Frequently Asked Questions (FAQ's)
1. Starting a Hospitality Business
+ What kind of business structure should I use?
To start a business, you will need an Australian Business Number ("ABN"). When registering an ABN you need to decide how your business will be structured.
Each structure will have advantages and disadvantages. You should speak to an Advisor about what business structure will be best for you.
The four main structures are:
- Sole Trader
The main things to consider when choosing a structure are:
- Setup & Ongoing Costs
- Personal Liability
- How much tax you pay
What are some examples of the advantages and disadvantages?
Let's take a look at a Sole Trader.
A Sole Trader structure is straight-forward and generally inexpensive to setup and maintain, however the individual has more personal liability. For instance, if something goes wrong within the business your personal assets may be at risk (your home, car etc).
Any profit the individual makes as a sole trader will be taxed at marginal rates. This can be an advantage if the business does not make large profits, but can be a disadvantage as the business becomes more profitable.
Once you have chosen a structure it can be a lot of work to change structures (and in some cases it may not be possible to change your structure) so make sure you receive some good advice and this is a decision that is not rushed.
+ How much money should I expect to make?
Whilst working out how much money a business can/will make can vary greatly - there are some key benchmarks set by the Australian Taxation Office (ATO) that can help you plan ahead:
In all of the above cases, average total expenses range from about 85% - 90%. That means that for every $1 the business brings in, $0.85 to $0.90 will go towards expenses.
Therefore as a rough example, if you want to earn $100,000 per annum from the business, your revenue will need to be around $1,000,000 per annum.
+ What are the setup costs involved?
Setup costs involved in starting a business will depend on a few key points:
- Location: Whether you choose to buy an existing hospitality business or plan on starting your own
- Size: The size of the business premises
- Structure: What type of business structure you choose to setup
Once a location is found, most other costs can be accurately projected.
Planning is key, so whilst opening a new business can be an exciting time make sure you spend some time in our resources section and speak to an Advisor before you make any big financial decisions!
+ What software & POS system should I use?
There are a number of systems you will need when setting up your business. Below are a few products to help you get started.
Accounting Software: This is the first system you will need. Accounting software will help you manage all of the money coming in and out of the business so that you can report to the ATO. It will also help you understand how the business if performing and if there are areas you can improve. We recommend Xero (https://www.xero.com/). Xero is very easy to use and understand, it is cloud based so there is no need to install software... all you need is a web browser.
Point of Sale (POS) Software: A good POS System will help you manage your customer relationship. At a minimum you need a system that will make it easy to take orders and take payments. There are a number of great products on the market. The best system for you will depend on the type of business you are running. For example, the needs of a hole-in-the-wall espresso bar will be different to a restaurant with a kitchen and table service. We recommend you take some time to review a few systems - many will offer free trial/demos so you can make sure it's the right product for you. Here are a few systems our clients use:
- Revel: http://revelsystems.com.au/
- IMPOS: https://www.impos.com.au/
- Vend: https://www.vendhq.com/
- Square: https://squareup.com/au/
- Kounta: https://www.kounta.com/
Payroll & Rostering: Xero has a great payroll system. However, as wages & salary expenses can quickly spiral out of control, you may want something more powerful to give you a clearer picture. We recommend Deputy (http://www.deputy.com/). Deputy will help you with rostering, costing wages and reviewing time and attendance. Deputy also integrates seamlessly with Xero.
2. What is a bookkeeper?
+ What does a bookkeeper actually do?
A bookkeepers basic responsibility is to keep all the financial data of a business (including invoices, receipts, revenue, expenses, bank statements, loans, payroll, assets and liabilities) organised, maintained and up-to-date.
A good bookkeeper will prepare one set of accounts that can be lodged on time to the Australian Taxation Office.
A great bookkeeper will prepare one set of accounts that keeps all of the following groups of people happy...
The Australian Taxation Office - the work must be of a certain standard to ensure it can be lodged correctly. Advisors - A set of accounts that your other advisors understand and readily have access to (Such as Accountants, Banks, Shareholders, Investors) The business owner/s - A set of accounts that YOU can understand and feel confident that you can be involved in regularly.
+ Why do you need a bookkeeper?
Often in the early days of a new business, you might try and wear as many hats as possible to keep costs down. However there are some key signs that mean it may be time to outsource some tasks, including the bookkeeping - Are you...
