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Thread: David's bookkeeping corner.

  1. #31
    Senior Member tree beard's Avatar
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    Default Re: David's bookkeeping corner.

    Hi David

    just wanted to say i am enjoying following your threads. Thanks for the time and effort you put in!
    To be wronged is nothing unless you continue to remember it.

    Real knowledge is to know the extent of one's ignorance.

  2. #32
    Senior Member glassngrass's Avatar
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    Default Re: David's bookkeeping corner.

    I know I won't chage the world, however do hope to be of assistance to some.

    Thanks for the feedback Treebeard, your comments are appreciated
    David
    Mr Sparkle Car Spa

  3. #33
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    Default Re: Tip No. 5: Control your Drawings

    Quote Originally Posted by glassngrass
    Control your Drawings

    Businesses need working capital to maintain cash reserves and cover the cost of operations. If the owner keeps taking excess cash from the business for private expenses, this will deplete the businesses capacity to pay its way. Set up a strict budget for the how much the owner needs to draw out of the business each week and avoid the temptation to take advances on business profits. Remember that money taken out of a sole trader or partnership business by the owner will appear in the Balance Sheet and not the Profit and Loss - this may make the business profits look better than they should be. Avoid using the business bank, credit card and petty cash accounts for private or personal use and try to stick within the budget that has been set.
    and if you are going to overdraw make sure all assets are in the wife's name
    Anything Ian says may or may not be garbage, it may also be his own opinion or it may not be his opinion at all, it may just be something he felt like stating anyone following his advice does so at their own risk and may be doing something Ian would actually advise against.
    And if you don't like what Ian has to say use the ignore function if you don't know how ask i will gladly tell you

  4. #34
    Senior Member glassngrass's Avatar
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    Default What's required on an invoice?

    By law, your Tax Invoices must include the following information:-
    • Date
    • The words “Tax Invoice”
    • The name of the business and ABN (does not apply to expenses less than $75 including GST).
    • Description and details of the item or service
    • GST amount
    • Total amount payable

    As a courtesy invoice should include
    • Name of the customer

    If over $1,000 then Tax Invoice must also include
    • Name and ABN of customer

    Best practice - always include
    • Due Date for payment
    • The terms for payment
    • Your bank details
    David
    Mr Sparkle Car Spa

  5. #35
    Senior Member glassngrass's Avatar
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    Default 10 Tips for Business Performance - Tip No. 6

    Tip No. 6: Get a Point of Reference for Expenses
    The point of collecting financial information is to measure it against something. It is always useful to ask yourself the questions:

    What was the expense last period?
    What is the expense this month?
    What should it have been?

    Budgets need to be reviewed regularly and adjusted if circumstances change. It is suggested that each month a certain expense be selected to see if it can be kept within the budget that has been set. If there is a significant variation from the budget then corrective action should be taken. Remember to also adopt budgets for revenue areas as well and make sure you allow for seasonal variations.
    David
    Mr Sparkle Car Spa

  6. #36
    Senior Member glassngrass's Avatar
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    Default 10 Tips for Business Performance - Tip No. 7

    Tip No. 7: Know your Breakeven Point

    Every business has to spend money in order to make money.

    Those expenses that have to be paid whether the business opens it’s doors or not are known as Fixed costs, while those costs that increase and decrease with Centre activity are known as variable costs.
    eg. Insurance is fixed, fuel & mower maintenance are variable

    By dividing total fees by variable costs you can come up with the margin made per hour, and when this is compared to the businesses fixed costs a measure can be made of how many enrollments/services are necessary to cover these costs or to “break even”.

    Similar businesses have expected break-even points or “bench marks” that you can measure your business against.
    David
    Mr Sparkle Car Spa

  7. #37
    Senior Member Bgs's Avatar
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    Default Re: 10 Tips for Business Performance - Tip No. 7

    Quote Originally Posted by glassngrass
    Tip No. 7: Know your Breakeven Point

    Every business has to spend money in order to make money.

    Those expenses that have to be paid whether the business opens it’s doors or not are known as Fixed costs, while those costs that increase and decrease with Centre activity are known as variable costs.
    eg. Insurance is fixed, fuel & mower maintenance are variable

    By dividing total fees by variable costs you can come up with the margin made per hour, and when this is compared to the businesses fixed costs a measure can be made of how many enrollments/services are necessary to cover these costs or to “break even”.

    Similar businesses have expected break-even points or “bench marks” that you can measure your business against.
    Thanks for the tips

    Would you include vehicle and equipment depreciation as a variable cost and should they be used in working out your break even point.

    Thanks

  8. #38
    Senior Member glassngrass's Avatar
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    Default Re: 10 Tips for Business Performance - Tip No. 7

    Quote Originally Posted by Bgs
    Thanks for the tips

    Would you include vehicle and equipment depreciation as a variable cost and should they be used in working out your break even point.

    Thanks
    Bgs. In treating variable costs, suggest you consider "would I still be paying this cost if I was not working?" Unfortunately having your vehicle sitting in the garage still will incur a monthly service cost and definitely a depreciation charge so while I may do a portion for maintenance I would include all depreciation as a fixed cost (as long as I have not already included the purchase of the vehicle).

