When it comes to tax time, having all of your receipts is vital to being able to get what you are owed and avoid running into trouble with the taxman. As a general rule, keep everything, and keep your receipts in the best condition that you can. Don’t let the government keep money that is rightfully yours, and check out the following tips so you can keep all the right receipts and get back every cent you are entitled to.

Work related

Anything that is related to you being able to do your job properly can often be at least partially claimed on your taxes. Clothing, shoes, car repairs, petrol, phone bills, and anything that you need for work can be considered a work-related expense — as can at least part of your rent and utilities costs if you do any of your work from home. Keep all of your receipts just in case it can be claimed on your tax return. On average, Australians claim just over $1,900 per person in work-related costs every tax year.

Don’t worry about under $10

You do not need to provide receipts for purchases less than $10, so don’t worry about your really little receipts. You still should keep some sort of record of what you spend, so keep track of all of your small work related purchases in a separate book, and include as much detail as you can about where and when you bought items and, of course, what you paid. This will make it easy to work out your expenses come tax time.

Donations

If you donate money to an organisation that has charitable status you can often claim at least some of your donation back on your taxes, so always ask for a receipt, and consider giving a little larger donation as you can get some of it back. The rule is the same regarding donations of less than $10 not requiring receipts, though if you receive anything for your donation, even if it is just a promotional pen, you cannot claim the donation on your taxes because it will count as a purchase instead.

Make a copy

Receipts can fade, smudge or otherwise become illegible, so apart from being careful about how you store your receipts, make a backup copy of them so you aren’t left in the lurch if your receipt paper deteriorates faster than you’d thought it would. Taking a photo or scanning the receipt are your two best bets, and remember that you need to keep your receipts for five years after you lodge your taxes — so they will need to be able to survive at least that long.

It may seem like a big bonus to be able to get money back from the government through your taxes, but when you think about all of the ways that you pay tax throughout the year, any money you get back is the least that you deserve. So get serious when it comes to your finances and doing your taxes, because your tax agent can’t do everything for you. Give them a hand by starting to keep better track of your receipts.

Should You Keep Your Receipts For Personal Tax? is a post from: Tax Advice & Tips

If you’re in business, no matter how small, you’re under a range of legal requirements as to how to run key elements of your business, and depending on how much money your business deals with, this may mean you’re required to register for GST. The government takes taxes extremely seriously, so make sure you know exactly what your business’s obligations are, so that you can have all of your information in order.

Who should register?

Any business or enterprise which has a ‘GST turnover’ over of more than $75,000 for the year, or more than $150,000 in the case of charitable groups, is required to register for the GST. You must also register your business for GST if your business is in any way involved in driving people around in either taxis or any other type of chauffeur-style driving. In this case, regardless of your GST turnover, you’re required to register for GST.

Optional

If your business has a GST turnover of less than $75,000 for the year, it’s up to you whether or not you want to register your business for the GST. Similarly, if your GST turnover drops below the $75,000-a-year mark, you are entitled to withdraw your business’s GST registration.

How to register

Registering your business for the GST is as easy as going to the Australian Business Registrar website at www.abr.gov.au and filling out an online application. You can also call 13 28 66 and request offline methods of registration.

GST groups

Under certain circumstances, a group of related entities can form a GST group where the entities are able to combine their earnings under one GST threshold, and therefore pay their GST together as one unit. One member of the group has to be the ‘representative member’ for the GST group and is required to handle the GST records and obligations on behalf of the group.

Multiple businesses, one entity

If your business has one main controlling entity, but operates several smaller businesses, you only need to apply for GST registration for the overall entity, rather than for each individual business. If, however, the structure of your business changes — such as with changing partnerships — then you must cancel your business’s GST and reapply as the new entity.

Reporting and GST credits

Once your business has registered for GST, you’re not only required to add and collect GST on sales of your products and services, but you also need to fill out regular activity statements, as well as fill out an annual GST report. Once you’re able to provide evidence of your business having complied with its GST obligations, you’ll be eligible to claim GST credits for your business. This generally means you can claim back some of the GST your business is required to pay in the running of your business.

