GST

Are you an Uber driver?

 

delorean-uber

The sharing economy is such a hot topic right now.  Think Airbnb, Uber and Airtasker.

If you bring in income via the sharing economy you might be disappointed to learn that tax rules apply to the sharing economy just like they do to the rest of the economy.

The Federal Court of Australia has handed down its decision that ride-sourcing is taxi travel.  For GST purposes, the word taxi means a car (vehicle) made available for public hire that is used to transport passengers for fares.  Don’t be caught out thinking that you earn less than the current GST registration threshold of $75,000 – it doesn’t apply to ride-sourcing enterprises!

In Australia, if you operate a ride-sourcing enterprise you are required to:

  • keep records
  • have an Australian business number (ABN)
  • register for GST, regardless of how much you earn
  • pay GST on the full fare received from passengers for each trip you provide
  • lodge activity statements
  • include income from ride-sourcing in your income tax returns.

Not sure if what you are doing is considered running a ride-sourcing enterprise?  Australian Taxation Office website provides more information:

Providing taxi travel services

 

Happy bookkeeping…

 

Looking for more related tips?

 

 

 

 

 

 

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4 Easy Ways to go Paperless

Watercolour splash final

I think the first hurdle to going paperless is probably a psychological one – you like knowing that you can physically hold those important pieces of paper and it is hard to change systems that you’ve been using successfully for years.

I’ve recently gone through the process of getting accounting records to an auditor who was interstate. It involved a lot of scanning of supporting paperwork, which was very time consuming. Now that I’ve gone through that process I’ve changed the way I work throughout the year for that organisation so that I will be better prepared for next year’s audit. The added bonus is that more of the organisation’s documents will be saved in soft copy that can be easily backed up with the rest of the accounting information.

Here are 4 easy ways you can go paperless:

1.  Online banking

This is probably the easiest and most readers have probably already embraced this one. Pretty much everything can be paid by electronic funds transfer, credit card or PayPal. If other people are responsible for making payments in your business, don’t forget to protect your hard-earned cash by having 2 separate people responsible for authorising online payments.

2.  Emailing customer invoices and statements

No need to print them out and post them – email them from your accounting software instead.

3.  Cloud accounting software

If you don’t have reliable internet, then cloud accounting software may not suit your business. However cloud accounting software providers are introducing more and more features to help you move towards having a paperless office. For example, you can have bank transaction info fed into your accounting program direct from the bank. Another example is saving copies of documents that have been sent to you straight into your software without having to print them off first. Whilst entering transactions in Xero I can use my laptop’s webcam to take a photo of supporting documents and attach them right then and there. Very cool!

Australian businesses have the option of keeping electronic copies of source documents instead of hard copies, as long as these copies meet the requirements outlined by the Australian Taxation Office. Be sure to check the record keeping requirements applicable to your country.

4.  Paperless Reporting

For those of us Down Under, the Australian Taxation Office is very much moving towards paper-less reporting. I’m sure the tax authority in your own respective country is either offering options for paperless reporting, or will be in the near future. For example, Business Activity Statements can be lodged electronically using the Business Portal. You can get a nice little reminder email when the next one is available to complete and lodge, as well as direct confirmation that your BAS have been received (no more posting it in the mail and hoping they receive it on the other end).

These tools are just the tip of the

I’m not suggesting everyone jump in the deep end and eliminate every piece of paper in the office – one step at a time is great and will give you a chance to get used to new ways of working without being overwhelmed. On the other hand, you might be an all-or-nothing person that wants to jump right in and embrace the concept fully.

I wish you well in your quest to go paperless!

What tools do you love that have helped you go paperless? Don’t be shy – I would love to hear your ideas in the comments section below!

Tip for Small Business – Better Cashflow # 1

Accountant

Do you put money aside regularly to help cover your tax obligations?

Businesses in Australia that are registered for GST are required to regularly submit Business Activity Statements. This could be monthly, quarterly or annually. (If you are paying a contract bookkeeper to do this, they must be a registered BAS Agent).

If having to come up with money to cover your ATO obligations is causing you stress why don’t you review amounts owing more regularly and put them aside into another account? This idea works equally well for larger businesses or sole-traders and freelancers.

Steps:

  1. GST – generate GST report for the past month. Subtract GST paid amount from GST collected amount. This is what you owe the ATO.
  2. PAYG withholding – generate payroll reports for the previous month to find out how much you withheld from employee pays.
  3. PAYG instalments & fringe benefits tax – check previous BAS to see what instalment amounts are going to be due with your next BAS.
  4. Transfer the total amount from steps 1-3 into another bank account.
  5. Repeat on a regular basis eg monthly.

