Getting Onboard with Falcon

Falcon will require tax file numbers and run identity checks before we can take over as your accountant. All parties will be notified of the change.

Once we fulfil our legal obligations we can then act as your accountant.

At Falcon we have certain legal obligations and need to verify our clients which involves checking their photo id. This is a normal process with most agencies and will minimise the risk of fraud.

If yo are unsure how to inform third parties or advice your existing accountant of the switch, call us for a chat to discuss how we can do this for you.

Xero Tips

When both bank accounts are in the same Xero file, coding bank transfers is simple.

During reconciliation, make a rapid transfer. You can enter a reference but not track using this method.

Select the Transfer tab on the bank reconciliation screen for the bank statement line you want to reconcile.

Choose a bank account.
If the statement line shows funds spent, select the bank account or credit card you transferred the money to.

If the statement line shows funds received, select the bank account you transferred the money from.
Enter a reference for the transfer transaction.

Click OK. Once you’ve reconciled the transfer transaction in one bank account, go into the corresponding bank account and reconcile the other side of the transfer transaction.

A profit and loss account and a balance sheet are included in the financial statements we generate for you. These total up all of the transactions that took place throughout the year, including those that came from the company’s bank account (s). The problem is that Xero must record such bank transactions as income or costs in the profit and loss account, or as an asset or liability on the balance sheet. During the reconciliation process, you can only do this by providing an account code.

Your BAS must include the following information:

For GST reasons, income must be stated.
Expenses for which you can claim GST
Transactions that are GST-free (such as bank fees, interest, and wages)
Transactions with a zero percent GST rate (mainly for imported and exported goods and services)
When you reconcile Xero, you’re ensuring that each transaction is assigned to one of those four categories automatically.

Once you believe you will no longer receive (any or all) amounts owed by your customers, you can write them off as a bad debt. When using Xero’s invoicing system, you can follow these instructions.

By writing off (part of) your non-paying customers balances, you’re won’t be paying tax on income you won’t receive.

Create a clearing account in Xero

Set up a separate current asset account for each type of bulk payment you receive, for example, Mastercard, Visa, American Express. Make sure you enable payments to this account.

When you apply a payment to an invoice, select the clearing account in the Paid To field. Then reconcile the bulk payment in your bank account and allocate it to the same clearing account. The payment into your bank account and payments applied to invoices will cancel each other out, leaving a balance of zero in the clearing account.

Assign the clearing account in your online sales system

If your online store or payments processor directly connects to Xero, edit the settings so when it marks your Xero invoices as paid, the payment shows in the clearing account.

For example, if you’ve created a current asset account called ‘Mastercard Clearing Account’, edit the settings in your online store or payments processor to apply invoice payments using this account.

When the bulk receipt from your online store or payments processor appears in your bank account in Xero, from the Create tab, create a new receive money transaction and allocate it to your clearing account.

If your statement details are the same each time, you could set up a bank rule to do create the transaction for you.

Create a receive money transaction coded to the clearing account.

Check your clearing account balance

You should regularly check the transactions in your clearing account using the Account Transactions report. Total payments applied to your invoices on a particular day should match the bulk receipt you allocated when reconciling. If the balance isn’t zero, it could be due to either:

Invoices you haven’t received payment for yet
Payment received in your bank account but the individual invoice payments haven’t been downloaded by your online store or payments processor yet

Handle a customer refund

If you refund a customer for part or all of a sale:

Create a sales credit note for the amount of the refund. Reference the original invoice number on the credit note.
Apply a payment to the credit note by entering a cash refund and select the clearing account as the payment account.

The total amount received should match the invoices less the credit note in your clearing account.

When reconciling, allocate the full amount of sales to your clearing account.

You should regularly check the transactions in your clearing account using the Account Transactions report. Total payments applied to your invoices on a particular day should match the bulk receipt you allocated when reconciling. If the balance isn’t zero, it could be due to either:

Invoices you haven’t received payment for yet
Payment received in your bank account but the individual invoice payments haven’t been downloaded by your online store or payments processor yet

Business Tips

If you want to start a company you will need to choose a company name, set up the right governance structure and register the company. We explain the benefits of starting a company and what you need to do to set it up.

