Foreword xv
Introduction 1
About This Book 2
Foolish Assumptions 2
Icons Used in This Book 2
Where to Go from Here 3
Part 1: First Steps 5
Chapter 1: Introducing the Bookkeeping Game 7
Understanding the Bookkeeping Life Cycle 8
Figuring How Often to Do the Deed 9
Working with a shoebox 9
Doing the books as you go 11
Staying on the Right Side of the Law 13
Registering as a business 13
Getting to grips with GST 14
Managing payroll 14
Developing an Attitude 14
Convince yourself this stuff matters 15
Quit counting sheep 15
Do your job well 16
Getting Skilled Up 16
Keeping your qualifications up to date 17
Joining an association 17
Signing up to a course 17
Chapter 2: Creating a Framework 19
Putting Everything in Its Place 20
Classifying Accounts 21
Building Your Profit & Loss Accounts 22
Analysing income streams 22
Separating cost of sales accounts 22
Cataloguing expenses 24
Dealing with personal expenses 26
Seeing Where the Money’s Made 27
Itemising Balance Sheet Accounts 28
Adding up the assets (ah, joy of joys) 29
Listing liabilities (oh, woe is me) 31
Accounting for equity 32
Building a Final Chart of Accounts 34
Chapter 3: Going for the Big Equation 37
Matchmaking with Debits and Credits 38
Studying a little give and take 38
Following a modern fable 40
Putting Theory into Practice 41
Moving funds in bank accounts 43
Taking a peek at sales 44
Checking out expenses 45
Viewing stock movements 45
Throwing GST into the mix 46
Playing the Double-Entry Game with Accounting Software 47
Drilling down to the debits and credits 48
Recording general journals 48
Choosing between Cash and Accrual 49
Keeping things simple with cash 49
Getting more info with accrual 50
Laying down the deal in debits and credits 51
Enjoying a half-half measure 52
Using one method for your books, and another for income tax 53
Part 2: Forming a Plan 55
Chapter 4: Playing a Bookkeeper’s Rhythm 57
Reporting for GST 58
Identifying deadlines 58
Managing cashflow 58
Staying on Top of Payroll 60
Generating Reports 61
Devising a Record-keeping System 63
Filing that needle in the haystack 63
Deciding what to keep and how long for 65
Developing a Bookkeeping Calendar 66
Chapter 5: Working with Accounting Software 69
Getting into Gear 70
Laying essential foundations 70
Understanding basic terms 70
Working in the cloud 72
Protecting your private parts 73
Matching Software to the Job in Hand 74
Starting up a new business 74
Getting ready to grow 75
Making stuff and buying stuff 75
Catering for bigger business or non-profits 76
Setting Up Accounting Software 76
Preparing for battle 76
Taking your first steps 78
Mopping up when the dust has settled 79
Protecting Your Accounting Data 80
Getting your data off the cloud 80
Storing data safely 81
Chapter 6: Understanding GST 83
Coughing Up the Difference 84
Signing Up (Do You Have a Choice?) 84
Submitting to the inevitable 85
Choosing not to register 85
Picking a reporting method to suit 86
Reporting for duty 87
Calculating GST 87
Figuring What’s Taxed and What’s Not 88
Move it, groove it, tax it 88
Transactions with no GST 89
Understanding Tax Codes 90
Creating a list of tax codes 90
Linking accounts to tax codes 92
Staying Out of Trouble 93
Avoiding traps for the unwary 94
Keeping personal matters separate 94
Dancing the Paperwork Polka 95
Brewing up a Tax Invoice 96
Checking supplier bills 96
Verifying that ABNs are correct 97
Part 3: Recording Day-To-Day Transactions 99
Chapter 7: Recording Expenses and Supplier Payments 101
Creating Order Out of Chaos 102
Getting your hands on the right info 102
Filing stuff so you can find it again 103
Working with a Micro Business 104
Automating data entry with bank feeds 105
Entering transactions one by one 107
Listing expenses on a spreadsheet 109
Recording Expenses for a Small Business 111
Deciding whether to use accrual accounting 112
Refining the process 113
Keeping tabs on who you owe 114
Dealing with EFTPOS and credit card transactions 115
Bookkeeping for a Larger Business 115
Managing supplier orders and invoices 116
Making supplier payments 118
Dealing with EFTPOS and credit card transactions 118
Allocating Transactions 119
Selecting allocation accounts 119
Getting things right: five top tips 121
Nitpicking over Petty Cash and Out-of-Pocket Expenses 123
Storing cash under lock and key 123