Having a good tax accountant for your business is always a massive advantage, though if you don’t, and are unsure about any step of your business GST obligations, the best piece of tax advice ever is always to call and find out. Not knowing any better is rarely going to be a good excuse for the taxman.

Registering Your Business for the GST is a post from: Tax Advice & Tips

Part of being in business involves keeping track of your finances, and being able to have an accurate record of any and all expenditure can allow you to have a clearer picture of what is happening with your business. Record keeping is a simple matter of discipline and organisation, so if you aren’t naturally geared towards record keeping, start getting hyped about it, as it could end up saving you a huge amount of money. The following are a few ways to try and stay on top of your business financial records.

Have someone trained

Your business should have someone who is designated to handle your finances and keep your records. Send this person off to do as many training sessions as you think they need, so that they can know exactly what your business needs to be doing. Accounting services training won’t automatically make your staff member a tax accountant, but they will know how to navigate the system more effectively.

Keep all receipts

It is crucial that you keep any and all receipts relating to your business, and keep them for seven years from the date they were issued. If something were to happen to your spreadsheets and documents where you compile your finances, you can always go back and recompile your figures if you have the original receipts.

Centralise it

Have one main book or file as the place where all of your important data and information are, as if you start getting tricky and trying to hide things all over the place, you’re bound to lose something.

Start a routine

Having a standard routine associated with any financial business activity will make it easier for everyone to start to appreciate and understand the importance of keeping your financial records simply and accurately. Type up a simple one-page sheet with a step-by-step guide to dealing with business finances, as this will make it easy for anyone to deal with the situation if you’re not around.

Make it easy

The easier and simpler it is to keep track of your business finances, the more likely you are to actually be able to do it. Fancy computer programs don’t always translate to fiscal clarity, so as much as possible, try to come up with a simple system that will work with your particular business.

Bring in an expert

If you’re ever going to splurge on specialty help for your business, this is a good time to do it. Professional bookkeeping can simplify your financial situation extremely quickly and have you perfectly positioned to take advantage of whatever is happening in both the local and global financial markets.

Having your business financial records in order is one of the most important factors in running a successful business. Always knowing the exact state of your books will have you poised to accurately read the financial landscape and make the right moves. Boring as it may seem, your financial records are one of the most important factors if your business is to succeed, so start simple by at least keeping tack of everything.

Ensuring Your Business Finances are Recorded Correctly is a post from: Tax Advice & Tips

The best way to prevent a nightmare for your small business when it comes to tax time is by preparing well beforehand and being organised. Make it as easy as possible for you and your business to keep track of all financial activity, as it will make doing your small business’s taxes no big deal. The following are some of the ways to ensure your small business is always ready for tax time, and all will come in handy if you ever get audited.

Use online banking

Using online banking for all of your business’s financial transactions will make your life much easier when tax time rolls around, as you’ll have everything already recorded for you via your bank statement. This can be extremely helpful if you have any staff, as whether you’re paying them via cheque or direct deposit, you’ll have a record of everyone’s pay. This will make life easier for your tax accountants when they need to look over everything.

Use electronic calendars

Keeping a detailed electronic calendar can be a lifesaver when you’re trying to figure out where a certain sum of money may have gone, as you can look back at a saved version of your calendar and see what was happening around that time. Sometimes even just knowing what else was happening may be enough to jolt your memory, and help you work out what has happened with the money.

Keep all receipts

It just isn’t possible to pay for everything electronically, so for those cash purchases, always keep the receipt. With a good accountant it’s amazing what you can claim on your taxes, so create a system for yourself to have all of your receipts kept safely somewhere.

Learn from last year

Once you’ve completed your small business’s taxes each year, it’s a good idea to talk to your accountant and financial advisors about areas where you can tighten things up and ways to do it. Sometimes these things will be obvious, like doing a better job of keeping your receipts, but regardless, put whatever lessons you learn into action early, so you aren’t dealing with the same tax problems this year.

