Cloud Accounting – Three Different Solutions

Cloud computing is helping bookkeepers & business owners. Providing us with better interaction, productivity gains by cutting down manual data entry and realtime accounting. New systems also allows for collaborative communication between Accountants, Bookkeepers & Owners of business. There is also financial savings on infrastructure & associated costs. However a good internet connection is required to get the most advantage of these new systems.

As of today, there appears to be 3 different implementations of using the “internet” or the “cloud” to access accounting datafiles:

1. Browser based:   Accessible through most internet browsers, nothing special is stored on the local machine, all data and the program is provided to you from the providers servers. This requires an internet connection to access. Typically there doesn’t appear there is an ability to do a datafile backup to access the data offline. To maintain business records then either you must retain access to the providers servers or extract the data and reports and save it locally. There is no ability to work without an internet access. What is available in this space: XERO, MYOB LiveAccounts, Reckons CashBook Online
2. ASP / Hosted (Terminal Server type arrangement):   Accessible when the local machine has the ‘client' connection program ie “Remote desktop connection”. The data and program is provided to you from the providers servers, however typically the program and datafile could also be copied to your local machine and you could work with the file (by copying it) locally, giving you the ability to work either online or offline. This model is simply an internet based connection to running the program on a provided server. A backup of the data could be stored on the provided online servers or the backup could be stored locally. To maintain business records then you backup or copy the datafile locally and ensure you have a program that remains usable. You cannot work on the provided computers without an internet connection, if you have a copy of the program installed locally and copied the datafile to your local machine you could then work locally. This would require you copying the file back to the provided computer at some point. Reckons Quickbooks Online or by using your own ASP arrangement. MYOB version is a hosted or ASP licence to your MYOB product on a third party ASP host
3. Synched Desktop:   Accessible through the program installed on the local machine, all data is stored on the provided internet server and also a synchronised copy of the file is stored on the local machine. The concept is that you will “normally” work with an internet connection and all processing is made directly into the data that is on the provided server, behind the scenes the program will synchronise the “online” data with the local copy. However if the server is not available or the internet is not accessible then you can, if you must, work on the local copy (normally after a planned “checkout”) and synchronise (or overwrite) the server copy when you do have the internet connection. A backup of the datafile should be made and stored locally, which can then be restored either online or offline. To maintain business records keep a backup of the datafile locally and keep the program installed locally. MYOB AccountRightLive will provide this style of cloud computing

Backup in the cloud world
The “Provided server” does backups but……In each case above, the provided server will be (or should be) doing their backups and have redundancy in their server arrangements. However we also suggest you have local copies of your data in some form

Ultimately the business is required by law to have their business records for up to 5 years, so ultimately it is up to the business to maintain access to the detail. Today's internet based world continues to show cases of internet hacking, server breakdowns, redundancy plans that don’t kicking when required, identity theft (login theft or breaches) resulting in loss of online data etc .We remain of the opinion that best practice requires a copy of your business records to be periodically retained locally.

Multi-use
Multiperson access can be provided in each of these situations, subject to your agreement with the datafile/program providers and also the providers of the server.

“Anywhere / Anytime” Browser based requires a browser on any computer (easy). ASP requires the ASP program “Client” application in order to access the host server. Synch’d desktop requires the computer to first download the application and then to connect to the server. All are arguably anywhere / anytime but with different levels of ease.

Fairwork – Workplace Myths Fact or Myth

MYTH    I can test out a new employee by asking them to work an unpaid trial
FACT     If someone is working for your business you must pay them wages. You must also give them any other conditions they’re entitled to under the National Employment Standards (NES) & any applicable modern award or enterprise agreement.There is no such thing as an unpaid trial. You can ask a prospective employee to demonstrate a skill that is required for the job, for example a touch typing test, or asking them to make a coffee. However, if they perform work they have to be paid for it.

MYTH    Employees have to work for 12 months before they can take any annual or personal leave
FACT     Under the National Employment Standards, employees start accruing leave as soon as they start work. This means that employees can take paid annual leave at any time as agreed with you, even if they have worked for you for less than 12 months. If an employee is sick, they must be paid sick leave as long as they have enough leave and they have given notice and if required, appropriate evidence.