Robbing Peter to pay Paul 125
Keeping tabs of expenses on the run 128
Chapter 8: Recording Receipts and Sales 129
Keeping Track of Sales and Payments 130
Recording customer sales 130
Entering customer payments 132
Working on a Cash Basis 133
Recording cash receipts using accounting software 134
Listing income on a spreadsheet 135
Combining income and expenses on the same spreadsheet 137
Bookkeeping for Other Kinds of Income 138
Recording miscellaneous receipts 138
Dazzling everyone with your brilliance 139
Bringing Home the Bacon 140
Dealing with Tricky Situations 142
Dishing out discounts 142
Dealing with prepayments 142
Giving credits or refunds 143
Writing off bad debts 144
Making Sure Cash Doesn’t Go Astray 145
Separating powers between bookkeepers and the cash 145
Putting in good controls 146
Chapter 9: Paying Employees 149
Staying Squeaky Clean 150
Hiring a New Employee 151
Step One: Complete a tax file declaration 152
Step Two: Supply a Fair Work Statement 152
Step Three: Cover against mishaps 153
Step Four: Subscribe to super 153
Step Five: Ensure your software is up to speed 154
Checking Minimum Pay and Conditions 155
Getting to Pay Day 156
Paying folks their dues 156
Checking timesheets are accurate 158
Taxing pay (no mercy shown) 159
Dealing with deductions 160
Calculating superannuation 161
Submitting to Single Touch Payroll 162
Taking Leave 163
Calculating leave on a percentage basis 164
Calculating hours per pay period 165
Maintaining Proper Records 166
Keeping tabs on employee details 166
Recording pays correctly 166
Issuing legit pay slips 167
Chapter 10: Reconciling Accounts 169
Getting Started 170
Deciding what bank accounts to reconcile 170
Calculating your true bank balance 170
Recording your opening bank balance using accounting software 172
Doing Your First Reconciliation 173
Reconciling accounts when you’re not using bank feeds 173
Reconciling accounts when you have bank feeds 175
Reconciling accounts with spreadsheets 176
Keeping Proof that You’ve Done the Deed 177
Troubleshooting Tricks 178
Balancing Other Kinds of Accounts 180
Part 4: Pulling It All Together 183
Chapter 11: Reporting for Payroll 185
Paying Tax and Super 186
Reporting and paying PAYG tax 186
Paying superannuation 186
Reporting for other payroll liabilities 188
Ensuring You Pay the Right Amounts 188
Understanding what goes on behind the scenes 188
Balancing your payroll accounts 189
Troubleshooting when things don’t balance 190
Calculating Other Payroll Expenses 193
Splitting hairs with fringe benefits 193
Hitting the payroll tax threshold 194
Reporting for workers comp 195
Finalising Pays at Year’s End 196
Making sure things are tickety-boo 196
Submitting your finalisation declaration 197
Generating payment summaries 199
Reporting for Taxable Payments (TPAR) 200
Chapter 12: Managing Inventory and Other Assets 201
Buying In, Stocking Up and Selling Out 202
Buying inventory to fill the shelves 202
Selling inventory to make a buck 203
Measuring the profits 204
Calculating the value of inventory 204
Organising Stocktakes 205
Balancing Your Inventory Account 207
Accounting for Assets 208
Figuring out if something is an asset or an expense 208
Recording new asset purchases 209
Recording the sale of assets 210
Dealing with personal assets 212
Depreciating Assets, One by One 213
Calculating depreciation 213
Depreciating using asset pools 215
Recording depreciation 216
Allowing for depreciation throughout the year 216
Checking your schedule 218
Chapter 13: Mastering Tricky Situations 221
Recording Journal Entries 222
Plunging Into Debt 222
Going into the red 222
Aiming towards the black 224
Recording loan interest and fees 224
Working with Hire Purchase, Leases and Chattel Mortgages 225
Taking on a new hire purchase debt 225
Recording hire purchase payments 227
Living it up with a new lease of life 228
Signing up with a chattel mortgage 229
Adjusting the Bottom Line 229
Reallocating prepaid expenses 230
Accruing future expenses 230
Figuring out leave provisions 233
Separating private expenses from business ones 235
Bringing Income into Line 237
Shifting income received in advance 237
Grossing up dividends 238
Chapter 14: Checking Your Work 241
Starting with the Bank Accounts 241
Step 1: Checking that everything reconciles 242
