Author: Harry Hoang | CEO of Tailored Accounts

With the End of Financial Year (EOFY) fast approaching, offices of accountants and bookkeepers are filled with the hustle and bustle of time-critical challenges. Some of you may wonder what makes EOFY an especially hectic time.  This article will give you a behind the scenes look at EOFY preparation.

Having worked in the accounting industry for more than a decade, I consider EOFY preparation as an opportunity to put in extra effort to ensure accurate, up-to-date numbers as well as presentable reporting. These outputs are the results of, what I call, a magical touch on your books.

The following list articulates the main examples of “magical touches” we exert to ensure your books are in the best order:

1.      The Year-End Payroll

During the financial year, we process 12 – 52 payrolls for each of our clients. At the end of each month or quarter, our team reports this payroll information to the Australian Taxation Office (ATO). In addition to the accurate reports regularly lodged to the ATO, payroll reconciliations at year-end take extra care and attention to ensure all requirements are met. Here are the core tasks that our team has been undertaking in the process of EOFY preparation:

• Final super payment runs must be done before 25th June each year to ensure the last super payment is eligible for a tax deduction in the current financial year. Final salary sacrifice payment runs must happen on or before the same date. These particular tasks will require a few extra hours of work during the EOFY period.
• Tailored Accounts will be preparing STP on behalf of our clients and submit them to the ATO. We will submit STP to the ATO by 14th August via STP enable software. Your payroll summary (used to be called payment summaries) will automatically show up in your MyGov ATO section.
• If you are managing your own payroll, you will also need to have STP ready for employees by 14th July and the ATO by 14th August.

2.      The Last GST & BAS of the Financial Year

As you may be aware, April-June BAS is not due until 28th July in the next year. Regardless of the due date of BAS, our team finalises the last quarterly BAS before 14th July to reconcile balances between payslips and BAS. To prepare for the end of the year BAS, the assignments below must be carefully completed:

• Completing all reconciliation processes for the last quarter BAS will require half a day.
• Review all quarterly sets of BAS submitted during the financial year to reassure the integrity of your financial data since all adjustments need to be made in the final BAS. This task usually takes half a day.

3.      The Final Review of all Other Accounts

After the big year-end reconciliation processes of Payroll and BAS, our team also reviews every single account in your Trial Balance prior to closing your books. If your business has 50 account codes, for instance, we will need to thoroughly go through all 50 of the accounts. To deal with the sheer volume, the Tailored Accounts team implemented a streamlined process to review every account.

Ultimately, the total hours of required effort tend to rely on a number of factors, such as the size of your books, your accounting software, and the maintenance status of your accounts.

For instance, a small business, with up to five employees and less than $500,000 turnover, would need three hours for the year-end payroll processes, three hours for finalising all sets of BAS, and another six hours for other EOFY tasks. An additional provision of three hours is required for assisting your tax agent or auditor. Accordingly, one-hundred small business clients can be translated into a budget for 1,500 hours (equivalent to 6.5 full-time staff) at a minimum for six weeks prior to EOFY. A hundred medium businesses would be an exponentially larger endeavour!

Now you know why accountants are always so busy at this time of the year.

Fortunately, at Tailored Accounts, we adopt the latest technology to minimise manual reconciliations. Thus, providing you with optimal savings in both time and cost during the EOFY period. With strong attention to detail, the Tailored Accounts team and I have always delivered neat, error-free and presentable reports to more than five-hundred clients since 2008. With EOFY approaching, this is an opportunity to set your financial reporting right by contacting Tailored Accounts today!

The Not for Profits (NFP) sector in Australia is considered diverse and large (approximately 600,000 NFPs in 2010 per the Productivity Commission report), contributing toannual revenue over $100 Billion and representing 8% of the Australia’s workforce (ABS, 2016). With the chief goal of achieving missions beneficial to the public, NFPs are expected to meeta higher standard of public expectations; balancing this withseeking and managing funding has been identified as the greatest problem.

Following the Government policy changes regarding grants in the NFP sector, organisations started to experiencethe impact of increased competition – diminishing funding and enhanced accountability requirements. Specifically, NFPs are expected to convince funds providers of the value of their mission while ensuring efficiency and stewardship of the organisation. This situation creates opportunities for NFPs to manage financials more strategically by reassessing the efficiency of core operations against their budget and demonstrating measurable effectiveness.

Despite the opportunities, current leaders of NFPs are not ready to capitalise on this ‘financial shock’. Grant Thornton Financial Literacy Survey revealed thatBoard Directors in the Australian NFP sector may need to enhance financial literacy to meet these challenges.It is thus necessary to focus on efficiency, efficacy and sustainability of organisations through considering collaboration with NFP governance experts.

