The Bank Reconcile screen is one of my favourite places in Xero. It was, and still is, what makes Xero a clear leader over the other cloud-based accounting systems. If used properly it puts an end to unnecessary data entry and reconciliations. But there is always a catch – if used properly! It is possible to be unreconciled even if you no more entries in the reconcile screen or if the Statement Balance equals the Balance in Xero.

Most businesses deal with Petty Cash at some stage. For the sake of clarity here I will define “Petty Cash” to refer to managing disbursements from a central pool of cash. The following are not meant to be addressed in this article as they are covered elsewhere:

As a business owner it’s not uncommon for you to have to pay business expenses from your personal funds. While we have previously written about the importance of keeping business and personal transactions separate we also know that in reality it happens. Whether it’s some cash spending from your wallet, using a personal credit card, or office expenses on the same receipt as domestic expenses, you need to be able to get these items into Xero (or other accounting system) so that you can claim back the HST and get the appropriate tax deduction for them.

When you own a business everyone’s got their hands out for some of your money. Whether it’s employees, suppliers, the government or even customers – you’re paying bills and paying people left-right, and center. But it’s not just business – you have a family and friends and the sports club and the girl's night out – many things that require you to make payments. Sometimes it can be a challenge to keep it all straight. In fact – it really is like having multiple personalities with you that sometimes all try to come out together,

Xero is a highly complex accounting environment. While the developers have worked wonders to make it simple and user friendly, this approach often masks the fact that it is a complicated accounting system under the hood! The bank reconciliation process in Xero, if provided with correct data and intelligent user interaction, should result in a perfect bank reconciliation where everything balances as expected. But the reality is that this does not always happen.

UPDATE

Xero has now implemented Repeating Manual Journals. The actually reached out to us for feedback because of this article. We’ve kept this article here just so that we can gloat – although it is no longer necessary!!

A few years back I was doing a minor alteration on the family home. One of the builders who I got in to do a quote gave me his price and then said “but if you can pay cash it will be $X” (a figure about 13% lower than his first quote). I didn’t hire him, even though I could have saved a nice chunk of change. I figured that if he was dishonest enough to defraud the government, what would stop him from trying to do the dirty on me as well. And with no records of the transaction, I would have nothing to fall back on.

Most people in business avoid calling their accountant. It’s a bit like going to the Dentist – you don’t know what they’re going to say but you presume that it’s not what you want to hear and you always get a big bill for the privilege. However, like going to the dentist, not checking with your accountant before making business decisions can often lead to more trouble down the line. Your accountant can often save you money by structuring things efficiently or avoiding pitfalls. It’s usually easier to start out the right way than trying to fix it after the fact.

A new report by the Ministry of Business, Innovation and Employment looks at outcomes of key changes to employment law made in 2011 to see if they are working as intended.
What the changes were meant to do
The broad aims of the changes were to:

Creating Outstanding Customer Service Levels To Obliterate The Competition

In 1987 Jan Carlzon, the CEO of Scandinavian Airlines, wrote the book, ‘Moments Of Truth’. It explained how he took the airline from deficit to profit by ‘moving’ the airline to a customer-focused organisation.

Now, as you know, there have been many books written on customer service, but where this book and Carlzon’s strategies really differ is his focus on each interaction the customer has with the business.

IMPORTANT: This post is specific to New Zealand. If you are not a New Zealand business/taxpayer then it is probably not applicable to you.

After the government increased the minimum wage rates earlier this year, it made a further amendment to the Minimum Wage Order, issuing a new fortnightly rate. The fortnightly rate is $1,140 for adult employees and $912 for starting-out workers and trainees. If you’re an employer already fully compliant with minimum wage requirements and your employees’ hours don’t vary from week to week, stop reading here. For you, nothing has changed.

We recently returned from a week’s holiday in Turkey. I love spending time away with the family—these days it’s the only real quality time we get together. Plus, it gives me time to catch up on reading. I often read what I consider to be ‘classics’ again and again. One of those books is ‘Broken Windows, Broken Business’ by Michael Levine. I read it again in Turkey.
The book focuses on the principle that neglecting ‘small’ problems ultimately ends in anarchy. It was a principle founded by James Q. Wilson and George L. Kelling in 1982 and put into practice by mayor Rudy Giuliani in 1993. He basically cleaned up New York with his tough stance and zero tolerance on the ‘small’ crimes such as graffiti and prostitution.

