Check our latest newsletter this year!
Axia Newsletter: January – February 2021
Cash flow and Profit – What is the difference?
Cash flow and profit are two different things. If you own a business, it is crucial to have a deep understanding and a solid grasp of both.
In this article, we will explain the difference between the two and the significance of each.
Cash flow explained
In a nutshell, cash flow is the total amount of money transferred in and out of business, especially as affecting liquidity. At times, it does seem it only goes one way but on business,
it does flow both ways.
1. Cash is coming in from customers or clients who are buying your products or services.
2. Cash is going out of your business in the form of payments for expenses like rent or a mortgage.
What is profit
Profit is the amount of money that remains from your sales revenue after costs have been deducted. There are two types of profit:
Gross profit and Net profit
So, are they the same? No, there is a complete difference between the two. Cash flow is the money that flows in and out of your business while profit is whatever remains from your revenue after costs are deducted.
Ultimately, cash flow and net profit measure different things. While profit is the goal – and an indicator of financial health – cash flow is the lifeblood of an organization, keeping operations ticking over on a day-to-day basis. For a growing business, both cash flow and net profit are viable, but in the short-term, cash flow is probably the number one concern.
In Axia Accounts and Bookkeeping, all our clients have access to our cash flow strategies to make their business profitable. Not only you will have a professional bookkeeper to look after your accounts, but you will also receive business reports giving you a better insight into how well your business should be performing.
Contact us here to enquire.
Doing your own Bookkeeping (or not)
If you’re a small business owner or a sole trader, the idea of doing your own bookkeeping to save money might be a great idea. But doing your company’s financials is not something to take lightly, you may do this well in the beginning and think you’re saving money but in the long run, it might cost you a fortune and your time.
On average, a startup business owner can spend many hours in a week updating records and making computations. Could be more if it is tax season and end of the year reports. This is okay but can do more harm than good to your money and time management. Doing your books are taking away valuable time for growing your business. Hiring a professional bookkeeper to take care of the company’s financial records and manage your day to day finances is something you should ponder on.
Bookkeeping is also something an expert in financials and accounting should be doing. Bookkeepers are experts in monitoring cash flow from different accounts, bills, and invoices. They are skilled in organizing your books for better money management. Though bookkeeping can be done by non-professionals, this task should be done and can be best handled by a trained individual. This will also avoid errors in your end that can cost problems in the future.
Hiring a bookkeeper can give you more time to focus on what’s important– YOUR BUSINESS. You don’t have to spend countless hours organizing your books. You can keep your focus on your business and health being.
Lastly, a good bookkeeper will help your business through all stages of starting and growing. They can give you a perspective on how you can make your budget well and run your business more efficiently. They can teach you ways on how you can cut costs and different strategies on cash flow. As they are an extension of your business and the keeper of your records, it pays to hire the right one.
Axia Accounts offers Bookkeeping, Taxation, and Accounting, Australia wide. We are more than just a traditional bookkeeping service. Our experienced Bookkeepers will give you a comprehensive, simple to understand business reports giving you a better insight into how well your business is performing.
For more information, call us today at 1300 497 790.
Bookkeeping: The importance of keeping it up to date
If you’re a business owner, keeping a close eye on your accounts and bookkeeping as well as checking all incomings and outgoings such as payments is vital. If your books aren’t up to date and your accounting records aren’t accurate, your business is bound to financial failure. However, if you know how your business stands when it comes to finances, you are more likely to be in full control and your company will be on the road to success.
We can think of many reasons why it is important to keep on top of your bookkeeping when running a business but here are the 3 main factors that you can take into account to ensure your business finances are running smoothly.
1. KEEP EVERYTHING IN ORDER
At any type of business, it is vital to keep everything organized especially when it comes to your company finances. It is also important to seek help from a professional bookkeeper if you’re a sole trader to make sure everything is done correctly. Though It is seemingly straightforward, bookkeeping quickly becomes more complex when tax, assets, loans, and investments come in.
Making sure these things are in order can allow you to make business calculations quickly. When you adopt good bookkeeping habits and an orderly structure from the beginning, you will find it easier to prepare year-end documentation, tax deductions, learn your financial position and improve your company’s business finances.
2. STAYING ON TOP OF TAXES
Businesses of all sizes are responsible for paying taxes on their earnings. Keeping good records is important in preparing your tax returns so you meet all necessary tax obligations. Minimizing tax liability is an important part of staying legally compliant. If you don’t accurately track and pay your taxes, you could find yourself facing a huge tax bill at the end of the year.
If you own a business as well as working full time or part-time job, make sure to separate your income from your business accounts. If you’re a freelancer and have multiple incomes coming in multiple times from different channels, make sure you have a list of where these incomes are coming.
3. TAKE CONTROL OF YOUR BUSINESS ACCOUNTS
A well-kept set of books means you are not in the dark about your finances. When your information is up-to-date, you can make informed business decisions. When the time comes to do your tax planning, you are prepared and you know exactly how much you can afford to spend to maximize your deductions, and can get good advice.
With Axia Accounts and Bookkeeping, not only will you have a professional bookkeeper to look after your accounts, you will receive regular, simple-to-understand business reports giving you a better insight into how well your business is performing. Also, all our clients have access to our cash-flow strategies to make their business more profitable.
If you need help or guidance, schedule a no-obligation meeting with one of our bookkeeping experts. Our professional bookkeepers will help you with your books and give you better cash-flow, and will free up your time.
We also offer mobile bookkeeping services to all suburbs.
Xero Roadshow 2020 new features and updates
We support our clients with whatever accounting software they use. Some of our clients use Xero. Our Axia team attended the Xero Roadshow event in Perth WA today.
Here are some of the NEW and UPDATED Xero features for 2020:
– Hubdoc now included in Xero plans
– Lodge TPAR from within Xero
– Lodge amended TAPR from within Xero
– Be able to view all BAS fields in BAS
– Notification of failed BAS lodgements with the ATO
– Rerun BAS for periods that already have been finalised
– Xero Bills integrate directly to NAB bank, no need to use ABA files
– With the inbuilt payroll, able to calculate commissions and bonuses
– Short term cash -flow forecasts (7 or 30 days)
