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Online Bookkeeping & Accounting Services Nudge Accounting

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Are you claiming all your tax offsets?

Tax tips, tax, it expenses, startups, small business
Tax is confusing at the best of times. No matter how much the ATO try to simplify things, there are always hidden deductions, offsets, rules and regulations. So how do you know what to claim and offset? Often it’s best to talk to your accountant, but here is a quick guide to help you make sense of your tax rebates.
Tax rebates or offsets directly reduce the amount of tax payable on your taxable income. In general, offsets can reduce your tax payable to zero, but on their own they can’t get you a refund.
There are several offset categories from which you can claim and you will generally fit into one of these. The categories are:

  • Receipt of government benefits
  • Dependents
  • Health insurance
  • Medical expenses
  • Senior Australian and pensioner allowances
  • Super related tax offsets
  • Low-income earners
  • Zones and overseas forces

 
Let’s take a look at each individual category.
 
Receipt of government benefits
The beneficiary tax offset is available if you receive certain Australian Government allowances and payments.
No tax is paid if you:

  • receive any of the qualifying benefits and allowances, and
  • have no other taxable income

 
Any assessable income that you receive beyond these benefits may require some tax to be paid. To claim the offset, declare the payment you receive at the correct item on your tax return.
 
Dependents

There are several offsets within this category. You may be entitled to a tax offset if you maintained your:

  • spouse
  • child or sibling aged 16 years or older
  • spouse’s child or sibling aged 16 years or older
  • parent, or spouse’s parent if they are an invalid or carer

 
For more information about what constitutes an invalid or carer please go to the ato.gov.au website.
 
Health insurance
Entitlements to a private health insurance rebate or tax offset depend on your income level. The amount of private health insurance rebate you are entitled to receive is reduced if your income is more than a certain amount. You can claim your private health insurance rebate as a:

  • premium reduction, which lowers the policy price charged by your insurer
  • refundable tax offset through your tax return

 
Medical expenses

As the ATO states, net medical expenses are your total medical expenses minus refunds from Medicare and private health insurers that you, or someone else, received or are entitled to receive.
The net medical expenses tax offset is being phased out.
To be eligible to claim the offset in your 2014-15 income tax return, you must have either:

  • received the offset on your 2012-13 and 2013-14 income tax assessment (the final year you can claim is 2014-15), or
  • paid for medical expenses relating to disability aids, attendant care or aged care (people with these expenses can continue to claim until 1 July 2019)

 
You may not be eligible to receive the medical expenses offset if other tax offsets have reduced your tax payable to zero.
 
This offset is income tested. If you are eligible for the offset, the percentage of net medical expenses you can claim is determined by your adjusted taxable income and family status.
 
Senior Australians
Senior Australians may be eligible for the seniors and pensioners tax offset (SAPTO).
SAPTO can reduce the amount of tax this demographic is liable to pay. In some cases, this offset may reduce your tax liability to zero and you may not have to lodge a tax return.
Eligibility is based on conditions relating to your income and eligibility for an Australian Government pension. You must meet the age requirement for the Age pension to be eligible for the offset.
In some cases, you may also be able to transfer your eligible spouse’s unused SAPTO to you.
 
Super related tax offsets
The two super-related tax offsets for which you may be eligible are:

  • Australian super income stream tax offset
  • Tax offset for super contributions on behalf of your spouse

 
The first offset occurs if you receive income from an Australian super income stream. If this is the case you may be entitled to a tax offset equal to:

  • 15% of the taxed element, or
  • 10% of the untaxed element

 
The offset amount available to you will be shown on your payment summary.
 
You’re not entitled to a tax offset for the taxed element of any super income stream you receive before you turn 55 years old unless the super income stream is either a:

  • disability super benefit, or
  • death benefit income stream

 
You’re not entitled to a tax offset for the untaxed element of any super income stream you receive before you turn 60 years old unless:

  • the super income stream is a death benefit income stream; and
  • the deceased died after they turned 60 years old

 
To receive the offset for super contributions on behalf of your spouse you must make contributions to a complying superannuation fund or a retirement savings account on behalf of your spouse (married or de facto) who is earning a low income or not working.
 
You will be entitled to a tax offset of up to $540 per year if you meet all of the following conditions:

  • the sum of your spouse’s assessable income, total reportable fringe benefits amounts and reportable employer super contributions was less than $13,800
  • the contributions were not deductible to you
  • the contributions were made to a super fund that was a complying super fund for the income year in which you made the contribution
  • both you and your spouse were Australian residents when the contributions were made
  • when making the contributions you and your spouse were not living separately and apart on a permanent basis

 
Low-income earners
If you are a low-income earner, or work part-time, the ATO will work out the offset amount for you.
 
