The ATO has set up a website to help small business owners learn about running their businesses. It’s called Essentials to Strengthen your Small Business. The site covers the 5 stages of business life (from idea to exit) and offers 21 short courses across each stage. In this blog, I’ll walk you through this website so you can see if it’s right for you!
On the website, you’ll find courses linked to one of the 5 stages of your business: Idea, Start-up, Day to Day, Change, and Exit.
Idea: when you’re thinking about starting a business.
Start-up: when you’ve just begun and need guidance on what to do next.
Day to Day: when your business is running, and you want help with everyday management.
Change: when you plan to reshape or update your business.
Exit: when you’re retiring, selling, or closing down your business.
21 Courses
The 21 courses match the stage your business is in. They cover topics from starting a business to keeping records, closing down—and everything in between. For instance, clicking “Start-up” shows you 11 courses on GST, cash flow, record keeping, home-based business deductions, and more. You can filter by business structure and industry to find the most relevant courses.
Course Breakdown
Each course has an overview, a video, and modules you can do in any order. If some modules don’t apply to you, skip them. Every course has “fast facts” – key points from the lessons. There are also “quick links” for more info. After each course, take a knowledge check to see what you need to review. Plus, there’s an “action plan” – a checklist to guide your next steps based on your learning. You can download the fast facts and action plan as PDFs or Word Docs to share or keep.
Course Account
Create an account on the website to track your courses. With an account, you can create a learning path that fits you and your business. Add or remove courses anytime from the course list. You can also save notes and favourite pages to visit later from your dashboard.
Here’s the video from the website that shows you how everything works, for those who like watching instead of reading!
This learning hub is perfect for small business owners looking for guidance without spending much time or money. It’s one of the best ATO initiatives I’ve seen recently.
For those who use the Cash Flow Coaching Kit, please note that it will be moved to this new Essentials website on June 30 2024.
This is the fourth part in a series I’m calling “How-To”. The first part was about insurance bills, the second part was about VicRoads registration bills and the third part was about chattel mortgages. I will be using Xero for the example, but don’t worry if you use another software, the basic rules will still apply.
The fourth how-to is about how to account for hire purchases in your accounting software. A hire purchase arrangement is an agreement to purchase goods in instalments.
Step 1
Let’s pretend that your business has purchased a new printer with all the bells and whistles for $15K via a hire purchase agreement, plus $5,000 interest. For this example, the hire purchase is for 30 months without a residual (balloon) payment at the end of the period. Note, that most hire purchase agreements will include a balloon component (check your documentation). The first thing to do is collect all of the documentation. You will need the hire purchase agreement, the invoice, and the interest amortisation schedule. The hire purchase company will provide all of this to you at the point of purchase. To begin the process, create some accounts in your accounting software:
Office Equipment (Asset GST Inc)
Hire Purchase Unexpired Interest (Liability GST Inc)
Hire Purchase Liability (Liability BAS Excluded)
Interest Expense – Hire Purchase (Expense BAS Excluded)
Note, For any Hire Purchase Agreement made after 1/7/2012, both the purchase price of the asset and all interest charges and fees are subject to GST. (see notes at the end of the blog)
Step 2
Now you can enter this journal which adds the purchase of the printer into the accounts:
Check your balance sheet. It should look like this:
Step 3
When it comes time to record the first repayment to the finance company, your entry will look like this (assuming each repayment is $500 (30 x $500 = $15K)). Note, that the tax code for the interest expense account is BAS Excluded. This is because the GST on the interest component of the hire purchase was claimed when the purchase was entered initially (see journal). Therefore the monthly repayments of interest are not reportable on the BAS.
Step 4
Check that the balances in the balance sheet are reduced by the first repayment – see below. Note that I have evenly split the interest repayments into amounts of $151.51 for this example ($4,545.45 divided by 30 payments). However, you will need to enter the interest amounts as per your amortisation schedule and these won’t be exactly the figures divisible by the number of repayments. Something to keep in mind!
GST rules for hire purchases
For hire purchase agreements entered into on or after 1 July 2012, all components of the transaction are subject to GST including: • The upfront purchase price of the asset financed under the agreement • Interest charges, and • Any other associated fees.
