Interaction

Want to know more about Xero?

We love Xero, but, ideally this is not the forum for Xero questions as the session started out. So we pushed over into business process. 

For those that want to know more about Xero and ask any questions, #xerocoffee on the First Friday of each month (except Good Friday) is a great place to learn more about what Xero can do for you and to troubleshoot any questions you may have. Sign up for Xerocoffee here

Talking Online Applications for Startups 

Software is important, but, the business values behind are the key.  

As the small business market looks to migrate to hosted storage, management tools, billing and accounting, the choice of software needs to be considered carefully just like any other large purchase or change in your life. 

The Engine Analogy

Since we talk about engine’s quite a fair bit in our analysis of software for your business, let’s compare the decision to buying a car. You could pick the best car, with the fastest engine in the world, this does not mean that the car is:

(a) the right choice for you, 

(b) going to make you the fastest or most dominant in a race, 

(c) mean that you are capable of driving the car as it was designed to be driven, or 

(d) you will get the perceived value you paid for. 

Cars like software applications have drivers. The skill of the driver, the skills of the assembly line, tires touching the ground and the ability to anticipate what’s coming around the bend are all skills needed to get the right products in the mix for your business. 

Building a scalable back end for your start up

At #startupbeers we focused on trying to not only talk about a great mix of applications that are available for businesses (Xero, eWay, Wufoo, Onelogin etc.) but, we also delved into why a business would choose these applications. 

In short, the purpose of these applications is to make sure that you have the right components and the desire and vision behind the wheel to scale your business in a fashion that is “new”. No longer do you need an army of labour to get things done and if you find yourself paying a “General”, then you should sit back and ask what steps he will put in place to negate inflation in the labour force. 

So, how do you build a scalable business model when you’re just starting out by yourself? 

Practising what we preach

It’s a strange analogy, but, one I’ve used to describe how Interactive Accounting has grown quickly and successfully. (I presented at #xerocon in Auckland in February on this very topic for accountants, check it out here:  The Modern Practice

The dinner plate analogy

At startup phase, the business is all you, a whole dinner plate. You are the business, there’s no denying it. We discussed what made it hard to separate out some of the functions and let this go: 

• Trust 
• Management Skills 
• Hiring the right person 
• Training time/costs 
• Systems in place 
• A brand (not just your relationships) 

Just to name a few. In short, it’s not a simple scenario you need to be prepared and the first step is the hardest. After this it becomes easier. The main aim is to split out roles and hire people that are excellent at these roles. In short, great leaders in industry always hire people smarter then themselves and make this known. 

but, wait, what happened to the beers? 

Beers were consumed, politics, security issues and the “how to put together” of online systems was discussed at great length. We also went through attendees website's with our in house digital guru, Rob Daly. 

So when’s the next #startupbeers?

Sign up here for the next startupbeers which will be on the 12th of April and if you can’t make it, send any questions via twitter hashtag #startupbeers and we’ll get back to you with the answers ASAP.

Xero’s Acquisition Mantra:
Xero has maintained it’s speciality is delivering a Small-Medium accounting tool focusing on the single ledger since it’s inception. Looking to open up it’s platform through it’s API to other developers.

Workflow Max is widely used by Accountants in the Modern Practice as the preferred Workflow tool featuring document storage, Tax (in New Zealand) and the ability to track leads and communication with clients.

Xero & Workflow Max History

Xero openly acquired 15.9% of WorkflowMax in December, 2010 in order to assist in facilitation of building out the tax modules for New Zealand.

The acquisition of the remainder of WorkflowMax has been undertaken to tighten up the links between WorkflowMax’s practice Management and Xero’s Practice Management suite. With all accountants with >20 Xero subscriptions now getting WorkflowMax gratis.

From Left to Right: Chris Spence (co-founder), Guy Pearson (Interactive Accounting), Gavin George (co-founder). Xerocon 2012 (NZ)

Xero’s intentions for WorkflowMax

Xero will leave WorkflowMax as an application in it’s eco system as a standalone and will not close it’s integration points in the open market with the view that other firms and clients that use it will continue to build up Xero’s accounting partner acquisition.

Personally, I can’t wait for Xero’s design and UX/UI team to have a field day with this application!

There is an ever increasing move for Accounting firms to move online, this acquisition will no doubt speed up the process. With Hubone’s sync engine (Microsoft, WorkflowMax and Xero sync tool) and Practice Ignition (client facing modern practice) coming in to production shortly, our industry is set to speed up it’s move towards a connected way of doing business.

Congratulations

A huge congratulations to Gavin and Chris, WorkflowMax’s Co-Founders, their lean, mean and green application has come a long way since I first laid eyes on it in 2009 and I’d like to take this opportunity to thank them both for providing kick ass service, a great sounding board and a beer or two from time to time.

It was Valentine’s Day yesterday (in case you wondered why you were in trouble today) although love was not the main reason why over 200 accountants and bookkeepers gathered at Four Points Sheraton, Sydney....The Xero Roadshow had come to town.

