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BAS Agent’s Blog

Xero Tips and Tricks

Xero accounting software is intuitive, fun to use, and an integral piece in the financial arsenal of many small businesses.

Xero has many features and functions and being able to understand them and utilise them correctly is crucial to getting the most out of the product. While most of these features can be learned via Xero’s many blogs, videos, and webinars, it’s often those little unknown tricks and shortcuts that can make all the difference. These tips and tricks not only speed up your work, they just make your bookkeeping life easier – and we all want that!

Here is my list of useful tips and tricks that I use when wrangling Xero. I’ll try to keep adding new tips etc as I discover them. I hope you find them useful. Feel free to share your favourite tips/tricks in the comments below.

  • Inbuilt Calculator – when inside an invoice or bill, and you are entering figures in a numeric field, you can enter a calculation and press tab or enter and Xero will calculate the result. For example, entering 3+7 and then “Enter” will display as the number 10 in the field.
  • Due Dates – Following on from the above tip, when creating a sales invoice or a bill use the + button in the due date box followed by a number to calculate dates in the future. For example, if the terms are 30 days from the date of the bill enter +30 into the due date box and Xero will calculate the date.
  • Keyboard Shortcuts – To go to bills, invoices, contacts, and other sections quickly, enter the forward slash (/) to open the global search field. Then enter b for bills, or c for contacts, or i for invoices etc. Xero will provide you with a quick link to go to all bills, or all invoices etc.
  • Navigating Reports – To quickly get to the bottom of a page, use the End key. To return to the top of the page, use the Home key. If you have a Mac keyboard without the Home and End keys, use Command and the Up and Down arrows instead.
  • Accounts Watchlist – Keep a closer eye on accounts that matter to you e.g. super to pay, by adding them to your dashboard. Do this by going to the Chart of Accounts, opening the relevant account, and selecting “Add to Dashboard Watchlist”.
  • Accounts Watchlist View – This list is organised alphabetically in Xero but that may not be what you want to see. If you want to see a particular account on the top of the list, simply add an asterisk (*) to the front of the name of the account, and voila, it will move to the top.
  • Find and Recode – If you own your Xero file or have advisor access, you will have access to Xero’s Find and Recode function. You can find this at the bottom of the “Accounting” tab. This function allows you to make changes to transactions in bulk – a great time saver!
  • Rectify Wages & Super Transactions Quickly – Use Find & Recode to quickly identify transactions that have been allocated to Wages and Superannuation expense accounts in error. Payroll entries are not picked up so any transactions that are returned are usually misallocated. Quickly finding and reallocating these can save hours of work reconciling the Wages Payable and Superannuation Payable accounts.
  • Xero Issues – keep the Xero Status page in your favourites list. If you are having any issues with Xero functionality, you should check there first to see if there are any known problems. This will save you from submitting a support query unnecessarily.
  • View Multiple Pages – Sometimes you need to view different reports or pages at the same time. You can do this by opening each page or report in separate tabs. Do this by right-clicking the “Dashboard” tab and selecting “Open in new tab”.
  • Prepayments – Rather than trying to remember to enter a monthly journal to take up expense payments for prepaid assets or liabilities, use repeating journals to release the prepayments. This will keep your management accounts current. One less thing to do!
  • Notes – All sales invoices, bills, and contact cards have an area where you can add notes about a transaction or contact. This is best practice in terms of record keeping. Making notes will also assist you or your advisor to understand or remember why an action was taken when accounts are reviewed in the future.
  • Annotations – Related to the above tip about notes, you can also make annotations to your reports which will assist others in understanding what has happened during a specific period or a transaction. To add annotations, simply click on the “add note” icon next to a cell and start typing. Find out how to use annotations here.
  • Split Transactions in Cash Coding Screen – Select a transaction when in the cash coding screen and from the right-hand side click the drop-down menu and select “split”. This will open the Spend Money function (you can also type the forward slash key “/” to achieve the same thing). Type a percentage for the split you require e.g. 50% in the “amount” cell and Xero will calculate the amount for you. Then complete the fields for each split line as necessary and click save. Your transaction will now be split between 2 lines (or as many as required).
  • Using Placeholders in Repeating Journals – if you use repeating journals, you can automatically include information about the period the journal relates. From a draft repeating journal, complete the Narrative box, then click Add placeholder to set up the placeholder you need. See more details here.
  • Share Xero Sales Invoices with WhatsApp and WeChat – Select an approved invoice, click Options, then Share, and then choose your app to share it.

