The Diprose Miller team has a wealth of experience when it comes to accounting, but we know it’s not everyone’s favourite task. While we will certainly get your numbers in order, we do need you to provide us with the initial information.
When we use client-generated accounting information as our basis for the preparation of GST and income tax returns, the quality and accuracy of your treatment of receipts and payments can make a significant difference to the time required to prepare these returns.
And when time is money, less time is better!
Here are our top six accounting tips to help you get the most out of the time you spend on accounting and reduce the time we need to spend on making things right.
- Reconcile bank account balances
Make sure the closing balance in your summarised accounting information is consistent with your bank statement. Even a small discrepancy can trigger other errors, which can take a fair bit of time to resolve. Accounting software products such as Xero and MYOB include features that help ensure your balances are reconciled on a regular basis.
- Get to know your company’s account codes
Knowing your company’s account codes is essential for allocating transactions to the correct code. Using the wrong code can result in a range of errors or, cause the balance of an asset to be incorrect. In some instances, receipts and payments require a “dissection” into a number of different codes (see Tip 4 below). Using the correct code(s) will help you (and us) avoid any re-work down the track.
- Check your GST treatment
Most accounting software products use a default GST indicator for each account code, which determines whether GST is claimed or returned on the transaction. This can be overwritten if required. Before using the default GST indicator, check it applies.
For example, if you use the wrong indicator you could end up claiming GST on the cost of services provided by a supplier who is not registered for GST, or claiming GST on expenses relating to a building that is used as a GST-exempt dwelling (even if the supplier has added GST to their invoice).
- Dissect transactions into their separate components
For most businesses, many transactions require the use of more than one account code to properly reflect the nature of the transaction. To further complicate matters, sometimes these components have different GST treatments. A good example is insurance premiums, where a single invoice or payment may reflect a variety of policies that require different account codes and GST indicators. Take the time to carefully review the invoice documentation to decide whether multiple codes and/or GST treatments are required.
- Ask for help with complex transactions
Some transactions are complex and require input from a trained accountant – so don’t hesitate to get support. Two examples of complex transactions are business or property purchases (usually through a solicitor) and vehicle or equipment purchases (perhaps with a trade-in and financed through a hire purchase contract).
When managing these transactions, check the correct treatment with your accountant or (if practical) leave the transaction for the accountant to process. If a transaction is processed incorrectly – particularly if it involves large numbers – it can create extra work down the track for you or your accountant, especially if the issue isn’t noticed for some time.
- Engage in one-on-one training with an accountant
If you prefer to process your day-to-day accounting records but feel you need a bit of extra support, consider engaging in some one-on-one training with an accountant. Diprose Miller provides hands-on support to our clients, as we like to see them excel, feel confident with accounting and reduce the likelihood of mistakes that can prove costly.
