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Separating Personal from Business Finance

  As a small business owner it can be easy to intertwine business and personal finances, but keeping the two apart is vital. To build long-term financial growth and keep track of ongoing expenses and taxes, making sure your business and personal capital are separate is essential. While as a growing small business it is tempting to save on as many costs as possible by claiming tax deductions, failing to see the difference between personal and business expenses could see you facing an audit or other legal consequences. Here’s how to keep your personal cash away from your business finances. Use Separate Accounts It seems like a no-brainer, but having two different accounts for your personal and business finances is fundamental. Even for those in the early stages of their business who see it as a one-man-shop, it’s all the more important to track business and personal incomings and outgoings separately, or risk facing a headache at tax time. Also, if you use accounting software , make sure you also have two separate systems for your personal and business financial activity. Keeping clear records all year long will provide you with proof of your business expenses in case the Australian Tax Office (ATO) queries any claims or you are audited. Have a Business Credit Card When it comes to buying stationery for the office or paying for transport to meetings, having a work credit card at the ready will help you separate your business financial activity from your personal purchases. No matter how big or small the expense, it’s important to keep your business finances on the company card... read more

Xero Announces New Features 2017 (Expenses & Projects)

Xero launches new expenses and projects The cloud accounting provider makes its “biggest ever” announcement of new apps and features.     Xero expenses The idea behind Xero expenses is that a user captures a receipt, and “we’ll take care of the less,” Xero expenses lead Samyak Shah told Xerocon 2017 attendees. Xero has developed a separate mobile app for expenses, as most employees don’t need access to other accounting-related functions. This app, for iOS and Android, lets a user photograph a receipt and submit it as an expenses claim. Behind the scenes, Xero extracts the relevant data and creates a corresponding transaction. Alternatively, the transaction can be entered in the traditional way via the main Xero web application, in which case the item can be entered on behalf of another person. Either way, claims can be approved by an authorised person via the app or the web, and then approved claims can be paid as a batch or individually. Other features of Xero expenses include reports such as a bar graph of a person’s expenses by category. Xero expenses is now live for selected users ahead of a general rollout. Plans for further development include the addition of mileage claims. Xero projects Xero projects is designed to make it easy to capture, track and report on the time and money spent on each job. Features will be added to support different market segments,  to include architects, engineers, and larger accounting and legal firms. Small business in Australia is fragmented and diverse, said Xero Australia managing director Trent Innes, so there will still be opportunities for boutique project management products... read more

Single Touch Payroll Is Coming – Start Preparing Now

If you have 20 or more employees, you should start thinking about Single Touch Payroll. You’ll be required to report payroll and super information to the ATO using a Single Touch Payroll enabled payroll solution from 1 July 2018. Visit ato.gov.au/singletouchpayroll for more information.... read more

Penalty Rates Cuts – Hospitality & Retail Industries

Sunday and public holiday penalty rates will be reduced for full-time and part-time workers in the hospitality, retail and fast-food industries, the Fair Work Commission has ruled.   WHAT’S ACTUALLY CHANGING? Full-time and part-time hospitality workers will have their Sunday penalty rate cut from 175% to 150% Full-time and part-time retail workers will have their Sunday penalty rate cut from 200% to 150% Full-time and part-time fast food workers will have their rate cut from 150% to 125%. Public holiday rate in retail, hospitality, and fast food will also be cut. Casual workers in the retail and fast-food industries will also see their pay cut but rates for casuals in hospitality will remain the same. The cuts to public holiday rates will start from 1st July 2017.   WILL IT AFFECT ME? The workers who will be hardest hit are those in the retail, hospitality and fast food industries. Aussie’s who rely on penalty rates generally earn a relatively low wage. The ACTU estimates the FWC decision will cost low-paid workers up to $6000   IF YOU WORK IN FAST FOOD Fulltime and part-time level one fast-food workers will have Sunday penalty rates reduced from 150 per cent to 125 per cent. Level two and three employees will stay at 150 per cent.   IF YOU WORK IN HOSPITALITY Fulltime and part-time hospitality workers will have Sunday rates slashed from 175 per cent to 150 per cent. Sunday rates for casuals will remain at 175 per cent. If you’re on the national minimum wage, $17.70 per hour, an eight-hour Sunday shift would have earnt you about $248. Under the changes, that drops to... read more

GST on low value imported goods 1st July 2017

New Australian law applying GST to imported digital products and services will take effect from 1st July 2017 On 16 February 2017, the Government introduced law to Parliament that will amend the law to extend Goods and Services Tax (GST) to low value imports of physical goods imported by consumers from 1 July 2017. A vendor registration model will be used and suppliers with an Australian turnover of $75,000 or more in a twelve month period will be required to register and charge GST. The existing processes to collect GST on imports above $1,000 at the border are broadly unchanged. The change was designed to harmonise tax rules for Australian and foreign retailers after local stores blamed sluggish sales on their overseas competitors having an unfair price advantage on goods priced below $1000. According to Treasury, the measure will see a bump of $300 million in GST revenue over the forward estimates period, not accounting for collection expenses. Common questions Question: How is the $75,000 registration threshold calculated? Businesses will be required to register for GST if their GST turnover in Australia exceeds $75,000 (which will include sales of low value imported goods). However, if they do more than $75,000 of sales into Australia, but some of these sales are through an electronic distribution platform (a digital marketplace) and the balance of their direct sales is $75,000 or less then they will not be required to register for GST. Instead, the electronic distribution platform will register for and charge GST, provided it has more than $75,000 of Australian turnover. Question: How is GST applied by the vendor, electronic distribution platform or... read more

