Learn Small Business Accounting in 7 Days E-Book

Rod Caldwell

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 231

Veröffentlichungsjahr: 2011

Beschreibung

Learn Small Business Accounting in 7 Days is your step-by-step guide to managing the accounts for your business.

This small business guide moves beyond this basics covered in Learn Bookkeeping in 7 Days, exploring the trial balance stage, end-of-period adjustments, final reports, payroll and all that's in between. In 7 quick and easy steps this book arms you with the knowledge you need to successfully manage the financials of your business.

Packed full of tips, tricks and traps, this is essential reading for all small business owners and anyone wanting to quickly and easily learn accounting.

Leseprobe

LEARN SMALL BUSINESS ACCOUNTING IN 7 DAYS

Table of Contents

Day 1

We are at war!

This book is a shield

What is covered in this book?

What influences financial decisions?

Who wants to know?

What is a small business?

Small business tax concessions

Cash versus accrual

Small business structures

Sole proprietorship

Partnership

Family trust

Companies

Now we get complicated!

Chart of accounts revisited

Assets

Liabilities

Equity or proprietorship

Revenue or income

Cost of sales

Expenses

Other income and expenses

Accounting conventions and doctrines

Day 2

What is an asset?

Materiality

The cost of an asset — GST or no GST?

Second element costs

Repair and second element costs

Replacement items

Accounting for assets

Depreciation and amortisation

Micro businesses using the simplified depreciation rules

Low balance assets

Disposal of an asset

The total of all closing values is in credit

The total of all closing values is less than $1000

GST included in the cost

Standard depreciation rules (capital allowances)

Assets to which the capital allowance rules do not apply

Low cost assets of less than $1000

Closing value less than $1000

Assets in excess of $1000

Effective life

Learn by example

Recording the depreciation charge

Disposal of an asset under the UCA rules

Private use of business assets

Assets register

Special rules

Industrial buildings and structural improvements

Primary producers

Software and website development costs

Other special provisions

Motor vehicles — a special case

What is a car?

Business vehicles that are not cars

Motor vehicles that are cars require substantiation

GST and substantiation

Claiming the GST on motor vehicle purchases

Disposal of the motor vehicle

Balancing charge event

Cars for employees

Day 3

What is inventory?

Asset, inventory or consumable?

Cost of inventory

Recording inventory purchases

Periodic inventory system

Perpetual inventory system

Computerised accounting

Inventory management systems

Small business entity (micro businesses)

Annual stocktake

Inventory valuation methods

Procedures for undertaking an annual stocktake

At what date?

Step 1 — stocktake sheets

Step 2 — records update

Step 3 — records review

Valuation

Tax considerations

Inventory internal control systems

Private use of inventory

Work in progress

Primary production — livestock

Day 4

What is end of year?

Bookkeeping, accounting and taxation

The end-of-year process

Impairment review of assets

Inventory

Depreciable assets

Debtors

Other assets

End-of-period adjustments

GST and other taxes — end-of-period adjustments

Categories of end-of-period adjustments

Inventory

Depreciation

End-of-year ‘matching’ adjustments

Prepayments — alternative treatment

End-of-period accounting

Closing off the books

End-of-year accounting reports

Day 5

What is meant by cash?

Controls over cash

The float

Daily banking

Petty cash

Fraud — it will never happen to me!

Internal controls

What to do if fraud occurs

Internal cash control methods for small businesses

Internal control of cash

Internal controls for cash receipts

Physical protection of cash receipts

Securing cash at the end of the day

Internal controls for cash payments

Cash management

Debt management

Debtor management

Record retention

Step one — a good filing system

Step two — archiving and record retention

Day 6

The legal requirements of employing staff

Tax residency

Tax-free threshold

Higher education loan program

Financial supplement debt

Employee requests

Wages and salaries

Ordinary time earnings

Penalties and allowances

Allowances

Superannuation

Putting it all together

Doing the calculations

The payslip

Payday accounting

Annual reporting requirements

Day 7

Paying the boss — drawings versus salary

Employee or contractor?

