Most people agree there is very little government assistance provided to small businesses. There is however one significant concession the government provides, which relates to selling your small business.
The Capital Gains Tax (CGT) concessions provide options on how to reduce the Capital Gains Tax – sometimes to ‘nil’ – when or if you finally decide to sell.
Continue reading “#TaxTipTuesday: What Are The Small Business Concessions and When Can I Access Them?”
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?”
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?”
What is payroll tax?
Often business owners get confused with payroll tax and PAYG Withholding Tax. Whilst they are both paid by employers and related to the staff they employ, they are two completely different taxes.
What is the difference between PAYG Withholding and Payroll tax?
PAYG Withholding is a tax on staff wages. It applies to businesses of all sizes, regardless of whether you have one staff member or 1,000 staff members. For more information, refer here.
Continue reading “#TaxTipTuesday: What is payroll tax and when do I need to pay it?”
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”
The due date for your tax return depends on how you answer these three questions:
- What type of tax return are you lodging – i.e. individual tax return, partnership, trust or company
- Do you have any tax returns outstanding, or have you been penalised in the past for lodging your tax return late
- Who is lodging your tax return – are you lodging your tax return yourself? or are you lodging your tax return through a tax agent (such as Nudge).
If you are lodging your tax return yourself
If you are lodging your tax return yourself, generally it is due by 31st October (for individuals and trusts) and 28th February (for companies). However, if a tax agent is preparing and lodging your tax return for you, then generally you will receive an extension. Continue reading “#TaxTipTuesday: When is My Tax Return Due?”
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?”
Crowdfunding is increasing in popularity amongst the startup world – but what exactly is it? This blog post will look at the background surrounding what crowdfunding is and will be followed by a later post in the coming weeks on what you need to be aware of in terms of bookkeeping, tax and recordkeeping.
What is crowdfunding?
Crowdfunding is where you fund a venture of project by raising small amounts of money from a large group of people.
What are the benefits?
There are three main benefits – (1) you can secure funds to get your business off the ground or help it enter a new phase, (2) you can test whether your business idea is viable before contributing resources to it and (3) you can build a customer base before you even launch.
How can I raise money through crowdfunding?
There are a number of crowdfunding sites which you can use, such as Pozible or OzCrowd.
What do you give in return for crowdfunding?
Generally most crowdfunded projects give something to those who supported them. This can range from the product itself to involvement in naming rights to a different secondary item. You’ll need to think through this, and the factor any of these costs into your crowdfunding budget.
It’s important to have a marketing plan in place before you begin to source financing through crowdfunding . Also, being active on social networks can help raise awareness and get invaluable feedback on your product or service.
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?”