I often have new aws accounts sell which are not sure what information to give me as their accountant or bookkeeper in order to prepare Australian Accounting and Tax returns, or Financial statements. So I have put together a brief explanation of a simple method of getting it all together. If you use this simple method you will not only look professional to your accountants but save them time (by doing some of the legwork and having all of the relevant information available) getting you a cheaper accounting invoice by saving accounting time and you money. This is a process primarily for businesses which, do not have an internal accounts or bookkeeper person and simply provide information to accountants to prepare returns.
I want to stress that all good businesses know how well they are doing. In fact many businesses fail because of a lack of current financial information. It is vital you know your current financial position and profit or loss statement ideally monthly or at least quarterly if the business is well established with comfortable cash flow. If you are a business who only reviews their financial position annually, I strongly recommend you consider obtaining more regular financial information. This is so you have relevant information to manage your business and profitability. This can easily be done by engaging in a bookkeeper or accountant who can also come to your office. However if you wish to prepare information for the accountant and bring it to their office here is a quick process for you to complete.
The starting point of accounting is that it is based on recording all transactions from bank statements of all relevant bank accounts including cheque accounts, investments,credit cards and loans. For this reason, businesses should aim to track all business transactions through one of their bank accounts and hence have little or no cash transactions. If you have cash transactions you may need to provide additional information.
Step one
The first simple step is to collate all your bank statements of all business accounts, credit cards and loans for the period you need to report on. Some examples to illustrate the periods involved for a tax return 2010 you’ll need to gather statements from 1st of July 2009 to 30th of June 2010, or for a BAS return March 2010 you will need to gather statements from 1 January 2010 to 31 March 2010. You should receive all statements from your bank, if any are lost or misplaced your need to reorder from your bank incurring normally a bank fee. Sort this out before you provide the accountant your information. Better still accountants love to get electronic files of your bank statements as they are quick and easier to data entry, contact your bank to do this.
Step two
Once you have collated all bank statements review all individual lines and code them with relevant information (write a relevant description of them if not obvious from the bank statement line entry). For example all credit entries all money going into your accounts, you should indicate if they are income or sometimes they are owner contributions. With all money expended (money out) from accounts, you should also be describing relevant details especially cheque numbers and EFT transfers. Remember any additional information may be useful to your accountant such as asset detail so they can process specific taxation rules. If you are GST registered, you should also indicate whether the transaction involved GST or was GST free. The more you code the more you make your financial reports accurate and speed up things for your accountants processing which will lead to cheaper fees.
Step three
If you have coded all bank statements as for step two and have made sure all relevant bank statements have been collated. You may provide this to the accountant so that the financial report can be prepared. However, as tax law requires substantiation of your transactions and keeping these records, I would also suggest, attaching all relevant invoices relating to transactions on each bank statement. There may be a few transactions which do not have invoices such as bank charges and direct debit all regular charges loan payments etc. You may have other ways of filing invoices which are also acceptable.
