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Ask any business owner why they are in business, and at least part of their answer is bound to include the following three words – to make money. So, how does a business know if it is making money? Do they wait until their annual visit to the accountant at the end of financial year to find out? Well, it would be a bit late then to discover the answer is no…

That is why it is wise to review business performance on a regular basis. One good way to do this is to use ‘Ratio Analysis’. Over the next two months, I will explain and examine the different ratios that businesses can use. For my first month of Ratios, I will turn my attention to two ratios – Gross Profit Ratio and Net Profit Ratio – that can be computed month to month or quarterly to track a business’s performance and health. (more…)

Financial reports summarize a business record for a given period of time and are used by bankers, potential lenders and the ATO (Australian Taxation Office) to assess the worth and profitability of the business and check that it complies with legislation. While many business owners may view financial reports as another red tape headache, these reports are in fact a useful tool in analysing the performance of a business. (more…)

Imagine this – it’s a dark and stormy night in Perth. You are sitting at home – or at work and you have just keyed in your last 3 months worth of invoices and payments for your business because it’s been busy and you haven’t had time. Or, perhaps, you have just downloaded from your camera 250 holiday snaps from your holiday of a lifetime. Whatever it is, you have just loaded important documents on to your computer – documents you don’t want to lose. (more…)

1. KEEP your invoices! When you pay bills for your business, hang onto them. Many businesses pay off the statement they get from the supplier, but bookkeepers still need the original invoice. Statements rarely tell what you paid for and most bookkeepers are only amateur mind readers.
2. Tell us how the bill was paid. Was it cash or an account?
3. Bank statements. To you they may just be a horrid bit of paper from that terrible institution, but these bits of paper help your bookkeeper make sense of the ins and outs of your business. Please keep them, treat them kindly and perhaps even give them a special file or folder to live in.
4. Keep up with handing over stuff. There is nothing more frustrating – except all of the above – than getting an invoice that was paid last year while preparing this year’s books. It can also stuff your GST returns up.
5. Any bills you pay where the type of purchase isn’t going to be obvious to all write a quick word or two on the invoice. While Lisa’s Mowing Services is pretty obvious, invoices to Lisa Pty Ltd for $456.23 and the like are hard to categorise… And bookkeepers and accountants love categories.
6. If you hand write your own invoices, make sure you add the GST into the total correctly. Now this might sound obvious, but it is easy when you are trying to leave a job and/or get rid of a customer to overlook the GST bit of your invoice.
7. If you decide to use a computer program to print out your invoices, try and ensure they are easy to understand. Don’t include past invoices or payments on an invoice, use a statement for that.
8. Keep a little notebook for your bookkeeper – write down anything that might be important to them – ‘The Tax man rang’ or ‘The Accountant needs the books this afternoon!’
9. Use a receipt book if your customers pay your invoices in cash, or, if you use an invoice book, scribble on the duplicate that the invoice was paid and when.

In finance, July is a month for good news. You survived the tax season (hopefully) intact and are ready to tackle 2007/2008. So, now that you have reclaimed sanity and put the Panadol back in the medicine cabinet, let’s go through the tax cuts and changes to super that will be phased in for 2007/2008 and 2008/2009. (more…)

Once again that time of year is upon us – Tax Time! As 30th June approaches it’s worthwhile taking some time out of your busy schedule to check your business’s financial records are in reasonable shape. Here are 10 things you can do before meeting with your accountant to save time and money. Remember, the less work your accountant has to do, the less they charge you for! (more…)