Tax offsets

Holiday leave loading

Medicare levy variation

Termination of employment

Taxation of unused leave entitlements on termination

Employment termination payments

Keeping records

Payroll fraud

Phantom employees

Records manipulation

An overview of fringe benefits tax

FBT exemptions

Accounting for employee’s private use

Private use by company owners

Accounting for FBT

A final note on FBT payments

Appendix A: FBT gross-up factors explained

Appendix B: Useful resources

Appendix C: Revision exercise solutions

Appendix D: Glossary

Rod Caldwell

For my darling wife Robyn, without whose support and encouragement this book would never have been written.

First published 2011 by Wrightbooksan imprint of John Wiley & Sons Australia, Ltd42 McDougall Street, Milton Qld 4064

Office also in Melbourne

Typeset in 11.3/14 pt Berkeley LT

© Rod Caldwell 2011

The moral rights of the author have been asserted

National Library of Australia Cataloguing-in-Publication data:

Author: Caldwell, Rod.

Title: Learn small business accounting in 7 days / Rod Caldwell.

ISBN: 9780730376798 (pbk.)

Notes: Includes index.

Subjects: Small business — Accounting.

Dewey number: 657.9042

All rights reserved. Except as permitted under the Australian Copyright Act 1968 (for example, a fair dealing for the purposes of study, research, criticism or review), no part of this book may be reproduced, stored in a retrieval system, communicated or transmitted in any form or by any means without prior written permission. All enquiries should be made to the publisher at the address above.

Cover design by Xou Creative

Tables 2.7 and 3.5 and Figures 6.1, 6.2, 6.3, 6.6, 7.1, 7.2, 7.3, 7.4 and 7.6 © Australian Taxation Office. The ATO material included in this publication was current at the time of publishing. Readers should refer to the ATO website www.ato.gov.au for up-to-date ATO information.

Printed in Australia by Ligare Book Printer

10 9 8 7 6 5 4 3 2 1

Disclaimer

The material in this publication is of the nature of general comment only, and does not represent professional advice. It is not intended to provide specific guidance for particular circumstances and it should not be relied on as the basis for any decision to take action or not take action on any matter which it covers. Readers should obtain professional advice where appropriate, before making any such decision. To the maximum extent permitted by law, the author and publisher disclaim all responsibility and liability to any person, arising directly or indirectly from any person taking or not taking action based upon the information in this publication.

About the author

Rod Caldwell is a tax accountant by profession and a TAFE business lecturer by choice. He worked for the Australian Taxation Office (ATO) for 20 years before leaving in 2005 to start a new career as a lecturer in business studies at a Perth technical college. Rod has a bachelor of commerce degree from the University of Western Australia and a postgraduate diploma in advanced taxation from the University of New South Wales. Rod is also a Fellow of CPA Australia.

This book was written as a direct result of his involvement with small business owners through the Adult and Community Education courses he delivers in Western Australia. Rod is also the author of Learn Bookkeeping in 7 Days.

Additional resources are available from the author’s website www.tpabusiness.com.au. The author can be contacted by email at <[email protected]>. All comments from the readers of this book, students or lecturers are welcome.

Preface

Who should read this book?

Learn Small Business Accounting in 7 Days is aimed at the small business operator, often a home-based business, with an annual turnover of less than $2 million, as well as larger businesses with a turnover of up to $20 million. It is the second book in the Learn in 7 Days series, the first being Learn Bookkeeping in 7 Days.

This book assumes that the reader is aware of bookkeeping procedures to a standard at least equal to that covered in Learn Bookkeeping in 7 Days. It takes the reader from the trial balance stage, where we were at the end of Learn Bookkeeping in 7 Days, to the production of the final accounting reports. The book also covers payroll.

This book as a lecturer’s resource

If you are considering using this text for a non-accredited course in accounting, your course is probably a series of two- or three-hour sessions over six to eight weeks. This text has been deliberately constructed over seven evenly deliverable ‘days’ in order to facilitate this.

Resources for lecturers’ use, such as additional exercises and the exercise solutions, are available from my website at www.tpabusiness.com.au.

Rod Caldwell

Perth

May 2011

Day 1

Setting the scene

Key terms and concepts

International Financial Reporting Standards (IFRS): a legally enforceable set of accounting standards that apply to larger businesses.

Generally Accepted Accounting Practices (GAAP): a set of standards that apply on a voluntary basis to all entities.

Small to medium enterprises (SME): business entities that usually fall within the $20 million to $100 million turnover that are subject to IFRS.

Small business entity: a tax term for a business with a turnover of less than $2 million.