Get help

Depending on how organised you’ve been throughout the year, preparing for tax time may be a little or a lot of work. There is some fantastic software available online to walk you through the process, which can save you huge amounts of time and frustration. It can help just having another head working on it too, so consider having someone come in for a few days to help you get everything sorted out. It’s easy to find casual accounting services to help you with your taxes at tax time.

Unless you’re doing something shady with your small business, there’s nothing to be afraid of when it comes to getting your taxes in order. The key is to take the time to always keep your finances in order, as taxes only become a problem when you start to lose track of what’s going on. Being on top of your taxes is a vital part of being on top of your business, so make sure you have your operation running according to plan with no nasty surprises at tax time.

Preparing Your Small Business for Tax Time is a post from: Tax Advice & Tips

The easiest way to stay on budget is to be on top of it 100 per cent of the time. For some people this requires a bigger effort than others; the trick is to come up with a way that works for you, as there’s no one-size-fits-all approach to being more careful with your money. The following are some starting points for trying to make sure that your budget is at least current.

Keep your receipts

One of the best pieces of business advice you’ll get is this: for any and all purchases, keep your receipts! This applies to the home as well, allowing you to update your budget quickly and accurately. Not only will you know if you’re staying on budget and how many dollars or cents you have remaining, but it’s also important for your taxes, because if you know exactly what you’ve purchased, you can claim a lot of seemingly random items on your taxes and maybe even get money back. Have some sort of receipt jar, box or folder so you can always put your receipts in the same place. This way, whenever you have time to update your budget, you’ll have all the information you need in one place. This will do wonders for your longer term financial budgeting.

Create a spreadsheet

Using a program such as Microsoft Excel, make up a basic spreadsheet to keep track of your budget and all of the information relating to how much money you have and how much you’ve spent. Make updating the spreadsheet every day when you get home part of your routine, as if you keep on top of it, using a spreadsheet can be an easy way to run a tight and accurate budget. If you need to add items to your budget, this is simple and easy to do, and you can also calculate the impact of any changes on the rest of your finances. Most financial difficulty comes when you start to lose track of your finances, so having a spreadsheet will be a good way to keep you focused and disciplined when it comes to your spending.

Do a weekly check-in

Conducting a weekly check-in with your budget stats is a good idea, just to ensure that everything is on track. Internet banking has made this extremely easy, as you can get up-to-the-minute details on your exact bank balances. Weekly check-ins are an especially good idea if you’re sharing money with someone else, as they may have made purchases that you were unaware of.

Keep a record book

To be totally up to date with your budget all of the time, keep track of your finances the old school way and get yourself a small book. With all of your important numbers handy in your book, you’ll be able to update them the minute after you’ve made a purchase or paid a bill.

Getting in the habit of keeping your budget up to date will help a lot when it comes to simplifying your finances, so if your budget needs some attention, start by getting it up to date. Unless you can afford your own accounting services, you’ll need to learn how to do it yourself.

How to Keep Your Household Budget Up to Date is a post from: Tax Advice & Tips

Along with shares, investing in residential property is one of the most favoured ways to build wealth in Australia. For many Australians, property investment forms an important part of their plans for financial security and retirement. These practical strategies will provide some useful insights for new property investors, although it’s advisable to consult accountants in Sydney or your local area for specific advice on tax and optimising your investment strategy.

Capital Gains Tax Discount

Capital Gains Tax (‘CGT’) applies to property acquired after September 20, 1985. However, there are many exemptions to this rule. For example, the main residence is not subject to CGT, and a 50 per cent discount to the CGT applies when the property is held for at least 12 months, subject to some limitations. CGT will have significant implications for investors who are intending to sell their property in the near future.

Buying Low Maintenance Property

Unless the investor has plenty of time to renovate or improve their property, it’s a good idea to buy low maintenance property. Relatively newer properties will save you outlays on repairs and upkeep.

Buying into a strata scheme (or body corporate) can also reduce the need for garden upkeep or other separate maintenance costs. Many strata scheme fees cover property insurance, garden maintenance, paint, and other issues such as termite infestations.

New properties have the added benefit of significant depreciation write downs, allowing you to deduct depreciation from your personal income tax. Services for personal and small business accounting in Sydney are able to provide assistance if you need information about negative gearing or depreciation.

