There are a lot of features Xero has that save me time whilst I’m wading through merrily singing my way through my bookkeeping.
One of my favourites, though, is one of the most simple and basic features that Xero offers. The feature I’m talking about is copying transactions.
To give you an example, I do very similar work for a client each month, with a few changes here and there. Because I like to be transparent in how I charge I include extra detail so that clients can see exactly what I’m charging them for – therefore my Invoices can sometimes be lengthy. I wrote about this in my previous post 3 Simple Tips to Improve Cashflow. I don’t invoice at the same time of the month every time, so automatically repeating Invoices isn’t the best option in this case.
When I’m ready to charge those clients I simply search for that client’s name in Xero, click on the last Invoice and copy that Invoice. I copy by selecting Options then Copy in the top right hand corner. I can then tweak it with any adjustments needed, but the bulk of the information is already there and my wording is consistent from one Invoice to the next.
Copying also works for transactions like Spend Money and Receive Money as well.
I try to remember to work smarter and not harder and this is one of those simple things that makes a difference when it comes to the sometimes very time consuming task of small business bookkeeping.
The issue of paying yourself money from your business can be confusing.
Technically, a Sole Trader cannot employ themselves. Money a sole trader takes out of the business for personal use is classified as “drawings” and is not considered wages for tax purposes. Drawings are not allowable deductions for the business.
Transactions that you record using the account Drawings are not reported in Activity Statements that are lodged with the Australian Taxation Office.
This is also the case for someone who has their business set up as a Partnership. At law, you cannot be an employee.
If your business is set up as a Company, you can be an employee of the company. You can pay yourself wages and would therefore withhold PAYG withholding tax if your wages are above the tax free threshold. Unlike drawings, wages are allowable deductions for the business.
Transactions that you record using your “Wages” accounts are also not reported in the “Goods & Services Tax” section of your Activity Statements – only the “PAYG tax withheld” section.
Because Drawings and Wages are both outside of the GST system the tax codes to use in your accounting software are as follows:
If you have just started a business you may be stressing about whether you are on the right track with your accounts. If you have been in business a little while you may be wondering if there is an easier way to keep on top of your accounts.
Once you start looking into the various accounting software options out there, unless you are in the business of bookkeeping or accounting, it’s not uncommon to become overwhelmed or confused.
I like to keep things simple, so I’ve come up with 3 simple steps to help you out and get you started. These are 3 steps I’ve used to get clients up and running with accounting software.
Importantly, don’t forget to try your software out for free first. Get a feel for it and make sure you can easily get answers to any questions you may have via their help centres, forums, videos, email support etc.
Spreadsheets have their place in business, and I enjoy the satisfaction that comes with creating a customised spreadsheet that is easy to use and looks good too.
However, accounting software can be purchased relatively cheap and businesses can choose the level of bells and whistles that they need, depending on the type and size of the business (or non-profit organisation) they are running.
Below are some of the advantages of using accounting software.
Save time. One entry in your software replaces several manual bookkeeping entries.
Real-time financial statements at the click of a button.
Information can be shared with your bookkeeper or accountant without physically having to let go of your business records.
BAS preparation (for Australian businesses) is faster and, if set up correctly, there is less chance of the errors that can occur when transferring figures with pen and paper.
Transactions that occur regularly can be automated.
Fast and accurate tracking of inventory.
Back-ups of data can be safely stored in the cloud or taken off-site. What would happen to your paper-based business records if there was a fire in your office?
If you are just starting out and are starting small, then spreadsheets may do the job for you in the beginning. If you do choose to use accounting software you will still need a bookkeeper or software consultant to help you along the way at some stage, however a lot of the day to day transactions are well within the scope of the average small business owner. Also, if you choose to hire a bookkeeper in Australia, don’t forget that they must be a registered BAS Agent if they are preparing or lodging your BAS for a fee.
A few of the more popular software companies provide free or low cost trial versions, so don’t be afraid to get in and have a go. I wrote about my experience with trialing accounting software in my post Trying Accounting Software for Free. You can also try a quick internet search for “Free Accounting Software Trial”.
