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3 Small Changes That Keep Your Financial Health In Check

3 Small Changes That Keep Your Financial Health In Check

For people who are not a fan of numbers, bookkeeping can be a daunting task. Taking bookkeeping for granted does not come as a surprise for business owners who do not have a proper bookkeeping system in place. Bookkeeping may only be a tiny fraction of your business, but it creates a serious impact on your financial when it is habitually ignored. Surprisingly, it does not take rocket science, but only some simple habits to ensure your financial health stays intact. 

1. Monitor your business expenses

It is easy to lose track of the money you are spending when you think that they will not seriously affect your cash flow. However, special events, travels and even lunches can accumulate. If you are going to check your tax records, you may be wondering why you have zero balance when you are only spending a minimal amount. Audit your expenses so you will know whether or not you are overspending. Aside from keeping financial details, you will also have to prepare audit. Making this a habit will ensure that you are not going to miss out any essential information. You will also have peace of mind as you know where money is spent. 

2. Put aside money for taxes

Delayed tax payment can result in incurring interest and penalties. Constant delays can affect your cash flow and instead of allocating money for paying your monthly bills, you end up using the money for penalties. The plan of expand your business needs to take a backseat as you need to prioritise tax payments. A simple neglect of tax payments can definitely hurt your business. Setting aside money for taxes can save you from these inconveniences and avoid paying unnecessary penalties. 

3. Track your invoices

As your business grows, you will need to monitor your clients including payments made and missed payments. Identifying the clients who have already made a payment and those who have not can be challenging without a bookkeeping system. When monitoring your invoices, make sure you have bookkeeping software that will be able to generate invoices and provide information of clients who have not yet made a payment. 

How To Set Up A Business In Australia?

How To Set Up A Business In Australia?

Setting up a business is not an easy decision to make. You need to be well-prepared for the challenges ahead and make sure that you can meet the demands and stay focused despite the distractions. If you have been dreaming to become a successful business owner, you need to comply with the requirements involved in product development, marketing, finance and many others. Your business will not be in operation if you still lack the basic but essential requirements. 

1. Know your business structure

It can be pretty exciting to toy with the idea of putting up a business, but behind the aesthetics are processes that you may not be prepared to face. The first step to starting a business is determining your business structure. It is vital to know the kind of structure that suits you and find out the advantages of each so you will know how you are going to manage your business. Do you prefer to be a sole trader or be in a partnership? 

2. Register your business

You will also need to business name to give your company an identity. It is also important to note that having a business name is not enough as you need to get it registered. You might run the risk of sharing the same name with another business. Registration should take precedence over creating business cards, websites, business cards and logos. The Australian Securities and Investments Commission (ASIC) still has to accept your business name prior to using it. Aside from your business name, you will also have to registered your logo as a trademark. 

3. Get an ABN

An Australian Business Number (ABN) is essential to businesses that are registered to collect GST. The number can be secured from the website of Australian Business Register. Aside from ABN, you will also secure a Tax File Number (TFN) from the ATO if you are in a partnership. 

4. Familiarise PAYG payments

All employees must make PAYG payments and as a business owner, you need to know the taxable amounts deducted from your employees' salaries. You will also need your accountant's advice when it comes to meeting your tax obligations. 

5. Secure licenses, permits 

Permits and licenses are important for your business to be in operation. It is also imperative that you check ATO's website so you will have an idea about your eligibility for fuel tax credits. It will also be helpful if you familiarise yourself with consumer and privacy laws as they are also part of your legal responsibilities in setting up a business. 

6 Reasons You Should Not Create Any Room For Bad Bookkeeping

6 Reasons You Should Not Create Any Room For Bad Bookkeeping

Managing your business takes skills that only a few businessmen could master. Perhaps, you have already been venturing into a type of business where you need to be keen on your finances. Without a doubt, bookkeeping is the heart and soul of your business. It is not just a task you need to complete so you can fulfil your tax obligations. In fact, keeping an eye on your financial records can save you from being dragged into a potential lawsuit. Some businessmen can be so careless that they pay little attention to the business' important aspect. 

If you have already developed the habit of putting all of your business' financial records in one chequebook, being confused will never come as a surprise. It can be a huge problem in the end, but if you see to it that your business transactions are properly sorted and recorded, you can easily track if something in your business process is not right. 

Reasons To Master Your Business' Bookkeeping Skills:

Provides better records. 