This is the case regardless of whether you account on a cash or accrual basis.
This means that taxpayers on a cash accounting basis can claim the full amount of any available GST credit at the time the first payment is invoiced or paidunder the hire purchase.
This was the last part of our How-To series (for now). I hope you found this series useful. For further details about hire purchase agreements and GST, go to this ATO webpage.
This is the third part in a series I’m calling “How-To”. The first part was about entering insurance bills and the second part was about how to enter a VicRoads registration bill. I will be using Xero to present the example, but don’t worry if you use another software, the basic rules will still apply.
The third how-to is about how to enter a Chattel Mortgage asset and associated loan into your accounting software.
Step 1
Let’s say your business has purchased a new motor vehicle. The invoice from the vehicle dealer might look something like the below example. Grab your invoice now.
Step 2
The finance company loan schedule is also required. It may look something like the below example. Grab you loan schedule now.
Step 3
Create the following accounts in your software (check first because some may already exist):
Deposit Paid (Current Asset) – no tax code
Motor Vehicles at Cost (Non-Current Asset) – apply capital expense including GST tax code
Chattel Mortgage (Motor Vehicle) (Non-Current Liability) – no tax code
Chattel Mortgage Interest Charges (Expense) – no tax code
Chattel Mortgage Fees & Charges – tax code varies, could be Free or GST inclusive (check your documentation)
Motor Vehicle Registration (Expense) – apply GST Free tax code
Motor Vehicle Insurance (Expense) – apply GST inclusive tax code
Unexpired Term Interest (Non-Current Liability) – no tax code
Step 4
First enter a spend money transaction to record the payment of the deposit:
Step 5
Next, enter this journal to record the purchase of the new vehicle:
Step 6
When it comes time to make a repayment to the finance company, enter a spend money transaction like this:
Bonus Tip!
Sometimes it isn’t possible to obtain the loan repayment schedule for whatever reason. When this happens, you need to create your own. I use this amortisation calculator by Bret Whissel. It has served me well over the years. I hope you find it useful too.
Last week, I started a bookkeeping resource series called “How To”. Each week I will share instructions with you about how to enter some common transactions. I will be using Xero to present the example, but don’t worry if you use another software, the basic rules will still apply. Last week I explained how to enter an insurance bill.
The second how-to is about how to enter a VicRoads registration expense/bill into your accounts.
Step 1
Grab your VicRoads bill and go to the part where it shows you the breakdown of charges. It may look something like this:
Step 2
Log into your software and go to the area where you enter bills.
Step 3
Enter the VicRoads as the supplier, the relevant dates and the reference number or name as below:
Step 4
Enter a line in the bill for each charge shown on the bill. The registration fee is GST-free, the TAC charge includes GST and the insurance duty is BAS Excluded. If you are entitled to claim 100% of motor vehicle costs in your business, then you can claim the full GST amount on the TAC charge. Time and time again, I see clients entering the full amount of the registration expense as GST-free. While they are partly right, they are also missing out on claiming the GST of the TAC charge. Also, relevant here is the choice of account for expense coding – you may like a general account such as this one “Motor Vehicle Expenses”, or you may like to split your costs out in a more detailed manner and have an account for each type of car expense, in this case, “Motor Vehicle Registration”. It just depends on how much detail you want to see in your profit and loss report.
Step 5
Check that the GST amount agrees with the VicRoads bill. In this case, it is $40.00.
Step 6
Approve the bill to ensure the expense is added to the accounts correctly.
Final words…
So that’s it for this week’s “how-to”. I hope you learned something new. One thing I’d like to add about VicRoads “bills” before I close off this blog, is that to obtain an actual bill, you do have to have an account with VicRoads. They used to send out the document in the mail, but not anymore – it’s all online, like everything these days. Here’s the link to VicRoads where you can make an account if you haven’t already done so.
Bonus Tip!
