Session 17 - 01 01 GST

Summary

The speaker discusses the complexities of the Goods and Services Tax (GST), emphasizing the importance of understanding tax obligations and the challenges that arise in accounting. They provide guidance on identifying non-taxable items, using professional judgment, and the necessity of continual learning and research. The talk also covers the significance of accurate expense classification, the process of reconciling transactions, and the value of questioning and verifying information to avoid mistakes in financial reporting.

Takeaways

• 📚 Comprehensive Understanding: The speaker emphasizes the importance of understanding the GST system deeply, including its complexities and the fact that there will always be uncertainties and questions.
• 🔍 Diligent Research: It is crucial to research and clarify terms that are not commonly known or specific to certain industries, such as 'sewage' and 'drainage', to ensure accurate GST application.
• 🛠️ Practical Application: The training includes a reading activity designed to enhance understanding of GST, with a focus on identifying items not subject to GST and understanding the context in which they are used.
• 🔗 Utilizing Resources: The speaker suggests using online resources and tools like Google to gain a clear picture of unfamiliar terms and concepts related to GST.
• 🏦 Recognizing Taxable and Non-Taxable Fees: The distinction between input taxed items like bank fees and those that attract GST, such as merchant fees, is important for accurate accounting.
• 💳 Merchant Fees Clarification: Every time a credit card is used, a merchant fee may be charged, and it's essential to understand that these fees do attract GST.
• 🔑 ABN Lookup Importance: For new suppliers, especially subcontractors, it's mandatory to verify their ABN and GST registration to avoid future issues.
• 📈 Professional Judgment: The speaker highlights the need for professional judgment in applying GST, especially when dealing with new or smaller suppliers.
• 🧐 Questioning and Challenging: Encourages trainees to question and not blindly follow previous work, promoting individual professional accountability.
• 🔄 Continuous Learning: The speaker stresses the importance of ongoing learning and updating knowledge, even after years of experience in the field.
• 🛑 Escalation and Problem-Solving: If a situation seems complex or unusual, it's important to stop, escalate, and solve the issue rather than proceeding without understanding.

Q & A

What is the main topic discussed in the video script?

The main topic discussed in the video script is an overview of the Goods and Services Tax (GST), its challenges, and the importance of understanding and applying GST correctly in a business context.

What is the purpose of the reading activity mentioned in the script?

The purpose of the reading activity is to deepen the understanding of GST, including items that are not subject to GST, and to familiarize oneself with specific terms and concepts that may be encountered in the process of accounting for GST.

Why is it important to research unfamiliar terms when dealing with GST?

It is important to research unfamiliar terms to ensure a clear understanding of the specific items and services that may be subject to GST, as terms can be very specific and may not always be immediately recognizable.

What is the significance of recognizing that bank fees and merchant fees are treated differently under GST?

Recognizing the difference in GST treatment between bank fees and merchant fees is crucial for accurate accounting and reconciliation. Bank fees are input taxed and do not attract GST, while merchant fees do attract GST, which impacts how they are recorded in financial statements.

What is the role of a payment gateway in the context of merchant fees and GST?

A payment gateway, such as Stripe, IntegraPay, or Square, facilitates credit card transactions. When a business uses a credit card, it may incur a merchant fee, which is typically subject to GST, unlike bank fees.

Why is it necessary to check the ABN (Australian Business Number) of a new supplier?

Checking the ABN of a new supplier is necessary to verify that the supplier is registered for GST and is eligible to claim GST on invoices, which is important for accurate accounting and tax compliance.

What is the importance of professional judgment when dealing with GST?

Professional judgment is important in GST matters because there are often no black and white rules. It allows accountants to make informed decisions based on their understanding of the business and the specific circumstances of each transaction.

What does the speaker mean by 'input tax' in the context of GST?

Input tax refers to the GST included in the cost of goods or services that a business purchases and uses to provide its own goods or services. These are typically not subject to GST if the business is registered for GST.

Why is it recommended to bookmark the ABN lookup tool?

Bookmarking the ABN lookup tool is recommended for quick and easy access when verifying the GST registration status of suppliers, especially new or unknown ones, to ensure compliance and accuracy in accounting.

What is the significance of understanding the nature of an expense when processing bills for GST?