Step 2: Hunting for stale transactions 242
Step 3: Drilling down on dates 243
Spring Cleaning Your Debts 244
Step 4: Getting debtors spick and span 245
Step 5: Sweeping through the creditors 245
Putting GST under the Griller 247
Step 6: Hunting for coding mistakes 247
Step 7: Balancing GST liability accounts 249
Understanding Control Accounts 252
Step 8: Balancing debtors and creditors 252
Step 9: Giving inventory the once over 255
Step 10: Priming the payroll 256
Doing a Mini-Audit 257
Step 11: Scanning transaction reports 257
Step 12: Analysing summary results 258
Chapter 15: Understanding Financial Reports 259
Telling the Story with Profit & Loss 260
Putting income under the microscope 260
Weighing up gross profit 261
Watching expenses, dollar for dollar 263
Painting a Picture with the Balance Sheet 264
Sketching assets, black as ink 265
Drawing liabilities, red as blood 266
Sculpting equity, cast in gold 266
Understanding the Relationship between Profit and Cash 267
Why there’s profit but no cash 268
Why there’s cash but no profit 269
Reporting where cash came from, and where it went 269
Putting Results under the Microscope 271
Comparing this year against last year 271
Calculating ratios 272
Chapter 16: Starting a New Financial Year 277
Finalising the Old Year 278
Out with the old year in with the new 278
Generating end-of-year reports 279
Protecting against accidents 280
Sending Data to Your Accountant 281
Matching the Accountant’s Figures Against Your Own 283
Recording year-end journals 283
Dealing with adjustments that only make things worse 284
Getting creative when the accountant gives you nothing 284
Bridging the Communication Gap 286
Starting a New Year 287
Understanding what happens when you start a new year 287
Archiving data — just one more time 289
Part 5: Running Your Own Bookkeeping Business 291
Chapter 17: Starting Up On Your Own 293
Deciding Whether You’re Ready 293
Five good things about starting your own bookkeeping business 294
Five not-so-good things about starting your own bookkeeping business 294
Thinking through the Practicalities 296
Getting qualifications in order 296
Updating your skills (and choosing software) 296
Launching Your New Business 297
Creating a plan — no excuses 297
Deciding what to charge 298
Calculating billable hours 299
Thinking about your rate of return 301
Looking for clients 301
Building a Successful Business 303
Identify what makes you different 303
Join a professional association 304
Set goals, and reach them too 304
Look to the future 305
Chapter 18: Staying on the Right Side of the Law 307
Becoming a BAS Agent 308
Figuring out whether you have to register 308
Checking out what skills and qualifications you need 309
Covering yourself with insurance 310
Acting Honestly and Independently 311
Staying squeaky clean 311
Avoiding conflicts of interest 313
Keeping stuff confidential 314
Making Sure Information Is Correct 315
Providing competent services 316
Supervising others’ work 316
Taking reasonable care 317
Ensuring tax laws are applied correctly 319
Understanding the limits of your advice 319
Setting Up Systems 319
Writing an engagement letter 319
Protecting client data 321
Part 6: The Part of Tens 323
Chapter 19: Ten Tips for Not-for-Profit Organisations 325
Know and Love Your Cost Centres 326
Become the Budget Queen 327
Get the Terminology Right 327
Report to the Board 328
Get Help with Payroll 329
Do Killer Grant Reporting 329
Be Accountable at All Times 329
Make Sure You Can Survive an Audit 330
Track Membership Dues with Care 331
Know When to use Trust Accounts 331
Chapter 20: Ten Tricks for Collecting Money 333
Draw Up a Credit Policy 334
Do Your Homework 334
Don’t Waste a Moment 335
Calculate the Cost of Debts 336
Get on the Blower 336
Don’t Give Too Many Options 337
Keep a Dossier 337
Track ’em Down 338
Stick to the Law 338
Get Drastic 339
Chapter 21: Ten Tips for Doing Your Books in the Shortest Possible Time 341
Get Connected with Bank Feeds 341
Create Bank Rules to Allocate Transactions Automatically 342
Scan Receipts 343
Create Recurring Transactions 344
Integrate Everything 344
Keep Personal Stuff Separate 344
Learn to Use all Ten Fingers 345
Set Up Your Accounting Software Properly 345
Ditch Paper Records 346
Make Customer Payments Easy 346
Glossary 347
Index 357