For any bookkeepers out there who know the pain of not ever receiving an actual VicRoads bill from clients (who probably don’t know how to get it – see notes above), which makes data entry nearly impossible, here is the link to the TAC registration rates for FY24. This document provides the breakdown of TAC and insurance duty fees based on postcode and vehicle type. An excellent resource that I am sure you will use time and time again. There is also an online calculator you can use on the VicRoads website that will provide the figures you need easily. Here is the link for the calculator. Either resource will get you the information you need. You’re welcome by the way!
This week, I am starting a bookkeeping resource series called “How To” (not very original, I know!). Each week I will share instructions with you about how to enter some common transactions. I will be using Xero to present the example, but don’t worry if you use another software, the basic rules will still apply.
So here goes, the first how-to is about how to enter an insurance bill into your accounts the right way.
Step 1
Grab your insurance bill and go to the part where it shows you the breakdown of charges. It may look something like this:
Step 2
Enter a line in the bill for each charge shown on the bill. In this case, there is one for the premium and one for the stamp duty component. Select the insurance account you want to use – you may have one for business insurance and another for motor vehicle insurance etc. Notice that the premium figure is plus GST, whereas the stamp duty is BAS excluded. This is because stamp duty does not attract GST. It is very important to break up your insurance bill like this and to never enter a bill 100% inclusive of GST. Doing so will mean that you overclaim GST in your BAS.
Step 3
Check that the GST amount agrees with the insurance bill. In this case, it is $38.25 which is one cent less than our bill, hence the rounding line I have added to agree the total amount with the supplier’s bill.
Step 4
Approve the bill to ensure the expense is added to the accounts correctly.
Final Words…
So that’s it for this week’s “how-to”. I hope you learned something new. Please note that this insurance example is pretty basic. Some insurance bills have extra charges which may or may not include GST. The trick to getting these sorts of more complex bills entered correctly is to ensure the GST figure in the bill agrees with your software entry. If it doesn’t, you need to check each charge for its GST status i.e. some items will include GST and others may be GST-free or GST-exempt.
Over the last couple of years, I’ve moved away from written content to podcasts as my preferred choice of learning and research. Podcasts are great because you can listen to them at any time, doing anything, and privately, too, if you use earphones or earbuds. I usually walk daily and listen to a podcast at the same time – getting my exercise and racking up CPE points simultaneously – win-win!
I have many interests and there are podcasts for just about any topic you can imagine. Being a bookkeeper, I have found several podcasts about tax and bookkeeping, and over the years, have narrowed the list down to three podcasts that resonate with me the most. Here is my list:
Two Drunk Accountants: This podcast is hilarious! If you thought that accounting and tax topics could never be interesting or even funny, you are in for a big surprise! Tim Garth and Dan Osborne of CATS Accountants are the voices behind this thoroughly entertaining podcast. I find that I am laughing from beginning to end but am being educated at the same time. I enjoy this podcast and you will too! Here is the link to hear the boys bang on about their industry and their lives in general.
ICB News Channel: The Institute of Certified Bookkeepers has a podcast that is published monthly, based on topics from their newsletter. Rob Marshall, the Support and Resource Manager at ICB, runs the podcast which often includes interviews with current stakeholders involved in the bookkeeping industry. If you want to keep up with the changing face of bookkeeping and also top up your CPE points, this podcast is the one to choose. Find this podcast here.
Tax InVoice: This podcast is delivered by the ATO. Certainly not as entertaining as the Two Drunk Accountants (because let’s face it, “Two Drunk ATO Tax Specialists” doesn’t have the same ring!), the podcast will dot the i’s and cross the t’s so far as covering many tax issues and topics. Covering everything from working from home to crypto assets, Tax InVoice is a purely tax-based podcast but I find it is an easier platform to use to try and understand tax topics which can be difficult to do via written text only. You can find the 50-plus episodes of Tax InVoice here.
I’m sure if you search, you’ll find many other bookkeeping/tax podcasts. As I said earlier, I did follow about 6 or 7 back in the day but have slowly removed the ones that I didn’t find useful or enjoy. There aren’t too many Australian tax podcasts really, so if you do a search, you’ll probably find several American-based ones. These ones have their place, but if you’re after Australian tax information, you need to ensure you choose Australian podcasts. I hope you find this information useful and if you haven’t delved into the world of podcasts yet, perhaps you can start with one or two from my list.