Zones and overseas forces
Zone tax offset

You must have lived or worked in a remote area (not necessarily continuously) for:

  • 183 days or more during the current income year; or
  • 183 days or more in total during the current and previous income years – but less than 183 days in the current year and less than 183 days in the previous income year, and you did not claim a zone tax offset in your previous year’s tax return

 
If you lived in a zone for less than 183 days in the current income year, you may still be able to claim a tax offset as long as you lived in a zone for a continuous period of less than five years and:

  • you were unable to claim in the first year because you lived there less than 183 days; and
  • the total of the days you lived there in the first year and in the current year is 183 or more

 
Overseas forces tax offset

You may be eligible for an overseas forces tax offset if you serve in a specified overseas locality as a member of one of the following:

  • Australian Defence Force
  • Australian Federal Police, or
  • United Nations Armed Forces, and income relating to that service is not specifically exempt from tax

 
This is a basic offset guide, based on information provided by the ATO. For a more comprehensive guide to offsets, you should speak with your accountant or spend some time further investigating the ATO’s website.

The Future of Online Accounting

The Future of Online Accounting
The increase in the number of online accountants seems to have has coincided with the elevation of online software. As such, small business accounting is as efficient as it has ever been.

 

There are several reasons for the rise of online accounting services. In a world where ease of use is a necessity not a luxury, it seems the simple nature of online accounting platforms employed by accountants has genuine appeal.

 

For instance, online accounting firms make the hassle of paperwork a distant memory by providing a simple online uploading system. You can lodge all of your documents by scanning them in or using your smartphone. You can then leave the rest to your online accountant.

 

Take Nudge for example. Once you have sent your documents through, we crunch the numbers, prepare the paperwork and lodge it on your behalf. When that is done we send you an ongoing monthly statement of your business performance. As the meerkat says, it’s “simples!”

 

Online accounting provides time poor businesses with a contemporary and affordable financial management system. It takes the time constraints of paperwork (sometimes poor paperwork that has to be done again) away from less experienced employees or bookkeepers who should be focusing on running their departments and dealing with staff, customers or stakeholders. It allows business owners to wipe their brow and focus on growth.

 

A further benefit of the online accounting model is the fixed fee structure. With online accounting you know the services you will receive for the price you have paid. There are different fee structures for the level of service you require, but again we live in a world where ease of use and transparency is a major caveat as to whether goods and services are purchased or not.

 

The future lies in a world where there are no appointments, flat fee structures, and any time, anywhere services.

 

It doesn’t matter whether the service or product is tea, tapware, telecommunications or accounting, there is an inbuilt need for online services. And with today’s technologies, there is no excuse for poor online experiences.

 

There is no expectation that traditional accounting will disappear, but as time-poor people look for ways to reduce stress and alleviate any business burden that can be outsourced, there will be an even bigger shift towards the delivery of online accounting.

What does a bookkeeper look like in 2015?

The basics of setting up a start-up
Accounting and bookkeeping are considered to be conservative, unchanging professions. However, the financial services industry, like any other industry, has undergone a rapid transformation in the last few years and the role of a bookkeeper is vastly different to what it was 20 years ago.

 

From technology to legislation, knowledge must be adapted, skills upgraded and services updated. In fact, the finance industry is virtually unrecognisable from what it was when bookkeepers first created financial records using quill, ink and parchment. It has lost considerable market share as increasing numbers of small business owners and entrepreneurs balance their own ledgers with DIY software packages.

 

The question with regard to all these changes is; have bookkeepers become redundant?

 

The answer is no. There will always be a need for professional bean counters; their skills are far superior and they take the bookkeeping burden away from people who should be focusing on growing and running their business, rather than monitoring where each cent to the dollar goes.

 

Bookkeepers, who have been able to adapt as times have changed, are invaluable.

 

The following situations provide an opportunity for bookkeeping professionals to take advantage of these industry changes:

 

Cloud accounting and cross collaboration

The Cloud has become an exceptional option for clients who want to manage the books themselves, but still require some assistance and collaboration. There are benefits for both parties when using cloud accounting including; reduced fees, reduced workload and additional control for businesses. A reduced workload for bookkeepers means that their time is freed up to take on more clients.

 

Bookkeepers can also expand their roles into management accounts and provide more in-depth information to the client and accountant.

