Account Systems Manual System off Bank Statements
This system still uses the least possible time of all concerned. Each time you receive a bank statement (say monthly) you write on the statement (out to the left) what each cheque and deposit is for. When you come to complete your GST return you can tell by the narration that you have written whether each payment or receipt includes GST and you can go through and highlight with a highlighter pen all of the amounts, which include GST. You can add these amounts up on an add-tape and the totals are your GST received or paid for the period. These amounts can then go directly into GST return or on to a worksheet if other adjustments need to be made for things, which do not appear on your bank statements (e.g. an HP Agreement).
If you are using this system you need to think of your bank statements as your entire accounting system and discipline yourself to ensure that every business transaction shows on the bank statements. For example, if you pay cash for something you should reimburse yourself by cheque or transfer so it shows on the bank statement and you can write the nature of the expense (e.g. petrol, or something). Likewise, if you pay for things by Visa, there should be a payment from the bank statements to your Visa account and then on the bank statements you can write the nature of the expense paid for by Visa. If there are a number of items on Visa they may need analyzing and writing a brief note on the bottom of the bank statement breaking a Visa payment down into the individual expense items.
At year end it is a relatively simple process for us to code the bank statements from the narrations, which you have written, enter them through our computer and produce financial accounts. At year end we will need to know any debtors outstanding to you, any creditors that you owe money to and any stock which you have on hand. We send a Client Questionnaire to you at year end asking for these things and other information that is relevant to your financial accounts.
Computerised Cash Book System There are many cash book systems for sale relatively cheaply that can be used to process the information in your bank statements and to produce a summary. These systems may assist you in understanding where your business is going during the year by providing monthly summaries of cash receipts and payments. We have quite a good spreadsheet, which is available to clients upon request. It is very simple and automatically calculates GST and allocates expenses to an account code providing a summary by expense category.
Computerised General Ledgers Again there are many products available. The advantage is regular monthly reporting of your profit and loss (provided the information is entered accurately). The time saving for us in preparing year end financial accounts is limited for small business because of the amount of time that is often spent updating the client’s computer system to the final figures.
We are a Xero partner and recommend this product because your accounting ledger is held on an Xero server accessible from any internet connection so both the client’s staff and ourselves are working on the same ledger. Xero costs $49 per month (cheaper for just the cashbook) and there is no term contract. Clients should register through us so that we have access to your accounts through our Xero link.
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