What is a tax loss?
A loss is made when the total deductions you claim exceed your income in the financial year.
Why are tax losses important?
It is important to know how to treat a loss when you are starting up a new company, as generally, most businesses will not make a profit in there first year of trading. This is often due to the initial investment in setting up the business and getting it running leading to a loss in the business until sales catch up. Continue reading “Tax Tip Tuesday: Can I use tax losses in my business?”
For more information about Nudge Accounting’s work with startups around Australia or our Startup Spotlight series, get in touch or find out more at @nudgeaccounting. And you can see more about our fantastic client The Protein Bread Company here, @proteinbreadco or at http://instagram.com/proteinbreadco
How to claim motor vehicle deductions.
Do you ever need to use your car for work? A common questions we get asked is can someone claim travel to and from the office from home. Generally the answer is a NO.
Examples of when you can claim motor vehicle deductions include:
- Travelling between jobs
- Travelling from the office to alternative workplace (eg a client)
- Travelling to a client if you were working from home
- Attending conferences or meetings
- If you need to carry bulky tools or equipment (not a laptop or tablet but say a ladder or lawn mower)
Once you establish that you can claim motor vehicle deductions, there are different methods you can use depending on the number of kilometres you travel and how careful you are with your record-keeping:
- Log book method – log book needs to be kept for 12 weeks – source documents need to be kept
- 1/3 of actual cost – if there are more than 5,000 work related km’s travelled during the year – need to keep source documents
- 12% of original value – if there are more than 5,000 work related km’s travelled during the year
- Cents per km method – if there are less than 5,000 work related km’s travelled during the year – based on engine size
Generally the log book is the most inconvenient method for someone to follow, but it usually gives you the most accurate indication of your work hours.
This Tax Tip Tuesday brought to you with love by Nudge Accounting.
Writing in my monthly contribution to Shoestring, I put myself in the position of a startup founder and asked the question, “How can I pay myself from my business?”. There are different ways that a startup founder can pay themselves but it all depends on the type of business structure that they have:
1. Sole traders – the business money is your money
A sole trader is where an individual operates a business and there is no distinction between them and the business. And this means that all money made from your sole trader business is yours. You just need to be careful as this means that all money you make in your sole trader business is taxed in your personal tax return. And personal tax rates can get quite high. Up to 45% + the medicare levy of 1.5%.
2. Partnership – you take a share of the partnership profits
A partnership is similar in many respects to a sole trader. Except that you are working with others, called the Partners, and you share the profits with them based on your share of the Partnership. Although a Partner may want to pay themselves a salary, this is effectively the same as them receiving a share of the profits and that is how the ATO views it.
3. Company – how do I pay myself?
There are different ways you can pay yourself from your company. As the company is a separate entity to you, you need to ensure that you don’t draw down money from the company as if it is your personal bank account. Ways you can pay yourself include: Continue reading “Startup Founders – How can I pay myself from my business?”
A big stress for startups we come across are all the different tax requirements they need to be on top of.
Last month, I wrote an article for leading startup magazine, Shoe String on some of the key requirements which startup founders need to worry about.
- Registering for GST – when do you need to start worrying about GST? You need to register for GST if your 12-month turnover or anticipated 12-month turnover is $75,000 or more
- Tax & Hiring staff – when it comes to hiring staff, you need to provide staff with a Tax File Number Declaration Form, as well as assessing whether to pay superannuation, how much superannuation to pay, and how much tax must be withheld from their wages.
- Superannuation – a mistake a lot of startups make is in thinking that superannuation is not payable for casual staff. This is not right. The same superannuation requirements apply for casuals and permanent employees. Continue reading “Worrying about tax & my startup”
Nudge provides Accounting and Tax Services to a very large number of Clients located across Australia in a range of industry segments/sectors for example : On-Line Retail, Construction, Financial, Hospitality, Media, Medical and Professional Services.
As part of our ongoing support for the Startup community, we blog (and vlog) every second month for Microsoft BizSpark as part of our #nudgemoments initiative. #nudgemoments is all about giving startups the opportunity to ask a finance question and get an answer that helps them grow their startup and make better business decisions.
What was the question for this month?
#Nudgemoments StartUp Question: I’m applying for R&D grants and investor funding and I’ve been asked to put together a budget. Where do I start?
A budget tells the story of your startup’s journey and uses numbers to do so. So what steps do you need to take to start a budget:
- Know your strategy. What are you aiming to achieve and how will you get there?
- What are the key drivers of your business? i.e. customer visits to your website, customer conversions, sales per customer. How will these drivers lead to sales and money coming into your business?
- What are the costs that lead to a sale? Each product you sell has a cost so what are your product costs? Also don’t forget to include operational costs such as rent and travel. Ensure that costs are reasonable and sustainable, especially when you start out and are operating on a shoestring. Remember that when you grow, you will also need to spend more dollars on marketing and advertising so budget that in.
You can read the next steps and more in my article here.
This week Nudge Accounting was featured in StartUpSmart.
The article discusses how we turned around one of our biggest challenges to make it our “Best mistake”.
Some key points we were able to take away from our best mistake were:
- Communication is one of the most critical parts of business. Getting it right needs to be with a whole-of-business approach, all the time
- Inject your key differentiators into the message straight away to capture attention, Otherwise the opportunity could be lost.
- Highlight the problem your audience has. Only when they understand their problem, can you provide the solution
We were lucky to have our communication mistake picked up by a presenter at a workshop during Small business month – we are pleased to say this presenter with his own small business has become a nudge client.
We have launched today and are delighted that you have come past our blog.
We’re planning to write this blog with the following people in mind:
- You’re a small business with roughly six or less staff
- You’re interested in running your own small business
We’ll cover a whole lot of interesting content. We will chat about issues we experience in running Nudge, as well as topics and info that small businesses will hopefully find useful. And, of course, we’ll also keep you update to date on accounting and tax news for small businesses.
Before we go, just a bit more about Nudge – Whilst we’ve officially just launched today, we have been working on our concept for over twelve months. In our pre-launch period during the last few months, we had a number of small businesses experience our service, and the feedback they have given us (some of which is on our homepage) to date has been fantastic! We’re the first Aussie integrated solution and are super excited to be bringing our service to the whole of Australia. Feel free to drop us an email, call or comment via this blog.
Emma, Mark and Aaron