Unless you are a bookkeeper or other tax professional, you probably won’t know what a suspense account is or how to use it. It certainly isn’t a group of bookkeepers waiting with bated breathe for something but you could be forgiven for thinking it was! A suspense account is an account to which transactions that are unclear or require further discussion are allocated i.e. they are kept in suspense. The suspense account is used frequently by tax professionals but maybe something quite foreign to business owners. If it is used properly, the suspense account can be very helpful for both parties in terms of bookkeeping.
For business owners who do their own data entry:
Never ever guess where and/or how transactions should be posted in the accounts. This will result in your tax professional firstly having to find those erroneous transactions and then secondly having to reallocate them to their correct accounts. This takes time and costs you money! Instead, set up an “other expense” account and call it “Suspense” then allocate any transactions that you are unclear about to this account. Next, advise your tax professional about what you have done and why. He/she will allocate these transactions to their correct accounts for you. This helps to avoid mistakes and double-handling of transactions.
For tax professionals:
As you process a client’s accounts you are likely to come across transactions that are not clear to you. Never guess or assume that you know what a transaction is, instead just post it to the suspense account. Once you have reconciled all of the other transactions, you will be left with a list of “query” transactions in the suspense account. Send this list to your client and ask for further information about the transactions and if necessary, copies of the invoices or receipts to assist you. When you have all of the required information, you will be able to properly allocate the “query” transactions as required. By putting these transactions in the suspense account, you will still be able to reconcile the bank account to ensure the closing balance is correct.
Some tax professionals don’t like suspense accounts, preferring instead to leave query transactions out until they can discuss them with the client. I prefer to use a suspense account because doing so allows me to reconcile the bank account which may uncover other issues such as missing transactions or double-entered transactions etc. I also like the idea of putting all “query” transactions into one account so that a report can be raised from that account and given to the client to review – it’s nice and tidy :-). Business owners doing their own data entry can also benefit greatly from using a suspense account. Instead of wasting valuable time trying to work out what to do with a troubling transaction, they can simply allocate it to suspense and ask their bookkeeper or tax agent to deal with it. A suspense account, in my opinion, is a very handy little tool!
One of the most useful online apps I include in my “bookkeeper’s toolbox” is Dropbox. Dropbox allows users to upload and share files with others regardless of location. This is a wonderful tool considering most of my clients are interstate. What I find however, is that some clients use it successfully with me and others, well, not so much! Those who use it successfully follow a specific procedure and today I am going to share that procedure with you so that you too can use Dropbox with your bookkeeper more effectively.
So you’re at a point in your business journey where you think you might need accounting software. That’s great but how do you choose the software that’s right for your business? Here is an easy-to-follow five-step process to help you make an informed decision.
The number one things that kills most businesses is poor cash flow. Lack of money basically means that your business will struggle to function and if this continues, may even mean you have to close the doors. Luckily there are ways to improve cash flow issues. Read on to find out about 5 ways you can improve your cash flow.
We’ve been running our bookkeeping business for over 10 years and in that time we’ve worked with many different clients; some have been wonderful and others not so great. So what makes a great client or ideal client? We have compiled our list of 10 characteristics that we believe the ideal bookkeeping client presents.
The other day I visited a client who told me about Load & Go Visa Cards. He was looking for a way to better handle giving petty cash to employees for minor business-related purchases. It wasn’t that he didn’t trust his employees with the cash, it was more that the physical handling and recording of cash purchases was becoming difficult to maintain and as a result, some purchases were not being recorded at all. My client wanted a more efficient system for petty cash purchases and after some research came across Load & Go Visa Cards from Australia Post. These are rechargeable pre-paid Visa cards to which you add your own funds up to the value of $999.00.
There’s a big push at the moment to outsource every task in your business that you don’t want to do. While this concept has merit, there is one business task that you probably shouldn’t outsource, your bookkeeping.
Okay so you run a small business and things are super busy! You’ve got lots to organise – employees, clients, projects, supplies, website, marketing and dare I say it, yes, the bookkeeping and tax compliance tasks! Some business owners prepare their own books but many are outsourcing the task to professional bookkeepers instead. Some prefer to employ an onsite bookkeeper but others have chosen to use the services of virtual bookkeepers. They have done this for various reasons, the main ones being:
As small business owners, they are probably operating a home-based business and do not want someone regularly coming into their home/family space.
They operate from a formal office which does not have the space for another worker, desk and equipment etc. or
Their business is primarily mobile and as such, they don’t really utilise a physical office.
So just what is a virtual bookkeeper and how does virtual bookkeeping work? What are the pitfalls or cons or virtual bookkeeping? Today we answer these questions and more……..
A virtual bookkeeper is someone who works remotely, utilising current technologies and the internet to complete bookkeeping and other tasks for his clients. Virtual bookkeeping is not location-dependent. A virtual bookkeeper can offer services to clients Australia-wide (or perhaps worldwide), without leaving his office. The internet, current technologies and cloud services all make this possible. At e-BAS Accounts, while we do have some local clients whom we see in person, we are essentially virtual bookkeepers and maintain clientele in several Australian states even though we are Victorian-based. To ensure the virtual relationship runs smoothly, we use a system which we will share with you today. Here is a summary of how our virtual bookkeeping system works. If you would like to read the extended version, head here.
