Xero Cloud Accounting Software – How it Helps Small Businesses Better Manage Tax

Record keeping isn’t one of the issues entrepreneurs spend a lot of time thinking about when they dream of starting their own business, so it’s little wonder then that so many new businesses get themselves into difficulty come tax time,  because they underestimate the time and resources involved in good bookkeeping.

Keeping up to date and accurate accounts presents a significant challenge for any business, but in recent years a plethora of cloud based accounting software packages have appeared, making it much easier to manage taxation and business record keeping requirements.

To get a professional opinion about the best cloud based accounting software, we spoke to George Kontominas, the principal of Dendra Accounting Group, who has been nominated two years running as the Executive of the year and the Partner of the year in the prestigious Australian Accounting Awards

“Modern cloud based accounting tools make running a small business easier than it’s ever been before”. says Kontominas “That’s why so many businesses are now moving their accounting software to the cloud”, and a common question they ask us is “what cloud based accounting software do you recommend.”

“At Dendra we can and do work with many of the popular cloud based programs (we are professional partners with Xero, MYOB and Quicken), but over the last few years we have seen a remarkable movement towards Xero accounting software,” says Kontominas.

Here’s a quick over view of some of the features that the Xero Cloud based platform has that makes it such a good option:  
•    You have instant access to your business fundamentals. Log in online anytime, anywhere on any device, Mac, PC, tablet or phone and get a real-time view of your cash flow and reporting dashboard.
•    Multi-platform capabilities. Use a mobile app, PC Mac or tablet to send invoices online and get updated when they’re opened.
•    Fast seamless reconciliation. Match your bank transactions automatically to invoices, bills and purchases recorded in Xero. Send Imports and categorises your latest bank transactions, credit card and PayPal transactions and reconcile on the fly, just click a button and it’s done.
•     Use a mobile or tablet to snap photos of your receipts as they happen and attach them to your expense reports so you have a complete record of all expenses at your fingertips. You can even give your employees access to create expense claims via their cell phone.
•    Track working hours, calculate the payroll, pay employees and manage payroll taxes with ease. You can even give your employees self-service access from any device which means they can view their payslips, submit their timesheets and apply for leave, all on their cell phone or tablet.
•    Xero integrates with 500+ third-party apps allowing you to create truly seamless integrated administration software.
•    Receive and store your bills electronically, you can even email bills and documents straight to your files inbox in Xero for paperless record-keeping.
•    Improve your work efficiency and reduce data entry by setting up bills that repeat each month, each quarter or any period you choose. Manage your cash-flow by scheduling payments and batch paying suppliers.  
•    Gives you live updates via a performance dashboard that allows you to tailor smart financial reports and budgets to suit your business.
•    Handles the challenges and impacts of multi-currency transactions, automatically tracks gains and losses across multiple currencies in real time. All foreign currency transactions are converted into your local currency and foreign exchange rates ae updated hourly, so you instantly know exactly how gains and losses affect cash-flow.
•    Managing goods and services taxes easily. Xero can accurately track and manage these taxes automatically for you as part of your tax submission process.
As mentioned, we also use MYOB and Quicken cloud based accounting systems. “If you are using one of these systems you may prefer to stay with them, they are catching up with Xero, but for the time being Xero certainly seems to be the most popular application,” says Kontominas.

Accounting Tips Every Business Owner Must Know

If you are the only one who’s managing the accounting in your business, you might consider some tips to keep in mind. That way, you will be able to execute just how like a professional accountant does it. Here are important tips that you should always
keep in mind especially if you are just starting out:


KISS

Just remember the word, Kiss. It refers to the abbreviation of “Keep it simple starting out.” The sole proprietorship is the simplest form of entity that you can have in managing your business and in this system, you are no longer required to talk to the Internal Revenues Services not until you starts paying your employees for their salaries. Accountants encourage business owners to keep it simple from the very start so that you get a hold of how things should be going.


