We look at some of the key aspects of the 2014 Federal budget and the resulting impact on small businesses and startups
1. Federal budget impact on Small business
The federal budget has impacted small business in the following ways:
a) Lower company tax rate
As part of the budget measures, the government has will cut the company tax rate by 1.5 percent from 1 July 2015. This will bring the current company tax rate of 30 percent down to 28.5 percent, benefiting many small businesses that use a company structure. Businesses with more than $5m in taxable income will not be in a better overall position as they will be required to pay a levy of 1.5 percent to fund the new paid parental leave scheme.
b) Superannuation contributions
Compulsory superannuation contributions for employees will rise from 9.25 percent to 9.5 percent from 1 July 2014. Although the federal government had previously flagged that this increase would be delayed, the superannuation contribution percentage will now be frozen at the new level of 9.5 percent until June 2018.
Continue reading “2014 Federal budget update – the impact on small business & startups”
As part of our monthly blog post for Shoestring, we write about the superannuation requirements that employers need to meet for their team members.
The key superannuation requirements that employers have to meet are as follows:
1. Relevant employees
(a) Full-time, part-time and casual employees
When it comes to superannuation contributions, you are required to pay contributions for employees if they are aged 18 years + and if they earn at least $450 or more in gross wages in a month.
A common mistake we see startups make is that they assume that they are not required to make superannuation guarantee contribution payments for contractors. If an individual is paid mainly for their labour for hours worked under a contract, then you will have to pay contributions for them, irrespective of whether they are a contractor or an employee.
2. How much superannuation do you need to pay?
The current rate of superannuation is 9.25% and is scheduled to change to 9.5% from 1 July 2014.
This rate of superannuation must be applied to the Ordinary Time earnings of your employees. This includes payment for your employees’ ordinary hours and whilst it includes commissions and performance based bonuses, allowances and shift-loadings; it does not include overtime payments.
3. When is superannuation due?
Superannuation guarantee contribution payments for your team need to be paid by the 28th day of the month following end-of-quarter. i.e. for the June quarter, payment of superannuation payments is due 28th July.
4. What else is changing?
Apart from the proposed change in superannuation rates, the Government has confirmed that superannuation contributions must be paid electronically by employers into the future. The new system will be compulsory from 1 July 2015 for businesses with less than 20 employees.
Under the new ruling, superannuation payments must be made using a single Electronic Funds Transfer (EFT) to a registered superannuation clearing house. Many accounting software providers offer this function (such as Xero and QuickBooks Online). Alternatively, if you have less than 20 employees you can register to use the ATO’s Superannuation Clearing House.
You can read more in the article on Shoestring here
We often get asked by small businesses how they should classify workers in their business. Are workers considered as employees or contractors? The question often includes something around the worker having an ABN so they must be a contractor! Unfortunately, whether a worker has an ABN or not has little bearing on the actual employee vs contractor decision.
This blog post is an extension of an article we wrote for Shoestring in November 2013 and we have included some helpful and more detailed tips about how to navigate your way through this issue and ensure that you are meeting your responsibilities as a small business owner.
So what is the difference between and employee and a contractor:
Employee: an employee is someone who works in your business and is a part of the business.
Contractor: A contractor is someone who is running their own business
Continue reading “Employees and Contractors: An ATO perspective on Small Business employment!”
Managing superannuation contributions for your small business employees can often be a difficult and tedious task. So we have created an easy guide to help you understand what some of your obligations are as small business owners.
What is the superannuation rate for my small business employees?
You’re required to make super guarantee contributions to employees if they’re 18 years or over and paid $450 or more gross salary in a month. The table below shows the key superannuation rates in 2013 and beyond:
Period Superannuation rate
1 July 2013 – 30 June 2014 9.25%
1 July 2014 – 30 June 2015 9.5%
1 July 2015 – 30 June 2016 10%
1 July 2016 – 30 June 2017 10.5%
Continue reading “What is the superannuation rate for my small business employees?”
With Bitcoin use increasing in Australia, there has been little guidance to date from the ATO and other regulatory authorities about the accounting and tax treatment of this payment method. So Nudge Accounting has put together a list of some of the key accounting and tax questions you may have when using Bitcoin.
If I make a sale from my business and the customer pays using Bitcoin, do I need to record the GST on the sale?
We can break this down into two components:
- When you make a sale to a customer, you should be issuing a valid tax invoice that includes GST if you are registered for GST. You will be required to remit this amount to the ATO the next time you lodge a Business Activity Statement.
- If you are not registered for GST, you cannot include a GST component on the tax invoice and you are not required to remit any portion of this sale as GST to the ATO.
Outcome: Yes, you are required to record the GST on this sale if you are registered for GST.
If I buy something for my business using Bitcoin, can I claim GST on the purchase?
- When making a purchase for your business and the supplier provides you with a valid tax invoice that includes their ABN and a GST amount, you are entitled to claim the GST back if you are registered for GST. This is irrespective of the currency you purchase the goods in.
