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Struggling to pay the household bills?

Managing personal finances can be a challenge that the Personal Budget spreadsheet is designed to assist with. By preparing a budget it can be determined if yourself or the family as a whole are currently living beyond your means, help in identifying areas where costs can be reduced and project potentials savings. Don’t forget to check your bank account statements and credit card statements to assist you in working out where your hard earned dollars go and perhaps set a cash limit for each member of the family. Life is not all about money each person needs some discretionary spending to enjoy without any feeling of guilt.

Please note that Accounting Revolution takes no responsibility for the use of this template and/or conclusions the user may come to.The template should be used for estimations and discussions only and should not be relied on without professional advice.

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Cash Flow

Cash flow projections provides insight into the variances of how and when cash flows in and out of your business.

Most businesses do not have a smooth flow of income and expenses – life would be so much easier if it did! For example, as a tradie, January is more likely to have reduced cash coming into the business as opposed to a cafe on the beaches where you would expect cash coming into the business to be at it’s highest. By understanding the cash flow of your business steps can be taken to provide for the quiet times or perhaps even recognise that an alternative source of income is required during these periods. The tradie for example may try a local letterbox drop that advertises their willingness to do the small household jobs that are close to home and are not normally the types of jobs that suit his target market.

Understanding cash flow can also help in planning for large expenses that have historically caused financial problems.

Perhaps all your insurance policies are due for payment in March because that is when you commenced your business many years ago .Contacting insurance companies to either pay by the month (careful with this as premiums will be higher) or changing due dates for each policy could be the answer i.e business insurance to September, car insurance to December, Workers Compensation to March and Income Protection in June .

Maybe the accounting bill for year end accounts is a concern – many of our clients are on a guaranteed monthly fee that helps in this area and eliminates bill shock.

GST, PAYG and Income tax can be a problem too – in this cases we suggest a second bank account to save – expected liability therefore can be accounted for on a daily, weekly or monthly basis

So cash flow is purely money in and money out and understanding how this affects your business is one of the keys to success. To take the next step download the template and start to plan and evaluate the cash flow of your business on a regular basis.

Please note that Accounting Revolution takes no responsibility for the use of this template and/or conclusions the user may come to. The template should be used for estimations and discussions only and should not be relied on without professional advice.

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Profit and Loss

I know the bank account balance is low so why does my accountant insist I have made a profit?

Money in money out – a much easier concept to understand than an actual Profit and Loss statements however it is not the cash flow that determines how much tax is paid at year end it is the Profit and Loss!

Just to confuse the business owner even more Profit and Loss statement can be prepared on a cash or accrual basis.

An Accrual Profit and Loss takes into account all income and expenditure regardless of whether or not the funds have been spent or received. Therefore a telephone bill that has been received but not paid will show as an expense and an invoice raised to a client will also be shown as income even if you have not been paid. A Cash Profit and Loss is usually based on actual amounts paid and received..although may include accrued expenses.

So obviously a Cash Profit and Loss is the same as cash flow – no in most cases it is not. Due to many ATO rules and concessions this is not the case as adjustments need to be made. The most common example would be depreciation. The business has bought new computers, screens and a server costing $10,000 ex GST. Unfortunately in many cases the $10,000 will be depreciated over more than one financial year reflecting the expectation that the useful life of the asset is expected to extend beyond one financial year

Another common example is the repayments on a loan. If the finance is a lease and the item in 100% used for business the full amount can be claimed as a deduction. Whereas if the finance is a loan or Chattel Mortgage only the interest paid is deductible and then additional calculations re depreciation need to be accounted for.

An accurate Profit and Loss statement can be complex and professional advice should be sought to ensure accuracy.

The Projected Profit and Loss spreadsheet available for downloading is a little different to the one prepared at year end by an accountant as will not take into account adjustments. It is more a combination of a both a Business Budget and Profit And Loss.

The projector is a useful tool designed to help businesses owners plan for increasing desired level of profit, determining if the business can afford expenditure on a new project or perhaps the affects of employ a new staff member. Historical or prior year figures are a good base to start from and then the document can be changed to project figures such as what would happen if I increase sales by 5% each month, reduce entertainment by 25% or take on a part time employee costing $250 a week. Often setting a target for monthly sales in itself will encourage goals to be achieved and the resulting increase in profitability to be realised.

Please note that Accounting Revolution takes no responsibility for the use of this template and/or conclusions the user may come to. The template should be used for estimations and discussions only and should not be relied on without professional advice.

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