Invest in a personal liability umbrella

This is usually done in order to keep you from worrying about the personal liability considering the fact that you are in a sole proprietorship. It’s very cheap and simple but it can assure you that you will be able to prevent the liability. Just make sure that you know how to trade properly and you must keep all records in regards to your accounting.


Set priorities

Making sure that you know what to prioritize first is also important. For instance, you should know that you must focus on developing your business more and more, therefore, do not worry about IRS anymore. Considering the fact that you are in a sole proprietorship, the IRS will not recognize your presence not until you tend to file for your personal income tax return. Now there is no need for you to have separate bank accounts for the sales and expenses.

 

Change ownership at the right time

You can consider changing your ownership after the first five years of managing your business. Make sure that you tend to plan things out carefully so that your business won’t fail. As much as possible, avoid an ownership that requires special communication with the IRS, the additional taxes requires for you to have your investment refund and the accounting fees that you have to pay in closing out your entity. You just simply file a final Schedule C for your next return. Simple as that. As we have mentioned above, you have to keep accounting very simple.

 

Seek help from a professional

It doesn’t mean that you have handled the first five years so well that you won’t bother asking help from a professional. You should always talk with a CPA because he might be able to suggest an entity type that can help you to save a lot when it comes to business taxes.

Now that you know the tips that can help you in managing the accounting in your business, it wouldn’t be that hard for you, even if you do not have an accountant. But by all means, it is always highly advisable for you to hire an accountant to help you sort things out.

Top Tax Saving Tips Every Business Owner Must Know

It cannot be denied that what could be one of the most stressful times of the year for every small business owner is when they have to deal with business taxes. Also, most business owners will just neglect it because the tax season only comes at once and when they are nearing it, they tend to deal with everything on the last minute. It will sometimes lead to additional expenses and stress. Therefore, here are the top tax savings tips that every business owner must know:


Utilize software in managing your taxes

If you don’t want to deal with the stress when it comes to managing your taxes, you can consider using software instead of automatically managing your tax. There are some questions that are necessary for what you have done with your business for the past 12 months. You should answer it properly because this is where the software will determine all of your tax deductions as well as credits.

Aside from that, if you have any questions or you need further assistance, you can easily call on their customer support to guide you in using the software. You can rest assured that their calculations are 100% accurate because they are more than willing to pay penalties if proven that they have provided a false data.


Business finances and personal finances should never be mixed

Never, ever combine your personal finances with your business finances. With that being said, you should assign different bank accounts for these two categories. In that way, it will become easier for you when it comes to managing books as well as organizing things when the tax season enters.


Prepare yourself

One of the most common reasons why most business owners tend to deal with a lot of stress when it comes to tax seasons is because they do not organize things ahead of time. Therefore, in order to reduce the stress level then you should make sure that you are already prepared even when the tax season is a couple of months away.

A filing system is needed in order to classify and organize all of your paper works. You can purchase a dozen folders good for one year and then in each month, put it in the corresponding folder, consisting of the ATM withdrawal slips, receipts, deposit slips etc. that you have done in that month only.


Treat your business finances as your personal finances

As much as possible, you should avoid going out and trying new restaurants every now and then, even if you wanted to impress your client or simply a blow-out for your employees. If you aren’t doing a good job in controlling it, then you can consider treating your business finances as if it’s your personal finances. When you know that it’s not an economical move, then why

bother spending? Instead of taking out your clients for lunch, you can just consider keeping the money instead.


Hire an independent contractor

You can also consider hiring an independent contractor in telling you all the data that you might need. In that way, you are not required to pay the payroll taxes anymore. Just make sure that you get to choose the best contractor in your local area.

Now that you know the top tax savings things, the next tax season shouldn’t be much of a problem to you, doesn’t it? Keeping these things in mind can help you a lot in saving both of your time and money and minimizing the level of stress that you need to deal with.