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ATO STP Filing Error Codes – what do they mean and how do you fix them?

At the time of writing this blog, most employers are actively submitting payroll events via Single Touch Payroll (STP). STP has been around since July 2018 and has now evolved into STP Phase 2. Most software companies used by small businesses to file STP reports, are now STP 2-enabled, so many employers will be reporting payroll via this mode.

While the process of filing or reporting payroll via STP is fairly straightforward, there can be occasions where things may go wrong. This is particularly true now, given the setup for STP Phase 2 is quite involved and onerous. Should the setup for STP 2 not be done correctly, this will most certainly lead to filing errors.

If a pay event is returned after filing it, the ATO will provide an error code that describes the issue. While these codes are useful in terms of helping the lodger understand what is wrong, they do not assist in providing details about how to fix the error within the software you may be using.  Luckily, there is help available from each of the main software providers. 

Here is a list of the software providers and the links to their help pages, should your filing return an ATO error code:

MYOB

QBO

Xero

Also, from Reckon, here is a list of the most common submission errors via the ATO. Each error code is explained and a reason behind the error is given. This can be a helpful starting point when trying to rectify any STP errors.

I hope this blog has been helpful to you if you are an employer or bookkeeper. It would be a good idea to add the link for your chosen software to your favourites list for future access, should you encounter an STP filing error.

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eInvoicing: what is it and how to get started

What is eInvoicing?

eInvoicing is a new way to securely send and receive invoices between businesses via a secure global public network known as PeppolThe Australian Peppol Authority is the ATO. eInvoicing, despite being a popular and efficient method of transacting, is not mandatory.

A buyer and a supplier must both be registered with Peppol in order to use eInvoicing. This is done via your accounting software (if it offers eInvoicing functionality). Larger businesses may need to use alternative options in order to connect to the network.

Why eInvoicing?

eInvoicing is secure and time-efficient. It removes the need for using email or snail mail as methods of sending invoices and therefore, is more secure. It also removes the need to key in invoice data when an invoice is received and/or scan and attach PDF copies of the invoice. Data entry error is also heavily reduced when using eInvoicing due to little or no keying in of details required. When an invoice is received via eInvoicing, you would simply go through your normal approval process and then prepare to pay the invoice when ready. The below image is from the Institute of Certified Bookkeepers and explains the difference between the current invoicing process you probably use now, and the eInvoicing process which is much simpler.

/

How do I know if my supplier or customer is eInvoicing-enabled?

When you or your supplier becomes eInvoice-enabled, you will be listed in the Peppol Directory. You can search the directory to see if your contact can receive or send eInvoices.

How do I know if my software product is eInvoicing-ready?

All software products that offer eInvoicing functionality are listed in this register on the ATO website. Some products are accounting packages and some offer online web portals for eInvoicing. 

Below are 3 of the most popular online accounting packages which are eInvoicing-ready now. Each software link below will assist you to get started using eInvoicing and explain the process specific to that software. It’s important to note that MYOB and Xero do not charge anything extra to use eInvoicing which is excellent! Reckon has monthly packages including eInvoicing.

Not ready to commit to eInvoicing? Need more information?

eInvoicing is relatively new, although large companies and government departments have been using it for quite some time now. Small businesses are slowly engaging in this new method, with the uptake increasing continually. It is understandable that you may not be ready to make the jump to eInvoicing or even require it at this stage in your business development. If you would like to do some further research before moving forward, here are some useful links:

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What NOT to include in payslips for paid Family & Domestic Violence Leave

Here is a reminder that access to paid family and domestic violence leave for employees of non-small business employers (employers with 15 or more employees) began on 1st February 2023 (and 1st August 2023 for small business employers). The leave is for 10 days for any full, part-time or casual employees and is not pro-rated. Read more about this new leave type in our previous blog here.

Something important to call out in relation to paying this leave is the information that is prohibited from being included on the employee’s payslip. 

Employers must not include:

  • A statement that an amount paid to an employee is a payment in respect of the employee’s entitlement to paid family and domestic violence leave
  • A statement that a period of leave taken by the employee has been taken as a period of paid family and domestic violence leave
  • The balance of an employee’s entitlement to paid family and domestic violence leave

The reason for not including this information is that if a perpetrator of violence gains access to the employee’s payslip and sees that this type of leave has been taken, this may pose a significant risk to the employee.