Understanding the nature of an expense is crucial for determining whether it is a cost of sales, an asset, or an expense that will provide benefit over a longer period. This affects how the expense is recorded and treated for GST purposes.

Why is it important for accountants to question and verify the work of others, even if they are new to the job?

It is important for accountants to question and verify the work of others because everyone can make mistakes. By taking accountability for their own work and not relying solely on others, accountants can prevent errors from propagating through the system.

Outlines

00:00

📚 Introduction to GST and Client Challenges

The speaker begins by outlining the purpose of the session: to provide an overview of the Goods and Services Tax (GST) and the challenges that might be encountered when dealing with GST for clients. They mention a prepared training and reading activity to help understand GST better, especially for items not subject to GST. The speaker emphasizes the importance of researching unfamiliar terms and the need for ongoing learning and clarification in the complex field of taxation. They also touch on the difference between input taxed items like bank fees and those that attract GST, such as merchant fees, highlighting the importance of recognizing these differences when reconciling accounts.

05:02

🔍 Understanding GST Obligations and the VAT System

This paragraph delves deeper into the obligations under the GST system, which is a value-added tax where the end user bears the cost. The speaker explains the concept of input tax and the necessity to include GST in invoices unless specific exclusion criteria are met. They stress the importance of being a tax collector and ensuring that GST does not become a cost to the business. The paragraph also discusses the complexities of the GST system, such as the tax treatment of different food items, and the need for ongoing education and professional judgment in applying tax laws to various business scenarios.

10:04

🤔 Developing Professional Judgment and Questioning Skills

The speaker encourages the development of professional judgment and the habit of questioning when processing bills and dealing with GST. They advise against blindly following previous coding or assumptions, emphasizing the importance of individual accountability and the need to verify the correctness of actions. The paragraph also touches on the importance of understanding the nature of business expenses, whether they are costs of sales or general expenses, and how to treat them in the accounting system. The speaker shares an example of a school's accounting scenario to illustrate the level of complexity and the necessity for critical thinking in GST processing.

15:04

🛠️ Building Knowledge and Independence in GST Processing

The focus of this paragraph is on building knowledge and the ability to work independently with GST across different clients. The speaker highlights the importance of reading, researching, and retaining knowledge to be able to identify problems and work out solutions efficiently. They encourage the team to see each client as a learning opportunity and to build a solid foundation of understanding that can be applied flexibly in various situations. The speaker also shares an example of a team member who successfully identified and addressed a system glitch, underscoring the value of inquisitiveness and self-checking in professional development.

20:06

🧐 The Importance of Accuracy and Inquisitiveness in Accounting

In the final paragraph, the speaker stresses the importance of accuracy and inquisitiveness in accounting practices. They advise against guessing and emphasize the need for a thorough understanding of a business's activities to ensure that expenses are booked to the correct accounts. The speaker also talks about the satisfaction that comes from having a tidy set of accounts and the importance of running sense checks to ensure that everything is accounted for properly. They encourage the team to get comfortable with running profit and loss statements and to understand the average expenses of a business to quickly identify anomalies. The speaker ends with a reminder to not memorize everything but to focus on identifying high-risk items and to be ready to ask questions and seek clarification.

Keywords

💡GST

GST stands for Goods and Services Tax, which is a value-added tax levied on most goods and services sold for domestic consumption. In the video, it is the central theme as the speaker discusses the challenges of dealing with GST in a business context, such as understanding what items are subject to GST and how to claim GST on invoices.

💡Dilution

The term 'dilution' in the script seems to refer to the process of becoming less concentrated or less intense, which in the context of the video might relate to the understanding of complex tax laws becoming clearer through training and experience. The speaker mentions preparing a reading activity on 'dilution' to be sent after the discussion.

💡Tax Invoice

A tax invoice is a document that meets specific criteria set out in tax legislation and provides evidence of the supply of goods and services, including the amount of GST payable. In the video, the speaker emphasizes the importance of tax invoices in claiming GST and the need to verify the validity of these invoices.

💡Input Taxed

Input taxed refers to goods or services that are subject to GST but are not entitled to an input tax credit. The speaker mentions bank fees as an example of items that are input taxed and do not attract GST, contrasting them with merchant fees which are subject to GST.

