Ah, spring. A great time to dust off the winter cobwebs – literally and figuratively – and get your home organised. It’s also a great time to organise your business accounts.
The more ‘neat’ and up to date your accounting file is, the more your accountant can maximise your tax savings. BAS agents and bookkeepers work closely with accountants to ensure your accounts are in order, and that they have the right data at the right time. This makes their job easier; they don’t need to chase you for information, enabling them to get the job done sooner. You save on accounting fees, and get your compliance obligations sorted sooner.
Here are four ways to spring clean your accounts:
- Ensure asset purchases are recorded correctly
You also need to provide documentation relating to any capital purchases to your accountant, as these purchases are often reconciled incorrectly. For example, they may be listed as an expense in the P&L (profit and loss statement) instead of being reconciled to the capital account on the balance sheet. Or a small capital purchase (under $1k) may be put into the capital account on the balance sheet, when they should be listed as an expense in the P&L so they are immediately tax-deductible.
- Have all loan and lease agreement documentation available
Having the relevant documentation at hand and up-to-date helps your bookkeeper to get the BAS done quicker.
At BAS time and end-of-year tax time, your accountant or BAS agent will look for errors by checking your balance sheet to ensure all transactions are recorded to the correct destination account. They will review every balance sheet item, as well as main expense items such as payroll, to make sure we have documentation proving every transaction. As every business is unique, they will look at the specific transactions (and their various tax treatments) relevant to that company: for example, management fees for intercompany loans for company groups, or vehicle allowances paid to sales staff.
It’s also important to have documentation on any agreements – such as loan agreements, hire purchase agreements, leasing agreements and chattel mortgage agreements. Each has different GST and depreciation treatments. We need to see the documents up-front to determine what and when GST components are claimable, what depreciation options are available, and prepare accordingly.
It’s always good to let your bookkeeper and accountant know any agreements you’ve entered into.
- Provide all statements at 30 June
Bank, credit card and loan statements are vital, as they prove your accounting system is fully reconciled. Most online accounting systems have bank feeds; while these are fantastic, they’re not infallible. Sometimes there are errors or duplicates. There can also be reconciling errors, where transactions have been incorrectly listed as mentioned earlier.
If bank reconciliation reports are not done at the end of each quarter, there is a greater chance that errors will creep in. For these reasons, we need bank statements at the end of each quarter, and the end of the financial year.
- Work with your bookkeeper to create an accountant’s pack
Like many BAS agents, we create a detailed accountants pack which brings together all the client’s information we think they’ll need, so it’s all in one place and at their fingertips. We work with you to preempt your account’s queries without them having to ask for it, so they don’t need to chase us or you with questions.