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small business accounting Archives - Keeping Company

Meaningful marketing and profitable brands – Introducing The Drawing Board

By | External CFO | No Comments

The increasingly digital world can be a challenging place for brands and businesses. People have more choice, more control and more expectations. And less time, less patience and less trust than ever before. Enter Gareth Jones and “The Drawing Board.”

“Meaningful marketing is about creating value first rather than simply trying to extract value. It means potentially reframing how you connect with your customers. Selling the problems you solve rather than just the products. Meaningful marketing involves 3 key areas of focus. Brand Philosophy, Customer Experience and ROI (Return on Ideas.)”

Gareth has an impressive background with 17+ years experience as a strategist in media and marketing, working with global brands through to local start ups.

“Some of the things I am grateful to have been involved with;
At my recent agency I developed and launched an innovation division to help uncover new partners to work with and new opportunities for growth.
New business team lead for multinational media agency working on pitches including BMW, Diageo and Kraft Heinz.
Created the B2B brand philosophy and positioning for the Multi Channel Network
Cowrote and presented (with Viacom) a landmark research paper on the Modern Australian Mum and the impact of technology.
Helped implement Nine Entertainment Company’s cross platform sales brand “powered”
Currently working with 2 Australian start-ups helping them launch
Regular lecturer and mentor at TAFE NSW
Guest lecturer at UTS
Graduate of Seth Godin’s “altMBA”
Graduate of Seth Godin’s inaugural “The Marketing Seminar”

You can read more about Gareth and his accomplishments here.

Or get in touch to discuss how he can help your business with services like;
Marketing innovation
Digital and social strategy
Implementation management and measurement

The Drawing Board
M: 0400 395 354
www.thedrawingboard.com.au

End of Year Tax Planning 2017

By | Business Bookkeeping Services, External CFO, Tax Advice & Planning | No Comments

With 30 June fast approaching, now is the time to consider your year end tax position. We have compiled the following list of items to assist in the year end tax planning process.

We are always available to answer any queries.

INCOME

Deferral – You may be able to defer sales from the 2017 year to the 2018 year or bring forward sales into the 2017 year in appropriate circumstances
Company Tax Rate – Small Business Entities now include companies with turnover of under $10 Million and will be taxed at 27.5%
Unearned Income / Income In Advance – You should consider whether any income received is in advance of the goods or services being supplied and can therefore be taxable in a future year
Construction Contracts – The ATO allows construction contract revenue to be recognised under various methods and may impact when the revenue is taxable. The application of the different methods must be consistently applied
Interest and Dividends – Income is generally booked as revenue when received. If you have received a loan from a related company or trust you should consider whether a Division 7A dividend is likely to be paid
Personal Services Income (PSI) – If you provide services by yourself through a company or trust it is likely that you have derived PSI and any profits will be attributed to you directly

EXPENSES

Deductibility – You should check whether any expenses incurred during the year may not be deductible
Capital – SBE’s are entitled to an immediate deduction of all assets costing less than $20,000 excl GST, these assets should be bought and installed before 30 June 2017. Any assets over $20,000 will be depreciated in a pool at 15% for the 1st year and 30% for each year after. A pool balance of less than $20,000 can also be written off
Bad Debts – if you write off doubtful debts before 30 June you will be entitled to a tax deduction. You should consider whether you have made all necessary attempts to collect before writing off
Trading Stock – You should perform a stock take to ensure the correct gross profit is being taxed. As an SBE if your inventory movements is under $5,000 each year you are not required to perform a stocktake. You can choose to value your year-end stock as cost, market value or obsolete value
Employee Bonuses – If you are paying bonuses you should ensure that you are committed to paying them before 30 June and some documentation should be kept
Prepayments – As an SBE prepayments that have a period prepaid of 12 months or less are entitled to an immediate deduction