Do you listen to a bookkeeping podcast that you think is great? Why not share it with other readers in the comments section below?
Unless you’ve been living under a rock, you would undoubtedly have heard the term artificial intelligence or “AI”. AI is the new buzzword and seems to be everywhere you look. In particular, most accounting software, and many other apps have embraced AI and have made it a part of their interface.
While some may be dubious about AI (even afraid), the fact is, that it is here to stay and has been a part of the way we use technology for a long time. Google apps including Gmail and GDrive, apps like “Grammarly” and other apps that make suggestions as you type, for example, are all using AI to enhance the user experience and basically make life easier.
Given AI is already here and we use it daily (even though we may not be aware of it), I have started to wonder how bookkeepers can use it to assist with daily tasks. To that end, I have done some research into how we can use ChatGPT for this purpose.
What is ChatGPT?
ChatGPT stands for Chat Generative Pre-training Transformer. It was launched in November 2022 and is a remarkable text-based chatbot. It enables users to effortlessly type queries and receive accurate answers, as well as efficiently complete tedious tasks. This advanced chatbot is trained with extensive data, allowing it to generate responses that closely resemble human-like interactions. You can download the ChatGPT apps from your favourite app store.
So now that we know what it is, how can bookkeepers use ChatGPT? There are actually many ways to use it, but here are 10 ideas to get you started.
Writing those “difficult” emails to clients. Sometimes as bookkeepers, we need to tell our clients they have to go, or we are putting our prices up or we found something dodgy in their accounts, etc. Ask ChatGPT to write the email for you by telling it what the email is about. You will receive a professionally written email script in seconds.
Creating Excel formulas. Tell ChatGPT what you want to calculate in a cell or column and provide the data to work with and it will create the formula for you.Here is an example of how this might work.
Creating journal entries. ChatGPT can extract information from receipts, such as dates, seller names, and amounts. Just provide the dataset, and ChatGPT will analyze it and input the client information for you. More specifically, the prompt you would use would be: “Use the following transaction details (add transaction text) and amount to create a journal using these account names (Add accounts) using (Add accounting system)”
Creating checklists and subtasks. Ask ChatGPT to create a list of steps to complete any bookkeeping process. The result can be modified to suit your needs and business. You can also ask it to create subtasks for each of the steps inside a checklist.
Creating client questionnaires. Ask ChatGPT to suggest a list of questions to ask new clients during client onboarding.
Creating client onboarding checklists. Ask ChatGPT to create a checklist for you when onboarding a new client. You can tell it some basic details like number of employees and business structure.
Creating an engagement letter. Ask ChatGPT what to include in an engagement letter for a client with XYZ requirements. Adjust to suit your business requirements.
Staff onboarding checklist and letters of offer. Ask it to create a checklist for onboarding staff either for your business or for a client. Also, ask it to create letters of offer based on the details you provide. Adjust to suit your business.
Creating email templates. Make a list of the type of emails you write continuously e.g. a request for information. Ask ChatGPT to write these emails for you. Update the details to suit your business and then save them as templates.
Creating copy for your blog or website. Tell ChatGPT what you want to write about e.g. ideas for your About Page. Ask it to write you the copy for this page. You can do the same thing for your blogs. Simply provide it with some basic information e.g. how GST applies to food sales in Australia, and ask it to provide you with copy for your blog. Of course, you should check the details it delivers for accuracy and currency before publishing.
I hope these ideas, or “prompts” as they are known, give you the motivation to start to play around with ChatGPT in your bookkeeping business. Obviously, the sky is the limit regarding what you can do with ChatGPT. I’m sure once you get started, you will discover many more ways to use it in your business. If you would like to share any prompts you currently use with ChatGPT, please add them below in the comments. I’m sure other bookkeepers would love the extra motivation!
There is a lot of information available to you if you just want to understand what a Taxable Payments Annual Report (TPAR) is and why you may need to lodge one. In short, if your business is primarily in one of the below industries and has made payments to contractors in the previous financial year, then a TPAR will need to be prepared and lodged.
