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Thread: David's bookkeeping corner.

  1. #151
    Senior Member glassngrass's Avatar
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    Default Re: David's bookkeeping corner.

    Are you contemplating purchase of a new vehicle or machinery?

    If so, then rather than waiting til the threshold of the next growing season, it may be worth bring your purchase forward a little.

    If you make your purchase before end June you may be able to claim the cost (or depreciation) in THIS financial year.
    If you account on a CASH basis, then you will need to have paid for it by end June.
    If you buy thru a credit card, loan or chattel mortgage, then the item is PAID for, you just ow the finance company/bank.
    David
    Mr Sparkle Car Spa

  2. #152
    Senior Member glassngrass's Avatar
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    Default Re: David's bookkeeping corner.

    PayCycle is a fantastic solution to help with your payroll compliance - and it integrates directly with Xero.
    Xero accounting bought Australian Paycycle.
    From early next year, Xero with full Payroll will be available for $49 a month.
    If you need Payroll then this is a fantastic and well priced solution.
    David
    Mr Sparkle Car Spa

  3. #153
    Senior Member glassngrass's Avatar
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    Default Re: David's bookkeeping corner.

    Paycycle is now fully integrated and included in Xero subscription at no extra cost (mid and large organization plans, not the small)
    So the 'hole' in Xero is now well and truly plugged with a very good payroll solution that works well.

    While different accounting platforms suit some business better than others, if you have a solid and reliable internet connect then I suggest that Xero is THE platform for INDI members (no, I don't get a 'cut' for promoting it)
    Why?
    1. bank feeds - bank activity from the day before is 'fed' into Xero the next morning
    2. bank rules - automate your most frequent transactions
    3. payroll - really very good solution - can even automate paying your super liabilities to the various funds
    4. Invoicing - make pretty invoices, save many templates - even create on the fly from smart phone
    5. Easy of use
    6. Great reports - can save customized variations
    David
    Mr Sparkle Car Spa

  4. #154
    Senior Member glassngrass's Avatar
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    Default Get your payroll up to speed now

    Once July starts you don't have long to get your Employee Payment Summaries out - just 16 days!

    It makes sense to do some payroll house-cleaning right away -
    Check that the total super, payg and net pay figures in your payroll reports do match the same amounts from your P&L
    If not, then you got some work to do tracking down the discrepancy.

    Also - you should double-check you have your employee contact and TFN number details correct - perhaps print out the details you have, GIVE it to your employees and ask them to return this to you with any corrections.
    If you use payroll with Xero you can set employees up with ESS (Employee self serve)
    This enables employees to log into an employee portal to view their own details, download past pay slips, check leave entitlements accrues, even apply for leave.
    David
    Mr Sparkle Car Spa

  5. #155
    Senior Member glassngrass's Avatar
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    Default New employees - are they eligible to work in Australia?

    It is a criminal offense to employ someone who is not eligible to work in Australia.

    Companies can be fines $66K per illegal worker
    Individuals can be fined up to $13,200, and/or 2 years' imprisonment

    If you find someone "I work cheap".... then you really need to check their illegibility.

    Proof from an Australian Employee
    1. Birth Certificate - full, not just an extract
    2. Australian Passport
    3. Certificate of Citizenship

    Proof from a non-Australian Employee
    1. Visa
    3. Certificate of Permanent Residency

    General Visa condition
    - tourist visa - cannot work at all
    - student visa and work permit - can only work up to 40 hours per fortnight while studying
    - working holiday visa - not allowed to work for any one employer for more than six months

    CHECK - some may be residents for tax purposes, but a non-resident for immigration

    To check specific visa conditions
    http://immi.gov.au/
    Click 'Check Work or Visa Entitlements'
    Provide name, DOB, Passport number and Passport country of issue
    David
    Mr Sparkle Car Spa

  6. #156
    Senior Member glassngrass's Avatar
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    Default Changes to fuel tax credit rates from July 1st 2012

    Businesses registered for GST can still claim Fuel Tax Credits when they lodge their BAS.
    For those who have a fuel account - be sure to claim the rate for when to fuel was aquired - not when you paid for it or used it.
    I suggest you keep a little spreadsheet to document the DATES you purchased fuel, also the number of litres with each purchase. Keep this with your records to substantiate your claims if asked to do so.

    Be sure to check the current rates table -
    http://www.ato.gov.au/businesses/dis...age=5#P76_5739
    David
    Mr Sparkle Car Spa

  7. #157
    Senior Member glassngrass's Avatar
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    Default End of flood levy

    If you have employees and have during 2011-2012 year applying the temporary flood and cyclone reconstruction levy (Flood Levy) to your employees, then this is no longer in force.