COMPANIES

Super Payments – Make sure all super payments are made and received by the Super Fund before 30 June 2017 to ensure deductible in the 2017 financial year
Maximise Deductible Super Contributions – The concessional cap for the 2017 year is $30,000 for persons aged under 49 at 30 June 2016 and $35,000 for persons aged 49 to 74, so you should consider maximising your contributions. Remember that your 9.5% is counted toward these caps. The cap drops to $25,000 per year for all ages from 1 July 2017
Division 7A Loans – You should review loans before year end to ensure you don’t accidentally trigger a debt forgiveness, deemed dividend etc and arrange a loan agreement with the company
Payment of Dividends – If you plan to pay a dividend or have paid a dividend you need to ensure the payment is allowed as well as documenting it via a Director Minute

TRUSTS

Trustee Resolutions – You should prepare a resolution or distribution plan before 30 June 2017 or earlier depending on your Trust Deed considering all types of income such as dividends, other income, capital gains. This will help to ensure income is not taxed at 49%
Meaning of Income – You should consider the definition of Income as per your Trust Deed to ensure your resolutions are effective in the distributions
Trust to Company Distributions – If these exist you need to consider Division 7A and whether all payments have actually been made to avoid any Unpaid Present Entitlements (UPE)
Family Trust Elections – You should review FTE requirements to ensure that franking credits can flow through and protect bad debts and carry forward losses
Trust Deed – Consider reviewing your Deed to ensure it is appropriate for the proposed distributions

CAPITAL GAINS

Timing of CGT Events – You should consider the timing of a capital gains tax event in respect to which financial year the event falls into noting that contract dates and not settlement dates are generally when the event occurs
Small Business CGT – Consider your ability to reduce any capital gains by applying the concessions
CGT Discount – Where assets are held for more than 1 year they may be entitled to a 50% discount on any CGT payable

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Budget_Update_from_Ryan-Miller

How will the 2016 federal budget effect your business?

By | Tax Advice & Planning | No Comments

We have summarised the key points coming out of the May 2016 federal budget that we feel relate most to our client base. If you require any further clarification or have any questions please contact us.

SMALL BUSINESS

Increased turnover threshold for small business income tax concessions

The small business turnover threshold will be increased from $2M to $10M from 1 July 2016 meaning that entities with turnover of less than $10M can access

lower company tax rate ie reduced to 27.5% from 1 July 2016
Instant asset write off up to $20,000 from 1 July 2016 to 30 June 2017
Simplified trading stock rules
Can account for GST on a cash basis and pay GST/PAYG nstalments calculated by ATO

The above does not grant access to the small business CGT concessions which are still only available for entities with turnover less than $2M that satisfy the $6M net assets test.

Unincorporated small business tax discount

The discount will be increased in phases over the next 10 years from the current 5% to 16%. From 1 July 2016 it will increase to 8% with the $1,000 cap per individual being retained.

GST reporting requirements simplified for small business

A trial of the new simpler reporting arrangements will commence on 1 July 2016 and be in place by 1 July 2017 for all business with turnover less than $10M making it easier to prepare and lodge the BAS.

OTHER ENTERPRISES

Reduced company tax rates

The company tax rate will be progressively reduced to 25% over 10 years.

From 1 July 2016 the company tax rate will reduce to 27.5% for all entities with turnover less than $10M.

INDIVIDUALS AND FAMILIES

Marginal tax rate changes

The threshold at which the 37% marginal tax rate for individuals commences will increase from taxable incomes of $80,000 to $87,000 from 1 July 2016. This means the marginal income tax rate on taxable incomes between $80,000 and $87,000 will reduce from 37% to 32.5%.

Medicare levy

The increases take into account movements in the consumer price index (CPI) so that low-income earners generally continue to be exempted from the Medicare levy. This change sees the threshold for singles increase to $21,335 and for couples with no children, the threshold will increase to $36,001. For single seniors and pensioners, the threshold will be increased to $33,738 and for senior and pensioner couples with no children, the threshold will be increased to $46,966.

Medicare levy surcharge

The surcharge payable on taxable income for a person who is married to $21,335.

SUPERANNUATION

Div 293 tax income threshold reduced

The Div 293 threshold (the point at which high income earners pay addition contributions tax) will be lowered from $300,000 to $250,000 from 1 July 2017. The annual cap on concessional superannuation contributions will also be reduced to $25,000 (currently $30,000 under age 50; $35,000 for ages 50 and over).