So, as I said, there is a lot of information you can Google about TPAR in general, but not a whole lot about how to prepare the report from a bookkeeping point of view. Some software will have you believe that you just select a few boxes here and there and then submit the report to the ATO. Voila! Done. Easy. Well, it is easy if you didn’t actually pay contractors in a given year, but if you did, there are a few steps you need to take to ensure your report is true and correct. In this blog, I will share my process for preparing the TPAR for my clients. I hope this helps you if you are feeling a bit lost as to the “how” behind the “what”!
How to prepare your TPAR in 6 easy steps
1. Make a list of contractors
Before you can prepare the TPAR, especially if this is the first time you have done this, you should make a list of all of the contractors you have paid during the financial year. Now move on to step 2.
2. Check contractor Details
The TPAR requires that you report various personal details about your contractors including the full name of the contact person, business name, business address, email address, phone number and the ABN. Before you begin preparing the TPAR, go through your contractor list and make sure these details have been added to their contact cards.
3. Ensure contractors are selected to be part of the TPAR
In your software, each contact card will have a checkbox to select if the contractor needs to be reported on the TPAR. Go through each contractor’s contact card and ensure this is selected if required.
4. Print out the TPAR and check the details
Find the TPAR in your software. At this point, it is only a draft report. Print it out and review each transaction – check that all transactions should be included. Remember, only invoices for labour and materials or just labour, need to be included. Invoices for materials-only do not need to be included. Materials-only invoices will need to be manually removed but clicking into the transaction and deselecting the checkbox for TPAR. If you have made any changes to the draft TPAR, then print out the updated version and move on to step 4!
5. Ensure the TPAR agrees with your profit and loss data
This is where some bookkeeping comes in! Not everyone knows that you need to make sure the total amount quoted in the TPAR agrees with the data reported on your profit and loss. This is called reconciliation. If you don’t do this step, your TPAR may be incorrect, so it’s pretty important! The TPAR only includes payments you made to contractors within a financial year – unpaid invoices are not included. Therefore, in order to perform this reconciliation, you need to print out the profit and loss in cash mode. Now, depending on how many transactions there are, you can either compare the two reports by eye or if you need to, you can export the profit and loss data to a spreadsheet to help you compare the calculations. Note, that the profit and loss data required will be where you recorded your contractor payments. This may be an expense account or a cost of sales account, depending on how your chart of accounts is set up.
Now, you need to ensure that the total amount showing in your TPAR, less the GST, agrees with the profit and loss data. If your initial setup was correct, these two reports should agree. If they don’t, there may be a couple of reasons why. Here are some things to check:
1) Make sure that all contractor transactions in the TPAR also appear in the P&L and vice versa. This may involve checking that those particular transactions have the TPAR checkbox selected or that you have a contractor’s contact card selected for TPAR. 2) If you have included some materials-only transactions in either the P&L data or TPAR, you must remove them. 3) You may also find that some transactions have been coded to other expense accounts and are therefore not included in the P&L data you initially exported or printed. Find those transactions and add them to your exported data.
When you are satisfied that the two reports agree, then print out a final TPAR and save it as a PDF for your records.
6. Lodge the TPAR
Depending on the software you are using, you may be able to lodge the TPAR within the software itself. If not, you will have to download a TPAR file and lodge it with the ATO using Online Services and/or your myGov account. Find more details here about how to lodge via ATO Online Services. Keep a record of the lodgement receipt you will receive from the ATO with your TPAR from your software.
Remember, if you do not have any contractor payments to report, you need to report a Non Lodgement Advice form. See my blog here for more information.
So that’s all there is to it, but as you can see, lodging the TPAR does require some background work. You can’t just click a button and lodge it because you need to ensure the figures and the data are correct. I hope this blog has helped you in the run-up to the TPAR lodgement due date which is August 28th each year. If you need help preparing your TPAR, please don’t hesitate to get in touch with me and I’ll see if I can assist you.
An accessory to a crime is a person who participates knowingly and voluntarily in the commission of a crime. An accessory can be categorised as before or after the fact (the commission of the crime). They need not be actually present at the scene of the crime in order to be held liable.