Buy Well-Located High Density Property

Australia is experiencing a strong trend toward high density, inner city living, with the ABS predicting that the average household will have 2.4 to 2.5 people by 2031. High density properties such as units and apartments tend to be more affordable for first time investors. They also attract less land tax.

Buying close to the city centre or in high demand suburban hubs means your property will be more likely to experience a high capital and rental yield growth.

Travel Expenses

If you manage your own investment property, you’re usually permitted to claim tax deductions on any costs incurred in travelling to and from your investment properties.

Leveraging

One commonly cited difference between shares and property is the fact that property investment allows investors to leverage equity and/or a deposit for borrowing to buy. Mortgages can be secured for up to 90 per cent of the price of the property.

As the investor holds the property, the equity that can be drawn upon will increase with capital growth, allowing the investor to borrow more. Leveraging is therefore a very common strategy used by many investors.

Buy and Hold

First, property is a relatively illiquid investment; the costs that are associated with purchasing and disposing of property are fairly high. Second, property in Australia in metropolitan areas tends to double every 7 to 10 years.

For these reasons, many successful property investment portfolios are based on a buy and hold. Aim to buy and hold for good capital growth and rental returns.

Smart Property Investment Basics for 2012 is a post from: Tax Advice & Tips

Like personal budgets and tax statements, financial statements are vital for any business. They facilitate business decision making, provide a clear picture of the status of the business, and enable owners and managers to know when business goals have been reached. We look at the essential statements for businesses of all sizes, including the profit and loss statement, the balance sheet, the cash flow statement, and the statement of retained earnings.

Why Use Financial Statements?

Financial statements provide readers with a picture of the financial status of the business. In large companies and for investors, financial statement literacy is vital, as it is for small business owners. For those who need specific advice, specialists for small business accounting in Sydney and elsewhere are qualified to provide in-depth consultations about financial reports.

The Essential Financial Statements

1. Profit and Loss Statement

The profit and loss statement (also known as the income statement) provides vital information about the success of the company’s operations. Showing all income and expenses in a specific period, it is an indicator of the profitability and credit status of the business.

• Revenues. All the income that has been generated from either sales or selling capital items. Revenue comes into existent at the point of sale rather than payment.
• Expenses. These are typically the costs incurred by the business carrying on activity in the period. Expenses are to be differentiated from Assets, which are usually a capital good that will bring value.
• Net profit. At a basic level, if your income exceeds expenses in a certain period, your business will have a net profit in that period and is considered profitable.

2. The Balance Sheet

The Balance Sheet gives a snapshot of the financial status of the business at a specific time. There are three elements in the Balance Sheet:

• Assets. Assets are the economic resources in a business, covering items such as stock, inventory, equipment, and cash. An asset can be tangible or intangible, as long as it can be owned or controlled to create positive economic value.
• Liabilities. The liabilities are the debts of any business or the obligations of the business.
• Equity. Equity represents the total value of the business. It’s calculated by subtracting Liabilities from Assets.

3. Cash Flow Statement

Since neither the Balance Sheet nor the Profit and Loss Statement gives an indication of the use of cash and further details about receipts during the period, a Cash Flow Statement plays an important role.

It summarises and specifies the inflows and outflows in any given period. Accountants in Sydney or elsewhere can provide businesses with detailed advice on cash flow and other financial statements.

There are three major components in a cash flow statement.

• Operating activities. Any inflows and outflows associated with production, sales, delivery, or collection of payment from customers.
• Investing activities. Any purchases or sales of Assets (as defined for the Balance Sheet) will come under this component.
• Financing activities. Any inflows from investors and financial institutions, or payments to shareholders and creditors.

4. Statement of Retained Earnings

Retained earnings are a part of net income that is retained by the business rather than distributed to shareholders or owners. When it’s a negative value, retained earnings are known as retained losses (or accumulated deficit or accumulate losses).

A Statement of Retained Earnings will show retained earnings for two points in time: the beginning of the accounting period and the end of the accounting period.

