Guide to Accounting Standards for Private Businesses

With your business being your financial life line, the financial status of your business is critically important to success. Australia maintains a number of accounting standards which help govern the standard of accounting within Australia. It is therefore essential to ensure you are successfully adhering to these standards by relying on professional accountants as they are compliant with the accounting standards. For the business owner who is not well versed in accounting practices, it is difficult to discern whether the accounting service providers adhere to the accounting standards or not.

What is an Accounting Standard?

Accountants are responsible for compiling the finances that pertain to business transactions. These should be done by following the criteria that has been put in place for them and have been accepted as general accounting principles. These make up the accounting standards.

Originally, these standards were put into place by professional accountants. They were governed under a code of ethics. In 1966, the Australian Accounting Research Foundation came into play. This was a joint union of the Accounting Standards Board and the Public Sector Accounting Standards Review Board. In 1984, The Accounting Standards Review Board was established. Then, it was renamed the Australian Accounting Standards Board in 1991. In 2000, this entity merged with the PSASB.

Why are Accounting Standards Vital to Businesses?

These standards and the generally accepted financial principles set the guidelines for the accounting standards. This allows for the production of financial statements for a business entity. These statements should accurately reflect the company’s financial status and how it is performing financially. It should give clear direction as to the status of the cash flow. All of these factors are important for every aspect of a certain business.

Most business owners rely on these financial records for making decisions concerning their company. Creditors can utilize them to obtain a clear financial picture of the company, while investors can use them for the same purpose. These financial records demand a high level of accuracy. The accounting standards are the foundation for accomplishing this. These records are pertinent for supporting the accountability of the business. They are also vital for keeping the business in compliance with the set rules and regulations.

Does Your Business Need Accounting Standards?

Every business regardless of its size or whether it is private or public has some regulations to follow. Listed companies are compelled by law to adhere to the accounting standards, requiring the entity to produce special purpose financial reports. For Australian businesses that qualify under this form of reporting, the requirements they have to meet are those needed by the users of the accounting record. If the company is filing statements that come under the Corporations Act, then there are accounting standards in place for this.

Some private companies can claim to be non-reporting entities. For non-reporting entities the demand and requirement for financial information is very low therefore there are reduced accounting standard requirements needed to be completed. ,

Choosing the Right Accounting Resources

Most business owners are not financial experts. Yet, at the same time, it is essential that business owners keep close tabs on what their business is doing financially. There are a lot of rules and regulations that have to be adhered to. For these reasons and many others, it is highly important to choose an expert accounting service provider like Tally Accounts. They ensure that your business stays compliant with the rules and regulations as they pertain to your business. In combination with remaining compliant, your financial records also serve as an extremely powerful resource. These help you to make the right business decisions as well as grow your business. Use Tally Accounts to help achieve and maintain your business success.

Bookkeeping Services for Your Small Business Can Save You Time and Money

A small business owner ends up wearing many hats in order to lead their  business to success. There are times however, when some of these tasks  should be outsourced. One of these is bookkeeping to assist with accurate  financial accounting for the business. There are a number of many benefits to putting this into the hands of a qualified bookkeeper.

Year End Financials

One of the most important times of the year when relying on the financial figures for the business is the filing of the year-end tax report. Accountants are commonly utilized to complete this work , which they rely on accurate financial records in order to prepare reliable financial statements. . When the accountant is supplied with  proper figures  to work with, it means all of the potential tax incentives can be taken advantage of. It also means less room for error and less chance of implications for the ATO. .

Relying on the Bookkeeper’s Expertise

Most often, small business owners are not well trained in proper accounting procedures. They may be able to keep track of the financial documentation that comes with running a business, but that’s as far as it goes. Putting each financial transaction in its proper category is important for accurate financial accounting. This often does not get done when the business owner is doing their own record keeping.

The Importance of Accurate Record Keeping

The financial statements that are generated from the bookkeeping records are not just important for the year-end report. They should be used as a source of reference throughout the year for making important business decisions. The income and profit statement can be heavily relied on to see how the business is actually tracking . If expenses are too high then corrective measures to reduce them can be implemented.

Comparison Value

Having a bookkeeper to complete and maintain your financial records creates a great resource for being able to do yearly comparisons. The information these properly completed records provide allows for the compilation of your balance sheet. You can use this to look back to see how you are doing compared to previous years. This will help you to make decisions that will affect the future of your business.

Using Well-Documented Finance Records

There may come a time in your business when you y need to borrow some money. Your financial records are going to be instrumental towards obtaining this potential finance. . Any commercial lender will want to see these records to assess how stable the business is, and review the cash flow condition.. They will also take into account how well prepared and accurate these statements are. It all begins with the bookkeeper.

The Prevention of Major Mistakes

A quality bookkeeper is able to correctly determine what are deductible business expenses and what are not. . Many times, business owners are under the impression that everything they buy for their business  can be written off as an expense, which is not necessarily the case. This is just one type of common error that is often seen when a businessperson attempts to complete their  own bookkeeping.

Prohibits Lazy Habits

It is common for the business owner  to try and rely on their memory when it comes to bringing their accounting records up to date. A good bookkeeper will not allow this. They will insist on a proper paper trail, which in turn keeps the business compliant with the ATO requirements.

Frees Up Valuable Time

As a business owner, most of your time is probably spent on other important areas of your business. Bookkeeping can be both time consuming and frustrating. Putting this into the hands of an expert means it is being done right and eliminates this additional task you have to completed. You also won’t have to rely on other staff members whose area of expertise may not be in bookkeeping, but is better suited for other administrative tasks.