When setting up this type of leave in the payroll system, it is important to give it a generic name that does not reference the words “Family and Domestic Violence Leave”. In fact, not calling it “leave” at all is best practice. Given the payment is for an employee’s full rate of pay for the hours he/she would have worked if they weren’t on leave, then simply producing a payslip that shows “gross” pay, is recommended. In the back end of the payroll setup, details can be added noting what the payments actually are, and leave entitlement balances can be recorded but not included on the payslip (simply uncheck that box in the employee’s payroll setup (software-dependent)). 

Precluding statements about this type of leave on an affected employee’s payslip is now part of the Fair Work Legislation Amendment Regulations 2022. Employers must take note and ensure that their payroll systems are set up correctly to reflect these amendments. Failing to do so may/will put affected employees at significant risk. If you are an employer, make sure you action this now (or by August 2023 if you are a small employer).

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A Better Employee Onboarding Experience is coming…

The way new employees are onboarded is changing. Currently, employers ask new employees to provide a Tax File Number Declaration form, a Super Choice form, and also other personal information required in order to set them up in their payroll systems.

While this process is fairly straightforward, often employers find themselves chasing new employees for the data and at times, needing to confirm details that may or may not be correct (usually not correct in my experience!). This process can therefore be very time-consuming and tedious for employers, not to mention that the room for error is very high. It is also not a great deal of fun for new employees either!

Enter the “New Employment Form”.

This is an all-in-one onboarding form that new employees access from their myGov accounts. The form will provide both the ATO and the employer with all of the information required to set up new employees in one easy action.

Importantly, this form will replace several forms. These include the Tax File Number Declaration, the Super Choice form, the Variation to Tax Withholding Declaration, the Variation to Medicare Levy Declaration, etc. Employees can also use it to update their tax circumstances, for example, if:

  • their residency status has changed
  • they no longer have a government study and training loan
  • they are claiming the tax-free threshold from a different employer.

This change to employee onboarding will reduce the administrative burden for employers and increase process efficiencies. It will also reduce data recording errors which are very common when obtaining personal details from new staff members.

How the new onboarding process works

Firstly, the employer needs to provide his/her ABN to the new employees.

To access the new form, employees will require a myGov account linked to the ATO. Once signed in they will:

  • access ATO online services
  • go to the ‘Employment’ menu
  • select ‘New employment’ and
  • complete the form then
  • submit the form

After submitting the form, the details will be sent straight to the ATO removing the requirement for employers to send completed TFN Declarations separately. It’s important to note that the changes to Single Touch Payroll Phase 2 have also made this possible i.e. every time a pay run is reported via STP 2, employees’ tax information is sent to the ATO. Although this step can now be removed from the onboarding process, employers must continue to receive completed TFN Declarations from new employees and retain them as part of the employees’ records.

Once the form is submitted, the employee will print the form and give it to the employer who will use the information to set up the employee in the payroll system.

It’s important to note that the downloadable version of the TFN declaration form will be removed by the end of 2022.

 The ATO is therefore requiring new employees to be onboarded using the new above process going forward. This is a new process that both employers and employees need to understand and adopt. It has benefits in terms of efficiency and data security and in my opinion, is the way forward.

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New PAID Family & Domestic Violence Leave

Employees (full-time, part-time, and casual), will soon be able to access 10 days of paid family and domestic violence leave in a 12-month period.

This will replace the current 5 days of unpaid leave available to affected employees.

Employees will be entitled to the full 10 days upfront, meaning they won’t have to accumulate it over time. The leave won’t accumulate from year to year if it isn’t used. The leave will renew every year on an employee’s work anniversary.

The new leave entitlement will be available from:

  • 1 February 2023, for employees of non-small business employers (employers with 15 or more employees on 1 February 2023) 
  • 1 August 2023, for employees of small business employers (employers with less than 15 employees on 1 February 2023

Reasons for requiring this type of leave could include:

  • making arrangements for their safety, or the safety of a close relative (including relocation)
  • attending court hearings
  • accessing police services
  • attending counselling
  • attending appointments with medical, financial or legal professionals

An employer can ask for evidence from an employee when the leave is applied for. Types of evidence can include:

  • documents issued by police
  • documents issues by court
  • family violence support service documents or
  • statutory declaration

Employees will continue to be entitled to  5 days of unpaid family and domestic violence leave until they can access the new paid entitlement.

Reporting paid Family and Domestic Violence Leave on payslips has very specific rules – read our blog here to find out more!

For more information go to the Fair Work website.

