What is a Fringe Benefit (FB)?
Fringe Benefits is a tax payable by you (as the employer/ small business owner) on benefits which you provide to your employees. Even though the benefit is received by your employees, it is you who bears the expense of the fringe benefits tax. This is different to employees’ salary and wages, where it is the employees who bears the cost of the tax through PAYG Withholding Tax.
Fringe Benefits do not include salary and wages or bonuses. They are generally non-cash benefits and can include the following:
- Employee is provided a work car for use. However, the employee also uses this car for personal purposes (the personal component is subject to fringe benefits tax)
- Holidays and entertainment
- Payment of a non-work related expense incurred by an employee – e.g. school fees
- and many others…
Continue reading “#TaxTipTuesday: What is Fringe Benefits Tax?”
A very important lesson was learnt on Sunday night’s episode of Shark Tank by a founder of Melbourne based startup WeTeachMe and that is, Know Your Numbers!
It is essential to track your numbers and know how your business is going, it is the best thing you can do for you business.
Why should I track my numbers?
- Do you want to be able to raise funds for your business? If so, you need to know what your revenue is and how much is coming in and out of the business.
- How can you keep yourself accountable if you aren’t actively measuring your performance? and further how can you be accountable to others (business partners)?
- How are you able to grow your business and make investments if you don’t even know whether you have any money available?
If you want to be a successful startup then these are the sorts of questions you should be able to answer straight away. Continue reading “Shark Tank – Why you need to Know your Numbers!”
This tax tip is based on our recent article in Startup Daily.
If you are operating your business from your home, there is a chance that you may be able to claim a tax deduction on some or even all of your home office expenses in your tax return. These expenses include rent, equipment, furniture and more.
There are a few questions that you need to answer first in order to determine whether you can claim rent and other home office expenses. Continue reading “TaxTipTuesday: I run my business from home. Can I claim my home office as a tax deduction”
A lot of confusion can occur amongst startups and whether or not they can claim their business lunches as a tax deduction. In order to help eliminate some of the confusion there are a few simple steps that you can follow in order to determine whether you these expenses are tax deductible or not.
The questions that you should ask yourself, are as follows;
- Why is the food or drink being provided? What is the purpose of the food and drink being provided, if it happens to be a social setting than the chances are this is entertainment.
- What food or drink is being provided? As your meal starts to take a more elaborate form, for example there is matching wines, its starts to take the form of entertainment.
- When is the food or drink being provided? If a meal is provided during work hours than the chances of it being classed as entertainment are less likely. You do need to consider though whether or not it is social.
- Where is the food or drink being provided? If you consume the meal on your premises than its not likely to be considered entertainment. However if you go to a restaurant it is difficult to say its not entertainment.
Continue reading “TaxTipTuesday: I am having a lunch with a client. Is it tax deductible?”
Recently Emma was involved in a podcast for the website, So You Want To Be A Virtual Assistant. So You Want To Be A VA, has created a professional-quality course that will train you to become a successful, self employed virtual assistant.
Emma’s podcast focused on finances, business and you, and these are a few of the key questions which were covered;
What do Virtual Assistants need to consider when they get started?
There are two important things to consider before you start your business.
- Structure: Are you going to operate as a sole trader, partnership, company or trust.
- How are you going to keep your accounting records: It is important to have systems in place, so that they stay organised and know how much money they are making and spending
What is a common mistake when starting out?
Not being organised is one of the most common mistakes seen, people become really overwhelmed with everything they need to do and fall behind very quickly. When starting out you need to make sure you are aware of all aspects from your business – from marketing to customer service to the accounts. If you get a really good system in place you can avoid those sleepless nights. Continue reading “So You Want To Be A Virtual Assistant – Finances, Business and You.”
If you are selling a product or service online, for example Ebay or Etsy, you first need to be able to determine whether you are operating as a hobby or a business.
What is the Difference?
A hobby is considered a spare time activity pursued for pleasure. Whereas a business requires some form of investment and enough customers to whom you can sell your product to constantly, with the intention of making a profit. Once you are a business receiving income you are required to pay tax.