    Be sure to obtain New PAYG withholding tax tables from the ato website - available online from mid-June.
    David
    Mr Sparkle Car Spa

  8. #158
    Senior Member glassngrass's Avatar
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    Default Updated MYOB and QB tax tables at a fraction of the cost

    There are significant changes to the PAYG tax tables this year.
    If you run payroll thru your QB or MYOB, then you will need to update your tax tables.

    If you are otherwise happy with your version of QB or MYOB, have no need for any new enhancements and/or features in this year's offerings and really just want the updated tax tables, then you can save perhaps over $500 by purchasing tax table updates only from a third party.

    Ideal for those who want just the tax tables, not Advantage, or a version upgrade.

    http://www.fghtables.com/

    If, however, you use an online solution such as Xero, then tax tables and new feature/enhancements are added behinds the scenes for you without any patches, updates or re-installs.
    David
    Mr Sparkle Car Spa

  9. #159
    Senior Member glassngrass's Avatar
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    Default Unpaid sales invoices and write-offs

    A member PM'd this to me today :

    "Hi David
    A quick question that maybe you could try to clarify for me; I asked this of my accountant a few days ago:

    "I have a couple of questions re work invoiced as opposed to payments received.
    I have a number of large invoices that won't be received by June 30 and one over $500 that looks like being a bad debt. The $500 invoice has had numerous reminders sent plus letters of demand and final demand, visits to the customer with no-one being home and phone calls unanswered.
    Do I include the outstanding invoices in the year's turnover or only if the money is received by June 30?"


    His reply which I didn't completely understand - or understand why he would say what he did?
    "I believe if we run on the cash basis I would only include money that has been received.
    It will get to complicated to include these other ones at this stage."

    ------------------------------------------------------------------------------------------

    The heart of this question appears to be your reporting method - CASH reporting as opposed to ACCRUAL reporting.

    1. When reporting on an accrual basis (usually larger that micro business) then you report income when it is EARNED, not when it is received.
    Similarly, you can claim as a business deduction expenses when they are INCURRED, even if not yet paid.
    If it seems you won't get paid for a sale and you have genuinely given up on this, then it would make sense for those reporting on a non-cash (accrual) basis to write this income off and reduce your income.
    If you do happen to get paid later, then include receipts as Cash Sales.

    2. However, YOUR accountant appears to indicate your reporting will be on a CASH basis. This is where income and expenses count only when a payment has been made. This can significantly simply the recording methods of a micro business. For example, rather than a two-step process of recording a bill at the date you receive it (date incurred) THEN record a payment of that bill, you can do a simple Spend Money at the date the payment is made.

    The advantage of the two-step process is that your accounting package can then provide you BOTH sets of reports, CASH as well as ACCRUALS.
    But to simplify things, if you are CASH reporting I would only do the one-step for bills unless you plan to change reporting methods, but that's another story.

    With sales, it is different if you run accounts for customers (not ONLY cash sales) - you do not need to only record sales when you get paid. It's the 'open sales invoices' part of your accounts program that gives you the most value - tracking who owes you how much and for how long. You should continue to record a two step process - raise a sales invoice, then record the payment. For jobs where you get paid on completion, you might choose to record as Receive Money (one step), however I always opt for the two step approach. This enables the software to prepare nice reports (statements) by customer since Cash sales (receive money) never actually goes on account - but is not crucial for end of year or cash BAS reporting.

    So to simplify - if you are reporting on a CASH basis, then ensure the Profit and Loss, Balance Sheet and General Ledger Detail reports you run for your accountant are selected as CASH reports. You do not need to 'write off' the sales you have not received to get a tax break, since the income will not show on cash reports until you have been paid (and as at the date of payment). But if you have genuinely given up prospects of collection, then feel free to raise a credit to clear the invoice and get the debt off your system.

    I do always recommend you forward delinquent accounts to a debt collector. Prushkas have worked well for me in the past, and I do recommend eCollect. They will take a percentage of what they recover (plus costs), however their 'no recovery - no fee' policy means that worst case scenario is you are no worse off and may get a pleasant surprise by payment of well over half what was owed - better that a kick in the head !

    Hope this is of some help.

    PS : you might search for my "Getting Paid 101" thread for some useful tips.
    David
    Mr Sparkle Car Spa

  10. #160
    Senior Member glassngrass's Avatar
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    Default Taxable payments reporting - building and construction industry

    The ATO is wanting to crack down on cowboys in the building and construction industry who and are not declaring all their income. Those in the building industry now need to report the ABN and amount being paid to their contractors - so the ATO will know if income is not being declared.

    http://www.ato.gov.au/content/00313486.htm

    Taxable payments reporting - building and construction industry
    Overview
    From 1 July 2012, businesses in the building and construction industry need to report the total payments they make to each contractor for building and construction services each year. You need to report these payments to us on the Taxable payments annual report.