Spending too much time on paperwork and not enough time on the business? Having stress or anxiety about paperwork? Not keeping up-to-date with paperwork? Uncertain about whether you are maintaining the accounts correctly? Using an Accountant, but not a bookkeeper? You may be paying much more than is required if your Accountant is completing bookkeeping work
+ What are the benefits of having a bookkeeper?
Ensure that the accounts are done correctly
- There is no point spending hours on your accounts, (which is often a task that most people do not find overly enjoyable) if things are not being done correctly. You may have to pay someone to fix any mistakes.
Maximises the time you have to spend doing the things you love.
- Did you start your business to reconcile bank accounts? Probably not. Do the things you enjoy and leave the numbers to someone that enjoys them!
Gives you a greater understanding of your numbers
- Often if you complete the accounts yourself, by the time you are up-to-date you may be too exhausted to actually review how the business if performing. Instead of wasting energy on getting the bookkeeping complete, you can save that energy to review the position of the business.
Answers questions and provides advice
- What is the difference between the profit & loss report, cash flow and the balance sheet? What percentage should my wages be relative to income? A bookkeeper can train you through the process with information you can take with you to any other future business or investment.
Less Stress and Responsibility
- Running a business comes with enough responsibilities! By outsourcing your bookkeeping to professionals you one less stress on your list.
Get a quote from our pricing page here.
+ What is the difference between bookkeeper and accountant?
An Accountant is the big picture specialist. A Bookkeeper is the fine detail expert.
Here's an example - Let's say you are currently employed as a chef where you receive payslips on a weekly basis, you also do some consulting work on the side offering menu suggestions to a friend opening a restaurant. Later in the year you plan to purchase a hospitality business with a business partner that you will own 50% of.
... How do you minimise tax in this situation?
Your Accountant can answer this question and give you advice that may save thousands of dollars.
To make the correct decision your Accountant will need reliable numbers prepared by your Bookkeeper.
Some questions will likely be; What was the total of pay you received that year from your employer? What were the total of invoices you sent out? Were there any expenses relating to this consulting work we can claim as a tax deduction? How much money are you planning to buy the business for? Will you purchase the business as a going concern? What business structure should you setup for the purchase of the business? Will there be bank finance involved or loans from other sources?
So what should you do?
The ideal relationship is one where you hire a bookkeeper to look after the day-to-day transactions. This information can then be collated and shared with your Accountant who, with the information at his/her fingertips, can offer you efficient and effective business advice.
+ Can a bookkeeper lodge a Business Activity Statement (BAS) or Tax Return?
A bookkeeper that is a Registered BAS Agent is able to lodge monthly and quarterly Activity Statements (Registered BAS Agent - https://www.tpb.gov.au/)
A Tax Return can only be lodged by a Registered Tax Agent (Registered Tax Agent - https://www.tpb.gov.au/register-tax-agent).
+ Are there different options or levels of bookkeeping?
Depending on a number of factors, such as time, budget and general interest in your accounts you might prefer different level of service from your bookkeeper. Some examples are:
Support Only Are you organised? Do you have spare time? Do you have an interest in your businesses day-to-day finances? Great! You may have a future career as a bookkeeper! For now, you might choose to complete your own bookkeeping and check in with a bookkeeper from time-to-time to make sure you are on track!
Weekly Bookkeeping Don't want to do the bookkeeping, but like to keep your finger on the pulse when it comes to payroll? Too easy - we'll do the bookkeeping and you process the payroll!
Weekly Bookkeeping & Payroll Not interested in anything number related and just want it DONE? We can do the bookkeeping and payroll - you just run your business!
Weekly Bookkeeping, Payroll & Performance Reports Have a real interested in numbers and margins but are short on time (or have better things to do than paperwork?). We can complete the bookkeeping, payroll and send you weekly performance reports so you know what changes you need to make to improve you performance week-to-week.
For a quote on the above services head over to our [pricing] page.
3. Getting started on Xero accounting Software
+ When should I setup my business up on Xero?
The best time to setup your business on Xero is before you begin trading, from around the time you begin purchasing items for the business (Eg. around the lease signing and fit-out stage of your business).
If you are already trading or are an established business, it is best to move to Xero at the start of a new financial quarter.
Contact us in the last month of a financial quarter, that way you are ready to begin using Xero from the first day of the next financial quarter.
+ What do you need for a Xero Setup?