When you consider separate banking and ensure that the money intended for your business is not spent for your personal expenses, you will begin to notice that your bookkeeping procedures have also improved in the long run. As a result, you will be able to provide better records, which can create a positive impact on your tax return. 

Creates corporate veil.

If you intend to form a new corporation, one of the best practices you need to follow, especially when managing a small business is to create a separate chequebook.  This practice helps you identify that bookkeeping is your business's distinct entity and you avoid confusing your business funds for your personal funds. 

Does Your Business Face These Payroll Challenges?

Your employees are also the lifeblood of your business because they are the ones dealing with existing and potential clients. As a business owner, it is important that you are well-versed with the details of your employees' payroll. That said, they need to get a fair amount for the service they have rendered. There can be numerous problems associated with payroll. This is why no employers can afford to make mistakes because it is the employees' money that is at stake.

1. Payment Summaries

It is necessary for employers to tax employees correctly as they may end up getting more or less than what is due to them. Once payments are not set up correctly, it will reflect on the annual Payment Summaries. The sad part of this oversight is that the ATO will be one to benefit from the money that is supposed to be awarded to employees.

2. Employee's Tax

Since calculating employee's tax can be time-consuming, using small business bookkeeping software is a good idea. However, there are taxes that require manual calculation such as the unusual payments. These unusual payments include bonuses, terminations and commissions. Since they are calculated manually, the details need to be reviewed to avoid undertaxing or overtaxing employees.

3. Default Superannuation Fund

Employers must provide a choice of superannuation to employees. However, there can be cases when the worker does not select a fund and the choice will be left to the employer. The default fund is selected for making a payment and it is the employer who selects the default fund.

4. Record Keeping and Pay Slips

When it comes to keeping receipts, businesses are recommended to file them for a maximum period of 7 years. The essential records that should be filed include leave records, hours worked super contribution, pay records, payment details and many more. These records should be treated with confidentiality as they contain employee information. The employees should also have access to their pay slips within one working day of pay day. If the employee is on leave, the employer should include specific information.

5. Superannuation Obligations

Superannuation is specifically designed for ordinary time earnings. Superannuation can also be applied bonuses, allowances and loadings. Contractors who are sole traders should make a payment of superannuation based on the working arrangement's nature.

There are business owners who consider a worker as a contractor but this does not necessarily exemptt them from paying superannuation. The online contractor tool will be able to help you determine if the worker needs to pay the superannuation. You should also be aware of late payments because the ATO implements stricter rules for delayed superannuation payments. Even the director can be held liable for the company's late payment.

Lodge Your Tax Return Online

Tax returns can be lodged with a tax agent, but there is an easier and safer way to lodge your tax return.

Benefits of lodging your tax return online:

  • myTax allows you to lodge at your convenience as it is available 24/7
  • the information from your bank, employer and government agencies will be pre-filled by late August so the process will be quicker and easier for you
  • you are assured that your information is protected as myTax uses online banking encryption
  • your refund is available within 2 weeks
  • all individuals including sole traders can lodge their own tax return

MyTax is web-based so you do not have to download anything. Using any device-computer, tablet or smartphone, you can lodge your tax return online.

MyTax features and upgrades in 2016 include:

>new online tools that record depreciation and capital gains
>ability to amend or lodge prior year returns
>fully integrated tools and calculators
>myDeductions data automatically loads into your return except sole traders
>helpful messages that will guide you through lodgment

Pre-filling information

The information that you lodge is partially complete by automatically loading the current year information from organisations that report to the ATO including banks, employers and government agencies and the data from your account activity and previous tax returns. Once the information is ready, all you have to do is to review them to know if you need to update incorrect details or add missing details.

More often than not, pre-filling information is available within a couple of days after it has been reported to the ATO. The information is available by early August. If you want to check the availability of pre-fill information for your health funds, investment income and government payments, you simply check the website of myTax.

The information that can be pre-filled

Some of the information that can be pre-filled include your salary, wages, dividends from your shares, interest credited to you by the bank, private health insurance information and more.

The information will greatly depend on when the information was received from your employer and other organisations once you lodge your return. According to the law, it is necessary for organisations to report your information by August 14 for details of payment summaries and October 31 for information about your investments. It is also ideal for organisations to send the information much earlier. You have the option to check the information to pre-fill by starting your online return.

It is also important to resolve any discrepancies with the organisation that provided your data before you lodge your return. The ATO checks the information that organisations have provided and matches them with the information you report on your tax return.