To overcome emerging challenges, it is time for NFPs to examine their current financial health. Focusing on a wide range of financial adaptation abilities, tools developed by our team can help to evaluate the effectiveness of current budgeting and cash flow management. The 20-point system health check has been a perfect tool for NFPs to assess their readiness for change. 

Using our tools, we ensure 1) financial integrity through regular reconciliations; 2)prompt clearance of any outstanding items; 3) close monitoring of liability balances; and 4) review of financial statements.These quality assurance activitiesnot only provide adequate financial management, but alsocreate integral information for CEOs and Boards through charts and graphs. The Tailored Accounts teamis prepared to assess and closely monitor your organisation’s financial health, delivering useful financial information for your decision-making.

In 2009, we were first introduced to cloud accounting, which was web browser accounting software like Xero. We really like it and strongly believe that it will be the future! 10 years into this technology and changes, we think Cloud accounting might not be the future anymore, even though there are still businesses and accountants who are still scare away from the Clouds.

So what should be the next?

We predict the future of accounting software in general to be more decentralised. Each business, each user will be using very different software. Accounting functions also will be varied in different area of business.

We think that cloud accounting will actually disappear in SMEs. The SMEs would be able to employ simpler business applications to manage some parts of their accounting function. The applications would be able to process financial data for management and compliance purposes.

Let’s pick an example of a coffee shop business:

Jane is a coffee shop owner. She is using multiple business applications to auto-feed her financial data into accounting software. It could be Xero or Intuit QuickBooks.

In the future, Jane might not need a cloud accounting software to manage all complicated accounting transactions since her business applications could be able to do just what Xero or Intuit QuickBooks is capable for.

Point of Sales (POS) application should be good enough to produce a comprehensive sale reports for Jane to keep track of her financial sale performance. POS could also be able to integrate to the ATO database so ATO could collect GST and tax information instantly.

HR application could be able to handle all core payroll function from on boarding, timesheet, rostering, leave, payroll, payment summaries, and superannuation to reporting to the ATO.  There might not be a need for Jane to integrate from HR to any accounting system. The list then goes on to all other areas of their business: Bill management; Inventory; Asset management…

What about bigger guys in town?

With end of financial year (EOFY) fast approaching, the Tailored Accounts team is counting down to the last day of the financial year! Offices of accountants and bookkeepers will be filled with the hustle and bustle of time-critical challenges. You may wonder why EOFY often becomes such a hectic time for us. I hope this article can shed light on the inner processes of EOFY preparation.

Having worked in the accounting industry for more than a decade, I consider EOFY preparation as a chance to place extra effort to ensure accurate, up-to-date numbers as well as presentable reporting. These outputs are the results of, what I call, a magical touch on your books.

The following list articulates the main examples of magical touches that we exert to ensure your books are in the best order:

1.      The year-end payroll

During the financial year, we process 12 – 52 payrolls for our clients subject to their pay cycles. At the end of each month or quarter, our team reported the payroll information to Australian Taxation Office (ATO), including Gross Wage and Tax details. In addition to the accurate reports regularly lodged to the ATO, payroll reconciliations at year-end takes care and attention to ensure all requirements are met. Here are the core tasks that our team has been undertaking in the process of EOFY preparation:

• Final super payment runs must be done before 25th June each year to ensure the last super payment is eligible for a tax deduction in the current financial year. Final salary sacrifice payment runs must happen on or before the same date to ensure all salary sacrifice arrangements are captured in the current year’s payment summary for employees. These particular tasks will require a few extra hours of work during the EOFY period.
• Payment summaries are to be communicated to employees via email/post before 14th July. We ought to undertake a full year payroll reconciliation to ensure the accuracy of the information in payslips, Business Activity Statements (BAS), and payment summaries. This significant task requires half a day at a minimum, depending on the number of employees and complexity of the payroll structure.
• Payment summary reports must be submitted to the ATO before 14th August in the following year. The task usually takes an hour to complete. To illustrate, 300 clients at Tailored Accounts are interpreted into a budget of minimum 300 hours for all payment summaries with no mistakes allowed.

Harry Hoang

Single Touch Payroll (STP) is now becoming compulsory for businesses, which have minimum 20 employees. You will be required to report on the new system from 1^st July 2018. What needs to be prepared to get ready for the new system? Would there be any impact on your business transaction or cash flow?

Here are few check points to ensure that you are ready for STP:

1.      Your STP readiness: If you have 20 or more employees on 1^st April in a later year, you will commence reporting under STP from the next 1^st July. It means you will have a minimum of 3 months to organise your systems & procedures to meet requirement of STP.