Tax exemption on earnings supporting income streams removed

The tax exemption on earnings of assets supporting Transition to Retirement Income Streams (TRISs) will be removed from 1 July 2017 (ie income streams of individuals over preservation age but not retired).

A rule that allows individuals to treat certain superannuation income stream payments as lump sums for tax purposes will also be removed.

These changes will ensure that TRISs remain fit for purpose, are not accessed primarily for their tax advantage, and still meet the objective of supporting people who want to remain in the workforce.

Lifetime cap for non-concessional superannuation contributions

A lifetime non-concessional contributions cap of $500,000 will be introduced. The lifetime cap will take into account all non-concessional contributions made on or after 1 July 2007, from which time the ATO has reliable contributions records, and will commence at 7.30 pm (AEST) on 3 May 2016.
The lifetime non-concessional cap will replace the existing annual caps which allow annual non-concessional contributions of up to $180,000 per year (or $540,000 every three years for individuals aged under 65).

Contributions made before commencement cannot result in an excess. However, excess contributions made after commencement will need to be removed or be subject to penalty tax.

The measure which will be available to all Australians up to age 74 will provide support for the majority of Australians who make non-concessional contributions well below $500,000 and flexibility around when they choose to contribute to their superannuation.

Harmonising contribution rules for people aged 65 to 74

The current restrictions on people aged 65 to 74 from making superannuation contributions for their retirement will be removed from 1 July 2017. People under the age of 75 will no longer have to satisfy a work test and will be able to receive contributions from their spouse.

Currently, there are minimum work requirements for Australians aged 65 to 74 who want to make voluntary superannuation contributions. Restrictions also apply to the bring-forward of non-concessional contributions. In addition, spouses aged over 70 cannot receive contributions.

The government will remove these restrictions and instead apply the same contribution acceptance rules for all individuals aged up to 75 from 1 July 2017. The measure will allow people aged 65 to 74 to increase their retirement savings, especially from sources that may not have been available to them before retirement, including from downsizing their home.

Catch-up concessional superannuation contributions

Individuals with a superannuation balance less than $500,000 will be allowed to make additional concessional contributions where they have not reached their concessional contributions cap in previous years, with effect from 1 July 2017. Amounts are carried forward on a rolling basis for a period of five consecutive years, and only unused amounts accrued from 1 July 2017 can be carried forward.

The measure will allow people with lower contributions, interrupted work patterns or irregular capacity to make contributions, eg women or carers, to make “catch-up” payments to boost their superannuation savings. It will also apply to members of defined benefit schemes, with consultation undertaken to minimise additional compliance impact for these schemes.

Restrictions on personal superannuation contribution deductions eased

From 1 July 2017 all individuals up to age 75 will be allowed to claim an income tax deduction for personal superannuation contributions.

This effectively allows all individuals, regardless of their employment circumstances, to make concessional superannuation contributions up to the concessional cap. Individuals who are partially self-employed and partially wage and salary earners, and individuals whose employers do not offer salary sacrifice arrangements will benefit from these changed arrangements.

Individuals that are members of certain prescribed funds would not be entitled to deduct contributions to those schemes.

Prescribed funds will include all untaxed funds, all commonwealth defined benefits schemes, and any state, territory or corporate defined benefits schemes that choose to be prescribed.

Low income superannuation tax offset introduced

A low income superannuation tax offset (LISTO) will be introduced to reduce tax on superannuation contributions for low income earners from 1 July 2017.

The LISTO will provide a non-refundable tax offset to superannuation funds, based on the tax paid on concessional contributions made on behalf of low income earners, up to a cap of $500. The LISTO will apply to members with adjusted taxable income up to $37,000 that have had a concessional contribution made on their behalf.

The measure will effectively avoid the situation in which low income earners would pay more tax on savings placed into superannuation than on income earned outside of superannuation.