 

Updated skills

Like any industry, skillsets change and bookkeepers must keep up with those changes. The best bookkeepers are the ones with the most up-to-date knowledge. Again, so much has changed within the industry and if you don’t keep up you won’t survive. There are many courses bookkeepers can take – far more than there used to be – so it’s worth looking into professional development options.

 

The bookkeeping timeline

Just to give you an idea of how bookkeeping has changed since the back-end of the 20th century, the following timeline displays some of the major advancements:

 

1979: The world’s first spreadsheet software was launched – VisiCalc

1983: QuickBooks was introduced

1985: Windows 1.0 was launched.

1996: Hotmail was launched and email was introduced

1999: Data-Tech became MYOB

2001: Cloud accounting was launched with Saasu.

2008: The launch of Xero also saw the instigation of free use of practice software.

 

In this day and age, bookkeepers travel less, have a better work-life balance, bring on more clients and have adapted to new technologies that help them run more lucrative businesses.

How to benefit from the 2015 Budget as a small business

The basics of setting up a start-up
The Small Business Development Corporation (SBDC) stated that, “The cuts to both company and income tax for small businesses will improve the cashflow of businesses and encourage more investment and employment generation. It is anticipated that these measures will assist small businesses to fund organic growth through reduced reliance on external sources of funding and assist employers to attract and retain key staff given the ability to increase staff remuneration.”
 
The 2015 Federal Budget was the friendliest we’ve seen for small business in some time. The Growing Jobs and Small Business package includes $5 billion worth of tax relief and that is just the start of the benefits. Other measures that will impact small business include:
 

  • cutting the company tax rate to 28.5% for incorporated businesses with a turnover of under $2 million;
  • a 5% income tax cut for unincorporated businesses, capped at $1,000;
  • an immediate tax deduction for any individual assets costing less than $20,000;
  • Fringe Benefits Tax exemptions for work-related portable electronic devices (e.g. laptops and tablets);
  • rollover relief from Capital Gains Tax when businesses change legal structures;
  • expanded tax concessions for employee share schemes;
  • a streamlined business registration process;
  • the introduction of GST on digital products bought from foreign businesses (from 1 July 2017);
  • $1.2 billion in subsidies for employers that hire specific groups of job seekers (both youth and older workers); and
  • an extra $265.5 million for the Australian Tax Office to crack down on GST fraud

 
Subsidies, a cut in red tape, less tax and the creation of a more competitive playing field, means small business can capitalise in ways that weren’t previously tenable.
 
“Not only will there be much greater flexibility for wage subsidy arrangements to help with the upfront costs of hiring staff, a new wage subsidy will be available for employers specifically to take on parents who want to return to work,” says NSW Chamber of Commerce CEO, Stephen Cartwright.
 
Another way businesses can capitalize on the budget is to accelerate depreciation of asset purchases.
 
“Measures to accelerate depreciation of asset purchases are designed to encourage more investment by small business operators in new assets, in order to stimulate cashflow and growth, and encourage the creation of new jobs,” states the SBDC. “They are expected to make an immediate difference by encouraging small business operators to bring forward investment in their businesses. The measure also reduces red tape as small businesses will spend less time tracking assets across years for tax purposes.”
 
The proposed changes will also reduce the cost and complexity of starting a new business in addition to making it easier for start-ups and budding entrepreneurs. So if you have a small business idea, now is the best time to instigate it.
 
If you are a small business, sit down with your accountant and review current and projected levels of profitability. By planning your future goals you can work to invest in more assets, grow your business and in-turn employ additional staff.

SMBs’ Market Confidence

nudge blog: Friday Finance

According to the Sensis business index (SBI), small and medium businesses (SMBs) have overall pessimistic perceptions of the Australian economy. The SBI, which has been tracking the confidence of SMBs since 1995, released findings in late May supporting the claim that SMBs owners believe the economy is slowing rather than growing.

When broken up into States, NSW fairs the best in terms of confidence whilst QLD, SA and WA were showing concerning signs. Regardless, all states on the whole perceived the current economic climate in a doubtful way.

Although overall confidence was low, one point of relief is that these rates had been shown to be relatively stable since last year’s results. These findings come as a results of SBI’s survey of approximately 1,000 SMB owners. A promising finding of the SBI is that 49% of SMB owners are feeling more confident for the coming year, with a manageable 22% being concerned for the coming year.

The general confidence in the upcoming year paired with a supportive 2015 budget for SMBs is a promising sign for the Australian economy.

