It’s a question often asked, do I need to have a specific tax accountant?
A good accountant should be able to answer your questions, and guide you throughout the course of your business’ life. So picking the right one is just as important as picking the right business partner.
A good accountant:
- Doesn’t need to have all the answers on hand. However, they should know where to look. They should be able to tell you tax or other government incentives, that could allow your business to thrive.
- Be completely transparent. You understand your fee structure, and never feel surprised by an accounting bill.
- Act in your best interests, even when you don’t always like the answers.
- Explain to you why you can, and why you can’t do certain things when submitting paperwork to the ATO, or ASIC.
- Be available when you need them. Everyone gets busy, but a good accountant will at least be able to get back to you in a timely manner (not weeks later)
- Has the ability to do more than lodge a tax return. Can advise you on how to grow your business, or achieve your goals.
- Promotes, and engages in conversation more than once a year, therefore understanding you and your goals in life.
But why settle for a good accountant, when you can have a great one. Contact LSKS to find one that will work with you.
This is a tricky question as the services that you demand from your accountant (or even the services that they might offer) will be different from accountant to accountant.
What you really want:
- Fixed fee service where you know what you’re paying well before you receive the bill
- No surprise bills randomly during the year for simple discussions or queries
- An understanding of what work fits outside the scope of your normal fee
- The opportunity to add more services to your fee when you need them, not before
- The opportunity to “dial down” services when you don’t need them
The above sounds very much like common sense, but unfortunately it isn’t always & the industry has been built on time sheet billing rather than fixed fees. It should be the requirement of the accountant to increase efficiencies internally in order to keep your accounting work on budget, not the other way around.
As business’ grow, individuals often look to set up various structures to own the business. A company is often setup for your larger business’. With a company comes a few more responsibilities. As a company is separate from its owners, there is the need to lodge a separate return for the company.
Income and expenses are calculated for the company, with the major difference being the tax rates applied.
They are taxed at flat rates:
- 28.5% for your smaller trading companies
- 30% for any other company
This is all calculated through the submission of your company tax return. The degree of separation between the owners of the company, and the company itself does have other advantages, such as a layer of protection between the personal assets of the owners, and the dealings of the company itself. If you would like to know more about whether a company is right for you, contact our team at LSKS Accounting & Auditing, where we tailor business structures to your needs.
Depending on your trading structure will depend on the steps required in order to close your business.
Some of the key things to remember when closing down a business are:
- Irrelevant of how far into the tax year you are, you will still need to lodge a tax return (final return) for the business after 30 June. This means keep your records in good order even after you have closed the business.
- You should cancel your tax registrations (GST, PAYG, etc) straight away once you have stopped trading so you don’t keep having BAS’s issued from the tax office.
- Structures such as companies are registered with ASIC as well, so until they are formally closed, you may still be incurring ASIC fees.
- NOTE: your structure may have benefits such as tax losses in it which will be completely lost if closed, it is worth checking with your accountant prior to closing to make sure there is not a better use for this tax entity.
It’s mandatory to register for GST once your annual revenue exceeds $75,000 or is likely to exceed it. However, you have the option to voluntarily register before this time. Things to consider – the volume of your expenses that contain GST, compliance costs (you’ll need to lodge quarterly BAS) and if you see the business growing.
Other things that you may be able to claim include:
- Tools, Equipment & other assets – if you use these for your work you may be able to claim the cost. Any private use needs to be apportioned. If the item costs less than $300, and isn’t part of a set, you can claim the cost outright. If it is more than $300 it will need to be depreciated.
- Printing, stationary etc – if you need to purchase these for your work, and are not reimbursed, then you can claim the cost.
- Union or Membership fees – if these relate to your employment then they are deductible
- Books, periodicals and digital information – things such as online subscriptions, electronic published materials, ebooks etc – if they related to your employment you can claim the deduction
- Self education expenses – Are deductible when the course you undertake leads to a formal qualification and meets the following conditions.
The course must have a sufficient connection to your current work activities as an employee and:
- Maintain or improve the specific skills or knowledge you require in your current work activities or
- Result in, or is likely to result in, an increase in your income from your current work activities.
You cannot claim a deduction for self-education expenses for a course that does not have a sufficient connection to your current work activities even though it:
- Might be generally related to it, or
- Enables you to get new employment.
Child care is not a deductible expense
Size of accounting business – There really isn’t a preference on the size of an accounting firm as there are pros and cons for both. The type of experience they have in the industry is just one of a myriad of factors that is considered when hiring a new accountant.
Accessibility – When taking on an accountant to assist your business, it is important to make sure there is always a point of contact to answer any queries in a timely manner. At Carbon, we have a large team of accountants, who are supported by client liaison managers to ensure queries can be dealt with in times when accountants are in meetings. We use online accounting software Xero, plus have a dedicated client portal, which allows clients to access their account data anytime, on any device, in any location.
Experience – How long has the accountant been successfully operating?
Qualifications – Aside from this tertiary qualifications in accounting and tax as a bare minimum, you should look for an accountant who has developed their skills by gaining either a CA (chartered accountant) , CPA (certified practicing accountant) or IPA ( institute of professional accountants). With the ever-changing landscape of the legislation in accounting and tax, it is important that accountants are willing to keep abreast of the changes that are made every year.
Personality – Finally the last aspect of hiring an accountant will be based on their personality and their fit within the organisation. Are they a good fit for your business and can you work with them to increase the success of your business? It’s best to talk to a couple of accountants to see who would be most suitable for your business.
Cost – The cost of an accountant can vary significantly depending on what services you require them to carry out. It’s a good idea to speak to several to get an idea of pricing. Don’t always go for the cheapest; the advice and work done by accountant can have a huge affect on the performance of your business. An upfront saving of $1000 could result in missing out on $10,000 if you are not given the right advice. At LSKS , we discuss all of our fees upfront, so there are no surprises.
People often ask, “what are the advantages of being a sole trader?” Is it worth it to be your own boss?
When comparing it to being an employee, some of the benefits include;
- Relative easy to set up and run for smaller business owners
- Set up costs are very low (when compared to other structures)
- Likely to be eligible to small business tax concessions.
- You control of your day to day affairs.
- Increased ability to claim business related deductions for business related items.
But, there are limitations to going down this path. If you are trying to build more than just a replacement for the income you would have earned as an employee, you would need to be open to other structures. Whilst the cost of setting up and maintaining other structures would be higher, the tax benefit often outweighs that cost.
If you would like to know more, contact our specialists at LSKS to have a free consultation with regard to setting you up for business success.