- If the supplier provides you with a valid tax invoice that includes their ABN and there is no GST on the invoice, you are not entitled to claim any GST, even if you are registered for GST.
Outcome: Yes, you should be able to claim GST on eligible business purchases if you receive a valid tax invoice that includes GST and you are entitled to claim the GST.
What is the difference between a bookkeeper and accountant?
I recently attended the launch of Jack Delosa’s new book, Unprofessional, in which he talks about his experiences as an entrepreneur and business owner.
I was immediately drawn to his chapter on Knowing your Numbers as a business owner and the great decisions you can make when you have them. At Nudge, we love it when business owners and clients know their numbers to make great business decisions!
Jack outlines from his perspective as a business owner and business educator the types of people you need to work with to manage the finances of your business. A bookkeeper and accountant were two key roles that he viewed as critical in any business, no matter the size. I have used extracts from his new book as it gives his perspective as a business owner on how he views the different roles.
What is a bookkeeper?
A bookkeeper is someone who does the administrative and operational tasks that relate to managing the finances of the business.
Continue reading “Do I need a bookkeeper or accountant or both?”
social media marketing comes down to brand building and exposure. So if you provide useful or interesting content then your likes, followers and fans will certainly come.
You’ve just started your startup or small business and your thinking you want to get into social media marketing. So where do you start? Here’s a quick guide on what each social media site does and how you can utilise it for your business:
Creating a Facebook page for your business is an easy way to start your social media plan. A Facebook page lets people interact with your business online, for example users can like your page and comment on your wall.
- Upload photos and videos of your product or service
- Get your family and friends to like the page to create an initial fan base. No one wants to like a page with 5 likes!
- Create events with Facebook to help launch a new product or service
Twitter is an online microblogging and social media site, users send ‘tweets’ which are messages up to 140 characters long. It allows you to follow people and interact with them.
Continue reading “Social Media Marketing Basics!”
One of Nudge’s clients, Nikki Parkinson of Styling You was recently interviewed by The Courier Mail on her blogging success. Emma was also featured in the article giving some advice for bloggers regarding their accounting needs such as GST and tax deductions.
Blogs are no longer on the periphery of the publishing industry, they have cemented their place online, with some blogs having readerships that dwarf traditional publications. So if you are thinking of turning your blog into a business, here’s a few tips from Emma around the accounting and tax implications.
- Choose a business structure and apply for an ABN
- Do you need to register for GST? This is compulsory if your 12 month turnover or anticipated turnover is at least $75,000.
- Keep good records: Does an expense relate to your ability to earn income? It could be a tax deductions.
- Invest in accounting software such as Xero, for easy and hassle free record keeping.
You can read the full article in The Courier Mail here.
If you are a blogger looking for accountants who understand your business, then give Nudge a call on 1300 068 343.
When it comes to hiring, a common area of confusion for startups and small businesses is whether their new hire is in fact a contractor or an employee.
To make things a bit clearer, I wrote an article this month for leading Startup publication, Shoestring about this very issue. It’s really important to get this right as hiring contractors and employees comes with different responsibilities with different outcomes. So, where do we start on this issue:
1. Is your new hire a contractor or an employee?
The ATO lists six factors which need to be considered in determining who is a contractor vs employee:
- Is your hire able to sub-contract/delegate? A contractor is able to sub-contract/delegate and pay someone else to carry out the work, whereas an employee is not.
- What is the basis of payment? A contractor is paid for achieving a result, whereas an employee is based on hours worked/commission/price per item.
- Who provides the equipment, tools and other assets? A contractor provides the majority of the equipment, tools and other assets they use and doesn’t get paid an allowance for these. Whereas, an employee does not provide the majority of equipment, tools and other assets and in instances where the do, they are reimbursed for these costs. Continue reading “Contractors vs Employees. What do I need to know for tax?”
When it comes to starting a new business, one of the important tax and legal decisions you need to make is what structure you will choose.
There are four main structures which Aussie businesses can choose, being; Sole Trader, Partnership, Company and Trust. Each structure is different and has its own advantages and disadvantages.
This month, I wrote an article for leading start-up publication, Shoe String, whereby I discussed some of the key implications of each structure. The article can be read via this link, and I’ve included some of the main points below:
- There is no separation in business ownership between yourself personally and the business. This means there is unlimited liability – if your business can’t pay it’s creditors, your own personal assets could be up for sale
- It is fairly easy and inexpensive to set up
- There are minimal compliance requirements compared to companies and trusts
- Requires 2 or more business partners
- The partners share in the business assets as well as its liabilities
- Similarly to a sole trader it is fairly easy and inexpensive to setup
- Remember a friend in life does not always mean a friend in business – no matter how good your friendship, ensure everything is documented from the start
Continue reading “What structure should I choose for my startup?”