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Online Bookkeeping & Accounting Services Nudge Accounting

Suite 139/243 Pyrmont Street, Pyrmont NSW 2009

Mon - Fri 9.00 AM - 6.00 PM (AEST)

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#TaxTipTuesday: Are my Small Business IT Expenses Tax Deductible?

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

If you are using the software or hardware for your small business, that generally speaking yes, it is a tax deduction. However depending on how much you paid, this will determine whether you can claim a tax deduction immediately or whether it must be claimed over a number of years (depreciated).

These rules apply not just to software, but to most other assets/equipment purchased for your small business.

What IT expenses are covered?

IT expenses that you incur for your small business can be claimed as a tax deduction. They can include ongoing expenses of your website in the year in which they are incurred. This may include maintenance, internet service provider fees, domain name costs and annual registration costs. Software can also include MYOB or Xero that you have purchased outright or on a subscription. If you have purchased this outwrite you may have to depreciate it. However with a subscription you can generally claim a tax deduction if you pay an annual or monthly fee. It is important to note that if software is purchased as part of a computer system then the total cost of the system would be depreciable. Continue reading “#TaxTipTuesday: Are my Small Business IT Expenses Tax Deductible?”

TaxTipTuesday: Contractors vs Employees. What do I need to know for tax?

Tax tips, contractors, ato, tax, startups, small business, startups

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:

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.
  6. Is there independence?

Continue reading “TaxTipTuesday: Contractors vs Employees. What do I need to know for tax?”

Tax Tip Tuesday: Can I use tax losses in my business?

Tax tips, tax loss, ato, small business, startupsWhat 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?”

Tax Tip Tuesday: When do I pay PAYG Instalments for my Business?

Tax tips, business, payg instalments, ato, small business, startups

A PAYG Instalment forms part of a small businesses BAS (Business Activity Statement). But what exactly is a PAYG Instalment? And when do you need to pay it for your business?

What is a PAYG Instalment?

A PAYG Instalment (or Pay As You Go Instalment) is the ATO’s way of making us prepay our income tax during the year for our Business.

When do you pay PAYG Instalments?

When you lodge your Income Tax Return for your small business, any PAYG Instalments paid during the year will be a credit against the Income Tax calculated. So by prepaying your tax it will help to reduce or avoid those lumpy tax payments at the end of the year, which no business wants!

A PAYG Instalment amount is calculated based on your previous tax return lodged. So, if you paid some tax last year for your business, it is likely that you will have to pay PAYG Instalments this year. However, if it is your first year of operation you won’t pay PAYG instalments, as you haven’t lodged your first tax return yet. Also, if your business was in a tax loss position last year, you will not pay tax instalments as the tax payable last year was nil. Continue reading “Tax Tip Tuesday: When do I pay PAYG Instalments for my Business?”

Tax Tip Tuesday: How long do I need to keep tax records for?

Tax tips, tax records, small business tax records, ato, small business, startups

Often small business owners ask us if they can throw out their tax records once they have lodged their tax return and received their Notice of Assessment from the ATO. The answer is no – definitely not!

Small business owners are required to keep their records for much longer than that. As a general rule of thumb, you must keep your records for the later of five years from when your tax return is due to be lodged, or when you lodge your tax return. Continue reading “Tax Tip Tuesday: How long do I need to keep tax records for?”

Tax Tips Tuesday – What is the 80 20 rule?

Tax tips, accounting, 80 20 rule, bookkeeping, small business, nudge accounting, startups

The 80 20 rule is something that we often get asked about by contractors and business owners? So what is it and where will you see it in business?

The 80 20 rule is one of several tests that fall under the ATO’s Personal Services Income provisions relating to income received by consultants and contractors. Personal Services Income is where the majority of the income is generated for the skills, knowledge, expertise or efforts of the person who performed the service.

Irrespective of what structure you operate under, if Personal Services Income applies in your situation, your deductions will be limited and income generated by you will be attributable solely to you, not your business. This means any perceived tax advantages associated with creating a corporate structure may be redundant under these rules.

So where does the 80 20 rule come into play? One of the ways in which the ATO determines whether you fall under the Personal Services Income rules is by looking at several tests. The 80 20 rule is one of these tests that looks at whether 80% or more of your income comes from one source (including related parties). If it does, then the Personal Services Income rules will apply which will require additional considerations when doing completing your Income Tax Return. If it doesn’t, than the Personal services Income rules will not apply and income will be considered business income.

This Tax Tips Tuesday is brought to you with love by Nudge Accounting.

Tax Tips Tuesday – Do you have to pay super?

Tax tips, accounting, pay super, bookkeeping, small business, nudge accounting, startups

Do you have to pay super in your business? We go through the key requirements that business owners have to meet around superannuation for employees and contractors. The key steps to understand 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.

b) Contractors
A common mistake we see businesses make is that they assume that they are not required to make superannuation payments for contractors. If an individual is paid mainly for their labour for hours worked under a contract, then you will have to pay super 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 9.5%

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.

This Tax Tips Tuesday is brought to you with love by Nudge Accounting.

Tax Tip Tuesdays – Are client meetings tax deductible?

Tax tips, accounting, client meetings, tax deduction, bookkeeping, small business, nudge accounting, startups

Are client meetings tax deductible? We often get this question so we thought that some simple tips can help go a long way in working out whether you can claim a tax deduction. It often comes down to what is provided at the client meeting (i.e. food or drink). So what are some things you should you know:

  • What is the purpose of the event – if food or drink is being provided in a social setting, then the chances are that the client meeting would be classified as entertainment and not tax deductible
  • What is being provided in the meeting – is it a light meal provided at work or is it a set menu with matching wines. As the meal starts to become more elaborate, it starts to take the character of entertainment and is not tax deductible
  • When is the meeting being held – meals provided during work hours are less likely to be entertainment, however with this point it’s especially important to consider the purpose and whether it is social.
  • Where is the meeting being held – meetings held on your business premises (and meals consumed) are less likely to be entertainment. At a restaurant or cafe, it is more likely to be entertainment.

Are your client meetings tax deductible? Always make sure you consider these initial steps when looking at client meetings for your business.

And do you need more information on whether business lunches are tax deductible, read our article in Startup Daily here.

This Tax Tips Tuesday is brought to you with love by Nudge Accounting.

Tax Tips Tuesday – Motor vehicle deductions?

Tax tips, accounting, bookkeeping, small business, nudge accounting, startups, motor vehicle deductions

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:

  1. Travelling between jobs
  2. Travelling from the office to alternative workplace (eg a client)
  3. Travelling to a client if you were working from home
  4. Attending conferences or meetings
  5. 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:

  1. Log book method – log book needs to be kept for 12 weeks – source documents need to be kept
  2. 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
  3. 12% of original value – if there are more than 5,000 work related km’s travelled during the year
  4. 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.

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.

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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
YEARS OF
EXPERIENCES
$250m
UNDER MANAGEMENT
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$150m
TOTAL
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100
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