The Learning Curve

Most bookkeeping is now being completed in conjunction with modern day technology, commonly utilizing cloud software solutions While many of the available products are being promoted as user friendly, they still create a need for some basic knowledge in accounting practices. Without this, it can be a nightmare trying to learn and utilise the software properly. It is a tool that a quality bookkeeper can rely on to provide you with an even better service. It means a lot less paper to file and records to store.

In the end, when you add up all of the benefits of what a bookkeeping service can provide, it far outweighs the cost for paying for this. It is a potential money saver by having the financial dealings of  your business  organised. It creates time efficiencies  as  it frees up the business owner from having to worry about this aspect. It provides a regular snap shot of how the business is tracking financially. . It is a resource that can be relied on in the event the ATO  has questions or for some reason wants to perform an audit.

The decision as to how often a bookkeeping service is necessary will depend on the size of your business, your specific business requirements and the  number of financial dealings that take place on a regular basis. Most often, bookkeeping services can be arranged on either a full- or part-time basis, with works being carried out weekly, fortnightly, monthly or quarterly.

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Tips When It Comes To Company Tax

Company tax is something that requires meticulous attention to details from the bottom to the top. There are many enterprises that fail when it comes to their numbers. This can lead to legal hassles which no company wishes to deal with. If that is something you are looking to avoid, it is then pertinent to pay attention to valuable tips. These are tips that have been provided by industry experts on what works and what does not. They are very helpful when you are looking to seamlessly get through ‘tax time’ every single year. In fact, these vital tips can go a long way when it comes to handling company tax. So, here are the tips that you must keep in mind.

Place Emphasis on Tax Credits

Company tax is often all about those credits that can be attained with a little bit of patience and focus. There are numerous tax credits that are on offer for those who are aiming to save money in the short and long term. The government ensures taxes do not have to be cumbersome. This is true especially if the focus is placed on correctly providing details and doing so in a timely fashion. There are many benefits to do everything on time including making the most of these credits that are in place.

Organized Records Are Key

Pay attention to any other company. See how they handle financial details and you will notice how organized the data is. There is certainly a lot of money that comes in and goes out on a regular basis with these enterprises. However, that does not mean it is aimlessly moving about. In fact, every penny is accounted for in order to ensure the business is on top of their finances every step of the way. When the business is organized, everything else will fall into place. Being organized is imperative for a company that wants to sustain positive tax credentials.

Pay Attention to Deductions

Deductions are present every step of the way when it comes to saving money. This can be something as simple as home based expenses that can be written off or legal expenses that might have been accumulated. There are a lot of deductions that can be taken advantage of as long as the company is aware of where the money is going. This is why it is pertinent to once again mention the value of being organized every step of the way. Those who pay attention and remain organized are the ones who are able to maximize their deductions.

Be On Time

There is nothing worse than missing deadlines. And this does happen more often than not. While most of the processes should be as automated as possible, this does not always happen as it should. This causes fees to be added on and legal trouble can often be right around the corner. And nobody wants to deal with that, right? Therefore, it is imperative to always make sure the deadlines are recorded and adhered to. In fact, it is recommended to submit everything well in advance to beat the rush and remain assured that you are safe.

Using these tips ensures that tax related with the business should not become a major hassle any longer. It does not always have to be about pouring over every single minor detail, but rather ensuring you are getting the general fundamentals down. A business that is able to pay attention to this is going to be successful with their finances year in and year out. Tax does not have to become an arduous hurdle that no one is able to deal with. In fact, it can be handled with relative ease when using the right tools and tips.

accounting

Accounting and its Role in Society

Accounting can be described as a quantitative method used to assess the financial position of an individual and/or business at a given point in time. On the basis of this definition, we can deduce that accounting is considerably important not only in businesses but also in the lives of individuals.

In this article, we will look into the basics of accounting and how important it is in today’s society.

General Concept

Let’s begin by dissecting the core concept of accounting and the reason why it is in place. Accounting is used to quantify the assets, liabilities, investments, and cash flow of a particular entity. This is done using an established legal framework that comprises specific guidelines that are easy to understand and follow.

Collectively, the fundamental principles of accounting are referred to as generally accepted accounting principles (GAAP). In essence, GAAP guides accounting professionals in the generation of financial reports.

Legal Obligations

All entities have legal obligations to report financial information on an annual basis. The same is seen in enterprises all over the world, with variations only being seen in the type of principles in place to guide the bookkeeping process.

Accounting is required to ensure that all economic activities within the boundaries of a nation are being processed in a legal manner without gaps. This is essential for nations with specific tax provisions that must be paid annually (i.e., income tax). Without accounting, it is impossible for the government to assess discrepancies and potential financial misconduct among its citizens.

Take for example an individual who earns $100,000 a year but only reports earnings of $80,000. Without the provision of sound and accurate financial reports, the government would have minimal leverage to track down this type of discrepancy.

Accounting Areas

Accounting can be broken down into “accounting areas,” some of which are enumerated below. These areas have different focuses and deal with different factors.

  • Financial accounting
  • Management accounting
  • Cost accounting
  • Tax accounting
  • Government accounting
  • Healthcare accounting
  • Auditing

Types of Reports

Several financial reports are created with the aid of accounting principles. These reports in turn help entities in assessing their financial health and in making important business decisions.

  • Balance Sheets
  • Income Statements
  • Retained Equity
  • Assets and Liabilities Report
  • Statement of Profit and Loss

Value of Accounting

Given the above descriptions, what could be the significance of accounting as a whole? Accounting is in place to ensure equality and fairness in financial reporting. Through the standardised processes inherent in accounting, it prevents the exploitation of existing financial systems.

Accounting plays an integral role even in the simplest financial activity of paying one’s monthly bills. Without this standardised process, entities will not have access to financial information that is crucial in decision making. With accounting’s many functions, it has clearly established itself as the core mechanism that drives society and its economic activities over time.