting file to allow for tax adjustments.
If your accounting system is not meeting your needs, give us a call at AP or contact us here. We would be pleased to help you get on track and get the most out of your accounting system.