This month of June is the best time to plan and prepare your upcoming Financial Year 2021. Starting from 1st of July 2020 to 30th of June 2021 is the period of Financial Year 2021.
As due diligent entrepreneur it is best to start right regarding your finances.
Proper recording and bookkeeping are the key elements. Because from there you can see where your business is at the moment.
It is like your own GPS, you've got to know where your location is, so you can take the next step to where you want to go. In short you can be realistic with your goals. You can plan ahead, you can manage your finances well. You will not be like most people will say “I seriously do not know where my money goes”. With your money affairs in order, you can say “I knew exactly where my money goes”.
1) HAVE YOUR OWN SEPARATE BUSINESS ACCOUNT
Nowadays major banks offer ‘NO” monthly fees for business account like CBA, NAB, Bankwest and so on. I personally suggest NAB because they have csv file of your bank statement transactions and they have “OSKO” payment, a payment in which, with a matter of second it goes to your Suppliers bank account.
If you need help with Cashflow you can also apply for Business Credit Card where they offer 55 days no interest, as most of your suppliers might ask to be paid 15 or 30 days nett due, this 55 days no interest will definitely give you buffer or timeframe by using your credit card.
But remember always pay your credit card on due time, don’t make it over the 55 day period as they will charge you a rate of 20 to 25% interest, that’s big. but the good side, credit card interest is also tax deductible. Always remember, you pay $300 credit card interest the tax saving part of it is somehow 30% only which is more likely $90 tax savings, you still pay out of pocket of $210. Hence, still not good if you lapse the due date of your credit card.
2) PROPER RECORDING & BOOKKEEPING
In regards, with proper recording and bookkeeping, I personally suggest buy an online accounting software called “Quickbooks” it is online and you can log in any where even on your own personal mobile phone. This accounting software is so sophisticated that you can take a photo of your receipt and it is now safe and save on the cloud, hence, no need to have a shoe box full of receipt.
It will make your life easier, and make your accountant's life a breeze as well, meaning you take less time with your accountant to sort your files, less time, less pay equal save you money.
Here is the QuickBooks link to see what package might suits you.
I urge you pay, as now a days they make the software more affordable and user friendly and the best part it is up to date with technology and compliance with Payroll and other government regulation and the best part QuickBooks customer service is superb.
3) GST
Let’s talk about GST. If your Turnover for the whole Financial Year is more than $75,000 you are now obliged to register your business for GST. Meaning you now need to collect 10% of your sales and that is GST, GST is government money that you need to remit every time you lodged your Business Activity statement on a quarterly basis.
10% GST is not your money, hence, you need to keep that aside, this is the most common mistake of businesses, they have this presumption that since they collect the money and it goes to their bank account that it's their own money… BIG mistake…
So be prepared, I suggest set this aside straight away, have another bank account to set aside as GST savings Account.
4) EMPLOYEES
If you decide to hire someone, make sure you know your employer obligation…
Know the work status of your potential employee and see if they hold the proper work rights.
Know the proper wage rate for your employee based on their role
You need to pay them Super and that is 9.5% of their GROSS Pay and not NETT pay
Know the leave entitlements, if they are regular employees
Your accounting function will now be more complex once you hire staff, hence a proper recording and proper accounting software in place is now very crucial in this stage.
These are your usual obligation to the ATO.
Business Activity Statement usually it is done quarterly basis
Super Payment usually is done quarterly basis (ATO Clearing house)
Single Touch Payroll occurs every time you make an employment payment.
Then Year End Tax Compliance
5) BUSINESS STRUCTURE
There are different Business Structure of the Business, that can help you save money on your Taxes, ask your accountant which business structure suits you. Remember with a proper business structure in place can save you thousands upon thousand of your hard earned money.
They are Sole Trader where they have ABN… the tax rate of this goes up to 47% that is really big. Partnership with joint collaboration… the income will be split based on their % of ownership, but still needs to be distributed to each individual hence the tax rate still can go up to 47%. Company, the tax rate is fixed 27.5% for every taxable dollar you earn.
Trust is a beautiful structure, if it's set up properly with the right accountant who can give you advise, you possibly might not have to pay taxes on this business structure.
SMSF – Self-Managed Super Fund is another type of trust, but this one is taxed at 15% fixed rate.
In few days’ time from today, 30th of June 2020 is coming..
Are you ready for the new financial year?
I pray that these tips were helpful for you as you prepare your business for the new financial year. It's an honour for me to impart my knowledge and expertise with you. Thank you for this opportunity to enlighten you in a wonderful world of Accounting.
May Reyes
May Modina Reyes, was born and raised in Manila Philippines where she completed her Bachelor's Degree in Accountancy and I worked for a few years before deciding to move to Australia.
After years of working in different fields in Accounting, May focused on her first love and which is Public Practice.
To add to her experience, May also took her Master of Accounting at the University of Technology Sydney.
Together with continuing skills & experience, May now has her own Public Practice where she uses this platform to be of service in the field of accounting through her Reyes Group Australia Firm.
For your accounting needs, you can contact her directly on:
Mobile: 0404 789 193
Email: may@reyesgroup.com.au
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