It also shows the retained earnings for that period in detail and provides information on any changes to retained earnings. These can include any dividends that are paid out to shareholders, or when losses or profits change the total of the retained earnings.

Often the Statement of Retained Earnings is included as a section of the Balance Sheet under Equity.

Business Financial Statements 101 is a post from: Tax Advice & Tips

Numbering over 1.96 million in the 2010/11 period, small businesses account for a significant proportion of the Australian economy, accounting for nearly half of industry employment. As many small business owners know first hand, time is a critical factor in small business. In this article, we look at some of the top secrets of the most time effective small businesses.

Outsourcing

Balancing profit considerations with staff requirements is a priority of most small business. Luckily, any business can boost staffing numbers very quickly, on a needs basis, by outsourcing. In addition, Outsourcing allows you to access expert advice and specialist skills; for example, obtaining advice from accountants in Sydney or your local area.

No one can run a business entirely on their own, and for any business, outsourcing is one way to buy time and skill.

Compliance

A recent survey by American Express suggested that small business owners were spending their personal time on reporting obligations, losing as much as 60 hours over the course of a year on tax issues. Most businesses owners spent at least one Sunday a month on business tax compliance.

Outsourcing to services for small business accounting in Sydney or your local area, setting up a good record keeping system, and getting advice from your accountant about maintaining good records will save you lots of time over the run long run.

Freeing up time spent on compliance and tax will also allow business owners to focus on core business activities that can grow their business and increase profit margins.

Information and Record Keeping Systems

Busy yet time effective businesses use an excellent information system infrastructure to support their processes. An effective information and record keeping system can streamline all business processes as well as compliance and recording keeping. Your IT system can encompass customer relationship management, inventory and operations, invoicing, budgeting, and more.

Consolidating your information systems reduces the need for double inputting of data and centralises communications so every single employee can have access to important data when they need it.

This will mean you can generate reports quickly, make accurate decisions more quickly, better support employees, and provide great customer service.

Setting and Reviewing Priorities

There is a lot of literature on the practical aspects of time management, including Stephen Covey’s ‘The Seven Habits of Highly Effective People’. Much of time management can be summed up in surveying, reviewing, and resetting priorities on a regular basis.

Time effective businesses regularly survey their use of time, and then review and set priorities as the environment changes.

• Plan. Plan and act based on the degree of importance of any single priority. In other words, do the most urgent or important thing first.
• Surveying the use of time. Owners/managers should be aware of how each staff member is using their time.
• Reviewing priorities. No business can do everything all the time. Competing demands must be reviewed and reprioritise on a regular basis.
• Setting priorities. Priorities should have a direct and tangible connection to your stated business goals. Once you’ve reviewed your priorities, you’re in a better position to set new priorities to better reflect the current day, week, or month’s goals.

Top Secrets of Time-Effective Small Businesses is a post from: Tax Advice & Tips

Thousands of businesses are bought and sold every year in Australia. As with any entrepreneurial endeavour, buying a business can come with its own risks, but when done correctly, it can be an excellent way to become a business owner without the initial start-up headaches. This quick guide outlines the things buyers should know when purchasing a business, including the need for due diligence and getting professional advice from accountants in Sydney or your local area.

Choosing an Industry

Many business owners choose an industry based on their personal passion or technical knowledge and skills. Whatever your motivations for choosing a business, it’s important to be certain that you can bring skills and know-how that will make you competitive in the market.

• Budget, skills and time. How much do you have to invest? What are our funding sources? You should have a budget set out. What are the skills, time, and other resources you and your business partner(s) can bring to the business?
• Industry. Research the industry and get to know the major trends and regulations that have and will impact on the industry in the future.
• Market and demand. What are the current conditions for demand? How will this change in the future?
• Finding a business. Research online, get in touch with business brokers who special in your area, and shortlist some businesses.

Due Diligence

Once you have a specific business in mind, you should conduct due diligence on the business. Due diligence minimises risk and ensures that the transaction proceeds smooth. Most people will consult their lawyer as well as services specialising in small business accounting in Sydney (or their local area) to carry out a thorough due diligence.

