When entering and filing purchases, many MYOB users don't even think about how they are going to retrieve a tax invoice in 6 years time, should they be subject to a tax audit or other dispute.
I tell all my clients to enter all expenditure through the purchases module of MYOB and to forget about using the spend money function. By using this method, each invoice is given a purchase number.
Once paid, all the invoices are filed in numerical order by purchase number, with usually about 100 purchases in a manilla folder. Tubeclip file fasterers are used to keep the purchases in order. The purchase numbers the file contains is then labelled with the purchase numbers it contains.
MYOB stores this number forever. So any invoice can be easily located. This number appears on most reports run in MYOB as well
Another advantage of using this method is that if you have your preferences set up correctly, you will never accidentally double input/pay an invoice, as the purchases module will reject doubled up supplier invoice numbers.
On clients who use spend money, I have seen tens of thousands (possibly even hundreds of thousands) of dollars of doubled payments. Spend money doesn't ask for the suppliers invoice invoice number, and allows the user to keep accidentally entering and paying the same supplier invoice over and over again.
Shane Holbeck
www.accountix.com.au
Tuesday, September 28, 2010
Monday, September 27, 2010
Multiple Entities - Mutiple costs
Don't misunderstand me here, setting up multiple entities can be a very effective and beneficial way to conduct business, especially from an asset protection point of view. However what is often overlooked is the true cost associated with doing so.
To run multiple trading entities properly requires a lot of duplication. For example bank accounts, supplier accounts, company accounting data files all need to be duplicated.
These are some of the basic expenses that business owners are prepared to accept when they restructuring their business. What business owners often overlook is some of the not so obvious costs they will incur if they are not strictly disciplined in running the entities as true separate entities.
The most common overlooked cost that I see, is the administrative cost to correct supplier invoices paid out of the wrong entity. Take for example the case where employees are issued company credit cards. Usually employees are only issued one company credit card, even though they may do work or incur costs for multiple entities. When the employee is at the cash register of a store, the last thing on their mind is "Am I purchasing this item with the correct entities funds". So they pay for the item with the business credit card in their wallet.
If the credit card was in ABC Pty Ltd's name and the item purchased was for XYZ Pty Ltd, then we start to analyse the true cost of the error.
1. An entry needs to be generated in ABC's books to record that XYZ now owes them money.
2. An entry then needs to be generated in XYZ's book to record the purchase of the item and to record the liability to ABC.
3. Intercompany loan accounts between the entities needs to be reconciled.
To make things even worse, in Australia we have tax legislation known as division 7A which legislates circumstances where interest needs to be charged/paid on intercompany loans.
It now becomes obvious how a simple oversight can be an extremely costly exercise.
The above is only a basic example, imagine the cost to the business if they then return the goods and the funds are then refunded.
Shane Holbeck
www.accountix.com.au
To run multiple trading entities properly requires a lot of duplication. For example bank accounts, supplier accounts, company accounting data files all need to be duplicated.
These are some of the basic expenses that business owners are prepared to accept when they restructuring their business. What business owners often overlook is some of the not so obvious costs they will incur if they are not strictly disciplined in running the entities as true separate entities.
The most common overlooked cost that I see, is the administrative cost to correct supplier invoices paid out of the wrong entity. Take for example the case where employees are issued company credit cards. Usually employees are only issued one company credit card, even though they may do work or incur costs for multiple entities. When the employee is at the cash register of a store, the last thing on their mind is "Am I purchasing this item with the correct entities funds". So they pay for the item with the business credit card in their wallet.
If the credit card was in ABC Pty Ltd's name and the item purchased was for XYZ Pty Ltd, then we start to analyse the true cost of the error.
1. An entry needs to be generated in ABC's books to record that XYZ now owes them money.
2. An entry then needs to be generated in XYZ's book to record the purchase of the item and to record the liability to ABC.
3. Intercompany loan accounts between the entities needs to be reconciled.
To make things even worse, in Australia we have tax legislation known as division 7A which legislates circumstances where interest needs to be charged/paid on intercompany loans.
It now becomes obvious how a simple oversight can be an extremely costly exercise.
The above is only a basic example, imagine the cost to the business if they then return the goods and the funds are then refunded.
Shane Holbeck
www.accountix.com.au
Wednesday, September 15, 2010
ATO to discontinue e-record
Several months have passed since the ATO decided to discontinue support and distribution of e-record, yet still thousands of users of the product are unaware of this.
The sad fact is that many users are only finding out they are no longer able to obtain the program after their computers crash. There are a few web sites out there who have copies of the program for users to download, however this can only be seen as temporary fix.
Despite many thousands of protests from passionate e-record users about the ATO's decision, the plees appear to have fallen on deaf ears, hence small business owners must prepare to move on from e-record.
At Accountix, we are recommending a well established product in the accounting industry called Banklink, to fill this void.
For more information on Banklink
http://www.accountix.com.au/services.html
http://www.banklink.com.au/demo/BankLink.html
The sad fact is that many users are only finding out they are no longer able to obtain the program after their computers crash. There are a few web sites out there who have copies of the program for users to download, however this can only be seen as temporary fix.
Despite many thousands of protests from passionate e-record users about the ATO's decision, the plees appear to have fallen on deaf ears, hence small business owners must prepare to move on from e-record.
At Accountix, we are recommending a well established product in the accounting industry called Banklink, to fill this void.
For more information on Banklink
http://www.accountix.com.au/services.html
http://www.banklink.com.au/demo/BankLink.html
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