Categories
Financial Planning Small Business Accounting

You don’t need a finance guy to your finance, you can use tools

A preconceived notion that most entrepreneurs fall prey to is that in order to resort to a powerful and beneficial financial planning, one will have to seek assistance from a professional. Evidently, hiring a financial advisor would imply that he will also have to be paid at the end of every month and this is what persuades the businessmen to drop their plan of delineating a budget and let things be as they are. However, in this article, we will be busting this myth for you. Far from consulting a business specialist, you can chalk out the business plans all by yourself using tools, some of which are even available for free.

 

Thereby, the answer to do you need a financial advisor as a small business owner would be no. Also, let’s not forget the fact that nobody is as familiar with the intricate notches of the business as you and this perspective can be capitalized on for fruitful financial planning. It is you who has been the closest witness of its past success and failures and are now sticking out hopes for the future. If you are baffled about where to start from and how to go about it, here are some ideas.

Reassess your strategic plan

First things first, to build a solid business plan you will have to be certain that your strategic policy is at its place. Ask yourself a series of questions like:

  • Is there enough cash flow?
  • Do I need to expand my business and resultantly hire more staff?
  • Should I invest in more efficient equipment to boost production/supply?
  • Do I need financing? If yes, for which areas exactly and how much?

When you have an answer for all of these queries, note them down and outline a realistic estimate for all of them and how the amount is going to affect the next 12 months (6 months) of your business expenditures.

Compare them with the past records

Because all these expenses will be borne by none other than the funds of your business themselves, pull out as many records as you can and compare your targets with them. Use tables, spreadsheets and means of calculation to form neat registers that will weigh your company’s performance so far and furnish you with the clean insight into how much you can risk spending, even if it is for the welfare of the business this year. For instance, if you gather that the average profit from the last five years is not as much as the sums that you are looking forward to financing this year then don’t succumb to the risk. Either spread out your plots to be attended over the next few years, or cut on the extras that you can possibly do without at the moment.

Consider the unforeseen emergencies

While carrying out the business planning do not forget to take the unforeseen emergencies that can hit your business into account regardless of how distant or erratic they are. Market analysts always recommend small business owners to have an emergency fund ready which they can fall back on during a contingency. The prospects include having room for enough line of credit or saving cash for the odds.

Examine

Lastly, like all other businessmen, you too must have a number of expectations from your company. Therefore, all you will have to do is examine whether or not these targets are being fulfilled in reality and if not, what are the feasible adjustments that you can implement to make ends meet.

Categories
GST Small Business Accounting

10 Accounting Mistakes Businesses must strictly avoid for accurate GST Filing

GST Return Filing

It has been over two years since the implementation of the New Goods & Service Tax Regime. And the GST regime has effortlessly taken over the former VAT & Service Tax system.

The GST System has eliminated the Cascading effect or the tax on tax effect on goods & services thus decreasing the costs of Goods & Services.

The GST System has also introduced various advantageous rules & relieves such as

  • The Composition Scheme for Small Businesses
  • Elimination of the Cascading Effect
  • Automating the Filing process online- Digitalization
  • Simpler Compliance
  • Improvements in Logistics
  • Systematization of the unregulated Sectors such as the E-Commerce
  • Input Tax Credit

In other words, the GST system was introduced to make the Indirect Taxation more efficient & sophisticated both for the Business as well as for the Government.

However, just like no system is perfect, the GST Regime has also faced backlash due to its not so effective implementation & the flaws in the system.

Out of the lot, the most basic issues faced by Taxpayers still remain Compliance. The former VAT system allowed the Taxpayers to rectify any errors while filing their Returns. The GST System does not provide any such facilities to the Taxpayer.

If a certain Return is wrongly filed there is no chance the Taxpayer can modify the returns until the next Filing. In the meantime, the Taxpayer shall receive a Notice & maybe even penalties.

Hence it becomes crucial for Businesses to comply with the GST System & file accurate taxes, not just for the sake of compliance but also for the Business.

A well-prepared Tax return helps the Business track their growth & progress. It helps the Business to learn the exact numbers of Inward & outward supplies and on that basis, they can understand the cash flow cycle.

An accurate GST Filing also ensures an accurate amount of Input Tax Credit Claim. ITC is an indirect form of cash inflow for Business & saves them from paying double taxes.

The Taxpayer must take the precision of the GST Return Filing into utter consideration & make sure to avoid errors, as errors in the filing cannot be rectified once submitted.

But Tax filing cannot always be accurate since the filing needs to be done manually some errors may still occur. The GST Norms are complicated & the Taxpayer may miss out on something or the other, such as missing records like invoices, or wrong entering wrong GSTINs, etc.

