Bookkeeping Essentials For Dummies

Veechi Curtis is a qualified accountant and business consultant who specialises in teaching small businesses about technology and finance. She is the author of MYOB Software For Dummies, QuickBooks For Dummies, Small Business For Dummies and Creating a Business Plan For Dummies.

Foreword xi

Introduction 1

About This Book 1

Foolish Assumptions 2

Icons Used in This Book 2

Where to Go from Here 3

Chapter 1: Getting Started 5

Deciding What Software to Use 6

Designing a System to Fit You 6

Getting organised 6

Keeping track of expenses and supplier bills 7

Recording money in 8

Getting Technical 8

Understanding GST 8

Working with payroll 9

Reconcile often, reconcile well 10

Developing an Attitude 10

Convince yourself this stuff matters 11

Quit counting sheep 11

Do your job well 12

Getting Skilled Up 12

Keeping your qualifications up to date 13

Joining an association 13

Signing up to a course 13

Chapter 2: Working with Accounting Software 15

Getting into Gear 15

Laying essential foundations 16

Understanding basic terms 16

Working in the cloud 17

Matching Software to the Job in Hand 18

Starting up a new business 19

Getting ready to grow 19

Making stuff and buying stuff 20

Catering for bigger business or non-profits 21

Chapter 3: Building Your Accounts 23

Classifying Accounts 24

Building Your Profit & Loss Accounts 24

Analysing income streams 25

Separating cost of sales accounts 25

Cataloguing expenses 26

Dealing with personal expenses 28

Seeing Where the Money’s Made 29

Itemising Balance Sheet Accounts 30

Adding up the assets 31

Listing liabilities 33

Accounting for equity 34

Your Final Chart of Accounts 35

Chapter 4: Creating Order Out of Chaos 37

Devising a Recordkeeping System 38

Getting your hands on the right info 38

Receiving bills electronically 40

Filing stuff so you can find it again 40

Developing a Bookkeeping Calendar 41

Keeping track of deadlines 41

Deciding what to keep and how long for 43

Helping Others to Help You 44

Chapter 5: Recording Expenses and Supplier Payments 45

Working with a Micro Business 46

Automating data entry with bank feeds 47

Entering transactions one by one 48

Recording Expenses for a Small Business 50

Deciding whether to record supplier bills 52

Bookkeeping for a Larger Business 53

Managing supplier orders and invoices 53

Making supplier payments 55

Dealing with EFTPOS and credit card transactions 56

Allocating Everything Correctly 56

Selecting the right account 56

Getting things right: five top tips 59

Chapter 6: Recording Receipts and Sales 61

Keeping Track of Sales and Payments 62

Recording customer sales 62

Entering customer payments 64

Working on a Cash Basis 66

Bookkeeping for Other Kinds of Income 68

Recording miscellaneous receipts 68

Dazzling everyone with your brilliance 69

Bringing Home the Bacon 70

Chapter 7: Understanding GST 73

Coughing Up the Difference 74

Picking a reporting method 74

Reporting for duty 75

Calculating GST 76

Figuring What’s Taxed and What’s Not 77

Move it, groove it, tax it 77

Transactions with no GST 78

Understanding Tax Codes 79

Creating a list of tax codes 80

Linking accounts to tax codes 81

Staying Out of Trouble 82

Avoiding traps for the unwary 82

Keeping personal matters separate 83

Completing Your Business Activity Statement 84

Playing in form 84

Meeting your deadlines 85

Chapter 8: Paying Employees 87

Hiring a New Employee 87

Step One: Complete a tax file declaration 88

Step Two: Supply a Fair Work Statement 89

Step Three: Cover against mishaps 89

Step Four: Subscribe to super 89

Step Five: Ensure your software is up to speed 91

Checking Minimum Pay and Conditions 91

Getting to Pay Day 93

Paying folks their dues 93

Checking timesheets are accurate 96

Taxing pay (no mercy shown) 96

Dealing with deductions 98

Calculating superannuation 98

Submitting to Single Touch Payroll 100

Taking Leave 101

Calculating leave on a percentage basis 101

Calculating hours per pay period 102

Paying Tax and Super 104

Reporting and paying PAYG tax 104

Paying superannuation 105

Watch out for payroll tax 105

Establishing a Schedule 106

Chapter 9: Reconciling Accounts 109

Getting Started 110

Deciding what bank accounts to reconcile 110

Calculating your true bank balance 110

Recording your opening bank balance using accounting software 112

Doing Your First Reconciliation 113

Reconciling accounts when you’re not using bank feeds 114

Reconciling accounts when you have bank feeds 116

Keeping Proof that You’ve Done the Deed 117

Troubleshooting Tricks 118

Balancing Other Kinds of Accounts 120

Chapter 10: Understanding Financial Reports 121

Cash versus Accrual — What’s the Difference? 122

Telling the Story with Profit & Loss 123

Putting income under the microscope 124

Weighing up gross profit 125

Watching expenses, dollar for dollar 125

Painting a Picture with the Balance Sheet 126

Sketching assets, black as ink 127

Drawing liabilities, red as blood 128

Sculpting equity, cast in gold 129

Understanding the Relationship between Profit and Cash 130

Why there’s profit but no cash 130

Why there’s cash but no profit 131

Scrutinising Results 132

Chapter 11: Starting a New Financial Year 135

Finalising the Old Year 136

Out with the old year… in with the new 136

Generating end-of-year reports 138

Protecting against accidents 139

Communicating with Your Accountant 140

Sharing your accounting data 140

Matching the accountant’s figures against your own 141

Bridging the communication gap 142

Starting a New Year 143

Understanding what happens when you start a new year 143

Archiving data 144

Chapter 12: Ten (Or More) Tips for Contract Bookkeepers 145

Register as a BAS Agent 146

Get Skilled Up 147

Cover Yourself with Insurance 147

Join a Professional Association 148

Act Honestly and Independently 148

Avoid Conflicts of Interest 149

Behave Professionally 151

Take Reasonable Care 152

Write an Engagement Letter 154

Know Your Limits 155

Protect Client Data 156

Chapter 13: Ten (Actually Seven) Tips for Speed 157

Get Connected with Bank Feeds 157

Create Bank Rules to Allocate Transactions Automatically 158

Create Recurring Transactions 159

Integrate Everything 160

Keep Personal Stuff Separate 160

Set Up Your Accounting Software Properly 161

Make Customer Payments Easy 161

Index 163