Done well, the virtual bookkeeping relationship can be very beneficial for both the bookkeeper and the business owner. Done poorly, the virtual relationship will fall over leaving all concerned a little worse for wear. So are there any pitfalls to virtual bookkeeping? Unfortunately yes, as with any system, things can go wrong. Here is our list of common pitfalls:
Many SMEs are outsourcing their bookkeeping and BAS tasks to professional bookkeepers. This frees them up to get on with running their businesses and gives them peace of mind that their bookkeeping is correct and compliant. It’s a great thing to do especially if you loathe bookkeeping! While some SMEs prefer to employ an on-site bookkeeper, many are turning to virtual bookkeepers for assistance. So just what is a virtual bookkeeper and how do you work with one?
What’s a Virtual Bookkeeper?
A virtual bookkeeper is someone who works remotely, utilising current technologies and the internet to complete bookkeeping and other tasks for his clients. Virtual bookkeeping is not location-dependent. A virtual bookkeeper can offer services to clients Australia-wide (or perhaps worldwide), without leaving his office. The internet, current technologies, and cloud services all make this possible.
How to Work with a Virtual Bookkeeper
Some business owners are hesitant to use a virtual bookkeeper because they just don’t understand how the whole process works. They can’t get their heads around using a bookkeeper who lives in another town or state for their bookkeeping needs. So just how does this virtual thing work? For the virtual relationship to be successful and beneficial, the virtual bookkeeper must have a proven system in place which nurtures this success. Here is the virtual bookkeeping system we use at e-BAS Accounts:
1. First Consultation
After the initial contact with a new client, an appointment is set for the first consultation. This meeting can be held via telephone, Zoom, Google Meet, and other video conferencing apps e.g. Any Meeting. At this meeting, the client’s bookkeeping assignment is discussed in-depth and created.
2. Legal Stuff
A client and confidentiality agreement is drafted and sent to the client via email, mail, or fax for signing. Once the agreement is signed, the bookkeeping can begin! Some practices call this an engagement letter.
3. Accounting Software
Clients can choose between desktop-based platforms like MYOB or QuickBooks and cloud-based software like Xero, Saasu, or MYOB Live Accounts. Desktop data files can be emailed (file size dependent), shared via Dropbox, uploaded to our secure online storage facility, and/or sent via mail on a USB drive or CD format. Cloud-based software files are shared with us via an invitation that the client sends to us to become a user of their file online.
4. How Clients Send us Source Documents
Firstly, we send our clients a checklist to help them prepare their source documents for us. We list all data required and provide guidance on how to organise this data before sending it. Clients use various methods to send their bookkeeping documents to us! These include:
Our free secure online transfer system via our website. Clients are provided with login details and can upload/download their files to us anytime. This of course means that some data needs to be scanned first by the client in order to create files for upload. Many new printers/scanners can scan documents quickly and in bulk and we recommend that our clients purchase one of these machines in order to do their scanning. If clients don't want to do this then we also recommend that they use Shoe-boxed, an online scanning service. Files created by Shoe-boxed also have the added advantage of being able to sync across to online accounting platforms like Xero and Saasu which is a great time-saver!
Adding their documents to Dropbox. Dropbox is an online storage facility that users can share with others as required. Clients simply share their accounts folders with us and we can access the information from the Dropbox account on our computers. Another online sharing service is Box - this is an alternative to Dropbox but works in a similar fashion. Google has announced their file storage offering called Google Drive which works in a similar fashion to Dropbox - another option!
Posting their documents to us via Australia Post's Express Post. Some clients also choose a courier service to send documents if they have lots of documents. Some client simply fax their data across to us although this becoming less common.
Emailing data. (Some files are too large to be emailed so other methods such as those mentioned above are used instead).
5. The Bookkeeping Stage
Once we receive the client’s documents, we get to work! We will process the data into the client’s chosen accounting software whether this is cloud-based or desktop-based. Clients are kept up to date with the progress of their bookkeeping assignments on a regular basis via email and/or telephone.
6. The Reporting Stage
Once all bookkeeping is complete, we process various financial reports for the client. We then send these reports via email or share them via the client’s chosen method e.g. Dropbox.
7. Monthly Meetings
Every client is required to attend a monthly meeting at which the previous month’s bookkeeping is discussed. This is compulsory as communication is the key to a successful virtual bookkeeping relationship. Because we do not see or visit our clients regularly (sometimes never!) in person, it is possible for the virtual relationship to fall over – “out of sight, out of mind” as the saying goes. Not only are these meetings necessary to ensure that nothing is forgotten or misinterpreted in relation to a client’s accounts, but they also ensure there is a personal level of contact maintained between the bookkeeper and client, something that no amount of emailing and texting can accomplish!
8. Returning Data to Clients
Data that is posted to us is posted back to clients at no cost to them. Data that is shared with us via Dropbox (or another sharing app) is retained in the shared folder at the discretion of the client and data which has been uploaded to our secure online storage facility remains in the client’s account until such time as the client may wish to terminate the bookkeeping agreement.
So that’s how we make virtual bookkeeping work at e-BAS Accounts! Does this work 100% of the time? No of course not! Things do go wrong but most of the time this system is fail-safe. It allows us to operate a successful virtual bookkeeping business that is not location-dependent all from the comfort of our lovely seaside office here in Torquay, Victoria! Perfect!
What’s a Virtual Bookkeeper?