Tax Rules Change for Working Holiday Makers

  Tax Rules Change for Working Holiday Makers Visa (subclass 417) During the Federal Budget earlier this year, the government proposed changes to tax rules for working holiday makers. The changes have been revised and are now law, and will be coming into effect on 1st January 2017. There is no longer an option for working holiday makers to claim the tax free threshold. They will be taxed at 15% up to $37,000, and then taxed at ordinary marginal rates after that threshold. Employers of working holiday makers will be required to undertake a simple, once-off registration with the Australian Taxation Office to be able to withhold tax at this new rate. Employer registration has been extended to 31st January. If you are employing working holiday makers, you will not be penalised as long as you register by 31st January 2017. You can still use the new withholding tax rate of 15% from 1st January 2017. Employers who do not register will be required to withhold tax at the 32.5% rate or higher, as per the foreign resident tax rates. ATO Working Holiday Maker Employer Registration Form The worker must apply for this temporary visa before entering the country for the first time.  Although the visa is valid for up to one year, the worker can generally only be employed with one employer for a maximum of six months. ATO Notification Many registered agents and employers, who have previously employed foreign workers, have already been notified by the ATO of the coming changes and been advised to register for the new tax. Tax for Working Holiday Makers Weekly Earnings... read more

Simpler BAS for Small Businesses Commences 1st July 2017

The ATO are introducing changes to the GST/BAS system for small businesses. The ATO has been working on ways to deliver a simpler business activity statement (BAS) to simplify account set-up, record keeping, BAS preparation and lodgment for agents and their clients, and make it less costly. To achieve this, several GST labels will be removed from the BAS, with small businesses only required to report: GST on sales (1A); GST on purchases (1B); and Total sales (G1). They will begin user testing from 1 July 2016 and a simpler BAS should be the standard option for all small business from 1 July 2017.... read more

Christmas Gifts for Employees, Clients and Suppliers

With Christmas around the corner it is a good idea to check what are acceptable “Gifts”    Christmas Gifts for Employees Are gifts to your employees claimable? Gifts may be classified as “entertainment” or “non-entertainment”.The provision of a gift to an employee at Christmas time, such as a hamper, may be a minor benefit that is an exempt benefit where the value is less than $300. Where the gift is given at the Christmas party, each benefit can be considered separately. For gifts such as wine, food, hampers, vouchers, etc., these are not considered to be entertainment. If the gift is a minor benefit (i.e., less than $300 value), then the gift is not tax deductible, and therefore GST is not claimable for gifts to employees and their family members. No FBT applies to gifts of less than $300. For gifts over $300, FBT may apply for employees and their family members. Gifts such as a holiday, membership to a club, or tickets to a theatre, sporting or musical event are considered to be entertainment. For minor benefits, as above, the gift is not tax deductible and no FBT applies. For employees this is not a minor benefit, the gift is tax deductible but it is also subject to FBT. Christmas Gifts for Your Clients and Suppliers Are gifts to your clients and suppliers claimable? Gifts may be classified as “entertainment” or “non-entertainment”. For gifts such as wine, food, hampers, vouchers, etc., these are not considered to be entertainment. Non-entertainment gifts to clients or suppliers are deductible and GST is claimable. Gifts such as a holiday, membership to a club,... read more

5 lessons my dad taught me from running a small business

I am the product of a small business family.  My dad started his first business the year I was born and by the time I left high school, he was running his third business.  Right now, he’s on his fourth. Being part of a small business family wasn’t always easy.  There were good times, but there were also tough times.  The hours were long and everyone had to contribute.  Growing up, I started to notice the difference between our family and my friends’ families, where their parents had a regular, corporate job. Today, I am nothing but grateful for what my dad has given me. In fact, I feel very lucky and privileged because I got to witness my dad doing what he loved.  Like so many small business owners, he wouldn’t have been happy doing anything else. I don’t think he ever specifically told me he loved his work, and I don’t remember ever discussing the trade-offs of starting a business.  But what I did learn from him is that we should all do something that makes us happy.  This is an incredible gift which has shaped key decisions in my life. I also learned some great business fundamentals – lessons which I reflect on and share with others whenever I get the chance. 1. Dream big  Someone has to have a vision for your business and it should be you. Share your vision with your team, suppliers, customers … anyone who will listen.  We all love a story and love to be a part of something bigger than the here and now – your vision adds to the intangible... read more