Accounting Software

Accounting Software

June-July 2017

Free Online Accounting Software

A new client recently made us aware that there is free online accounting software that they have been using. It is called Wave and, like Xero or MYOB Essentials, is designed with small businesses in mind. It is US-based, which means some of the terminology is different to what we are used to. ‘Users’ are called ‘collaborators’, for example, the Profit & Loss report is called ‘Income Statement’ and GST is ‘Sales Tax’.

Otherwise it seems to do the things that you expect accounting software to do. You can connect your bank accounts to it so that transactions are imported, create invoices and bills, and have all the usual reports. One drawback is that, as with MYOB Essentials, Wave does not have any tracking function so you will not be able to do your tracking of grant money through here.

Their web site does not reveal how they can keep their product free. Their privacy policy prohibits sharing your information with anyone else other than as aggregate statistics, however they may be able to offer targeted marketing to some companies and they may email you with offers they think are of relevance to you.

Wave offers other services, most notably the ability to accept credit cards and also give small business loans, which are fee- and/or interest-bearing, and providing free accounting software may be their main marketing tool for those services.

As with all online software, make sure you regularly copy the General Ledger to your organisation’s PC. Companies can fold without warning and servers may be switched off from one day to the next.

We are yet to have a good look at it, but if you are starting out or want something better than your own spreadsheet or manual cashbook it’s definitely worth trying out. If you do, let us know your experiences.

December 2016

Unbalancing Xero

Yep, it can be done. Even if you have bank feeds activated, and Xero shows you the green tick indicating you are fully reconciled, your actual bank balance may still be different to the one Xero shows you.

Xero itself recommends to occasionally check an actual bank statement against Xero – for good reason. The bank balance that Xero shows in the Balance Sheet or on the dashboard is not the figure imported from the bank statement. It is the balance of Xero’s bank ledger accounts.

Sometimes people choose to delete a transaction during the reconciliation process or at some other time. Xero then erases this transaction from your bank ledger, even though it appears on your bank statement. Since the transaction no longer shows up in the bank ledger, it no longer requires reconciliation, so Xero doesn’t see an issue.

This is actually fairly common, and the difference has occasionally amounted to a few thousand dollars. By now we have a bit of experience fixing this particular issue, but it is not an easy one to work out when you are first confronted with it, so contact us if you find your Xero balance does not agree with your bank statements.

On the face of it it seems strange that Xero allows transactions to be deleted that were imported directly from the bank. The reason for this is that Xero cannot be certain that its import function is 100% accurate, and it does very occasionally omit or duplicate imported lines. This error is more common with some banks than others, and also with particular types of accounts. For this reason the user must have the option of correcting those errors.


October-November 2016

GST and Accounting Software

One of the irritating thing about GST is that you need to turn on your brain when inputting or coding transactions in your accounting software, including CCA’s Accounting 4.0.

GST fields are overwriteable in all accounting software for a simple reason: Transactions that ‘normally’ have GST sometimes may not and vice versa. Your accounting software does not know which transactions are GST-liable – only you do.

Let’s say you have a ‘supervision’ account which you use for payments to counsellors for your staff and volunteers. The account is set to deduct GST at the normal rate from these payments by default. However, many counsellors in private practice are not registered for GST. For payments to such counsellors you need to change the GST field of the transaction: in Xero from ‘15% GST on expenses’ to ‘no tax’; in MYOB from ‘S15’ to ‘N-T’, in CCA Accounting 4.0 from ‘True’ to ‘False’.  You don’t need to change the GST setting for the account, only for that particular transaction.

How do you know if a supplier is GST-registered or not? If they are they must supply you with an invoice headed ‘Tax Invoice’, containing their GST registration number and business name. Without such a tax invoice you are not allowed to claim GST on this transaction!

Not changing the GST field in software is by far the biggest source of GST mistakes for our clients, sometimes amounting to thousands of dollars where GST is paid on exempt grants or where it is claimed on not-registered contractors.

Where GST is underpaid in any given GST period by $500 or more Inland Revenue will charge use-of-money interest on the amount, which accumulates the longer the mistake remains undiscovered or unreported.