We will also look into factors to consider before implementing web-based accounting system or online accounting solutions.

Here, we are talking about desktop accounting where you buy boxed software off the shelf, install onto your computer and use it. Web-based accounting system will have you login to your system using Web Browser and process transactions via the Internet.

Desktop Accounting

Let us first examine desktop accounting. Fast, really simple, easy-to-use and comprises of all basic features of accounting. Anyone can simply buy the software off-shelf and use immediately. A majority of account clerks are familiar with desktop accounting, making it easier to implement such system. Come auditing time and ending financial year, accountants and auditors will spend time examining full year accounting records, do currency realizations for the full 365-day period, check on records and authorize financial reports. One-system-fits-all as accounting principles is quite similar.
So, if desktop accounting is meant for your business, continue using it until there is a need to upgrade. Allow me to shed lights into why “higher grades” of accounting systems are needed.

 Web-based Accounting

When companies grow larger and expand, one system does not fit all anymore. Even companies in the same industry may have different accounting practices. Example, a company allows a post-dated cheque to be included as credit limit but another company may think otherwise.

Understanding different needs in accounting, XeerSoft figures out a few key points to look at when purchasing a web-based accounting system.

• Up-front costs
• Implementation Speed
• Security and Accessibility
• Configurable and Scalability
• Support and Training

Implement a “ready-made” web-based accounting will be more affordable and quicker to deploy compared to writing your own accounting software. While programmers and software developers can write codes, too seldom an Information Technology expert could also understand accounting and financial terms unless he is well-trained and experienced in both fields.

Web-based accounting systems host your data in a cloud server. Therefore, it will automatically utilizes services like data replication and backups. Also find out if data can be saved or exported to a file format you could use, such as a spreadsheet. Most vendors charge extra for these services, do ask for the pricing as well.

You have the flexibility to access a web-based accounting system anywhere and have overall control even if you have multi-companies in multiple locations. On the other hand, you can set the web-based accounting system with security in restricting access – you only want your users at your fixed location to use this web based system.

Also ensure that the system can be configured to your needs. First list down requirements for your accounting needs and find out if the system could fulfill your needs. Ensure that the system is scalable – can be upgraded and integrate with other modules easily. You normally look into implementing a new system because your business is expanding. So, if your software does not support your business expansion, do not rely on it.

XeerSoft Factor

At XeerSoft, we provide a complete business requirement study to configure a web-based accounting system that fitsyour business and supports business expansion. Extra features in XeerSoft Web-based Accounting System includesmulti-currency, multi-lingual, multiple companies accounts consolidation, multi-currency realization, workflow authorizations, middleware to link to hypermarkets electronic data interchange systems and easily scalable by integration with XeerSoft modules.

Browse to www.XeerSoft.com/Accounting for more information, screenshots and articles related to accounting.

Although these are small businesses, the upcoming proposed 6% Goods and Service Tax (GST) will equally apply to them from April 1, 2015 once Parliament approves the GST bill which is expected to be debated in the March/April 2014 session.

Early preparation is very important since April 1, 2015 date will soon be here. The following are a few things business owners should be looking at to prepare yourself :

1) Understanding the general GST mechanism.

Customs and various professional bodies such as the Chartered Tax Institute of Taxation of Malaysia and industry associations are conducting GST awareness sessions which will provide a quick overview of the GST mechanism.

There is substantial information and educational materials and GST guides on the Royal Malaysian Customs website at gst.customs.gov.my. You can also find reading materials from the websites of most professional bodies and industry associations and accounting firms.

Please note from April 1, 2015 the Sales Tax Act 1972 and the Service Tax Act 1975 will be repealed subject to certain transition rules applicable to legacy matters and will be replaced by GST. All facilities and exemptions given under the old regime will be removed from April 1, 2015.

2) Should you register for GST or not?

If an SME is making wholly exempt supplies such as financial services, healthcare services, educational, transport services and supply of land for residential or agricultural purposes etc, such SMEs cannot register for GST.

Mandatory registration is required for businesses with annual sales of taxable turnover exceeding RM500,000. However voluntary registration of businesses below the threshold is allowed, provided the business enterprise can show that it plans to stay in business in the future.

Registration, allows the business owner to claim the GST paid on the purchases or inputs which will otherwise become a cost. Of course registering comes with a cost of compliance, therefore a cost benefit analysis must be done before opting for voluntary registration of GST.

In doing this analysis business owners should also consider factors such as the availability of resources to maintain proper accounting records to meet their GST obligations that will be called upon in any future audit by the Customs Authorities.

Signing up can also become an administrative burden for SMEs, considering that filing of GST returns need to be done on a timely basis (either monthly or for those with less than RM5 million annual turnover on a quarterly basis); payment of taxes on time; issuing GST compliant tax invoices; credit notes and debit notes and receiving similar invoices to enable them to account for and claim back the GST paid; proper coding of the income and expenditure in the accounts, cost and time spent on training the staff; changing price displays and invoices to reflect GST inclusive prices, as well as time spent to check on the GST status of suppliers etc.

3) Assess the impact of GST on all the transactions of the business enterprise involving money or otherwise.

This includes both local and overseas transactions involving goods, services and financial & intellectual property transactions.

It will be important to classify on the output side (ie. sale/revenue) all the supplies into standard or zero rated or out of scope or exempt supplies as each has different implications.

The exempt and out of scope supplies are not taxable supplies but the zero rated supply is a taxable supply without GST. On the input side (ie. acquisition), the key issue is whether the input tax can be recovered. Please note that generally GST will apply if the supply is made in Malaysia.

4) When to account for GST and at what value should the GST be charged.

The general rule is GST should be charged when the supply is made. This is called the basic taxpoint. In the case of goods it is the time when goods are removed or when the goods are made available to the customer or in the case of services it is when the services are performed. However there are exceptions: for example where a payment is received or a tax invoice is issued before the basic tax point, the time of supply can be moved forward to the earlier of either events mentioned above.

There are many more exceptions to the general rule.

Again on valuation, the basic rule is that GST will be applied on the value of the supply i.e. price paid or payable excluding GST. Again there are many exceptions: eg supply made for consideration in kind, then the value shall be open market value less the tax chargeable.

When preparing for GST the SMEs need to look at the implications of all the transactions involving the whole value chain.

Examples of issues that may have an impact on their business post April 1, 2015 are:

• Contracts spanning April 1, 2015 – check whether GST can be recovered post April 1, 2015
• Pricing policies need to be reviewed – do the prices need to be increased or reduced based on the post GST situation (e.grefunds may allow for price reduction or purchase of exempt goods and services may add to the cost of the business)
• Fringe benefits given to employees – selected benefits may be subject to GST
• IT software and systems – can your system produce the information required to prepare the GST return.
• Impact on cash flow: depends on the timing of the payments and receipts to suppliers and from customers as GST may be need to be paid over to the authorities before the cash comes in.

Originally published under S.M. Thanneermalai in The Sun Daily. S.M. Thanneermalai is the President of Chartered Tax Institute of Taxation Malaysia and the Senior Executive Director of PwC.