• Financial status and profitability. What’s the current financial status of the organisation? Revenue, liability, expenses, and other factors should be checked.
• Assets. What are the organisation’s key assets and are they in good condition.
• Contracts. These may include current lease agreements, franchise contracts, supply and distribution agreements, and more.
• Permits and licenses. What are the permits, licenses, and registrations that the business holds?
• Employees. How many (if any) employees does the business have?
• Customer base. The business’s current customer base.
• Reason for selling. What is the seller’s reason for selling?

Conducting due diligence provides the buyer with a good picture of the business. It provides an assessment of the business’s strengths, opportunities, potential weakness, and areas for improvement.

Negotiation

Negotiation often occurs between the due diligence stage and the exchange of purchase agreements. Buyers should negotiate key terms and a price that’s agreeable to them. Have a solicitor prepared and carefully check over your contract. Be certain of the terms that you’re agreeing to.

Ownership Structure

Another element to know when you buy a business is how you’d like to set up the ownership structure. This can have a strong impact on issues such as tax as well as day to day running of the business. It’s a good idea to check with an accountant about your needs before you decide on a structure.

Business Plan

Once you’ve purchased the business, don’t forget to update or create a business plan. A plan clarifies your goals and keeps your business on track.

What to Know When Buying a New Business is a post from: Tax Advice & Tips

Good financial planning, budgeting, and management are vital for any growing business. Some of the common financial mistakes made by businesses stem from failing to prioritise financial management. While it’s advisable to seek out the advice of accountants in Sydney or in your region if you have any specific questions, this article outlines some of the most common financial mistakes by businesses.

1. Undercapitalisation

Undercapitalisation is linked to poor cash flow management. Carefully consider all possible options for funding. Where possible, seek professional advice. Specialists in small business accounting in Sydney and elsewhere can provide directions on budgeting, projections, and accurate cost estimates.

Always start with a clear plan that lists all your set-up costs and ongoing outflows, and make sure you have enough cash to sustain you business until your first customers make their first payments.

2. Lack of Planning or Unrealistic Planning

Whether it’s lack of planning or unrealistic planning, inaccurate forecasts and projections can lead to risk of poor decision making, failure to achieve targets, and ultimately a frustrating business experience.

• Allocate sufficient time and resources to planning. Some experts suggest that we may need to devote as much as 25 per cent of our time to planning.
• Detail. Make sure your plans and financial projections are sufficiently detailed and defined.
• Research. Base your projections on sound research. For example, set pricing strategies by first considering other players’ pricing strategies.

3. Not Incorporating Tax Strategies

Neglecting tax can prove to be costly over the long term. Incorporating a proactive tax strategy into your business plan, capital purchase decisions, and other business decisions encourages both tax minimisation and compliance. It also reduces the chances of your business having to pay penalties in the event that you fail to meet tax reporting requirements in a timely manner.

4. Undervaluing Record Keeping

Setting up a good record keeping system eliminates last minute dashes come tax time. Managers will be able to access real time data quickly to accurately assess the status of the business.

The benefits of good record keeping include:

• Streamlined compliance and reporting
• Accurate decision making
• Effective management and monitoring of stock
• Sound financial projections and management

5. Not Managing Risk Effectively

Risk is inherent in both life and business. As such, businesses should manage risk effectively. For the financial side of your business, good risk management may involve the following.

• ensuring you have access to sufficient cash in an emergency
• structure your business appropriately to limit personal exposure
• undertake insurance
• securing physical and intellectual assets
• accurate projections and budgeting

6. Choosing the Wrong Structure

Your business structure should help, not hinder. While business structures can be changed, you’d probably prefer not having to go through the process unnecessarily. Select your business structure carefully from the outset according to your personal financial situation and tax strategies. A good business structure can boost your income, reduce tax liability, and protect your assets.

7. Not Managing the Sales and Payment Cycle

Actively manage the sales and payment cycle to your benefit.

• Have an invoice reminder and debt collection procedure in place.
• Take deposits or payment in full before delivery if it’s appropriate for your business model.
• Give customers incentive to buy and pay quickly.

7 Most Common Financial Mistakes by Businesses is a post from: Tax Advice & Tips