How do I know if I need to pay tax?
The following checklist (click here to access to access the checklist via the ATO website) will help to assist you in determining whether you are operating as a business that should be declaring income. Each time you answer ‘yes’, the more likely it is that you are in fact operating a business, however the questions should be considered collectively rather than in isolation. Continue reading “#TaxTipTuesday: Do I Need To Pay Tax On The Money I Earn From Ebay?”
A common area of confusion for startups and small businesses, is whether or not their new hire is in fact a contractor or an employee. It is important that the difference between a contractor and an employee is clear, as they come with different outcomes and different responsibilities.
Determining whether your new hire is 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? An employee can not sub-contract/ delegate and pay someone else to carry out the work, whereas a contractor can.
- 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.
- Who takes the commercial risk? Contractors take on the commercial risks, being legally responsible for their work. An employee on the other hand does not take on the commercial risks which are borne by your business instead.
- Who has control over your hire’s work? Contractors, subject to the terms in your agreement with them, can exercise freedom in the way they carry out their work. Whereas, workers are more bound by the employment terms of your business. Contractors operate independently from your startup whereas employees are part of your business.
- Is there independence?
Continue reading “TaxTipTuesday: Contractors vs Employees. What do I need to know for tax?”
Writing for the Officeworks blog ‘The Office Space‘ in our February blogpost, we look at setting up your small business budget for the 2015 year.
Some of the key things you should focus on with your small business budget are:
1. Understand what your budget is
A budget is a forecast of what your business income and expenses will be over a period of time.
2. What is the purpose of your small business budget
Like all goal setting, we set targets for what we want to achieve within a time frame. The purpose of your budget is to set the financial goals for the business and plan out how you will allocate resources to achieve these targets.
3. Is your budget just about the money?
Yes, and No. We set financial goals as we want to achieve certain targets in our business. However, one area we often see small businesses failing in is the disconnect between their business operations and their business finances. A budget allows you to allocate the resources that you need to achieve your financial goals. And the way that you do this is by looking at your operations and determining what is needed, when. Just remember, your finances are an output of the operational decisions you make in your business. Make sure that your budget has mapped out your operations and how you see your business running for financial success.
You can read the full article about small business budgets on the Officeworks blog here.
Determining whether or not your meals can be claimed as a tax deduction can be very confusing for startups and small businesses. While its not a black and white area, there are some simple tips that you can follow to determine whether or not you can claim a tax deduction.
What are the questions you should ask yourself?
- Why is the food or drink being provided? That is, what is its purpose, if it is a social setting than the chances are its entertainment.
- What food or drink is being provided? As the meal becomes more elaborate i.e, a menu with matching wines, it starts to take the form of entertainment.
- When is the food or drink being provided? If the meal is provided during work hours, this is less likely to be entertainment, however it is important to consider at this point whether or not it its social.
- Where is the food or drink being provided? If the meal is consumed on your premises then it’s not likely to be entertainment. However at a restaurant it is difficult to say it isn’t.
These initial steps are what will help you work out whether your business lunch is tax deductible. Continue reading “Tax Tip Tuesday: When is my Business Lunch Tax Deductible?”
Looking at the tax rate for your business is something many small businesses ask about. But it all depends on the type of business structure that you have. So lets get to the bottom of it:
What is Your Business Structure?
The structure of the business will determine the tax rate. The different structures include; Sole Trader (Individual), Partnership and a Company. You can read more about different business structures here.
1. What is a Sole Trader?
As a sole trader there is no separation in business ownership between yourself and the business. Therefore there is unlimited liability, so if your business can’t pay its creditors, your own personal assets could be up for sale.
2. What is a Partnership?
A partnership requires 2 or more people and like with a sole trader, the partners individually share in the business assets as well as its liabilities.
3. What is a Company?
A company has a director(s) as well as shareholder(s). The directors are responsible for the management of the company, whereas the shareholder(s) own the company. Continue reading “TaxTipTuesday: What’s The Tax Rate For My Business?”