Category: Accounting

  • Should I Hire a Bookkeeper or an Accountant?

    Should I Hire a Bookkeeper or an Accountant?

    One of the most common questions business owners ask is whether they should hire a bookkeeper or an accountant. The answer is that they perform different roles, and for many businesses, both are important. 

    A bookkeeper is responsible for maintaining the financial records of your business throughout the year. They record transactions, reconcile bank accounts, process supplier invoices, manage customer payments, assist with payroll, and keep your accounting software accurate and up to date. Reliable bookkeeping provides the financial information needed to understand how your business is performing. 

    An accountant, on the other hand, typically focuses on taxation, financial reporting and compliance. They prepare annual financial statements, lodge tax returns, provide tax planning advice and help business owners make decisions about business structures and tax obligations. 

    Think of it this way. Your bookkeeper keeps your financial engine running every day, while your accountant checks that everything complies with legislation and helps optimise your tax position. 

    Businesses often make the mistake of relying solely on their accountant. Unfortunately, if the bookkeeping is inaccurate, accountants spend valuable time correcting errors instead of providing strategic advice. Maintaining accurate bookkeeping throughout the year generally results in lower accounting costs, more reliable financial reports and fewer surprises at tax time. 

    As businesses grow, they often require an additional layer of financial support through a Virtual CFO, who focuses on budgeting, forecasting, profitability, cash flow and strategic planning. 

    The best financial outcomes occur when bookkeeping, payroll, BAS services, accounting and financial advisory all work together. 

    Key Takeaways 

    • Bookkeepers manage day-to-day financial records.  
    • Accountants focus on taxation and compliance.  
    • Accurate bookkeeping reduces accounting costs.  
    • Most growing businesses benefit from both services.  
    • A Virtual CFO provides strategic financial guidance beyond bookkeeping and tax.  

    Related Articles 

    • What Does a Bookkeeper Actually Do?  
    • What is a Registered BAS Agent?  
    • When Should I Hire a Virtual CFO?  
  • Considering outsourcing accounting or bookkeeping overseas?

    Considering outsourcing accounting or bookkeeping overseas?

    I recently read Rich Dad Poor Dad by Robert Kiyosaki, a book widely considered to be the number #1 personal finance ‘bible’ of all time. In one chapter Kiyosaki poses the question: “How do you determine if you are an employee or an entrepreneur?” In his opinion, an ‘employee’ who wants to grow their business will aim to do so vertically (achieve growth, hire more staff and repeat) – but by contrast an ‘entrepreneur’ will work towards growing the business horizontally (achieve growth, outsource where possible and repeat).

    While it’s not uncommon for the employee mindset to result in sustainable business growth, with the right processes and support in place the entrepreneur ‘method’ can be an extremely cost-effective way to operate a business – and achieve financial success in a relatively short space of time.

    But when it’s not executed properly…? Well, that’s when business failure can occur.

    What actually is ‘Outsourcing’?

    Let’s go back to the start. Anyone who is not directly employed by your company but provides a key service for your business is an ‘outsourced’ provider. They may be located in the same state and country as you or even overseas – a more regular occurrence these days as businesses turn to foreign companies for support with technology and/or digital services.

    Many companies have been exposed to outsourcing in one way or another. And while in theory outsourcing should save time for businesses, it’s understandable you would want to ensure the same service levels are being provided (but for less cost!) – particularly when the services are viewed as vital to the business, despite them being mundane in nature or a burden. So it might not actually be a big time saver after all when handled on your own.

    So how can it all go wrong?

    While outsourcing for its part can be extremely effective for businesses, it can also be disastrous. Having gained considerable exposure to international outsourcing practice, in my experience failure is a common occurrence – and it’s usually for the following reasons:

    • Lack of local operational presence – The absence of someone local who you can liaise with face-to-face can make the outsourcing process very difficult, and the results can be fraught with problems. Often people will hire through an Australian-based sales person but when it comes to actual operations and liaising with the team, these people have little to do with the actual operations.
    • Believing it’s a ‘set and forget’ process – Many businesses think that if they outsource internationally and hire their staff directly, that is the end of their problems. They won’t have to worry about staff training, staff falling sick, retraining employees or maintaining the quality of their work. But it’s not the case! In my experience you will most likely have the same HR problems you see in any organisation, but with the logistical challenges of being in a completely different country and time zone.
    • Hiring international contractors – This is a very risky option in my opinion, as you are only ‘one’ of their clients and have little to no insight into data security and quality control. Avoid at all costs.
    • Your only consideration is cost – If you haven’t done any process mapping or created back up options for unforeseen circumstances, you run the risk of failure. Instability can occur anywhere whether it be political, infrastructural or even climatic. Without proper contingencies in place, your business could be exposed to considerable down time at what may be a critical stage of your life cycle – defeating the entire purpose of outsourcing.
    • Falling for Google Ads – If you undertake a Google search it’s likely the first ad you see advertises the service you’re needing for as little as $10 per hour. It’s tempting – but beware! These rates are completely misleading and do not reflect the overall costs involved, nor are you guaranteed the quality of work you expect.

    How to outsource overseas – the right way!

    With the above in mind, the most risk-averse way to successfully outsource overseas is to engage the support of an Australian-based company.  Knight Business Process Outsourcing has the capability and experience to manage office management services for small to medium-sized businesses and can look after your outsourced staff on your behalf. A Perth-based company, our team is highly skilled in overseas outsourcing, finance, accounting and administration, and can ensure the mitigation of any risk while still providing valuable, cost-effective services.