We have identified & stated The Most Common Mistakes Taxpayers Make & Must Avoid while filing their Returns-

GST Return Filing Mistakes To Avoid

 1. Manual Data entry errors– This is the most basic mistake in GST Return Filing & the one that should essentially be avoided. The taxpayer must ensure the details are entered correctly & in the right format, such as the date format, non-repetition of Invoice numbers, correct Invoice values & value format, correct counterparty GSTINs & Supply address, etc. The special characters must be used wisely by the taxpayer only where required.

2. Tax Slab Compliance– The taxpayers must ensure that the tax rates of the items are calculated as per the Tax Slabs given by the GSTN & the HSN summary must be calculated accordingly. Currently, there are 5 tax slabs- 0%, 5%, 12%, 18%, & 28%.

3. Non Filing of the NIL Returns– Taxpayers usually feel that since they had no transactions for a particular tax period, they don’t need to file their GST Returns. This is a misconception, even in case of zero transactions, Businesses must file a nil return.

4. Reverse charge Mechanism– The Supplier taxpayers must thoroughly understand the Reverse Charge Mechanism under GST. Under Reverse Charge, the Buyer pays the Tax for purchased goods directly to the Government. In normal cases, the Buyer pays this tax to the Supplier who then pays it to the Government. While filing their GST Returns the supplier must understand if they fall into the RCM category & file the Returns accordingly to avoid double tax payment. There may also be cases where the RCM is ignored even for eligible transactions. This practice is incorrect & must be avoided

5. Confusing Zero-rated Supply with Nil-rated Supply– Yet another common concern is the confusion in Zero-rated supplies & Nil-rated supplies. Goods & services with 0% applicable GST is Nil rated Supply, whereas, exported goods & supplies to SEZs are Zero-rated supplies. The taxpayers must categorize the supplies carefully & accordingly.

6. ITC Reversal & Credit Blockage– As per the various amendments in the ITC laws, the ITC shall be reversed in situations like ITC on goods used for personal use, lost or destroyed goods, non-payment to the supplier within 180 days, sold capital goods, & samples, etc. Also, there are certain goods for which the Credit is blocked. Taxpayers must keep in mind the ITC laws while filing & claiming ITC.

7. Paying Taxes under the wrong GST head– There are GST heads such as CGST, SGST, IGST, etc. The payment of taxes under the wrong GST Head can invite trouble for the Taxpayer. The CGSTs must be paid under the CGST head only.

8. Mismatch of monthly/quarterly filing with Annual Returns– The taxpayer must file accurate GSTR-1, GSTR-3B, & GSTR-9. The mismatch in the three reports can cause the taxpayer to receive notices. The GSTN is highly dynamic about the same & does not tolerate even the slightest mismatching of even negligible amount. Hence the taxpayers must be highly cautious while filing these returns.

Mismatch in GSTR1, GSTR3b and GSTR9

9. E-WayBill Compliance – The taxpayer must comply with the E-WayBill system since the GSTN has announced the reconciliation of the      GSTR- 1 & E-WayBill data. Hence the taxpayer must file their GSTR-1 accurately concerning the e-WayBills & vice versa.

10. Precise ITC claim – The taxpayer must thoroughly cross-verify their auto-populated GSTR-2A, Purchase books & GSTR-3B & claim the correct value of ITC. Since return once filed cannot be rectified or changed until the next filing. The delay caused due to the error can attract notices, fines & penalties. The taxpayer must keep in mind to claim only the accurate value of ITC in their filing to avoid concussions. That is, the taxpayer must know, how to claim input tax credit in gst

To conclude, it is advisable to the taxpayer that they must take their time & file accurate GST returns, to track the exact Business progress & to comply with the GST system to dodge Notices, Scrutiny, Late fees, fines & penalties.

GSTR Filings can be done accurately using APIs & Integrations of the billing systems with software solution providers such as GSTHero Software Solutions.

Categories
Small Business Accounting

Business budget samples, examples, and templates

Having a budget that sincerely secures all your needs throughout the month in an excellent idea but creating one for your business qualifies as indispensable. Instead of rushing with the procedure, take your time with the budget so that you can readily control the costs, steer away from overspending and achieve the financial goals that you have been looking forward to. There are several ways of approaching the task but, referring to business budget samples and using budgeting worksheets that would eventually furnish you with enough clarity is the ideal way of complying with its requirements.

The requisites of the budget

According to business analysts, there are a few things that a business budget must contain under all circumstances and in the following section, we will be jotting them down.