Superannuation transfer balance cap introduced

A balance cap of $1.6m on the total amount of accumulated superannuation an individual can transfer into the tax-free retirement phase will be introduced from 1 July 2017. Subsequent earnings on these balances will not be restricted. This will limit the extent to which the tax-free benefits of retirement phase accounts can be used by high wealth individuals.

Where an individual accumulates amounts in excess of $1.6m, they will be able to maintain this excess amount in an accumulation phase account (where earnings will be taxed at the concessional rate of 15%). Members already in the retirement phase with balances above $1.6m will be required to reduce their retirement balance to $1.6m by 1 July 2017. Excess balances for these members may be converted to superannuation accumulation phase accounts.

A tax on amounts that are transferred in excess of the $1.6m cap (including earnings on these excess transferred amounts) will be applied, similar to the tax treatment that applies to excess non-concessional contributions.

Anti-detriment death benefit provision removed

The anti-detriment provision in respect of death benefits from superannuation will be removed from 1 July 2017.

The anti-detriment provision can effectively result in a refund of a member’s lifetime superannuation contributions tax payments into an estate, where the beneficiary is the dependant of the member (spouse, former spouse or child). Currently, this provision is inconsistently applied by superannuation funds.

Removing the anti-detriment provision will better align the treatment of lump sum death benefits across all superannuation funds and the treatment of bequests outside of superannuation. Lump sum death benefits to dependants will remain tax free.

GST

GST extended to low value goods imported by consumers

GST will be extended to low value goods imported by consumers from 1 July 2017.

The intent of this measure is that low value goods imported by consumers will face the same tax regime as goods that are sourced domestically.

Tobacco excise to increase

Tobacco excise and excise-equivalent customs duties will be subject to four annual increases of 12.5% from 2017 until 2020.

That’s all for now.

Need assistance or advice? We’re here to help.

Contact our friendly team now.

1300 533 787 . service@keepingcompany.com.au

 

why small businesses need accounting software today

By | External CFO | No Comments

If you’re a small business owner and have the goal of being successful and making money, then you absolutely need to be using an accounting software. Regardless of the structure, sole trader, company, partnership or trust, accounting software will greatly help you run your business.

Accounting software has progressed in leaps and bounds in the past few years with fantastic technological advances for the end user. The software has also moved to the Cloud. “Cloud” accounting means that there is now no physical software to install and the file is stored in servers and located via the internet. Cloud providers such as MYOB have the same security as the major banks, so if you use internet banking you should not have any security concerns.

The advantages of using accounting software in the Cloud for small business owners are as follows:

Real time access to financial information – by being able to access your accounting software file any time you want you will be able to make informed and up to date decisions about your business.
Automatic bank feeds – one of the major advancements in Cloud accounting is “bank feeds”. Bank feeds is when your transactions are updated in your accounting software when they appear at the bank. This saves you time in data entry and possibly the additional hours of a hiring a bookkeeper to manually enter all transactions.
Multiple user access and no version control issues – with your file stored in the Cloud you are able to have multiple users logged into the data at the same time. This will allow you to keep working on your file while the accounting is working at the same time which means no version control issues.
Add-on solutions – there is a huge marketplace for add-on software that synchronizes with your cloud accounting file. The add-on software can assist the small business owner with debtor control, inventory, project management and payroll to name a few. A savvy small business owner will do some research of the software to see what will best improve the way business is conducted.
Improve cash flow – by being able to review your debtors in your accounting software you will be able to make decisions about collection and credit extension. The ability to issue online invoices via email will mean the invoice gets to the client faster, which means faster payment (hopefully).
Processing payroll – accounting software packages help the small business owner calculate the correct amount of superannuation payable as well as PAYG to withhold on wages, which means no more manual calculations and errors that may result in fines and penalties from the ATO.
Make a tax change for the better this end of financial year with MYOB AccountRight, it’s the power to manage business, your way. For further information or assistance with setting up or upgrading please contact Keeping Company on 1300 533 787.

The information provided here is of a general nature for Australia and should not be your only source of information. Please consult an experienced and registered tax agent as each small business’s circumstance will vary for end of financial year.
By Ryan Miller, published 1st June 2015 for MYOB “The Pulse”.

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