These are basic procedural activities that ALL businesses should undertake. Applying a simple disciplined approach to this will have the following benefits:
1. No last-minute preparation of year-end accounts for tax or business reporting.
2. Allow early detection of errors and frauds.
3. Enable accurate and timely reporting of your business performance.
My experience is that most business owners do not care very much about record-keeping until it is too late. This often results in unnecessary accounting fees, penalties from the respective statutory authorities and ultimately business collapse. The choice is YOURS.
a) All receipts & payments are recorded.
b) Monitor cash flow position as this will reveal issues even before your financial statements (monthly or annual) are produced.
a) Bank Reconciliations – compile your bank statements.
b) Loan Reconciliations (if monthly) – compile your loan statements.
c) Credit Card Reconciliations – compile your credit card statements.
d) Business Activity Statements (if monthly) – A good accounting package could ease collation of figures for submission.
e) Wages – Proper journal entries at point of wage processing will make this process a breeze:
o PAYG Withholding – Instalment Activity Statement (if monthly).
o Superannuation Processing and Payment (if monthly).
f) Payroll Tax submission – Dependent upon the wage thresholds set by the different state requirements.
a) Wages activities as described above (if quarterly).
b) Loan Reconciliations (if quarterly)
c) Business Activity Statements (if quarterly)
d) Personal & Drawings Account Review – To properly segregate private from business affairs and to account for this segregation in the books. This will assist in completing your FBT obligations at year-end.
e) Depreciation journal entries – some may take these entries up to reflect a more accurate financial picture.
a) Personal & Drawings Account Review and final verification.
b) Closing Stock Figures – Annual stocktake performed and also to account for this in the books.
c) Gross Profit Review – A percentage margin would give you some clues as to whether the figures are reasonable. Calculation of Gross Profit is merely = (Sales – Cost of Goods Sold) / Sales
d) Depreciation Journal Entries – Can be done quarterly or monthly as well.
e) Fixed Asset Movement and Register check for the financial year under review.
f) Treatment of Net Profit depending on structure of business (e.g Sole Trader, Partnership, Company etc)
g) Tax Returns & FBT Preparation.
If you need assistance or further professional help to the above, please feel free to drop us a note.