What is a company?
Choosing a company name
Deciding on company governance
Setting up company officeholders
Registering a company
Setting up a shares register

The role of a liquidator in a creditors’ voluntary liquidation (that has not adopted the simplified liquidation process) and a court liquidation is to:

protect, collect and sell the company’s assets
investigate and report to creditors about the company’s affairs, including:
- unfair preferences (payments made to certain creditors over others) that may be recoverable
- uncommercial transactions that may be set aside
- possible claims against the company’s officers (including insolvent trading)
- creditor-defeating dispositions that may be recovered, including in relation to illegal phoenix activity
inquire into the failure of the company – and possible offences by people involved with the company – and report to ASIC
distribute money from the collection and sale of assets after payment of the costs of the liquidation, including the liquidator’s fees (subject to the rights of any secured creditor) – first to priority creditors, including employees, and then to unsecured creditors.

A trust is an obligation imposed on a person or other entity to hold property for the benefit of beneficiaries.

A Trustee is a person who is in charge of supervising the assets owned by a Trust. A Trustee must follow the Trust Deed’s instructions (the document which establishes theTrust and outlines what its purpose and operations are).

A beneficiary is someone who receives a benefit from the Trust’s assets. The beneficiary’s rights are outlined in the trust deed.

The person who first contributed the assets to the Trust, established the Trust Deed, and chose the Trustees is known as a Settlor.

The Trust Deed names all Trustees, Beneficiaries, and Settlors.

A SMSF – Self Managed Super Fund is a fund that is setup and a way the member can save for retirement.

Benefits of a SMSF

Flexibility and control
Investment choice
Accountability
Protection from creditors
Effective tax management

A director is someone who has been elected or appointed to arrange company affairs. They can be, but aren’t necessarily, a shareholder of the company. Every company is required to have at least one.

A director is obliged to act honestly and in the best interests of the company (and its shareholders), with reasonable care at all times.

A shareholder is someone who has an investment with a company by owning shares. In small-medium businesses, a shareholder may also be an employee, a director, or a shareholder-employee, participating in day-to-day management.

A deductible gift recipient (DGR) is an entity or fund that can receive tax deductible gifts. There are two types of DGR endorsement:

An entity that has DGR endorsement in its own right
An entity that is only a DGR in relation to a fund, authority or institution it operates. In this instance, only gifts to the fund, authority or institution are tax deductible

For further information on deductible gift recipients, visit the not-for-profit page on the ATO website.

As a small business operator, it is important you protect your interests when you deal with other businesses. Here are some steps to keep your business safe.

Ask questions when dealing with other businesses

Manage and resolve disputes

Get trusted business advice

Review loan and credit contracts

End of Year Financials

We aim to have your accounts done within 28 days of receiving all the information we require from you. If there are going to be any delays (which sometimes happens when we’re really busy), we’ll let you know up front, before we get started.

Also known as the chart of accounts which is an index in th eledger of all financial accounts of a company.

There are 5 major accounts as follows:

Assets
Equity
Expenses
Liabilities
Revenues

Fixed assets are subject to depreciation, which is a non-cash expense. There are two approaches to this:

Accounting for the fixed asset’s typical wear and tear as a business expense each year lowers its worth (and eventual selling price); and

Claim the cost of the fixed item over several years (small assets can be claimed in full the year they are purchased).

The cost of a fixed asset is spread out over its useful life in this way. It’s a profit and loss account cost, which implies it lowers your tax bill.

Dates are as follows:

Sole trader/self employed: If you lodge by yourself your tax return can be lodged from 1 July to 31 October each financial year. If you lodge via a registered tax agent contact them for more information.
Partnership: If you lodge by yourself your partnership tax return can be lodged from 1 July to 31 October each financial year. If you lodge via a registered tax agent contact them for more information.
Company: Company tax returns lodgement dates vary. The majority of company tax returns will be due 28 February each financial year, however we recommend you check the ATO website for your specific date.

See the end of financial year calendar below for a full list of key dates.

1) Create a good working relationship with your accountant early.

2) Be sure you understand single touch payroll (STP) now.

3) Make full use of your accounting software – and if you don’t have it get it.

4) Ready yourself and anticipate EOFY before it’s upon you.

Reconcile your accounts
Reconcile your payroll
Look at your accounting software
Review your working capital
Create a valuation of your assets
Set financial targets
Establish a cash flow forecast
Comply with ATO