For many Australian Businesses, Australia Day marks the beginning of the Business New Year. It is a tradition that many Australians take an extended holiday break through Christmas, only returning to work after the Australia Day long weekend. Now that the New Year has set in and the hustle and bustle of work begin, it’s an important time to ensure your business is leveraging off software that will allow for businesses growth. Learn how using Australian built software has many benefits for you and your company.
Business Activity Statement
The Australian tax regime is quite complex compared to other countries. Businesses are required to lodge a business activity statement; larger businesses are required to lodge one quarterly. A business activity statement is a summary of all the business transactions that have been made during that quarter and is quite complex in the categorisation of income and expenses. If your accounting system has not been designed to create an activity statement, you may find that you are unable to source the correct information required to lodge one.
As an example, the business activity statement requires separate information for the wine equalization tax (WET), PAYG instalments, fringe benefit tax instalments and deferred company tax. Many businesses have ended up in a position of implementing a new system and having to complete their business activity statement manually. This defeats the object of putting in a new system as it results in the company becoming less efficient rather than more efficient.
Goods and Services Tax
Australian Goods and Services Tax (GST) is a value-added tax but differs somewhat from value added tax in other countries. Your system needs to differentiate between both taxable and non-taxable supplies. The tax office provides a list of exceptions and any stock items that are non-taxable must be identified as such in your system. The system must also be able to deal with ‘mixed supplies’. This means that on a single tax invoice you may have supplies that are goods and services taxable and supplies that are exempt. The total tax on the invoice will not equal 10% of the total invoice amount. Many Non-Australian systems cannot handle this. Additionally, there are strict requirements for the layout of a GST compliant invoice. Systems that can create a generic invoice designed for other countries may not comply with the ATO requirements and standards.
Cash vs accrual GST
Australia allows small businesses to operate on a cash-based GST system. This means that the GST component is only remitted to the ATO once payment has been received from your customer, or paid to your supplier. Businesses with an aggregated turnover of less than $10 million can choose to account for their GST using the cash accounting method.
If you run your business on cash-based GST you should be aware that once you exceed the threshold, you will be required to switch to accrual (invoice based) GST. This means that the GST must be remitted based on your invoices rather than on your cash receipts. Switching from a cash-based GST to an invoice based GST is extremely complicated, and if you intend to grow your business the sooner you switch, the better. Not all software systems can handle both cash and invoice based GST.
If you thought that GST legislation was complicated, Australian payroll legislation is even more so. There are very few overseas payroll systems that are able to deal with the complexities of Australian payroll. Terminations are even more of a minefield. In addition to the basic requirements, if you are operating in an industry with awards, your system must be able to handle the interpretation of these awards.
As an example, an employee starting at 7 am in the morning may earn a different rate per hour to the same employee starting at 8 am. The interaction between payroll, timesheets and awards is a complex one. Superannuation legislation is also complex. Australian built payroll systems have evolved over years to deal with these complexities. This is one area where software that has not been localised will not be able to meet the legislative requirements.
Changes in Legislation
The Australian legislation is not only complex but changes frequently. Overseas software providers are not able to be responsive to these changes. Australian providers liaise closely with the ATO and other government regulatory bodies. They are usually involved during the drafting phase of the legislation and are given sufficient time to modify their software to meet new requirements. Recent changes that will impact on your ERP and payroll systems are SuperStream, One-touch payroll and electronic lodgment of business activity statements. Stay up to date with the most recent changes and requirements of Single Touch Payroll here.
Small differences in terminology make learning a new system unnecessarily complicated. For example, in Australia, we may refer to “stock” where in America this may be referred to “inventory”. An invoice may be referred to as a bill, a stock code may be an item code in a non-stock business and American terms like dunning letters are unknown to Australians. Using terminology more familiar to Australian users eliminates much of the pain of learning a new system.
Why MYOB is the best choice for companies in Australia
MYOB has software for all companies large and small. All of the above localization factors have been incorporated into all MYOB software. Moving from one MYOB product as your business grows means that not only do you comply with the legislative requirements but the users of the system will be familiar with the interfaces, terminologies and workflows. MYOB is a leading provider of business management solutions in Australia and New Zealand. Products include a simple bank feeds service, MYOB Banklink, to cloud accounting product suites, MYOB Essentials and MYOB AccountRight, through to enterprise software for more complex businesses, MYOB Exo Business and MYOB Advanced.
If you are currently using MYOB AccountRight you will know that from 30th September 2019, MYOB will no longer provide features, patches, compliance updates or product support for your MYOB AccountRight Classic desktop software. In conclusion, now is a good time to explore the transition to MYOB Exo or MYOB Advanced.
Benefits of using the Australian ERP
- Suitable for all size companies
- Increased growth with MYOB Software – Click here to hear about one of our recent successful implementations of MYOB
- It complies with Australian legislative requirements
- Made in Australia – tailored for Australian Market
- MYOB – leading software provider in Australia and New Zealand
- Hosted and SaaS – freedom of choice of which MYOB product is most suitable for your needs
- Local support and software development
Approximately two in three Australian businesses use accounting software and of these around 60% use MYOB. Around 60% of accountants use MYOB as their main practice solution.
Take this opportunity to contact your local advisor to learn more about MYOB products. We are located in both Australia and New Zealand to be more accessible for our clients. Call us now on 1300 857 464