💡Merchant Fees

Merchant fees are charges that a business pays to a payment processor for the ability to accept credit card payments. The script discusses how these fees are different from bank fees in terms of GST implications, with merchant fees being subject to GST.

💡ABN Lookup

ABN stands for Australian Business Number. The speaker mentions ABN Lookup as a process to verify whether a supplier or subcontractor is registered for GST, which is crucial for claiming GST credits and ensuring compliance.

💡Cost of Goods Sold (COGS)

Cost of Goods Sold refers to the direct costs attributable to the production of the goods sold in a company's income statement. The video discusses the importance of matching COGS with revenue and understanding when to recognize revenue in relation to the provision of services.

💡Professional Judgment

Professional judgment is the expertise and discretion used by professionals to make informed and educated decisions. The script emphasizes the need for individuals to use their professional judgment when dealing with uncertainties in GST application, rather than blindly following previous practices.

💡Reconciliation

Reconciliation in the context of the video refers to the process of comparing and adjusting the differences between the amounts reported in a company's records and the amounts stated on the invoices or statements received from others. The speaker highlights the importance of recognizing differences like merchant fees during the reconciliation process.

💡Sense Check

A sense check is an informal validation of a figure or result to see if it appears reasonable or plausible. The script encourages the use of sense checks when processing bills and dealing with GST to ensure that the amounts and allocations are logical and accurate.

💡Asset

An asset is a resource with economic value that a company owns or controls. In the video, the speaker discusses the distinction between expenses and assets, particularly in relation to GST treatment on the balance sheet, and the importance of correctly identifying and accounting for assets.

Highlights

Overview of GST and challenges in tax compliance for clients.

Importance of understanding GST for bookkeeping and reconciliation tasks.

Training includes reading materials and links for deeper understanding of GST.

Need to research and clarify specific terms not commonly encountered.

GST is a complex tax with uncertainties; knowing where to research is crucial.

Distinguishing between input taxed items like bank fees and those that attract GST like merchant fees.

Explanation of merchant fees associated with credit card transactions.

The necessity of verifying ABN registration for new suppliers to ensure GST compliance.

Professional judgment plays a role in determining the GST treatment of various expenses.

The concept of cost of goods sold and its relation to revenue recognition.

The importance of matching principles in accounting for revenue and expenses.

The role of tax invoices in claiming GST and ensuring they meet the required criteria.

GST system's complexity, such as GST-free foods versus GST-inclusive prepared meals.

Encouragement to develop a holistic approach to processing transactions and understanding business activities.

The value of questioning and not blindly following previous practices in accounting.

Developing the ability to identify and escalate complex issues in accounting.

The significance of self-checking and validating the accuracy of accounting entries.

The importance of not guessing in accounting and ensuring all entries are justified and accurate.

Encouragement to use previous coding as a guide while maintaining professional skepticism.

The goal of becoming comfortable with GST and accounting processes to work independently and efficiently.