    Outsourcing can work for your business when you partner with the right provider. Contact Knight BPO today and discover how our cost-effective services can give you back much-needed time to spend working on your business – not in it. 

  • End of Year Super

    End of Year Super

    A handy tip for small businesses

    The Australian Tax Office (ATO) only allows deductions for superannuation payments which are actually paid on or prior to the 30th of June. If you are looking at minimising your tax liability, it is recommended that businesses try and process their June quarter Superannuation payments prior to the cut off date – 30th of June. That said if your business has been running at a loss, year to date and Cash Flow is a concern then it is recommended that you consult your Tax Accountant about prior to the 30th of June to consider the best option for you.

  • Bad Debts are Bad for Business

    Bad Debts are Bad for Business

    No-one likes dealing in Bad Debts, and it’s definitely a case of “Prevention is better than cure”.

    Cash Flow is important for any business and for Small Businesses in particular, it is often tight. Bad Debts push this even further.

    The ATO published a story titled “Protect yourself from illegal phoenix activity. Do you know who you’re going into business with?”. In this article they discuss ways to reduce your exposure to bad debts. Helpful for developing new business relationships, but it wasn’t about day to day processes.

    Manage the risk of Bad Debts

    Even businesses that are “cash up front”, are still exposed to Bad Debt by broken promises and this risk is increased by offering any credit terms.

    Managing your Accounts Receivable in a planned and structured manner can be instrumental. Many small business owners find it tough to discuss payment in person. Important discussions are often missed and any potential issues not managed.

    Money is personal and often emotional.

    Utilising a service such as Knight BPO to manage the collection of outstanding monies before they become a doubtful debt not only saves time, but stress as well!

    At Knight BPO, we work with our clients to put together a structured Accounts Receivable process and execute that process.

    Scenario: We have a client with a service-based business. Their standard credit terms are 14 days from service for most customers. The process that we work through for them looks like this:

    • Their Knight BPO Customer Service Team calls to check in at the completion of a service, check that all is OK and confirm receipt of the invoice. This is the first check point to make sure they’re happy and all is well.
    • We send a pre-written reminder email for debts that are 3 days overdue.
    • Should a debt reach a week overdue, a phone call by the client (made by the Knight BPO Accounts Receivable Team) to understand the issues causing the delay and work through a plan to resolve.
      • The plan is communicated to our client.
      • The plan is actioned by us.
    • If there are any issues with the new plan, we contact the client and manage each case individually.

    Each and every business is unique and managing debtors is no different! The Account Receivable process is tailored to suit your business. You are involved in scripting the phone calls and emails to make sure they’re representative of your business.

    The Knight BPO Accounts Receivable process takes away the stress from collecting money. It takes away some of the more painful tasks of running your business and gives you time to focus on more enjoyable tasks such as earning money – or counting it!

    Ask Us Today!

  • Casual Workers Entitlements to Long Service Leave

    Casual Workers Entitlements to Long Service Leave

    Did you know Long Service Leave is an entitlement for your casual workers in a similar way to permanent staff?

    Casual labour provides the flexibility needed to help ease the burden of peaks and troughs experienced by businesses. There is a direct and instant relationship between revenue, the outputs required, and costs associated. Having a workforce that is reliable, experienced and knows your business is beneficial on many levels. The responsibilities of employers to its permanent workforce compared to its casual labour pool is different in the immediate liabilities, such as annual leave and sick leave. However, longer term employee rights, such as Long Service Leave accrue in the same manner.

    Casual workers are entitled to Long Service Leave.

    So how does a small business manage this? The entitlements of casual workers are the same as for their permanent colleagues. Rules for Long Service Leave differ depending on things like award, the structure of a business and where it operates. If you have employees who have been with you for 7 or more years, it’s important to know the rules that apply to your business.

    A common entitlement structure provides employee entitlements of 8 2/3 weeks of Long Service Leave after 10 years. From 7 years, should the employee leave for any reason, entitlements are determined on a pro rata basis. This means if an employee leaves after 8 years, they’re entitled to nearly 7 weeks of Long Service Leave.

    Records for Long Service Leave need to be kept for longer than taxation requirements.

    Determining Long Service Leave for permanent employees is relatively simple, as it is calculated based on their current employment conditions. For casual workers, it’s more complicated. In order to determine the amount of Long Service Leave that a casual worker is due, you need to determine the average number of hours worked over the full term of their employment. If you’re not prepared, this means trudging through old records, finding the hours worked each week for the past 8+ years!

    That’s longer than you’re required to keep your taxation records!

    At Knight BPO, we keep track of all of our client’s employee information so that your business is compliant. We track employee leave entitlements so you know your liabilities.

    Oh. I am not yet a Knight BPO client, but I need help!

    There are a number of government agencies that can provide the information you need to know your liabilities. The Fair Work Ombudsman, and WA State Government both have helpful resources, or you can speak with your accounting services provider.

    Knight BPO can review your historical records to prepare a report on historical staff entitlements. It’s all a part of the onboarding service that gives you comfort that your business is compliant, that you know your liabilities, and that you have all of the information needed at your fingertips to maintain great relationships with your employees!!

    Ask Us Today!