The main concerns for those worried about the state of the Australian economy or the imminent year of business includes:

Aside from the more obvious concerns for SMB owners, there are additional concerns that many have failed to consider that impact on their perceptions and confidence in the current economic climate. These include excessive bureaucratic requirements for SMBs in the finance and insurance sector, competition in the wholesale sector, and the looming likelihood of growth in ever-present overhead expenses.

Such concerns, however, are being offset despite a soft last financial quarter. Last quarter SMB owners claimed to have a slightly easier time sourcing finance and as a result experienced increased success in doing so.

The results gained for the specific States regarding SMB owners’ overall confidence in the coming year were shown to greatly reflect their perceptions of the State government. For example, in NSW which had the highest confidence level out of all States, the perception is that the State government is supporting the building industry, reducing bureaucratic red tape, and investing money to stimulate the economy. On the other hand, in QLD where the most significant drop in confidence occurred, SMB owners failed to see how the State government understood the situation of SMBs. They were also concerned about increasing costs enforced by the State government.

The influence of government in the confidence of SMBs cannot be ignored. At a federal level, the recent release of the 2015 budget will surely stir some alterations to the confidence of SMBs. The budget is largely positively geared towards SMBs, with the intention of this being to increase confidence and stimulate spending and growth within the domestic market.

SMBs account for over 90% of Australian businesses, meaning their current state is greatly significant on the welfare of the overall Australian economy. The following 12 months for SMBs is sure to be of interest to many Australians.

The Winners and Losers of the 2015 Budget

Tax tips, tax, it expenses, startups, small business
A major winner of this year’s budget is small businesses. The government is hoping that these small businesses will take advantage of this and start investing in their businesses in order to generate future growth. From tax cuts to asset deductions, this is the time for small businesses to invest and take advantage of their current position. Below are some of the major budget announcements impacting small businesses.

Continue reading “The Winners and Losers of the 2015 Budget”

2015 Budget’s Impact on Small Businesses

nudge blog: Friday FinanceHaving experienced significant political backlash after the release of the 2014 Federal budget, the government has come out fighting this year. The release of the 2015 budget in May was designed to increase public and private sector approval whilst reeling in the current deficit and stimulating the economy to control the unemployment rate. One of the outcomes of this challenge has been the prominence of small business support.

What follows is an overview of the amendments made to the small business assistance package and recommendations about how businesses can best capitalise on the 2015 tax breaks. Continue reading “2015 Budget’s Impact on Small Businesses”

A Nudge as we head towards the end of the 2015 financial year

Tax tips, tax, it expenses, startups, small business
With the end of the financial year almost upon us, there are some questions the Nudge team would like you to think about with regard to your small business.

  1. Are you on top of your unpaid invoices? It’s important to review your unpaid invoices (debtors list) as small businesses can claim a deduction for old debts that are unrecoverable.
  1. Are you about to do your year-end invoices? Unless you are a sole trader operating on a cash basis, income is generally assessable when an invoice is issued. This means you might want to hold off invoicing clients until July so that it is taxable in the next financial year.
  1. Do you still have old equipment on the books? It’s important to review your list of assets as small businesses can claim a deduction for the remaining value of any asset that is no longer used.
  1. Have you organised a stocktake? If your business carries stock (for example if you are a retail business), then a stocktake is generally required before the end of the year. During your stocktake, identify unsaleable and damaged stock. If you pass this stock to charities, or gift it to organisations in need, the stock can be written-off and claimed as a tax deduction.
  1. Do you need to update some of your equipment? Small businesses can claim a deduction for the entire purchase price (up to $20,000), rather than having the deduction spread over several years. So purchasing new equipment now means you will receive a tax deduction this financial year.However, please note that the legislation confirming this new threshold of $20,000 has not yet been passed by Parliament. We will provide updates as information becomes available.
  1. Will you be paying your staff a bonus? If you are paying yourself or your staff a bonus you need to think about whether you pay it in this Financial Year (to June 30) or early next year. Paying the bonus this month, will mean you can claim a tax deduction for the payment this financial year.
  1. Are you paying dividends? If your small business is a company, you need to consider if the company will be paying a dividend this financial year or next. Declaring a dividend in July means you have an additional year to pay the tax on it.
  1. Do you owe your company money? Generally, if the director or shareholder owes the company money and there is no agreement in place, the loan must be repaid by the lodgement date of the Income Tax Return for that year. Ignoring these issues could result in an unfranked dividend paid to the shareholder (which means you will effectively be taxed twice, both in the company and in the shareholder’s tax return).
  1. Are you a trust distributing income? If your small business is trading through a trust, the trustee will need to determine which beneficiaries are receiving a distribution, what the proportion of the year-end income is and then prepare a minute resolving this. We will be chatting more about this to our clients with trust structures in the coming week.
  1. Have you considered paying June superannuation early? If you pay your staff super contributions after 30 June (even though payments are not due until 28 July), then you will not be able to claim the tax deduction until next financial year. You can only claim a deduction for superannuation when the payment is received by the superannuation fund, so get in early with these payments to ensure you receive the tax deduction this financial year.