Transcripts

today i just wanted to talk to you just

briefly

um an overview of gst and some of the

challenges that you might

encounter when you're actually you know

having to do a buzz for your clients

um and then after that i've prepared um

a training a reading activity i'd like

you to read

i've said that dilution so she'll send

it to you after i'm done i'd like you to

read through it then there's a whole

series of links

i'd like you to read through the links i

want you to take

um you know the opportunity to

as you're reading through things that

are not subject to gst for example if

you don't know

what something is because sometimes the

terms are very specific and you may not

have come across them

um you know like for example i don't

know like things like sewage and

drainage i don't know you might know

what they are but there are some

specific terms like

rates um i really would love for you to

google them and just

you know really get a clear picture um

i know that you went through the process

of actually you know how

how we do the baz um we're actually even

reviewing that process so the process in

itself

will change there'll be some you know

additional factors

but what i really need you to kind of i

understand is that you know gst

it's a tax that regardless of how much

you

you know you work on it and how much you

study you will always have questions

there will always be things

that you're not specifically certain of

and that's where you'll have to know

where to go

where to research to actually um confirm

and clarify there will be things that

you become used to for example you'll

remember

that bank fees don't are input taxed and

they don't attract gst

but you'll remember that merchant fees

do and what's important there is when

you're

um you know booking something like when

you're reconciling something like

merchant fees or bank fees that that

lights up and that you recognize that

one has gst and one doesn't have gst

because you won't always have a receipt

for things like that

you won't have a receipt for a two

dollar bank charge

you may not readily have this receipt

available for the merchant fees

for example um and i'll just explain

what merchant fees are just in case

if anybody isn't certain of what that is

every time you use

a credit card these companies have

cropped up all over the place there's

stripe there's integra pay there's

um oh square there's a thousand

different

merchant facilities and basically what

they're doing is they're like a payment

gateway for credit cards

whenever you use a credit card um you

have two options

either you are forced to pay the

merchant fee or the company

can opt in to actually pay the merchant

fee

so when the company opts in to pay the

merchant fee you'll see

a merchant fee charge right and it's

important to remember that these have

gst

but generally as a general rule you will

be guided by the source document

so you will have an invoice that you are

processing

and that invoice will clearly state the

gst is claimed

if you're processing a supplier for the

first time you will obviously go through

the process of checking them on the abn

lookup

because anybody can write that they

claim gst that

they're charging gst but it doesn't mean

that they're actually registered

and if we you know just blindly follow

suit and

and test and trust that when it comes to

a new supplier

then um there could be issues later on

but as a general rule

um there are some people and you'll

you'll learn which ones they are and

dushitsen knows this it won't be

reputable companies

that that'll happen very rarely it'll be

subcontractors

and i think so as a general

rule we we check subcontractors we don't

check the other companies is that right

we which are called you check do you

check every single

company that you set up every single

supplier that you set up

okay good all right fantastic so

sorry i stand corrected um you will

check every single

um supplier that you set up um i guess

in my mind i'm thinking if you're

setting up something like anz or nab

which is a bank and we know that you

know

would you check in that case

no okay so if they're large corporations

um you wouldn't be checking but

generally if it's an unknown

smaller supplier business then you would

be making that confirmation right

um again nothing is black and white 100

it's about your professional judgment

except for the fact that with a new

supplier

you will always be you will always be um

sorry with a new subcontractor you will

always be checking

um i can't give you a black and white

guideline

uh you know initially your best bet is

to check all of them

because you won't know who the bigger

companies are until you get used to it

and you start seeing it across multiple

clients

i'm better to check it takes two seconds

i would actually bookmark

the abn lookup and you know go through

that process

so you'll read through um you know each

of the

the sections i could sit here and talk

to you about all of it but i honestly

don't believe that you'll retain it it

is

too detailed it's tax law um it's not

something that

you know you could study for a month or

months on this

we don't need to necessarily memorize it

we just need to understand what our

obligations are

you know how the system works it's a

value-added tax and the end user is

meant to pay

we have items that are in um that are

input tax which means

uh there are there is no gst on them

if you are a company that is registered

for gst

everything that you invoice except for

um

excluded items which will you'll see the

list of those and you'll probably need

to

review an even more detail the list of

excluded items you would generally

always

have to include gst uh

as long as you meet a certain set of

criteria

um and you have a tax invoice uh

the tax invoice is valid um the item

isn't excluded from gst you'll be able

to claim

tax and remember i said to you guys

before that we are the tax collector so

really gst shouldn't cost us there are

like a few small

situations where it might uh but we

won't go into that because it's not

really it's not overly relevant but just

for you to know

