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  • #998830
    TTime
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    Hi all,

    we have a business that has been operating for a few years, but on a pretty bad shoebox style form of bookkeeping! We kept track of everything but of course it was a terrible way to work. So we’ve finally set ourselves up with accounting software and are going through the motions of doing the extensive setup.

    If we had set it up right at the start it would have been easy, but with an already operating business it’s a little complicated.

    It’s been suggested that we need to enter opening balances, opening stock, opening accounts receivable/payable etc. All that makes sense to me.

    But then it comes to Retained Earnings and I don’t really understand it. Googling doesn’t really help, because it assumes you’ve already got an Profit/Loss statement from the previous period. Which of course we don’t have. So I’m not quite sure what to enter here. Or do I even need to worry about this?

    I really want to do what’s best for the business, as I’d like the best possible idea of what our position is now. But of course we don’t have the detailed records that we should have.

    Cheers!

    #1216254
    thomasservices
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    Hi

    You’re correct to say retained earnings refers to net profits retained from prior periods.

    If you’re a new business you won’t have this.

    What Bookkeeper software are you using?

    Steven

    #1216255
    TTime
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    Yeah but as I said we aren’t a new business, we’ve been going for several years – just keeping a shoebox of receipts and invoices in word.

    So I’m not sure how to fill out retained earnings when we don’t really have that info.

    We are trialling a few different packages.

    #1216256
    El Arish Tropical Exotics
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    This is a question for your accountant who would have records and exact figures for your business.
    You may also want to ask their advice of software, if it’s something they’ve never used before it’ll take time to master and time is money.

    #1216257
    James Millar
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    First – retained profits are generally only relevant for companies. Other entity structures generally disburse profits each year. (for reference retained losses may be retained within a company or trust but generally not in a partnership or sole trader). It’s not clear from your post what structure you have.

    What profit and loss data (and balance sheet data) was used in your tax return? If its been going a few years something must have been lodged. This all needs to reconcile against BAS’s lodged.

    Honestly if you are asking this question then I think you really need to see an accountant. There are so many tax issues that depend on having an accurate balance sheet and I’m not sure google is going to bridge the gap for you.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
    #1216258
    elissa.doxey
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    See an accountant to get it set up for you, then you’ll know it’s done properly & hopefully won’t have headaches down the track ;).

    Most accounting software apps will have certified practitioners that they can refer you to, depending on what platform you chose.

    Elissa

    #1216259
    Ellane
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    I run a company on a budget, and we have just started using Wave accounting. It’s free for us because we don’t need payroll, and so far it looks REALLY good. If you need accounting software, you also need an accountant.

    #1216260
    James Millar
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    Ellane, post: 260965, member: 111746 wrote:
    I run a company on a budget, and we have just started using Wave accounting. It’s free for us because we don’t need payroll, and so far it looks REALLY good. If you need accounting software, you also need an accountant.

    I agree that most businesses benefit from having an accountant but I’d question the value in deploying accountants for raw bookkeeping – certainly not at conventional accountant rates. Great software and a great bookkeeper should resolve most day to day issues.

    Helping build better businesses and better lives with expert financial and taxation advice. [email protected] www.360partners.com.au 03 9005 4900
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