If you are a new business we will need the following data:
Bank Details (send through details for all seperate business/savings accounts)
- Bank Name (eg, Commonwealth Bank, NAB etc)
- Bank Account Name
- Bank Account BSB#
- Bank Account#
- For any business credit cards, please send through the last 4 digits (instead of BSB# & AC#)
- Your pay frequency (eg. Weekly, fortnightly or monthly)?
- When does your working week start and finish? (Eg. Monday through Sunday?)
- What day you will you make payments to employees?
Employees (For each employee - all info is available on our form here)
Tax File Declaration form (Available from Newsagents: https://www.ato.gov.au/forms/tfn-declaration/) Bank account Details (BSB & AC#) Superannuation fund & membership# E-mail Address Salary &or hourly pay rate/s
POS Login (If you have setup a Point of Sale System that you would like integrated with Xero please send us access to this software)
+ Can you convert me from another Accounting Software to Xero?
How much is involved in the conversion will depend on the software you are currently using. Contact us and we can discuss your options.
+ Can I setup Xero myself?
Xero is very user friendly and we actively encourage our clients to use Xero themselves day-to-day. This said, too often we see incomplete Xero setups by clients that contain incorrect data & balances. Often it takes us longer to fix these setups than if we handled the Xero setup from scratch.
Please contact us before you sign up for Xero!
+ What is GST?
Goods and services tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia.
+ Do I have to Pay GST?
You must register for GST if you run a business or enterprise and your GST turnover is $75,000 or more.
Therefore as a hospitality business, it is very likely that you will need to be registered for, and pay, GST.
+ How much GST do I have to pay?
You will need to put aside 10% of your sales.
As an example, if your business posts $1100 in sales for the day, you will need to put aside $100 which is the GST portion (10%).
Keep in mind that any GST you pay to your suppliers will lower the amount of GST you need to pay.
As an example, if on the same day you purchased $88 of packaging supplies, it is likely you paid the supplier $8 in GST (10%).
$100 - $8 = $92 GST to put aside for the day.
+ When do I have to pay GST?
GST is payable by most businesses on a quarterly basis. The amount of GST to be paid will be reported when you lodge your Business Activity Statement (BAS) to the Australian Taxation Office (ATO).
The following dates make up the financial quarters:
- Quarter 1: July, August, September. Due 28th of October.
- Quarter 2: October, November, December. Due 28th of February.
- Quarter 3: January, February, March. Due 28th of April.
- Quarter 4: April, May, June. Due 28th of July.
Cafe Bookkeepers clients are often eligible for an added 4 week payment extension from the above due dates. Contact us for further details.
+ What is a GST Free Sale?
Food items are classified as either GST Free or taxable food.
It is likely the majority of sales you make will be GST applicable. Though, some sales you make in your business involving some fresh food or beverage items may be GST Free.
For instance, if you sell fruit or vegetable juice (of at least 90% by volume of juice of fruit or vegetables) as a takeaway item (for consumption away from the premises) - you do not need to collect GST from your customer.
However, depending on the circumstances, some food items can be both GST-free or taxable.
For instance, if the same above fruit or vegetable juice was sold for consumption on the premises - you do need to collect GST from your customer.
Further information can be found on the ATO website.
+ How do I keep track of my GST Free Sales?
It is important to initially clarify what is and what is not a GST Free Sale.
Once this has been confirmed, we recommend you setup items in your Point of Sale (POS) System to track any GST Free Sales.
Cafe Bookkeepers will confirm your GST Free Sales at the end of the quarter before your Business Activity Statement (BAS) is lodged.
+ What information do I need to collect from my employees?
For each employee you will need the following:
- Tax File Declaration form (Available from Newsagents: https://www.ato.gov.au/forms/tfn-declaration/)
- Bank account Details (BSB & AC#) Superannuation fund & membership#
- E-mail Address
- Salary &or hourly pay rate/s
Please get in touch for a New Employee Form that contains all necessary data for your employees to complete.
+ What is PAYG?
PAYG stands for Pay As You Go and is essentially tax that an employer withholds from an employees pay. The amount withheld is then paid to the ATO on behalf of the employee. All of these payments will add up towards the employees expected personal income tax for that financial year.
+ How much PAYG do I withhold from my employees?
The amount of PAYG (Pay As You Go) withheld will depend on a number of factors such as if the employee has claimed the tax free threshold or if the employee has a HECS or HELP debt.
An example of how this works looks something likes this...