um the way that they created our gst

system

honestly um they they really complicate

they did complicate it by

you know you know saying that certain

foods uh

you know vegetables and raw foods are

just

gst free but if somebody does something

to the food

um you know so a beef patty is gst free

but a hamburger bought in a shop

isn't you know you could buy all the

separate ingredients

and they would be gst free but obviously

if you buy it in a shop there's gst

attached um so you're really going to

have to just get comfortable with it and

you know what i suggest you know as

you're processing bills and as you're

coming across

transactions what will actually make you

really good at what you're doing is

if you look at them in the context of

okay you know what is the business doing

what's this type of expense

is this an expense that is a one-off

uh is this an expense that that they

will use over a longer period of time

these are the kind of questions that you

need to be asking

is this is this a large amount um

you know do i need to spread this over a

period of time

i actually had a situation today working

for the first time on a school just to

give you an

idea of the level of complexity that can

come in

and i don't expect that you will be able

to immediately diagnose the complexity

but what's important is if you ask him

these questions

you will know to stop to escalate it so

we're working with the school

and there's an accounting standard

around recognizing revenue

which is the school fees that we're

charging now in january the kids don't

go to school

okay so as the as

we were processing bills um we were

processing um you know

supply our read you know reading

supplies a whole host of things

to cost of goods sold now remember cost

of goods sold in the matching principle

there should be revenue

so once we actually read the new

standard that had come out that said

you should recognize the revenue when

you've completed

the service so in january because we

didn't start teaching the kids we

started teaching them in february

we actually didn't complete any service

so it was up it was after that fact that

we went

okay so all of the revenue is unearned

and so we moved on but that's when the

trigger needs to happen

oh hang on this looks weird why have i

got um no revenue but i've still got

these expenses in cost of goods sold

and then when i when i was digging in

deeper then i realized that you know

this is an area that can be a

very can be very confusing you know when

you when new people are processing

things

so what's really important when you're

you know focusing on gst and all of

these things you actually have to focus

on a whole

multiple series of items as you're

processing each bill and maybe

what i might do is actually have i have

a little bit more of a think about it

and come back with

some kind of a little scaffold for you

to look at so you know

as you're doing it getting into the

discipline of going okay

um first of all you know do i have an

invoice is there gst on it

okay can i trust the fact that this is a

registered entity

yes it's a registered entity i'm going

to claim the gst then i need to look at

what's the nature of this expense

and how am i deciding where i'm going to

put it

to which account is this a cost of sales

meaning does this mean that without this

expense

we cannot deliver the service that we're

delivering so if you're in a restaurant

um and it's food

then that would be a cost of sales but

if you're an accountant and you bought

food for a lunch you can still

be an accountant and deliver those

services without the lunch

so this is where there's no hard and

fast rules

so then you're looking at the

transaction and you're saying asking

yourself

um with me understanding what this

business does

is this a cost of sales and a cost of

sales is

an expense that's incurred in the

process of making that revenue

so you have to start thinking in terms

of

um the activities of the business when

you're actually processing

um and then when you ascertain yes this

is the cost of sales or no this is an

expense

then you have to ask yourself the

question is this

expensed in that one period in that

month

or is this an expense that they will get

value from

over a longer period of time you know in

which case it's treated differently

so this is a whole series of questions

that you know do relate

to gst but also to the broader picture

of

how are we um actually deciding where

are we booking um every single

transaction to

and so if you can take a holistic

approach and combine

everything that you know you've been

learning over the last couple of weeks

and combine it with your understanding

of what we're doing what we're trying to

achieve

and ultimately what is the information

that we are trying to present

you know to the owners or to the board

or whoever it may be and

really we want to be making sure that it

actually is logical and makes sense

that if we have revenue then we have

associated expenses if we don't have

revenue then we don't

um and so when you know at the moment

what most people will do when they have

an expense is

they'll look at what the last person did

and they'll also trust whatever the last

person did with gst

for example that's something that i

absolutely don't want you to do i want

you to use it as a guide

but i want you to be the professional

that makes sure for yourself

that it's correct because don't assume

that just because you're new

everybody else knows what they're doing

and that everybody else will get it

right

everybody makes mistakes everybody has

moments where

you know they click the wrong button

whatever it may be

if but if if every single person in the

company is standing as an individual

professional

and i'm taking the work on their taking

accountability for the work themselves

and not relying on but rather referring

to

anybody else's work that's how we stop

problems

very quickly in the chain they don't go

on for a year and then we realize a year

later oh everybody

just followed what the last person did

and it's all wrong so we

the people that will be able to pick up

a mistake

or um you know call it out that's

