Structure is very important. Your accountant may have set up your structure many years ago, and at that time it may have suited your needs perfectly well then.
But what about now? Changes in tax rules, legislative changes and, of course, changes in your own business may mean it’s time to review and revamp. If you haven’t had this discussion with your accountant lately, ask them if your current structure is still good for you. If you are a sole trader and your income has increased, then definitely have this conversation with them.
Accounting is also about asset protection
So often when clients talk to me they are thinking about (legally) minimising their tax, but structure (ie company, trust, partnership, corporate trustee etc) is also about asset protection. You absolutely should have insurance, good business practices, but also consider what assets you have which you want to protect. Talk to your accountant if you have concerns or this bothers you. Remember that quite often Directors Guarantees and other supplier contracts can open you up to being very exposed; take care to read things before you sign them and ensure you understand your structure and the do’s and don’ts around it.
Keep your business and personal records separate
In order to be effective and minimise the time you or your bookkeeper spend on bookkeeping activities, keep your business and personal records and transactions separate. Have a separate credit card for business and, of course, a business bank account. Try to run all personal transactions outside your business accounts. If you need funds, far better to transfer an amount of money to your personal account rather than pay personal bills from your business account. On that note, if your bookkeeping is clean, then your accountant can focus on your tax and accounting advice rather than getting caught up in messy bookkeeping.
Not all allowed claims are immediately deductible
Business owners often believe that if they purchase an asset for the business, then that is a deduction. Yes, whilst it is, sometimes it’s not immediately deductible and has to be depreciated over a number of years. Tax rules are always changing, sometimes the limit is $1000, although at present it is $20,000. However, an exclusion to this rule is website setup costs which must be depreciated over a number of years. Another example is, say, an investors rental property fence replacement. If you replace the whole fence it has to be depreciated, but if you replaced it in parts (eg, when a part was damaged due to a recent storm), then that part is immediately claimable. Be sure to have those discussions with your accountant, or put enough information in the memo field of the transaction so that s/he can claim it in the correct way.
Accounting isn’t just about tax
Whilst some accountants only focus on tax returns, many (like us at Tax Depot) can also focus on what your figures can tell us to help provide valuable additional services. We can assist with everything from cash flow forecasts, through to analysis, margins and the calculation of break-even figures. Knowing how your business is performing is a huge part of daily decision making – accountants can help you know and understand your figures. And yes, we do tax returns. When a client comes on board with us, we determine how much (or little) they require in services and action accordingly.
Investment Property Construction Costs
With an investment or rental property you are able to claim building costs which may include extensions, alterations, as well as any structural improvements. These are called ‘capital works deductions’. Generally speaking, these are at a rate of 2.5% of the construction cost being spread out (amortised) over 40 years. If your property is commercial (and you are GST registered) then you can claim GST, however, if it’s a residential property then you cannot claim GST, but remember to include in your records, the GST inclusive price so that the GST makes up part of that total deduction. If there was a prior owner who made a claim for capital works, they should give you that information; so be sure to ask, it’s important to know. If you use the services of a professional make sure they are qualified valuer. Land should not be factored into the calculation when working out your construction costs.
You can ask us questions
At Tax Depot we don’t charge for every second we’re on the phone … so if you have a question, please ask it. Perhaps you’re about to purchase a new business vehicle and don’t know which finance would work best for you? Possibly you want to buy an industrial shed and are unsure if you can afford it? Talk to us. We can also help with business analysis, budgets, forecasts and assisting in the calculations of margins and break-evens. It’s simply a matter of asking – you don’t have to wait till the end of the year to talk to us.Timely reminders*
7th Each month Payroll Tax
21st January – monthly BAS is due
28th January – quarterly Super is due (for October to December 2017)
Please note the quarterly BAS (due to Christmas) is 4 weeks later; 26th February.
*For those dates above which have passed, so be sure to action urgently if not already completed.
At Tax Depot, we service Logan, Springwood and Beenleigh clients in all areas of taxation, tax planning, bookkeeping and business accounting services.
If you need assistance or advice from our CPA qualified accountants, call us today on 1300 722 955; we would be only too happy to discuss how we can help you and your business.
Noel Ryan BCOM CPA