Assets & Depreciation - Changes for Small Business
Check with your Tax Agent if you are included.
- No more ? long life? pool for small business
- Write off assets immediately if they cost less than $6500 excl GST
- Motor Vehicles have a $5000 write off in the year acquired plus 15% depreciation in the first year. 2nd year onwards, Motor Vehicles then have 30% depreciation
CPA Australia says there is room for "significant improvement" in the financial management of SME's in Australia. On the to-do list are more frequent bank reconciliations, chasing late payments, more regular preparation of financial statements and cash-flow forecasts, and greater use of financial ratios to measure the performance of a business.
Only 56% of SME's reconcile their bank accounts at least once a month. 12% never do it. CPA Australia found that the number who never reconcile their account has increased over the past couple of years.
47% of SME's contact their customers about late payments on a regular basis (once a month or more). 20% never do it. The association says "In difficult economic times, it is hard to understand why a business would not chase up late payments on a very regular basis".
Only 26% of SME's prepare a financial statement at least monthly (16% never do it), 34% prepare cash-flow forecasts at least quarterly (36% never do it), and only 21% prepare a financial ratio analysis at least quarterly (49% never do it).
All business have goals, but to be achievable they must be measurable. Even the smallest SME needs to recognise that if you can't measure it, you can't manage it.
Call us NOW to discuss how we can assist you with managing your finances.
FROM 1 JULY 2012 the personal tax free threshold rate will rise from $6,000 to $18,200
1st margin tax rate increases from 15% to 19% on income between $18,200 to $37,000
2nd margin tax rate increases from 30% to 32.5% on income between $37,000 to $80,000
There are several common bookkeeping mistakes that business owners make. These mistakes can not only cost you money, they can cost you a great deal of time as well. In order to help you avoid these mistakes, let’s take a look at what they are, and how they affect a business.
Mistake #1: Trying to keep the books yourself.
This is an especially big problem for small business owners. It is not uncommon to try to manage every aspect of a business by oneself. Many times people do this in an effort to save money; however in the long run it can lead to errors in the accounting, and a good bit of time being wasted that could otherwise be spent on the products or services being offered. If you’re not an experienced bookkeeper than hire a bookkeeping service.
Mistake #2: Not reconciling your business bank accounts with your books.
It is essential that the books always match the bank statements. When all the numbers are properly tallied, you can clearly track where money goes, what money is owed, and what bills are outstanding. This keeps monetary errors from being overlooked.
Mistake #3: Not updating the books regularly.
It is very common to simply forget to update the books. Anytime you make a purchase for any type of business expense, and every time there is any type income or outgo of cash, you need to document it in entry form.
Mistake #4: Not using, or not using the right type of, bookkeeping software.
Bookkeeping software can be extremely beneficial to accurate record keeping. Try to find a program that will work well for your type of business, and train anyone who completes transactions for your business to use it properly.
Mistake #5: Not backing up data.
You should always keep a backup log of all of the data that is entered into any type of bookkeeping program. This takes no time at all, but will mean a world of difference should your computer crash.
Mistake #6: Not categorizing entries.
Make sure you design your books to have plenty of categories in order to properly explain all entries. This will ensure your records are easy to follow, clear, and consistent.
Mistake #7: Not establishing a separate business bank account.
Even if you run a sole proprietorship, you should always have a separate bank account to track all of the transactions that have to do with the business. Doing this will make the process of keeping books much simpler, and will provide easy to track documentation of all income and expenses.
If you are serious about having a successful business do not fall into the trap of trying to be an expert at everything. Do what you do well and outsource what you do not do well.
An experienced bookkeeper who is up to date with government regulations is an asset to your business because they will keep your business government compliant.
The tax office does not accept ignorance as a reason for not complying.
Bookkeeping Mistakes Made by Small Businesses:
1. Not having an audit trail.
While receipts may not be required by the tax office, they provide backup documentation for the many deductions you claim. It is very simple to have a folder for such receipts, which can prove valuable at tax time, or if audited.
2. Doing it yourself.
No matter how much they hate it or how little they know about what is claimable and what is not claimable, many small business owners insist upon spending hours on the books themselves. Having a competent bookkeeper handling the finance side of the business is extremely beneficial in that they have the skills to do the job quickly and efficiently and will provide a second pair of eyes to find errors and make suggestions.
3. Forgetting to track reimbursable expenses.
Small business owners often pay for expenses out of pocket or with their own personal credit card then make the mistakes of failing to track these expenses. They then fail to submit the expenses to the company for reimbursement.
4. Not properly classifying employees.
The proliferation of independent contractors, consultants, and casual employees has made it difficult to determine who is on staff and who is not, and the government has guidelines which need to be understood by businesses.There are different rules and regulations for employees and non-employees.
5. Lack of communication.
Having open communication with your bookkeeper is very effective in maximizing the benefits for the business.
6. Not reconciling bank statements, credit cards and petty cash each month.
One of the fundamental aspects of bookkeeping is reconciling bank statements and credit cards every month. This is extremely important to ascertain the profitability of the business.Small businesses should be a miniature of larger businesses, and a larger business would never operate without understanding it profitability each month. A good reason for hiring an experienced bookkeeper.
7. A good bookkeeper will code transactions correctly.
There are fairly standard categories for expenses. Often expenses are entered into the wrong categories or too many categories are created. A good bookkeeper will use general bookkeeping guidelines for standard categorization and create as few new categories as possible. A good bookkeeper will use accepted accounting guidelines.
Angelique offers professional service with peace of mind. As a qualified and registered BAS agent, Angelique provides quality services combined with honesty and integrity, confidence, competence and lawful independence.