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ATO has recommenced tax & super debt Collection Activities…

What you can do to help yourself and/or your business

During the past 2 years of the COVID-19 pandemic, the ATO deliberately halted tax and super debt collection in order to assist businesses and taxpayers affected by the pandemic’s consequences.

But now they are back on the bandwagon. Debt collection has recommenced!

The ATO is clear that if you engage with them as soon as possible, they will try to work with you to help you manage your debts. However, and I quote:

Where taxpayers don’t engage, the ATO is taking firmer actions. These include garnishees, recovery of director penalties, disclosure of business tax debts, and legal actions including summons, creditors petition, wind-up, and insolvency action.”

So the message is don’t hide under a rock. The debt won’t disappear and the ATO will chase you to recover it. Instead, contact the ATO immediately and work with them to resolve the issues. They can’t help you if you don’t communicate with them. Your tax or BAS agent can do this on your behalf if you would prefer not to call the ATO yourself.

It is important to note that from July 2022, any tax refunds or credits will be automatically applied to any tax/super debt you may have, meaning that you may not receive any refund or a smaller refund than expected.

The ATO has various avenues of help for businesses or taxpayers experiencing tax/super debt stress. Some of these are listed below:

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How to apply for a Director ID without a myGovID account

Applications for a Director ID will close on 30th November 2022. Have you got yours yet? If not, why not? Is it because you lack the confidence to use a computer or smartphone or the technology required? Have you been told that you need to have a myGovID to apply for a Director ID and don’t know how to get one or even what it is? Never fear, there are other ways to apply for a Director ID and these are explained below.

What is a Director ID?
Just quickly, before we go on, for those not in the know, a Director ID is a unique number identifier that identifies you as being a company director to government authorities, shareholders, employees, consumers, creditors, external administrators, and regulators. The reason behind obtaining a Director ID is to prevent the use of false or fraudulent director identities i.e. director identity fraud. Read more information about the Director ID here.

So, when you visit the Director ID information page via the Australian Business Registry Services (ABRS) to learn about how to apply for the ID number, it will immediately begin by explaining that you need to have a myGovID account. A myGovID account is a digital identity that helps you prove who you are online by participating government online services. This is a good thing to have but if you aren’t ready to go down that road or can’t for some reason, you can actually apply for a Director ID by phone or by sending in a paper application – yep, that’s right, you can do it old school style! Read on to find out how!

Apply by Phone

To apply by phone, have the below data at hand, then call 13 62 50. Wait for the automated system to ask you to make a selection from the following and select option 1. Tell the operator that you wish to apply for a Director ID number. Supply the operator with the below data and when he gives you the ID number, record it. A copy will also be sent to you by mail or email – your choice. 

Documents Required:

  • your tax file number (TFN)
  • your full name
  • your date of birth
  • your residential address as held by the ATO
  • two Australian identity documents – one primary and one secondary

Primary documents

  • Australian full birth certificate
  • Australian passport
  • Australian citizenship certificate or extract from a Register of Citizenship by Descent
  • ImmiCard
  • Visa (if you are using a foreign passport but are still in Australia)

Secondary documents

  • Medicare card
  • Australian driver’s licence or learner’s permit

Apply by Paper

To make an application via a paper form, you will need to call the ABRS on the same phone number as above i.e. 13 62 50, and ask for the form to be mailed to you. In addition to completing the form, you will also need to send certified copies of:

  • one primary and 2 secondary identity documents, or
  • 2 primary and one secondary identity document.

Primary documents

  • Australian full birth certificate (extracts and commemorative certificates are not acceptable)
  • Australian passport (including passports that have expired in the past 3 years)
  • Australian citizenship certificate or extract from a Register of Citizenship by Descent
  • Foreign passport

Secondary documents

  • Medicare card
  • Australian driver’s licence or Australian learner’s permit. This must show your photo, licence card number and signature, and the address on the card must match the details on your application.

If you have changed your name, you must provide another document showing the change, such as a

  • marriage certificate
  • deed poll
  • change of name certificate.

Certifying your Documents

Copies of documents you provide to support your application must be certified as true and correct copies of the original document by an authorised certifier. To certify your documents:

  • photocopy them
  • ensure the copy and any photograph is clear and identifiable
  • take the copies and originals to an authorised certifier.

Authorised certifiers

The following people can certify copies of your original identity documents as true and correct:

  • Barrister
  • Solicitor
  • Medical practitioner
  • Judge
  • Justice of the Peace (JP)
  • Minister of religion (who is authorised to celebrate marriage)
  • Police officer
  • Bank, building society or credit union officer with at least 5 years of service
  • Sheriff’s officer
  • Commissioner of Declarations (in Queensland only).