  • Estimated sales, revenue, and profit.
  • Fixed costs including loan payments, rent, electricity bills, business license expenses and the like that must be cleared off regardless of your income.
  • Variable costs- the ones which depend on your sales namely cost of raw materials, production, labor charge (if they work overtime) and several others.
  • Semi-variable costs- these are the expenses that partially depend on the trades and can be adjusted if the sales are not at par with the expectations.
  • Projected profits

Basic budget

For you are comparatively new in this realm and do not want to go wrong the whole setting, then starting with a basic business budget examples containing strategic templates would be the right choice. Move on the more detailed and complicated examples once your revenue starts multiplying and your business grows in size. Till then, a basic budget plan will take care of all your needs. In this, the income and expenditure are isolated from one another to deliver a firmer comprehension of the funds that are being drawn and spent.

  Labor wages Materials Fixed costs Variable costs Budget Actual Difference
January $100 $100 $100 $100 $600 $400 $200
February $120
March $90
Total of Q1 $310

Department budget

The thing with a department budget is that you will be able to transparently draw out the income and expenses of your company as per its different divisions and therefore, efficiently calculate the percentage change across the years. Furthermore, you will easily get hold of the numbers right when you need them and weigh the configurations of the departments against each other to identify the shortages and surpluses.

Income Budget2018 Budget2019 Budget2020 Budget2021 Budget2022
Salary/Wages $100        
Pension $87      
Business $264 56    
Dividend $37 32 91  
Total $- $- $- $- $-
  Expenses                    
Administrative $100        
Marketing $87      
Public Relations $64 56    
Development $37 32 91  
Total $- $- $- $- $-

12-month business budget

Lets say you are trying to settle for something that is more detailed and neatly laid out, then the 12-month business budget template is your ultimate answer.Then all you have to do is enter the details of your revenue and income estimations for each month of the year and then check if the real figures are at par with your appraisals.Next you can create two of the following tables if needed to separate out the income and expenses to gain a clearer perspective.

Profit and loss category January February March Total of Q1 April May June Total of Q2 July
Sales and marketing costs $100 $70 $80 $250
Revenue $90 $80 $70 $240
Labor costs $80 $100 $90 $270
Admin and general $70 $60 $100 $230
Categories
Small Business Accounting

How to create budgets for your business yourself quickly?

If you are an entrepreneur whose business is still in its blooming years then, fabricating a budget will be the first step towards building the foundation that would keep lending support to the company throughout its tenure. In the following section, we will be jotting some tips that will help you to quickly create business budgets all by yourself without any professional intervention whatsoever.

  • Analyze your revenue

The first and the most important thing to do would be to thoroughly analyze your business revenue. Take into consideration all the sources of your income and then add them together to delineate the closest figure of your monthly revenue estimation. While outlining your income remember that you must calculate the revenue and not the profit only; because in business, the funds constantly flow from one point to another and in such a scenario you cannot simply rely on the profits to protect its interests. Additionally, do this for multiple months; even if not the entire year than at least for the last six months because considering the present upheavals of the economy, drawing out a budget that is a single month’s descendant can open doors to a huge risk.

  • Figure out the fixed costs

If you are not looking forward to losing your direction midway into the budget then, keep figuring out the fixed expenses including that of rent, loan dues and depreciation of assets, taxes, insurances and the like. The biggest mistake that most businessmen commit is that they equate their budget with the average monthly revenues but, that is not the case. There is a string of other components that must be considered with equal sincerity to fabricate a budget that proves beneficial for your company and the not the other way round. Collect as many bills and tax papers as you can from the past because that way, it will only take you a few minutes to bring together all your fixed expenditures and subtract them from your income to create business budgets.

  • Set aside a chunk of your fund

To avoid the potential confusion and smoothly make your way out with your budget, set aside a chunk of your fund that will be sufficient to serve your variable and emergency expenses. Instead of segregating them any further and investing your precious to assign individual amounts to each of your needs, assess an overall amount and let it cover you whenever a secondary need arises in your business. Keep in mind that the arrangement should be such that no matter how grave the contingencies are, they will not force you to scoop out resources from your ultimate budget.

  • Use budgeting tools

Lastly, without rushing through the process of budgeting like a thunderstorm, take your time to understand the requirements of your business and then break the mechanism into small steps. This idea might seem lengthy but, trust us when we say, this is the most effective approach when you are running short on time and yet want your budget to be characterized by the virtues of transparency and accuracy. Attend the distinct bits on different days and you will see ideas that can are capable of adding value to the budget seeping into your mind. Arrange the procedures that will help you to readily find the numbers you need to steer away from unwanted complications. Additionally, you can refer to some budget samples and examples and effectually choose from a wide array of templates to make your task a lot easier.