MYTH     I can fire an employee without notice during their probation period
FACT      Under the National Employment Standards, employees who have been working for less than 12 months must get at least 1 weeks’ notice. Certain employees aren’t entitled to notice including casuals, fixed term employees and employees whose employment is terminated because of serious misconduct. You should also check the modern award or any agreement that applies in case it provides a greater entitlement

Setting up opening balance for CREDITORS (Quicken)

When you set up a new Supplier (Creditor) in QuickBooks, there is the facility to add an opening balance to the supplier record, as at a date that can be selected from the calendar.

By entering a figure on the supplier record, what QuickBooks is doing behind the scenes, is generating a bill. This bill can somewhat be edited, the name, the date, the amount etc but a tax code cannot be added to the tax column.

If the business is registered for GST on an accruals basis, this is fine because the GST would have been picked up in the previous accounting system. However, if the business is registered for GST on a cash basis, then once this bill is paid, the GST should be reported – and the GST figure is not split from the total expense.

Another point to consider is that the opening balance may be made up of more than one outstanding bill and may cause havoc if you are paying per invoice, reducing the one opening balance amount, but having no concept of aging of the creditor, or individual bill totals. Instead of using the opening balance feature on the supplier record, redo any outstanding bills in the new data file as at the date that it was originally generated. If the business is registered on a cash basis, add the appropriate tax code to the tax column. There is no need to add the tax code if the business is registered for GST on an accruals basis.

There would still be original documentation, so not much detail is required when the bill is re-entered. This would then give accurate aging reports as well as report the GST on purchases correctly.

Setting up opening balance for DEBTORS (Quicken)

When you set up a new Customer (Debtor) in QuickBooks, there is the facility to add an opening balance to the customer record, as at a date that can be selected from the calendar.

By entering a figure on the customer record, what QuickBooks is doing behind the scenes, is generating an invoice. This invoice can somewhat be edited, the name, the date, the amount etc but a tax code cannot be added to the tax column.

If the business is registered for GST on an accruals basis, this is fine because the GST would have been picked up in the previous accounting system. However, if the business is registered for GST on a cash basis, then once this invoice is paid, the GST should be reported – and the GST figure is not split from the total sale.

Another point to consider is that the opening balance may be made up of more than one outstanding invoice and may cause havoc if the customer is paying per invoice, reducing the one opening balance amount, but having no concept of aging of the debtor, or individual invoice totals. Instead of using the opening balance feature on the customer record, create a QuickBooks item called OB (opening balance) positing appropriately in the general ledger. Redo any outstanding invoices in the new data file, using a single line item (OB) to pick up each invoice as at the date that it was originally generated. If the business is registered on a cash basis, add the appropriate tax code to the tax column. There is no need to add the tax code if the business is registered for GST on an accruals basis.

There would still be original documentation, so not much detail is required when the invoice is reentered. This would then give accurate aging reports as well as reporting the GST on sales correctly.

Entering customer opening balances and historical sales (MYOB)

As part of the initial setup of your company file, you need to enter customer opening balances & historical sales. This will enable you to enter customer payments against sales that were made prior to the time you began to use your MYOB software. The date you began using your software is known as the conversion date, & historical sales you made for which you are yet to receive payment are known as pre-conversion sales.

Note: For supplier opening balances and historical purchases the principles & process are the same. Historical sales and purchases will also not generate Baslink figures, so your BAS must be done manually for these periods.

Enter the opening balance of your Trade Debtors account 
This account represents the amount owed to you by your customers. To do this:

1. Go to the Setup menu & choose Balances then choose Account Opening Balances. The Account Opening Balances window is displayed
2. Locate the Trade Debtors account, then in the Opening Balance column enter the sum total of what your customers owe you as at the time you began to keep your records using MYOB software
3. Click OK.

Enter previous sales
Entering the sales you made prior to using your MYOB software which are still unpaid, in other words your pre-conversion sales, will allow you to record payments subsequently received against these sales. To do this:

1. Go to the Setup menu and choose Opening Balances then choose Customer Balances. The Customer Balances window is displayed
2. Click Add Sale. The Historical Sale window is displayed
3. Enter the details of the pre-conversion sale as per the following example
   
   
   
4. Click Record
5. Click OK to the alert regarding cash reporting
6. Repeat steps 2 - 5 for all your pre-conversion sales  Note: You need to enter historical sales for all customers that had pre-conversion sales which were still unpaid as at the time you began to use your MYOB software

When the total value of the pre-conversion sales you have entered equals the opening balance figure for the Trade Debtors account, the following message is displayed: Congratulations! Your total outstanding invoices equal the balance of your linked receivables account. You’re ready to use the Sales Command Centre.