3-month period is not sufficient to prepare thoroughly for the change if your accounting system has not been ready for STP. You should check with your software provider NOW to ensure they are STP if you plan to have 20 employees in the next 6-12 months. As a XERO Gold partner, we can confirm that XERO will be compliant with STP.

Tailored Accounts was pleased to conduct the Financials & Accounting workshops for more than 30 participants from the IACT 2016 competition teams. This is an important training for all teams before the idea pitching date. Accounting knowledge is the key to convince the judge on the credibility of your ideas!

The teams were interact with workshop instructor, raising interesting questions, and sharing their experience in dealing with financial issues in start-up projects. Cashflow, budgeting, and financial forecast were our hot topics. Great discussion among the teams!

The judges of 2016 Telstra Business Awards have shortlisted Tailored Accounts to be the finalist for Small Business Award Category. Once again, we have an honour to become a Telstra Business Award finalist together with many other inspiring Australian companies.

The 2016 Telstra Business Awards has encouraged us to reach for higher achievements in serving our clients and being committed to innovation in bookkeeping practice. The news comes to us when we are working hard to improve our service bundle.  July is the beginning of an exciting yet challenging financial year for many of us. Being the finalist of this prestigious award gives us a great inspiration to pursue our goal in the year 2016/2017.

The achievement that we have today comes from the endless contribution and support from our staffs and clients. We are grateful to have amazing team members who never fail to deliver the best quality of work. Our clients have always been supportive of us. The clients’ queries and concerns give us many ideas to design business solutions that answer their needs. Seeing our clients become successful businesses in town is a source of joy.

Let us together celebrate this exciting moment as it is another milestone to mark our growth and success.  

Tailored Accounts is proudly listed on Telstra Business Awards website. 

Most business owners do not know that the SME sector in Australia has wasted millions of dollars due to inefficient cost, most of which can be attributed to the complex bookkeeping process. As the financial year is coming to an end, here is a guide to help business owners save the unnecessary cost and improve the company performance in a period when financial management is very much needed.

To improve the existing financial management process, you will first have to evaluate the system. Take a minute and think about how you control your financial process right now. Most SMEs have the same mistakes listed below:

• They fail to realise how important financial management is. Businesses with poor financial management tend to suffer from poor cash flow and profit margins, ineffective debtor control, and an inability to meet their business’ commitments;

• They are unaware of alternative solutions such as hiring an accountant or implementing an accounting system. If crunching the numbers is not your strength, either hire or outsource to an accountant or bookkeeper who will deliver regular and reliable information and advice that you can use to manage your financial position;

• While many businesses are in the field of IT, it is surprising how backward their accounting systems are. Stacks of receipts, manual ledger books, simple Excel sheets, messy financial transactions and reports, and overdue BAS and tax returns are common among start-ups with bad financial management;

• Businesses owners tend to focus on their products, ideas, and clients, often neglecting the fundamentals of their business. I have never seen a successful business that does not have strong financial management.

As a matter of fact, most people fails to realize their mistakes until it’s too late. If you are a small business, it is highly likely that you need to do everything to manage your business, from administration, marketing to bookkeeping. It is seemingly running well and you believe you are able to manage it until the end of financial year approaches. One client shared with us that EOFY used to be her nightmare and she was always lost with massive paperwork. Only until the end of financial year does your disorganized bookkeeping system come back to bite you. To avoid this scenario, though, here is the EOFY to-do list from our executive director.

By Harry Hoang

Reprinted from B2B Magazine

Bookkeeping can be a challenge for many business owners, and even if they don’t mind bookkeeping, they might not enjoy doing it. One of my clients recently remarked to me, “I don’t like doing the books for my business because it is so easy to make mistakes, and the tasks are so tedious! And because I avoided bookkeeping altogether, I was faced with years of overdue bills, tax returns, and so on.” While keeping on top of your accounts can be a real hassle, keeping track of the incomings and outgoings of your business is crucial to its survival.

Reprinted from B2B Magazine

By Harry Hoang

Heraclitus, a Greek philosopher said “Change is the only constant in life.” As with people, businesses must embrace change. So, this financial year, consider making some changes in your business.

By Harry Hoang

I had a talk with an insolvency partner from one of the biggest accounting firms in Australia last week. We both agreed that small or large businesses should have their financial systems reviewed more regularly by an insolvency expert. This will ensure that the systems are in compliance with latest financial standard requirements and potential ATO audit.

By Hon. Joseph J. DioGuardi

Reprinted from The Huffington  Post

After nearly 70 years of discussion, and endorsement by four presidents (Truman, Eisenhower, Johnson and Nixon), it is high time that accrual accounting be implemented... America's future depends on it!