that's valuable that's important you

know so something that i really want you

to consider

you don't necessarily rely on the

previous coding

but use it as a guide still question it

everything

comes down to you know all the years

that you guys studied everything will

come down to

you know what were you taught you were

taught to question but somehow people

will start a job and they'll just leave

everything at the door and just

you know think everybody else knows

better it's not to say not to respect

other people's opinions but

start to have faith in yourself go rely

on the structure of the scaffolding of

what you've been

taught and you can rely on that and

what's really important is that you're

asking the right questions

and that you're challenging the right

things um

okay so look i i don't know that i'm

going to go into

you know too much detail other than that

for tonight

because i think what's important is that

you go through at your own pace and just

read these last pieces read them i want

you to write down your key

points understanding what is the gst

system what are some of the things that

are not taxed um and just you know try

to keep it there for recall just

think to yourself as you're reading

think about it and go

think about it from the perspective of

what's something that can um catch you

up

what's something that you know looks

like it's important i want you to put

your risk assessing hat on

as you're reading it and take note of

what items you believe might be

high risk so that when you're confronted

with it

you might just have that trigger at the

right time then what i'd like you to do

is take those notes and then

also uh write a list of questions

any questions that you have as you're

reading this and then at the end of the

session

submit your questions to say

anything that you didn't understand but

of course i'd really love you to first

google and go a little bit deeper i want

you to look at this as a little project

for you to go through and any word you

read that you don't understand

google it this is how you're going to

build and layer knowledge

you're basically in the beginning things

will be slower you'll

you know have to check everything you'll

have to double check you'll you know but

then what we'll want to see

over time is that you know retention of

knowledge

the the knowledge that you um knowledge

and training being um

easily transported from one client to

another so it's not

lost at that client and you've got to

start from scratch again when you go to

do payroll somewhere else these are the

ultimate goals

the ultimate goals are that you learn it

and are so comfortable with what you're

doing

that you can see problems you can work

out things you can see when things don't

look right

and basically if you get put into

another client

that you can work independently as a

start and then go into another client

and retain

the knowledge and build on it if

something's different but be able to

you know that training time each time is

a lot less and that you're a lot more

flexible

and can step in and work it at yourself

the only way you're going to do that is

if you do this reading

if you do the reading and if you're if

you're constantly referring back

you know today i've been doing this for

now 30 years

and i'm sitting there and i'm sitting

and reading still to this day if i'm

unsure of something and i'm questioning

myself

okay i've never come across a school

that works in 10 months

how do i allocate revenue over 10 months

okay if i'm doing it daily do i work out

the annual fees and divide them by the

number of

days that the teachers are teaching and

do i then apportion it based on the

number of days but hang on if i do that

if i have to do that for all my expenses

so i can meet the matching principal

that's going to be

a ridiculous amount of work so i need to

find a way that fits in within the

standards but that's still

reasonable for the size of the business

um and so yeah these are the challenges

that you face and then you do

you need to read you need to research

you need to make sure

you sometimes you need to get a

confirmation um

you know we'll still have when it comes

to something a bit more complex and

complicated like that we'll bring in

additional people um we see this as a

chance to learn

as well um and to you know extend our

own knowledge

um and also you know we had another

scenario today as well here's an example

um and this was actually good because

the team member picked it up

they that first time ever and this is

another thing that i want to share with

you

just before we finish off today having

the courage to um you know get to a

point where you have the courage

to try to work out new things that are

complex even when

you've never done it before so this team

member had never ever set up inventory

or you know tracked inventory in xero

and they were entering in all of the

information

and when they went through the last

part of it they saw that there were

these random transactions that were on

the debit side

for example now a less experienced team

member would have just left it at that

but

that going back to have a look does

everything look right

they also look to see that the end

balance of sales

uniform sales were the same as the

source document and they weren't and so

then they went to investigate

by investigating they found a glitch

there was an issue

so we all sat down trying to work out

why was this happening the system was

creating this issue

and in the end um you know we pulled out

the ones that

had the issue we looked for patterns we

looked for anomalies we looked for

something concrete to grasp onto and

then we realized that

um when they had processed the bills

they didn't have the cost of goods sold

accounts set up in the item

so what that what happened when when you

sold

remember we talked about two

transactions for inventory

when the when the item was sold then it

needed to automatically create a cost of

goods sold entry

but because there was no cost of goods

sold account set up in the item

it defaulted and pushed it back into

inventory and that's what happened

