Reconciliation in business ensures that two lots of records (commonly the balances of two accounts) agree. Reconciliation ensures that the money taken from a business account matches what is spent. The aim is to have the balances matching when the accounting period ends. Accounting software such as Xero makes reconciliation in business both accurate and time saving and is a sure-fire way of weeding out errors so a business owner or manager can make accurate decisions based on sound financial data. Reconciliation of accounts also decides whether transactions are in the right place or should be transferred into a different account.
The benefits of reconciliation in business are:
- It reduces mistakes made by the bank and discovers any fraudulent withdrawals from a business account.
- It helps create an overall picture of spending and helps assess if a business is overspending on fees.
Reconciliation is an essential internal control method in the process of financial reporting.
BYO Group is committed to providing tailored bookkeeping solutions for all your business needs, giving you peace of mind that everything is being handled according to the proper standards.
Business Reconciliation Items
The following business reconciliation items can give you some idea of whether or not you can claim a tax deduction:
- Immediate deductions for small business start-ups: Certain start-up expenses can be claimed as deductions, including any costs regarding the raising of capital where incurred by a small business or any entities not running a business per se. The provision for non-commercial loss can mean your deduction may be deferred to a later financial year.
- Business-related startup costs: During the year in which the costs are incurred, the expenses can be fully deductible. However, this applies if the costs apply to a small business proposal and are incurred by paying for advice or services relating to the proposal. The other area where costs can be deducted is the business’ operation or a tax, fee, or charge by an Australian government agency concerning establishing an operating structure or setting up the business.
- Five-year write-offs for some business-related costs: There is a five-year write-off for certain capital expenditure acquired by a business for a past, present or future commercial concern if the cost is not already accounted for or not denied as a deduction elsewhere.
The Australian Taxation Office’s(1) 2019 Business and Professional Items section of the ATO website can assist you to fill in this year’s schedule for individuals.
Reconciliation in business can be time-consuming, so if you’re wondering, ‘Is there someone nearby or near me who can help me reconcile?” why not give BYO Group a call on 0402 100 421? Alternatively, you can fill in the convenient online form, and we’ll get back to you. We’d love to help.