You may have heard about changes to the financial reporting legislation. In the short term, many people are finding it a bit hard to work out how or whether the changes affect them.
The requirements are changing for some businesses that used to have to file financial statements based on the New Zealand version of International Financial Reporting Standards (NZ IFRS). For example, your requirements have changed if your business:

One thing that constantly amazes me is how quickly each year passes. The days, weeks and months seem to roll into one, and before you know it 6 months has passed. You’re left wondering ‘where did the time go?’ Now that’s okay as long as you plan your year out. However, most people spend more time planning their holidays than planning THEIR YEAR AHEAD.

If you plan – you get more done, much more done. If you fail to plan and set goals it’s surprising how little you’ll accomplish.

The world of social media has come a long way in recent years and Facebook, in order to stay at the top of its game, has taken the phenomenon one step further. Offering strategic marketing solutions, paid advertising and even the option to sell retail online, Facebook has created a portal for businesses to get their name out in the marketplace with ease and in real-time.

To understand why growth slows or stagnates in any business, we first need to look at how a typical business evolves and why the frustration starts to mount as this growth slows. We call this the ‘Growth Roller-Coaster’.

Word is spread by customers and referrers about the great, cost-effective products or services and new business is easily gained. The business quickly expands to a peak at point A, driven by the personalities and skills of its owners.

IMPORTANT: This post is specific to New Zealand. If you are not a New Zealand business/taxpayer then it is probably not applicable to you.

We have a number of Charity clients who are GST registered. The number one issue we have to deal with for these clients is sorting out what income streams should be subject to GST. Just because you are a Charity doesn’t mean that all your income is exempt from GST.
This has become relevant recently as the IRD has begun challenging a number of scenarios in this space. In particular, the IRD has published a Revenue Alert looking at private schools and kindergartens that required parents to make a “gift” to the school or related foundation. The school, therefore, didn’t charge GST on the “fees” and the parents claimed a tax credit on the “gift.” The IRD is investigating and reversing lots of these, and tax fraud charges are likely to those who promoted the arrangement! I tell my clients that they should treat all receipts as GSTable UNLESS they can prove that it is not. There is an alarming trend among charities (and this includes Churches, where honest and ethics are supposed to be virtues) to reliable a receipt as a “donation” and therefore grant a tax credit to the “donor” and avoid having to pay GST by the Charity (forgive my rant, but which part of claiming the input tax credit for the organization and then failing to pay the output tax credit is ethical?).

IMPORTANT: This post is specific to New Zealand. If you are not a New Zealand business/taxpayer then it is probably not applicable to you.

Rules around tax breaks for charitable donations have undergone a lot of change in recent years. With the introduction of the Charities Act and the removal of the restrictions on deductions/credits for charitable giving the landscape is now quite different than it was a few years ago. Individuals and businesses can now claim a credit (individuals) or deduction (companies) for donations made to eligible organizations. The first thing to check is whether your intended recipient is actually eligible. They need to be recorded as a Donee Organisation by the IRD. You can find a list of these on the IRD website (http://www.ird.govt.nz/donee-organisations/donee-organisations-index.html). Being registered with the Charities Office is not necessarily the same (although in practical terms almost every registered charity is also a donee organization, there are some exceptions). You can only claim credits/deductions if you have a proper charitable receipt from a donee organization.

IMPORTANT: This post is specific to New Zealand. If you are not a New Zealand business/taxpayer then it is probably not applicable to you.

Currently, there is no requirement for a charity to have it’s accounts prepared to any standard (such as Generally Accepted Accounting Principles) or audited by an Accountant. While many do have an audit, it is mainly due to a requirement in their rules, or to requirements from funders. This is all set to change in 2015.

IMPORTANT: This post is specific to New Zealand. If you are not a New Zealand business/taxpayer then it is probably not applicable to you.

Keeping a log of your motor vehicle mileage is an important (and often overlooked) aspect of your record keeping. In this article I will give you some pointers on how to properly maintain the required records. The requirements and issues are different for each of the three methods of accounting for motor vehicle expenses (for a primer on the different methods of handling motor vehicle expenses check out our earlier article “Pimping your Ride“):