    So you think this doesn't affect you? Think again!
    Landscaping Services is included in the Building and Construction industry.
    If any of your commercial clients are in the building industry, then they will likely be reporting to ATO the payments they make to you.
    If YOU subcontract to others, then you will be reporting the payments you make to them in an annual report.

    I recommend you review http://www.ato.gov.au/content/00313486.htm and/or speak with your accountant for clarification regarding what YOU need to do to comply.
    David
    Mr Sparkle Car Spa

  11. #161
    Senior Member glassngrass's Avatar
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    Default Re: Taxable payments reporting - building and construction industry

    It's been a while since I posted here, so thought I'd give you guys something to chew on before the end of tax year.
    This article was prepared just before the end of last financial year, but contains lots of good info for you.

    TOP TEN TAX TIPS FOR SMALL BUSINES AT EOFY 2011-12

    One of the big changes this year is to depreciation and incentives to spend on capital items.
    Last year purchases valued between $100 and $1,000 could be EITHER :
    1. brought on as an asset and expensed over several years, OR,
    2. these could be 100% written off in the first year

    The first option is beneficial if you plan on applying for finance as it declares a better position with higher profit and assets on the books
    The second option results in lower recorded profit and the assets not recorded on your balance sheet (they having no 'book value' being fully depreciated)

    During this 2012-2013 this amount has increased from $1,000 to $6,500 (excl GST)
    This means that items you purchase up to the value of $6,500 can be fully written off in year of purchase.
    This may be of real benefit to those wanting to reduce their taxable income.

    There are also huge incentives to buy a new or second hand vehicle, with $5,000 plus 15% remaining balance able to be depreciated in first year, and 30% each year after.

    I am not qualified to advise of tax - I am relating my own understanding.
    I recommend you get your books in order to end May, then make an appointment with your Tax Agent or Accountant BEFORE end of financial year.
    Using your accountant for tax planning can result in significantly more value than using him just for end of year lodgements.
    David
    Mr Sparkle Car Spa

  12. #162
    Senior Member glassngrass's Avatar
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    Default Re: David's bookkeeping corner.

    At times I here complaints about accountants and tax agents not claiming all the deductions the business owner could have claimed.
    In their defense, it takes significant effort to keep up with constantly changing taxation laws.
    I find more often than not, deductions that are not claimed are more likely to be due to the business owner not recording these things on their records, or making note of these things to query. Mind-reading and crystal ball gazing are not among their qualifications. Really, how can the accountant know that some items apply to you if there is nothing to flag this for his attention? (unless you consult all day running thru an exhaustive checklist which is likely to cost more than than the additional deductions identified)
    You can claim ANYTHING you like as a business expense, but not every expense is an allowable deduction.
    This is where your tax advisor is of value. How can you work with him to identify all the deductions you can reasonably claim?

    My advice to you :
    1. when in doubt, record the item as a business expense. Your tax agent/accountant can advise if all, or a portion of it can be reasonably claimed as a deduction and make adjustments (if needed) at end of year.
    2. understand your last year lodgements. Be sure to consider all that was claimed in previous years and see if they can be claimed this year (if not already in your records for this year) - eg. The ATO advises a reasonable per hour rate for Heat, Light and Power in your home office. You might record a monthly, or quarterly, or annual entry to account for this.
    3. Information is power. Visit the ATO website and search. Subscribe to their newsletters and read. Look for anything that might apply to you. Each year your bank of wisdom will grow, enabling you to work more effectively with your tax agent.
    4. Google is your friend. There is so much good information on claiming deductions that is free.
    eg. Tax deduction guide for small and medium business
    75 Items You May Be Able to Deduct from Your Taxes - this is not Australia specific, but adds to the list of things to consider.
    Concerned about accuracy/relevance of information? Then I refer you to point 1 above and then follow up with point 5 below.
    5. Don't wait til after end June to visit your tax agent. When you do see him - ask lots of questions. Bring things to his attention, including your plans for the next couple of years and your desired result - reduce tax (obviously), or show best position (do you plan to sell?) Request he volunteer information to help you claim all you reasonably can.

    Usual disclaimer applies.....
    David
    Mr Sparkle Car Spa

  13. #163
    Senior Member 4 Gardens's Avatar
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    Default Re: David's bookkeeping corner.

    Thanks David, some great thought / action starters as always

  14. #164
    Member Redeye's Avatar
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    Default Re: David's bookkeeping corner.

    I assume my new trailer is claimable?




    http://curraronggardening.com/

    "All sin is washed away in the Holy goodness of Beer"
    Book of Redeye, Psalm 69

  15. #165
    Senior Member PaulG's Avatar
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    Default Re: David's bookkeeping corner.

    Thank you for those tips David! Knowledge is power.

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