After receiving our name badges other Xero goodies and a coffee we headed into the main room  to take our seats and quietly unwrap and devour the chocolate heart that the Xero team had lovingly placed on every table....apologies to the woman who arrived late next to me who didn't get one. 

Wayne Schmidt, Xero National Sales Manager and owner of the shiniest shoes I have ever seen, kicked off the day in his usual charismatic and infectious style with an introduction on Xero and what lay in store for the day ahead.

After a brief break Joel Hanna, National Training Specialist and Xero Jedi Knight, ran through some of the processes involved in converting customers from MYOB into Xero amongst other Jedi like tips and tricks...the force is strong with this one.

Lunch came and I caught up with the guys from Fathom, one of the events sponsors. Usually, the mention of analysis and reporting tools doesn’t really get blood pumping, however, one look at this new add on for Xero and I realise this is something completely different. At last someone has come along and actually ‘designed’ a reporting and analysis tool that is easy to understand for the even most financially illiterate and also looks totally awesome...good work guys.

In the afternoon there were more helpful tips from Xero Jedi Knight, Joel Hanna, on the general use and configuration of Xero...the force is strong with this one.

After another chocolate heart and more coffee, Chris Ridd, Managing Director of Xero Aus, touched on some of the new Xero features to come this year including:

• Ability to import and export budgets
• Integrated payroll
• Xero personal bank feeds
• Report packs (closed and full release)
• Android app
• Purchase Orders
• Tax code updates

It’s going to be an exciting year for Xero and users of Xero!

Stuart Mcleod, General Payroll Manager and Founder of Paycyle, then took us through the introduction of Payroll to Xero. A huge win for Xero, as this is one of the features that was felt as missing in the Xero offering. Stuart explained that as well as getting it’s own button on Xero it will also include the following features:

• Xero style reports
• Super and tax liability in money going out
• Leave liability included in balance sheet
• PAYG liability hooked to BAS reporting
• Time sheets for employees 
• Expenses syncing as reimbursements

This is great news for users of Xero, congrats to Stuart and the team. We look forward to it’s implementation in April!

Wayne then wrapped up the day with a summary of how we are now living through a new evolution of computing, coming from the first industrial computers, then to PC’s and now The Cloud. He’s right, computing has come along way and when he harked back to past computing practices and software such as Wordperfect and Lotus123, I’m glad it has.

Don’t be left behind, if you haven’t already moved your business to the cloud, then maybe 2012 is the year to do so. Exciting times are ahead!

Never is a tax topic more hotly disputed, misunderstood and argued than that of fringe benefits tax especially when it come to Meal Entertainment. With fringe benefits season just around the corner the issue will once again rear its ugly head.

It is easy to understand the position of many small business operators who take a clients and business associate out to lunch or down to the local coffee shop. These types of social meetings are a great way to start a business relationship, build a repore with a key person, seal the deal or to express gratitude. Many come to the conclusion that if it is a meeting has a direct nexus to their business that the cost of meal and drinks is a business expense and fully deductible.

The ATO are clear on this – not only is meal entertainment not deductible it is also subject to Fringe Benefits Tax. The ATO’s argument is that food and drink are sustenance for our body and therefore not business related and are of a private nature.

The ATO have produced the following scenarios and outlined what the deductibility and Fringe Benefit treatment are.

Minor Benefits – Exemption from Fringe Benefits

To be eligible for this provision the taxable value must be under $300 per employee and be infrequent and irregular.

The ATO have stipulated that “it is not appropriate to specify the number of times associated benefits that are identical or similar to a minor benefit, or benefits provided in connection with the minor benefit, can be provided while satisfying the 'infrequency and irregularity' criterion. However, the more often and regular those benefits are provided, the less likely that this criterion would be satisfied”

This is an absolutely impractical response from the ATO and honestly has many accountants in our industry frustrated that there are not clear guidelines on this issue. In Taxation Ruling TR 2007/12 It concludes that an employer who provides a Christmas party for its staff fails to qualify because the benefit is not infrequent as a Christmas party is arranged annually for the staff and hence occurs on a regular basis. On the other hand the ATO have released a fact sheet entitled Fringe Benefits Tax and Christmas Parties and includes the use of the minor benefit exemption in the examples it provides.

Our position at Interactive Accounting is to concentrate on the regularity instead of the frequency so that if the benefit is provided on a regular basis, every week, month, quarter or year then it does not qualify for the exemption. If the benefit occurs ad-hoc or on a one-time only basis then it will qualify as a minor benefit.

Conclusion

If you are incurring and claiming meal entertainment in your accounts you have two choices. Keeps records and pay the appropriate FBT or have the meal entertainment that is applicable to you and your employees paid out as dividends. If you are unsure about your obligations please contact support@interactiveaccounting.com.au

Remember: GST is only claimable on the tax-deductible portion.