so what the fix was to delete those ones

and redo them

because now the items had been set up

correctly

and then it worked right so that that is

the power

and the importance of checking yourself

you know like

in the beginning i would like if i'm

nervous and i'm doing something new i

would go so far as quickly

you know if i've got all of my invoices

looking in these days you don't have the

um the

receipts but calcul i'm adding them up

and going does it equal what i've just

done

looking at the the invoices and going

okay

does everything look right you know

doing a sense check um

by learning what each of the companies

do you can look at it and go ah

if electricity for example came and it

was fifteen thousand dollars

unless you understand what a general

you know an average electricity bill is

for a company

that you could easily process that and

not question it

but this is where you know as you start

to get exposed to clients you could even

google things like what is you know

what's the average small business

electricity expense per month what's the

average water expense what's the

these are the little things that if you

ask yourselves they're going to anchor

you more

so that when you are processing bills um

and you know

getting the gst right will be so easy

because you're going to be focused on so

much more higher level stuff while

you're doing it

um things will be going to the correct

account so it's really about getting

inquisitive

and really wanting to understand what's

this business doing

what are they spending their money on

what it what's the average you know

what's the average expense just a little

bit of time spent there

will give you the ability to do the

sense checks um

same with uh when you're doing payroll

get an understanding of what their

average

weekly monthly fortnightly payroll is um

have a look look historically what were

they doing in the past

what what's been happening recently um

have a look and and

you know see is your is your number

close

you know you obviously you know check

properly as well but always check

you know learn to run the profit and

loss and have a look at

the months and see where are the

expenses going understand what their

expenses are

you know you get so comfortable with a

client you immediately see if something

doesn't look right

you know so you start to book things to

the correct accounts

um and then it's about you know wanting

it to be neat you get a sense of

um you know satisfaction knowing that

you've got a tidy

set of accounts and everything it's a

bit like having a clean house with

everything put away in the right draw

and the right place that's how you feel

and i'm just experiencing this today so

that's why i'm sharing it with you

um you know you feel good because

everything's accounted for

and everything's right it's not messy

and all over the place and you're not

guessing

don't guess please don't guess you know

that's really important because

it'll only raise questions because the

client will look at it and go what the

hell is that

that's how they'll say it in their head

and then they'll ask you and then

that'll create a whole series

of a lot more work so you know learn to

get confident

with where you're booking um make sure

that

if you're booking um an expense that has

gst on it for example

um one of the things that i need you to

know is that when

things are in the balance sheet it's

usually gst on capital

so you'll have to ask yourself again is

this expense an asset

you know if it's a bookcase if it's

furniture

if it's some type of equipment that's

another one of the questions

you know so as you're going through the

expenses you're asking yourself

when you ask yourself is this something

that they're going to derive

um benefit from for a long period of

time the next

question would be you know is this an

asset or is this an expense

and so it would be really good for your

clients maybe to even

screenshot all the asset accounts uh

maybe screen

if it's not too long and have have have

the chart of accounts available even

print them out

so that you're looking because when you

when you're going into um actually

process the um bill and you're picking

up

you're looking at you know you're

looking at the bill you see the gst you

see everything there

you're in order to pull something up you

have to

start with something so you're going to

start with the bias you're going to

start with our stationary

or something but if you can look at the

whole list

and go okay yes it could go to

stationary but actually there's a

specific account here

that says blue highlighters it's not

going to do that but i'm giving an

example

there's actually a more a better suited

account

so there could be a couple of accounts

that it could go to and this is where

you have to

um you know have a look at what's in

that account to establish a logic

as well so it's about also clicking into

that account

and that's something that we'll show you

we'll show you how to run the pnl next

week

we'll show you how to click into the

accounts to check

um we'll give you a couple of examples

where that's concerned

so that you know you get a better idea

when you do start

processing reconciling and and all of

that

um so does anyone have any questions

before

i leave you to gst reading

i'm not expecting you to memorize all

this as i've said before

it'll always be handy to look at but

it's more about

identifying those high-risk items no

questions

no okay um

buddha i've sent that to you so

if you can please um you know get

everybody working on it

and there's one of them the second and

last one i didn't put the hyperlinks but

please read

um all four of the items you'll see them

i screenshotted it

it's the second last thing all right

and um i will be talking to you again

next week

um after a few other sessions so i hope

you have fun with chris

she's amazing i'm her number one fan

she's brilliant at balance sheet wrecks

um she does the liquidity finance

manager role

and she's all over it and she knows um

all of the

specific ways that we've decided to do

things liquidity to keep consistency

so she'll go through that with you