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Business Tax Tips – 14 End of Financial Year 2017 tips to PREPARE for 30 June! Time to ACT NOW!

Business Tax Tips – 14 End of Financial Year 2016 tips to PREPARE for 30 June! Time to ACT NOW!

14 End of Financial Year 2016 tips to PREPARE for 30 June! Time to ACT NOW!

Time to plan for a good finish for EOFY and here are 14 tips to get started and prepare for 30 June.

1. Consider the ideal timing for asset sales

If you are thinking of selling a profitable asset this financial year, but are likely to earn a lower income in the next year, it may be worth postponing the sale until after 30 June; however, if you expect an income windfall or higher from 1 July, it may be worth bringing the sale forward. As always, your decisions depends on your expectations for future asset prices, so don’t postpone a sale for tax purposes if you are expecting your investment to fall in value! Ask your Tax advisor.

2. Delay sales invoicing if in profit

Most businesses are taxed on income when it is invoiced (accrual). Some small businesses may be taxed only when income is received (cash basis). Income from construction contracts is generally taxed when progress payments are invoiced or received. If you are making a good profit (which is good if you want to sell) and want to reduce business tax, it may help to delay invoicing the June work until July, after 30 June – talk to your tax advisor for your situation.

3. Accounts receivable – write off by 30 June

If you have clients that have closed or all manner of collection has failed – sometimes it is best to move on and write off. Keep looking for better clients!

4. Spouse and family wages

Paying family must be reasonable and legitimate for work performed.

5. Super liabilities

Employer and/or self-employed superannuation contributions must be paid to, and received by, the super fund before 30 June and must be within the contributions cap ($35,000 for individuals aged 49 or over on 30 June 2016, otherwise $30,000)

6. Depreciation – Accelerated Write off – up to $20,000

The accelerated depreciation write-off for assets up to $20,000 acquired by small businesses was announced in the May 2015 budget and is available to June 30, 2017. The write off threshold was previously $1,000 and the concession only applies to businesses in 2016/17 with an aggregate annual turnover of less than $2 million. As a boost for small businesses, the Government will extend access to a number of small business tax concessions by increasing the annual turnover eligibility threshold from $2m to $10m. These measures will apply from July 1, 2016.

7. Pre-pay income protection premiums 

If you are a self-employed director or self-employed, income protection insurance provides peace of mind about the security of your income in the event you are unable to work due to illness or injury. Premiums for this insurance are generally tax deductible; prepaying your annual premium prior to 30 June will allow you to claim a full year of cover in advance as a tax deduction.

8. Get a super top up from the government

If you earn $35,454 – $51,021 pa, of which at least 10% is from employment or a business, and make a personal after-tax super contribution, you could qualify for a Government co-contribution of up to $500. 

9. Boost your partner’s super and reduce your tax

If you have a spouse who earns less than $10,800 pa, consider making an after-tax super contribution on their behalf, and you could receive a tax offset of up to $540.

10. Use super to manage capital gains tax

If you make a capital gain on the sale of an asset this financial year and earn less than 10% of your income from eligible employment, you may be able to claim a tax deduction for a contribution to superannuation, which could reduce or offset your capital gain. You will need to be eligible to contribute to superannuation (which means you are under the age of 65, or under 75 and meeting the work test (2017 now abolished), and be comfortable having your contribution preserved in super until you meet a condition of release (eg retirement decision).

11. Make tax deductible super contributions

If you earn less than 10% of your income from eligible employment (eg you are self-employed or not employed), you are generally able to claim a tax deduction for personal contributions to superannuation. As with super, you will need to be eligible to contribute to superannuation (which means you are under the age of 65, or under 75 and meeting the work test), and be comfortable having your contribution preserved in super until you meet a condition of release (eg retirement). If you claim a deduction for it, the contribution you make will be taxed at 15% in your super fund, so your tax saving will be the difference between your marginal rate and 15% – which could be up to 34%.

12. Review your portfolio

Review your portfolio and consider a strategic re-allocation of your investments. Consider portfolio allocations – is your portfolio heavily over- or underweight in specific industry sectors or stocks? Are you continuing to carry stocks that have exceeded your price targets or continue to under-perform – this may be an opportunity to re-balance. If you have an SMSF, now is the time to ensure your fund is invested in line with your documented investment strategy – your auditor will be confirming this after 1 July.

13. Offset capital gains with capital losses 

Generally, if you have incurred capital losses on your investments, you are able to offset these capital losses against any capital gains you have made. You can also use losses you have carried forward from previous years. Remember, income losses can only be offset against income; capital losses can only be offset against capital gains.

14. Best tip of all

Get advice specific to your business and situation that considers your personal position – both go together!

If you need a referral, call me – 0407 361 596 – plan NOW don’t delay!

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Call 0407 361 596 Aust and also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

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Business Finance 101 – COS or COGS – Cost of Sales or Cost of Goods Sold – What it means

Business Finance 101 – COS or COGS – Cost of Sales or Cost of Goods Sold – What it means

COS or COGS – Cost of Sales or Cost of Goods Sold – What it means

Cost of Sales (COS) or Cost of goods sold (COGS) is the cost of the product that was sold to customers. It includes the cost of materials and direct labour used to produce the goods ready to sell. The cost of goods sold is reported on the profit and loss at the time/period the sales revenues of the goods sold are reported.

A retailer’s cost of goods sold includes the cost from its supplier plus any additional costs necessary to get the product into inventory and ready for sale. For example, a store purchases a book from a publisher. If the cost from the publisher is $60 plus $5 in delivery costs, the store reports $65 in its Inventory account until the book is sold. When the book is sold, the $65 is removed from inventory and is reported as cost of goods sold on the profit and loss.