    I can send you a spreadsheet to use if you like!
    David
    Mr Sparkle Car Spa

  9. #39
    Senior Member Bgs's Avatar
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    Default Re: 10 Tips for Business Performance - Tip No. 7

    Quote Originally Posted by glassngrass
    Bgs. In treating variable costs, suggest you consider "would I still be paying this cost if I was not working?" Unfortunately having your vehicle sitting in the garage still will incur a monthly service cost and definitely a depreciation charge so while I may do a portion for maintenance I would include all depreciation as a fixed cost (as long as I have not already included the purchase of the vehicle).

    I can send you a spreadsheet to use if you like!
    Hi David,

    thanks for the info it was a very worthwhile exercise indeed

  10. #40
    Senior Member glassngrass's Avatar
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    Default Re: David's bookkeeping corner.

    Would love to post the spreadsheet but it's a little too big.
    Compressed it wit winzip, but forum will only accept a much smaller file if a zip, so it's still too large.
    PM your email to me and I'll send it to you.
    David
    Mr Sparkle Car Spa

  11. #41
    Senior Member glassngrass's Avatar
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    Default Re: David's bookkeeping corner.

    Sorry I've been occupied lately - I'll catch up here next weekend...
    David
    Mr Sparkle Car Spa

  12. #42
    Senior Member glassngrass's Avatar
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    Default 10 Tips for Business Performance - Tip No. 8

    Tip No. 8: Manage your Stock Levels

    The time it takes to use an item purchased for use in a Centre activity can have a significant impact on a Centre’s productivity and cashflow. There is a general rule that 20% of a businesses stock will contribute to 80% of it’s profit, which means that you have to keep a close watch on how much stock is being held and how quickly it is converted into learning resources. Don’t buy up boxes of product just to have it sit on the shelf or in the store.

    Lawnies, however, generally don't sell stock, but you likely keep a store of consumables - spare parts, engine oil, blades, filters, roundup, fertilisers and weedicides, etc.

    Significant savings CAN be had by purchasing in bulk, however this should be carefully weighed against the tieing up of your cash reserves - find a good balance that won't leave you short!

    Of course, in a gardening contracting business significant investment is in machinery and equipment. Similarly, 80% of your income might be generated from just 20% of these. If not put to good use, your capital is not returning on your investment but locked up in unused assets that depreciate!

    For example, so of you mow acreages, residential, pressure wash, lop at heights, trim hedges, etc.... this is great, but if we purchased ALL the equipment we might ever want, then these might never really be used to capacity since you are spread thin.

    As a good rule of thumb, maximum profitability comes from determining what you are good at, enjoy, and brings a good return - then focus on this core activity!
    David
    Mr Sparkle Car Spa

  13. #43
    Senior Member glassngrass's Avatar
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    Default 10 Tips for Business Performance -Tip No. 9

    Keep Accurate and Timely Payroll Records

    If you employ staff then there are a number of obligations on the employer to withhold and pay income tax, work cover, superannuation, various types of leave and allowances. There are a number of privacy issues that need to be observed to safeguard employees rights and make sure that accurate records are being kept of their entitlements. Your staff are your most important asset and it is important that they are looked after and rewarded for their efforts.
    There are some 16 different items employers are legally obligated to include on each and every payslip
    David
    Mr Sparkle Car Spa

  14. #44
    Senior Member glassngrass's Avatar
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    Default Re: David's bookkeeping corner.

    Keep Accurate and Timely Payroll Records

    There are some 16 different items employers are legally obligated to include on each and every payslip - with significant penalties for each individual breach - and the govt regulatory bodies are increasing in their efforts to enforce compliance! If you employ staff then there are a number of obligations on the employer to withhold and pay income tax, work cover, superannuation, various types of leave and allowances.
    There are a number of privacy issues that need to be observed to safeguard employees rights and make sure that accurate records are being kept of their entitlements. Your staff are your most important asset and it is important that they are looked after and rewarded for their efforts.

    With ever changing legal and reporting requirements and award interpretations, keeping pace with these is a specialist field in itself. Few employers are equipped to properly manage payroll - even those with dedicate payroll departments!

    Although I'm a part-time lawnie with employees AND I'm a bookkeeper, I choose to outsource my own payroll to dedicated payroll professionals!
    David
    Mr Sparkle Car Spa

  15. #45
    Member Of Forum Wattle GC's Avatar
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    Default Re: David's bookkeeping corner.

    Dear David..
    I have been keeping tabs on your thread and its great info Thanks..The delemah I have is that I am a one man band however i do have the contacts to take my business to the next level with employing someone..With your knowledge could you advise me if I should take this plunge or rather involve another contractor to share the workload.
    An employment agency has called me and gave me some good advice and the government incentives to do so..I have been badly burnt with the franchise thing a few years ago however i would dearly love to take on these new contracts and employ some help but its an area i have little to no experiance with and hence reluctant to employ anyone..I know to grow the business i need to do this but i dont want the hassels that can be associated with it all and would rather concentrate on my core business..
    Any suggestions would be muchly appreciated..Regards Michael..

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