 

Cash vs. Accrual Accounting – Which Method Do I Use?

Tax tips, tax, it expenses, startups, small business

When starting a business, deciding on which bookkeeping method is best suited to your business may be confusing. Two methods that you can use are cash vs. accrual accounting.

What is Cash Accounting?

Cash accounting tracks the actual money that is coming in and out of your business. If you receive an invoice, you do not record the cost until you have actually paid the invoice. This also applies when you send an invoice to a customer, you do not record the sale until you have received your payment. An example of this would be if you sent an invoice on Wednesday, but didn’t receive the payment until the following Monday, you then record the income against Monday’s date.

Continue reading “Cash vs. Accrual Accounting – Which Method Do I Use?”

#TaxTipTuesday: 2015 Budget Proposal for Small Businesses

Tax tips, tax, it expenses, bookkeeper, ato, startups, small business,

There were a few exciting incentives proposed for small business in the Federal Budget released on 12 May 2015.

The most significant proposal relates to the $20,000 tax break on the purchase of equipment. If you are a registered small business with an annual turnover of under $2 million, you can claim immediate tax deductions for purchases of $20,000 and under.

Assuming the legislation is passed, this scheme comes into effect retrospectively from 7:30pm on budget night (12 May 2015) and ends 30 June 2017.

We will keep you posted about when, or if, this proposed incentive becomes law.

We Are E.S.T. 2012

Who WE Are

At Nudge, we do it all for your small business: bookkeeping, accounting and tax. we can also help you with tax advice, company setups, personal tax, monthly performance summaries and specialist advice for small business owners. All work is completed by Aussie Accountants so you’ll never have to worry about compliance again.

Nudge Accounting
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TESTIMONIALS

OUR COMPANY

OUR COMPANY Quality

With the uprising of technology and the plethora of competition in the majority of industries, business owners tend to seek help and assistance in managing and tailoring their business to suit the era’s needs and expectations. The process of accounting provides reports that bring key financial indicators together. Understanding financial concepts and gearing clients to financial success is what we exceed at here at Nudge Accounting.Our expertise lingers throughout the field of online accounting and engulfs all financial cases. With years of extensive experience and a dedication for our clients success, we endeavour to evolve our existing methodologies, in order to transform into Australia’s leading online financial firm.

OUR COMPANY Commitment

A successful marriage between bookkeeping and accounting will contribute to the long-term financial success of any business. Nudge Accounting takes pride with their online bookkeeping and online accounting services that encompass all aspects and sectors of finance to ensure our clients receive the utmost finest service. Commitment is an attribute we stand for as client satisfaction is always key to evolution.Our reliability is second to none, as we ensure our clients are well organised and pursuit their financial tasks with accuracy and precision. Nudge Accounting propelled their excellence and with their dynamic team of online accounting professionals transcended competition and have cemented themselves as the leading online bookkeepers in Australia.

OUR COMPANY Success

Our software and technological client interface is meticulous and seldom do alternative online accounting companies acquire this quality of infrastructure. This is what portrays our excellence and gears Nudge Accounting towards success. We ensure client satisfaction, by going through all the details and explaining financial situations to our clients. Engaging the client is what makes us stand out!Online accounting software, combined with online accounting techniques is a much more effective procedure than filling out paperwork because half the work is already done for you! Nudge Accounting take pride in providing the utmost finest online accounting service across Australia, with a variety of small to medium businesses and accounting excellence, technology and Nudge go hand in hand, just like the glove fits the hand!

WE HELPING SMALL BUSINESSES

Nudge provide exceptional accounting service and support whilst remaining price competitive. All of our packages provide the same great features for your small business accounting needs, which includes:

  • Performance Management Reporting
  • Annual Tax Return Preparation and Lodgements
  • Annual Financial Statements
  • Financial Monthly Statements
  • QTR BAS Preparation and Lodgements
  • Monthly KPI's to Identify Improvement Areas
80
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UNDER MANAGEMENT
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100
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