Categories
Small Business Accounting

Different Types of Business Budgeting

A budget is a crucial ingredient for the establishment of any organisation. Additionally an organization’s financial as well as operational goals depends on the budgeting of business. If elaborated, growth of resources, profit line of business and infrastructural areas totally depend on the budgeting of a business.

If we think to establish a company,then budgeting plays a vital role because good budget can make fly you high while improper budget can create light risks. Also once your business is established, budgeting becomes a regular task that  can be done normally on a quarterly and/or annual basis.

The budgeting of business depends upon the company’s VARIABLE & FIXED pay and on the basis of this, funds are allocated. Different companies have different terms used for budgeting purposes such as cash flow, etc.

The first step is to set up a plan for the up-coming year on a month-to-month basis. Starting with the first month, establish specific budgeted levels particularly for each category of the budget. The sales numbers will be critical and important asset, since it will be used to check gross profit margin and further help in determining operating expenses, as well as the accounts receivable amounts and inventory areas that need to be improved in order to enhance business growth at the next level.

DIFFERENT TYPES OF BUDGETS:

Every business can follow these different types of budgets:

  1. MASTER BUDGET: A master budget is an aggregate of a company’s individual budgets which is specially designed to present a complete picture of its financial activity and health areas of a company. The master budget combines factors such as  sales, operating expenses, assets, and income streams to allow companies to look for the  establishment of goals and evaluate their overall performance accordingly. It also looks for  the individual cost centers within the organization. Master budgets are often used in larger companies to keep all individual managers aligned about business management.
  1. OPERATING BUDGET: It is a forecast and detail analysis of projected income of the company and overall expenses over the course of a set time frame. To create an accurate picture of the business, operating budgets must aligned for different factors such as sales overview, production management, labour costs for resources, materials costs of the product, overhead count, total manufacturing costs, and administrative expenses. Operating budgets are basically created on a weekly, monthly, or yearly basis. A manager might compare these reports month after month to see if a company is growing on good phase or the set budget needs to be modified.
  1. CASH FLOW BUDGET: It is a means of projecting how and when cash comes in and flows out of a business within a specified time period. It can be useful in helping a company determining the profit areas of business and regulate the growth of company at the next level.
  1. FINANCIAL BUDGET: It deals with all the transactions in terms of assets and liabilities of particular project within the company.

The benefits of budgeting can be elaborate as the best source in success of your business.It enables the businessmen to regulate the cash flow,reducing the expenditure and hence improving the overcome inputs of business.

Categories
Small Business Accounting

Never miss a beat on your business activities

Running a business or working the business management is no easy feat, we get it. In addition to that, staying on top of the all business related activities, deadlines, compliance can be soul crushing. Once it happened to us even, there was new form announced by the compliance authority to file by a certain date, We were so busy to notice it,  due date passed and we were late, let’s say very late to file it. We were slapped with a huge fine for the late payment. Very frustrating experience, not a good thing to happen to any business. At myBooks we wanted to alleviate some of this pain point. We understand what a regular small business owner goes through to make it, these kind of additional d

To address this myBooks has created a simple business checklist functionality. You can keep your important deadlines, recurring activities like compliance due dates, recurring activities so that you can keep track of all your business activities in 1 place. Please don’t mistake this to be a To Do list, This is not a to do list inside your accounting software. It is much more than that specifically designed for Business owners. It is well integrated with your business activities, so it will be much more specific and relevant to your business needs. Further we have plans to push compliance deadlines based on your geographical region to your accounts, you will have an option to either subscribe to these reminders or just leave them if you are already on top of it. Further our data analytical functions will routinely check your data, to identify any pending action items which may need your attention.

Feature available soon.

Suppose you have a workflow of activities at the month end to close the books like upload expense receipts, running payroll, balance the bank statements, run month end reports. All these activities can be managed by creating a recurrent action items and managed effectively using in myBooks. You can further delegate these activities to your employees. Further if there is a payment you are supposed to make it the vendor on date, any overdue on that may attract late payment interest fees, myBooks can automatically remind on the outstanding vendor payment. Further it can also send automatic reminders to your customers in case any payment you are supposed to receive are overdue.

These action items are shown in the dashboard of myBooks, so it cannot be missed again what good to record this action items if it is not in your sight, it will be easy to forget it. Also if you are using myBooks mobile app for iOS or Android, You can receive notifications on the mobile app, So it will not be missed even if you are not at your desk. We hope this will help business owners to stay on top of time critical business activities and alleviate some of the operational management pains. We are open to feedback and suggestions, if you can think any other functionalities around these, please drop us a mail feedback.mybooks@zetran.com