COGS is usually the largest expense on the profit and loss of a company selling products or goods. Cost of Goods Sold are deducted from the sales/revenue.

Cost of goods sold is calculated in full, as follows:

Cost of beginning inventory + cost of goods purchased (net of any return stock) + freight-in – cost of ending inventory.

This account balance or this calculated amount will be deducted from the sales amount on the income statement, leaving a Gross Profit.

Get a FREE 30 min answer to your query, and FREE ongoing email or phone support – No-one offers as much! Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia


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Xero – Handling Overpayments in Xero

Xero – Handling Overpayments in Xero

Handling Overpayments in Xero

From the Xero blog, here is how to handle overpayments in Xero and resolve them –

Overpayments can be challenging at times, or even forgotten. There are some easy ways to handle overpayments within Xero.

Let’s take a look at a few ways we can record an overpayment and apply this to an invoice/bill or refund it directly. In Xero, the term “invoice” relates to a sale, and a “bill” relates to a purchase. I’ve only referred to invoices below, but these processes relate to both.

To Record (handle) an Overpayment, you can either:

  • Simply enter the amount paid directly onto the invoice, and if the amount exceeds your invoice total, Xero will automatically calculate an Overpayment transaction.
  • Create an Overpayment Receive Money / Spend Money transaction in your bank account
  • During reconciliation, create an Overpayment Receive Money / Spend Money transaction

Allocate or Refund an Overpayment (Resolve the overpayment)

Once the Overpayment transaction has been entered into Xero, a cash refund can be recorded or you can allocate the overpaid amount to an invoice for the same Contact in Xero.

  • The Allocate option will appear in the Overpayment Options drop down menu while viewing your Overpayment transaction.
  • If a contact has a new invoice you created Xero will ask if you wish to allocate the overpaid amount against this invoice.
  • You can record Cash Refunds on the Overpayment directly and then reconcile them with your Bank Statement line.

(XERO) have some great Help Centre pages that step through Overpayments in Xero. You can check them out here, and call us for help!

Need help? Not sure? Call for FREE 30min advice / strategy session today! 0407 361 596 Aust

***BEFORE you BUYAsk us for a competitive software price BELOW retail – No obligation!

You also get FREE 30 min to assist in setting up your company in the software, and FREE ongoing email or phone support – no-one offers as much!

Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia


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Bookkeeping – 7 tips for business health by keeping healthy books/accounts!

Bookkeeping – 7 tips for business health by keeping healthy books/accounts!

Bookkeeping – 7 tips for business health by keeping healthy books/accounts!

Here are some timely reminders from J T Ripton at smallbizdaily.com

Accounting is often one of the toughest jobs for small business owners, especially those who don’t have a lot of experience or a strong background in bookkeeping. Following a few simple tips throughout the year can make it much easier to track expenses and file taxes when the time comes.

1. Plan Ahead

The first step is to look ahead at the potential needs for your company and plan for these expenses. For example, if you know that you will need to replace expensive equipment in the near future, make sure to set aside funds every month to cover the costs. Other major expenses that may arise include office supplies, inventory, maintenance, and repairs. You can also set aside money each month to cover the annual taxes, so you won’t stress about the amount you need to pay when April 15 arrives.

2. Use Reliable Software

Business bookkeeping software has come a long way over the past decade, and some programs make it much simpler to input expenses and cash flow. MYOB, Reckon and Xero allow you to keep everything you need in one place for easy recovery as needed. From tracking the status of unpaid invoices, to creating customized invoices, to tracking billable hours and budget spent, online accounting software is a great way to save time and money. Some programs like Dropbox and  Google Drive also offer cloud access to your files, which means that you can pull up information from anywhere instead of having to go to the office to find a document or receipt.

3. Separate Business and Personal

If you use your business credit card to pay for a personal expense, make sure to track that and separate it as soon as possible. It is much easier to separate expenses if you use separate accounts to pay for them, but you may accidentally use your business card for a non-company purchase. Business costs are tax deductible, so make it easier on yourself by separating them every time you make a purchase.

4. Schedule Yourself

When it comes to bookkeeping, it might seem easier to just put it off until the end of the year. However, this is going to result in a big headache when you are trying to track down receipts and invoices that may be months old. Schedule time each week or each month to work on your books and stay as current as possible. It may be tempting to skip this every so often, but when you can stick to the schedule, it will be much easier to stay on top of the finances without feeling so stressed.

5. Review Invoices

Be sure to keep close track of your invoices, since some (clients) are notorious for paying bills late. You can probably use your accounting software to run a monthly report and determine what invoices are still outstanding. This gives you the flexibility to send reminders and follow up on outstanding bills before too much time passes. It is also smart to keep a close eye on your cash flow statement, so you can avoid the dreaded insufficient funds message on a payment.

6. Call in a Pro

For some things, it is definitely worth the investment to bring in an expert. You may rely on a financial advisor who specializes in your industry, or you might just need an accountant who can pay your taxes and payroll. You can even use a student intern who is working on an accounting degree if the budget is tight.

7. Track Expenses

Most experts discourage business owners from using cash to pay for any business expense, since it can be very difficult to track. When you use a credit card or debit card, you can view the transactions right away and make sure that all items are true business expenses to avoid issues with write-offs and taxes.

Accurate bookkeeping is an important part of business ownership, so it is crucial to stay on top of the expenses and invoices to prevent problems. If you have questions about bookkeeping, you can always rely on an expert, but once you have your system down, it should be much easier to keep track of the money coming in and out of your company each day.

Need help? Not sure? Call for FREE 30min advice / strategy session today!

Call and you also get FREE “Avoid these GST mistakes” – There’s 18 that the Tax Office see regularly – Get them right!

Email info@accountkeepingplus.com.au or call 0407 361 596 Australia