Legalmatch.com
In the bookkeeping world, there is much chatter about “accessorial liability” especially in relation to those providing payroll services for clients. So what is this about and what does it mean? Basically, as per the above quote, if you are involved in contravening the Fair Work Act 2009 and are knowingly doing so, then, if investigated by the Fair Work Ombudsman (FWO), you could be classified as an accessory to the contravention and be prosecuted accordingly. In simple speak, if you are involved in performing payroll tasks for a client (or your employer) and you know that something is being done illegally or incorrectly in relation to the payroll and you do not do anything to rectify it, you have just made yourself an accessory. The FWO is clear about this and there are no if, buts, or maybes. No excuses accepted. So there are 3 aspects to accessorial liability – being involved, knowing it’s happening, and doing nothing to stop it. Is this scary for bookkeepers? You bet your life it is!
Should I stay or should I go now?
So if you’re a bookkeeper reading this and you’re not already scared about your involvement in your clients’ payroll, then you should be! In general, you do your best and bring your expertise and knowledge to the task, and hope that all will be well. But is that enough? Perhaps not it seems. The FWO will have us believe we need to do more in order to avoid becoming an accessory to payroll contraventions. So what can you do if you suspect something is out of kilter with a client’s payroll? Athena Koelmeyer from Workplace Law makes the following suggestions:
Arrange for a payroll audit to be performed by a professional HR service. This will uncover any anomalies and errors being made and assistance will be provided to rectify them.
Make sure that appropriate processes are in place and are being followed correctly. These processes should include:
ensuring employers (your clients) are across their obligations under the Fair Work Act 2009, modern awards and any record-keeping obligations
ensuring employees are properly classified under their relevant award
ensuring employees pays are correctly in terms of minimum rates of pay, allowances, penalties and loadings
ensuring all payroll records are compliant and correct
keeping up to date with changes to modern awards, especially pay rates, allowances, loadings, penalty rates etc.
conducting regular audits of your payroll set up, especially when using generic software
If you discover any anomalies with your client’s payroll, communicate this immediately with the client and ensure that they rectify the situation. Keep written records of the steps that were taken to repair the issue/s. If neither you or your client can rectify the issues, seek professional advice and assistance. Do not ignore the situation.
The above is great advice is should be followed if you are going to provide a best-practice service to your client. As bookkeepers, however, we all know that in reality, making clients cross the t’s and dot the i’s is not as easy as it sounds. Some clients take your advice on board and some don’t for whatever reason. So what is Athena’s advice if you find yourself working with a client who is openly flaunting Fair Work laws and who refuses to make any improvements? Basically, her advice is to
RUN FORREST, RUN!
Athena says you always have to come back to the accessorial liability provisions under section 550 of the Fair Work Act when making your decision about whether to persist or leave. She says that where you are involved (processing payroll) AND you know that payroll processes as above are not sufficient, AND you don’t do anything about it (even if you tried to), you will be seen as an accessory in the event of prosecution. While this is not the forum to go into possible charges and legal consequences of said prosecution, I’m sure you’ll agree that you do not want to go there! Athena recommends that you should terminate your engagement with these types of clients immediately, no questions asked, and just walk away. Before walking away, always put your concerns and any steps taken to rectify the situation in writing to the client and retain this as your record in the event that you are pursued by the FWO. She also advises that you should report non-compliant clients to the FWO as an extra means of protecting yourself. Athena says, and I quote:
If a payroll provider makes a client aware that their systems are not compliant, refuses to participate in the contravening conduct and terminates the relationship with them, then the payroll provider has done all that they can do to make the client aware of their non-compliance and not participate in any contraventions.
Payroll HQ
In my opinion, there isn’t any job worth doing where you are putting yourself at risk of litigation and possible jail time. If you are reading this and you think you may be at risk, then get some advice from a trusted advisor and/or your bookkeeping association. If you are sure you are at risk, then take Athena’s advice and run, run, run, and don’t look back!
If you want to be a bookkeeper in today’s environment and abide by the Tax Agent Services Act 2009, you will need to ask yourself a question: What sorts of services do I want to provide to my clients?