If you have gone from keeping manual bookkeeping records to using accounting software, how did you go? Do you have any tips you can give other small business owners or non-profit organisations?
Choosing accounting software can be hard. Each product comes with slightly different features, looks different and the prices vary. Don’t think that you have to jump right in and purchase straight away – make use of a free trial and you can play around and have a good look at it before you decide whether to go ahead and purchase it. Even if you outsource your bookkeeping, you still need to be comfortable with finding your way around the software and getting access to essential information.
MYOB Essentials and Xero are popular cloud based accounting products in Australia. You also have Reckon One, Quickbooks Online, Sage One and Saasu. For tips on getting started with Sage One head over to Steve Bicknell’s blog and look at: How do you switch over to Sage One.
So I thought I would show you my experience of getting started with the 30 day free trial of Xero.
I went online to the Xero Australia homepage, clicked “Try Xero for Free” and filled in my name, contact number and email address.
From there nothing happened for quite a long time and I couldn’t move on to the next step. I refreshed the page a couple of times, which did nothing. I have “Ghostery” set up in my browser and I noticed it was blocking something – once I selected unblock I was instantly through to the next step. Success!
Entered my basic organisation details in the next screen. There is an option in this screen to convert your MYOB datafile over to Xero, if that is what you want to do. Xero had entered a default conversion date, which was not the date I needed. Not to panic – it also tells you on this screen that you can change the date via the Settings screen once you are set up.
Up and running – straight into my business dashboard.
Watched the 2 minute information video.
Went into Settings / General Settings / Conversion Balances and changed my conversion date.
And that was pretty much it! Ready to get into the finer details of setting up contacts, customising the chart of accounts, setting up bank feeds etc. You will need all your business accounting information handy for the next stages of set-up if you are taking it that far.
Just a side note – I had a question about something which I had typed into the Xero website and less than 24 hours later a representative from Xero phoned me (yes – not emailed, but phoned) to discuss. I thought this was good customer service.
If you are wanting to look at MYOB, then the Student Edition of MYOB is a great way to sample the product – it costs $15.00 at the time of writing and you get the desktop product in CD-ROM format. There is a limit to the number of transactions you can enter (is still quite a lot) but there is no timeframe that you have to finish using it by, which is handy. Students at TAFE use this when studying accounting and bookkeeping.
Alternatively you can try the 30 day free trial of MYOB’s online products here.
As a small business owner or non-profit are you contemplating moving your accounting software to the cloud, or thinking of changing which product you use?
This is a really great round-up of significant improvements and changes in cloud accounting software throughout 2015, as well as some insights into where accounting software may be headed in 2016. Margaret of Cloud Accounting Buzz knows her stuff when it comes to accounting software, so I hope you might be able to get something out of this post. Enjoy!
I just had to share this bookkeeping tip – it’s too good to keep to myself.
If you use Reckon for bookkeeping, you’ve no doubt used the “Find” feature at some stage to track down a past transaction. It’s quick and easy to use and I couldn’t do without it. Ctrl + F are the shortcut keys.
But just using the Find feature isn’t my tip.
Do you have transactions throughout the year that you aren’t 100% sure you have entered correctly and that you want your accountant to have a look over before your financial reports are finalised? Perhaps you have some GST transactions that you want your BAS Agent to look over before they prepare your BAS?
Well when you enter those transactions simply type “??” into the memo field. When it comes time to meet with your accountant or BAS Agent you simply use the Find feature (Advanced tab) to search for those transactions and generate a report. You can either print this off or memorise the report so that your accountant or BAS agent can simply click on each transaction and be taken straight to it.
No more having to stop and write down your queries on scrap pieces of paper or scrambling to remember what it was exactly you had trouble with throughout the year!
I can’t take full credit for coming up with this idea. It’s a gem of advice I picked up when I recently attended a Reckon workshop that I wrote about in my post So I attended a training workshop today.