A certifier should never witness documents:

  • for their family, business, clients, employer or any other person where it could create a real or perceived conflict of interest
  • connected with matters in which they have an actual or perceived personal or financial interest.

So there you have it – you can apply for a Director ID without having to set up a myGovID account.  Of the two old-school methods above, I think phoning is the easier option as long as you have all of the documents and information in front of you before you call.

PS – I’m not against getting a myGovID account and in fact, I do advise that you try to get one eventually. However, I do recognise that not everyone is tech-savvy or has a smartphone, or if they do, may not be sure how to navigate it – it is certainly a learning curve and not that easy for some. Luckily, the government understands this too and is providing alternative options to those who may require more time to transition to the digital world.

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Which Income Type do you choose for Closely Held Payees?

As part of the set-up for STP Phase 2, employees must be labelled correctly as per a category of taxpayer (e.g. Regular, Actor, Senior or Pensioner & Horticulturist or Shearer) etc) and an additional layer known as an income type from the list below:

  • SAW (salary and wages)
  • CHP (closely held payees)
  • WHM (working holiday makers)
  • FEI (foreign employment income)
  • IAA (inbound assignees to Australia)
  • SWP (seasonal worker programs)
  • JPD (joint petroleum development area)
  • VOL (voluntary agreement)
  • LAB (labour hire)
  • OSP (other specified payments)

Most of the above income types are self-explanatory, with the exception of “closely held payees” (CHP). The CHP income type is tripping people up because they assume a payee who is a CHP should automatically be given the CHP income type. While this appears to be a logical choice, a CHP may have either an income type of SAW or CHP, depending on the entity’s situation. So how do you know when to choose one over the other? Below is my explanation of this issue.

Firstly, what is a CHP? The ATO says it’s a person directly related to the entity from which it receives payments such as the following:

  • family members of a family business;
  • directors or shareholders of a company; and
  • beneficiaries of a trust.

Payments made to CHPs which are subject to withholding tax and superannuation guarantee must be reported via STP Phase 2.

When to choose the CHP Income Type

If the following applies to the entity that is paying CHPs, then the CHP income type must be selected during setup for STP 2:

  1. There are 19 or fewer employees (small employer) and
  2. One of the 2 x quarterly reporting concessions is being used
    • Option 2 – Report actual payments quarterly
    • Option 3 – Report a reasonable estimate quarterly
  3. Payroll finalisation will occur later than 14th July

Choosing either CHP or SAW Income Type

If the above reporting concessions are not being used by the entity and finalisation will occur by 14th July along with other arms-length employees, you may choose the income type CHP or SAW for your closely held payees.

I hope this has clarified the confusion around when to choose CHP as an income type for a payee who is a CHP.

If you are in the process of setting up your payroll for STP Phase 2, the ATO has a number of resources available. See also here for further ATO resources. It is worth checking them out to ensure that your setup is correct. Remember, STP Phase 2 will see a large proportion of payroll data shared with Services Australia on behalf of your employees. Services Australia will use this information as the basis for calculating future payments to your employees, should they be receiving them. For this reason, as well as ensuring employees’ wages are taxed properly, it is very important to ensure that your STP Phase 2 reporting is accurate and correct.

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Complete a TFN Declaration via your myGov account

Have you taken on new employees? Did you know they can complete a TFN declaration through ATO online services?

This is an easy way for them to provide both you and us with the information we need. If your new employee has a myGov account linked to the ATO, they can:

  • access ATO online services
  • go to the ‘Employment’ menu
  • select ‘New employment’ and complete the form.

This sends the TFN declaration details straight to us so you don’t have to. Your employee will need your ABN to complete the form. Once they’ve submitted the form, they need to print it and give you the summary of their tax details so you can input the data into your system.

You may be able to link your payroll software to the online commencement forms. But check first with your software provider if they offer this service.

You can also use the New employment form to collect a range of information. Despite its name, you can also use this form instead of the:

  • Withholding declaration form
  • Medicare levy variation declaration form
  • Superannuation standard choice form.

Your employees can use the New employment form to update their tax circumstances with you, for example, if:

  • their residency status has changed
  • they no longer have a government study and training loan
  • they are claiming the tax-free threshold from a different employer.

You can continue to use your current processes, including providing a paper TFN declaration where employees can’t create a myGov account or don’t have access to the internet.

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