An employee earns $25 per hour and works 32 hours in a week period.
$25 per hour X 32 hours = $800 earnings or gross pay.
From this $800 earnings, it is the employers obligation to withhold some PAYG.
In this instance the employee withholds $113 PAYG.
The employer then pays their employee $687 directly (Eg via bank transfer). This is known as the net pay.
The process may seem confusing, especially if you have multiple employees, but the good news is that once you setup employees in accounting software such as Xero, the PAYG will be calculated automatically.
+ Can a hospitality business employ a contractor?
We are sometimes asked if a hospitality business can employ a contractor.
Generally, the answer is no.
Rather than being paid via payroll like an employee would be, a contractor invoices the business for payment much like a supplier would.
It is often believed that it is possible for a business to avoid withholding tax, paying superannuation and other entitlements such as annual leave by employing contractors.
However a worker must meet a number of conditions and rules before they can be classed as a contractor. It is important to remember even if someone agrees to be paid as a contractor, the business may still be liable to pay superannuation and other entitlements.
It is always the business owners responsibility to make sure that workers are classified correctly to avoid penalties.
You can check if your worker is an employee or contractor by using this handy tool on the ATO website.
+ What is superannuation?
Superannuation is a way to save for retirement. The money most commonly comes from contributions made into your super fund by your employer.
Currently your employer must pay 9.5% of your salary into a super fund. This is called the Super Guarantee and it's the law. The Super Guarantee will gradually increase to 12% in coming years.
+ How much superannuation do I have to pay?
The Superannuation Guarantee (SG) is currently 9.5% of Ordinary Time Earnings.
For example, if an employee earns $1000 gross in a regular pay run, the employer must keep aside an extra 9.5% (eg. $95).
This $95 is then paid directly to the employees superannuation fund.
+ When do I have to pay superannuation?
You have to pay super guarantee contributions for each eligible worker at least four times a year.
The payment cut-off date is 28 days after the end of a quarter.
Quarter 1: July, August, September. Cut-off Date: 28th of October. Quarter 2: October, November, December. Cut-off Date: 28th of January. Quarter 3: January, February, March. Cut-off Date: 28th of April. Quarter 4: April, May, June. Cut-off Date: 28th of July.
It is important not to miss the cut-off date. If you miss the cut-off date you are not able to claim superannuation payments as a tax deduction. You may also have to pay extra fees/penalties for missing a payment.
+ How do I pay superannuation?
An employer must pay directly to the employees nominated superannuation fund.
One easy way to do this, is via Xero's Auto Super feature.
+ How do I process Auto Super in Xero?
Processing Auto Super in Xero only takes a few clicks. Just follow the instructions here or contact us for more information.
See here how you can Auto Process Super in Xero
+ What happens if I can't afford to pay superannuation by the cut-off date?
If you haven’t met your super obligations as an employer, you have to lodge a Superannuation guarantee charge statement with the Australian Taxation Office.
The Superannuation guarantee charge statement also means extra costs to your business such as administration fees, interest charges and losing the ability to claim superannuation payments as a tax deduction.
... In summary, it is vital that you pay your super on time!
+ What is a 'bank feed'?
A bank feed is a link between your bank and Xero. Xero will download your bank statement lines directly from your bank. Once setup, this is an automatic process and bank statement lines will generally be imported into Xero on a daily basis.
+ Can you access my bank account through Xero?
No. We cannot access your online banking through Xero and and will never ask you for these details.
+ Do I need to send you copies of my bank statements?
Xero is great, because each day it will automatically bring in your bank statement lines. However, we still need to check physical copies of your bank statements to make sure nothing has been missed.
We need to check copies of your bank statements at least once each quarter, but you can forward them to us whenever you receive them.
Note: Please make sure your bank statements are in a format that contains the 'on-going' or 'statement' account balance.
+ What is a .CSV File?
CSV stands for 'comma-separated values'. CSV file types can be opened as spreadsheets in programs such as Microsoft Excel. Banks typically allow these file types to be exported from online banking platforms and Accounting Software allow these file types to be imported.
+ How I do download a .CSV File?
Every bank has a different method for downloading .CSV files. Typically the banks call this 'exporting' and it is a different process to downloading a .PDF bank statement. When exporting you can usually choose a date range and export to a number of file types.
Here are some specific instructions for some of the major banks:
[- Commonwealth Bank] [- ANZ] [- NAB] [- HSBC]