Not only do you have the money sitting there available to pay your BAS liability when it falls due, but you can also pay your other expenses with confidence knowing that your tax obligations are taken care of. So easier business decisions, less stress and improved cashflow overall.

I have other ways to improve cashflow that you can implement into your small business and will post these soon. In the meantime, you could check out my post from a couple of years ago 14 Cashflow Tips for Small Business  and also Have you heard about cashflow forecasting?

Do you put aside money regularly to meet your tax obligations?

Common GST Mistakes

Even though we have had the Goods and Services Tax here in Australia since July 2000 there are some GST rules that are harder to remember than others – particularly if we aren’t entering these transactions on a regular basis. Included here are some of the more common errors.

  • Claiming all of the GST of an expense that is part personal – you can only claim that portion of the expense relating to the business.
  • Claiming GST credits for contractors or suppliers not registered for GST
  • Claiming GST credits for residential rental property expenses
  • Claiming GST on the total of business insurance policies – GST cannot be claimed on the stamp duty component of the premium. For more info on GST and stamp duty, click on the link to my previous article Entering Transactions with GST.
  • Claiming GST credits for bank fees and charges.
  • Not claiming GST credits for credit card merchant fees
  • Claiming GST credits for wages and superannuation
  • Claiming GST credits for fines

If in doubt about the way you are entering any of your GST transactions, it is a good idea to speak to a BAS agent, accountant or to refer to the ATO publications on GST, which can be viewed online or sent out to you via post.

Happy bookkeeping…

Not for Profits – 6 ways your bookkeeping differs from other organisations

church

There are many types of organisations out there (one of the reasons I enjoy bookkeeping), and not-for-profits are one type of organisation in particular that require a special approach to their bookkeeping.

Terminology – Terms such as “profit” and “loss” are usually replaced with “surplus” or “deficit”.

Complex budgets – Broken down into many different departments or auxiliaries. Essential for decision-making and helps keep organisational spending on track.

Asset purchase – Often recorded as an expense, with adjustments made at the end of the financial year to transfer the amounts to the correct asset accounts.

Special tax concessions – Available for some registered charities in Australia. For example, income tax exemption.

Cash handling – A lot of trust put in volunteers, who may be handling large amounts of cash. Do you have good internal control procedures in place to reduce the risk of theft and lost money? For some tips on internal controls, refer to my previous tips in Reducing the risk of fraud and error in small business.

Non-Profit Sub-Entities – Treated separately to the rest of the organisation in relation to GST.

Who said bookkeeping is boring? Always something new to learn, particularly if you are a newly appointed Treasurer or Bookkeeper.

Have I missed something important that you have found to be different with not-for-profits? Please join the conversation and add your comments below.

Have you heard about cashflow forecasting?

Have you comColourful building block graphe across the term cashflow forecasting whilst skimming through business material? Maybe you have heard about it and thought to yourself that it’s pretty important but I don’t have time to look into it now?

Typically, a cashflow forecast shows your bank balance at the beginning of the period, the money you expect to come in, the money you expect to go out and then your final bank balance at the end of the period.

It gives you a chance to see periods in the year ahead where cash may be tight and periods where you may have extra cash on hand. Instead of flying by the seat of your pants, you can make more informed decisions about when to make your more expensive purchases or when you may need to look for additional finance.

For example – maybe you have kept an eye on your Profit & Loss Statement and your business is making a profit, however you don’t seem to have much cash on hand to pay your bills. You may have been spending money on capital items, have had to pay GST owed to the ATO or have large amounts of outstanding customer invoices – these transactions aren’t reported on your Profit & Loss Statement and are easily overlooked when trying to figure out where your money is going!

Reckon and MYOB both have cashflow forecasting tools. Otherwise a spreadsheet will also do the job. If you have been in business for a while you can use figures from the previous year and build on those.

If you would like to read more cashflow tips, click on the link to my previous article 14 Cashflow tips for small business.

Do you use some form of cashflow forecasting in your business – maybe the MYOB or Reckon tools? What do you think of them – I’d love to hear your thoughts.

Entering Transactions with GST

ImageHave you noticed that on your business vehicle registration notices the GST portion does not equate to a nice neat 11% of the GST inclusive total?  If the total payable for 12 months is $842 including GST, the GST portion is only $43.16 – not $75.18 as you might expect.  This is due to the inclusion of stamp duty.

Telstra bills are similar – but it is trickier to spot because they do not give you the GST amount listed clearly on the bill.  It is easily overlooked.  Insurance bills also need to be checked carefully.

As a consequence, you may need to enter some non-GST portions to these bills to get your GST to equal what the organisations are charging you.

Just a small thing – I know.  And it does mean your bookkeeping takes a little longer. However, once you are aware of what to look for and have entered a few bills it isn’t too hard at all.