Q1. What is a BAS?
- A Business Activity Statement, or BAS, is a form issued by the ATO (Australian Taxation Office) to all GST registered entities to facilitate the reporting of the entities GST related activity for the period.
- Where necessary, the Business Activity Statement also facilitates the reporting of small businesses PAYG withholding obligations, fringe benefits tax obligations and any PAYG income tax instalments that may apply to a business entity.
- The Activity Statements are normally issued quarterly, however in some circumstances, a business may be required or volunteer to complete monthly Business Activity Statements.
Q2. What's the difference between an ACN and an ABN?
- An ACN (Australian Company Number) is issued by the ASIC (Australian Securities and Investments Commission) to all new companies registered in Australia
- It facilitates the monitoring of these companies
- It is a unique identity code within the structure of the Corporations Law of Australia. Only a company can be issued with an ACN.
- An ABN (Australian Business Number) is a unique number issued by the ATO (Australian Taxation Office) to all entities that are in business.
- If an entity is trading as a business, no matter how large or small, they must apply to the ATO to acquire an ABN
- The ATO will then automatically issue a unique eleven digit number.
- They must show that ABN on any invoices they issue.
- The ATO will use the ACN as the basis for a company’s ABN
- A company’s ABN will always consist of their ACN with a two-digit pre-fix.
It is not necessary for an entity that has an ABN to be registered for GST if their annual turnover or income does not exceed $75,000.00. As mentioned, if you want further clarification, call David Jepsen on 02 8207 6721.
Q3. What is the tax amount for a business?
- 30% if over $25M turnover
- 27.5% for Small Business under $25M.
Q4. I'm new to business. Can you help me?
As your accountant for a new or existing small business, here’s a rough guide on what we aim to do.
- Recommend and establish a suitable business structure based on your requirements
- Establish a suitable method for accounting for the business
- Advise you of all obligations with the ATO
- Set up all necessary registrations with the ATO
- Provide Xero training through email and telephone support
- We are always available to answer client queries.
- So you can focus on operating your business, we will advise on the best way to prepare your business documents for us.
- Attend to all ATO lodgements and prepare accounts on a regular basis
- Provide meaningful reports that can be used in making the business operate more efficiently.
Q5. Do I have to include GST on Invoices?
- A business is only required to be registered for GST with the ATO if their annual turnover/income exceeds $75,000.00 per annum.
- Once you are registered for GST, you must, by law, add 10% GST to all of the invoices that you issue to your customers.
Q6. What Accounting packages do you work with and recommend?
There are many accounting packages on offer to businesses in the current market. Here at RTO Accountants, we specialise in using Xero cloud based software for the majority of our existing clientele. Xero has a ecosystem of add on applications that can make business easier that we can also assist you with. We have knowledge of most SME accounting systems and can work with them.
Q7. What items are tax deductible?
This is a very common question in business, especially for people who are new to the world of business. There is no easy answer as this will largely depend on your business structure and industry. With our many years of experience, we will guide you in the right direction in this regard to ensure that your business is claiming all possible deductions that it is legally entitled to do so. If you have any questions on this topic, we are always willing to help.
Q8. Is my car a business expense?
This will largely depend on the type of business that you are in and the structure that you trade under. In the majority of cases if you require a motor vehicle to travel between suppliers, meetings, places of business, etc, there will be some form of deduction available to you. There are a number of different ways of claiming motor vehicle expenses and we will gladly advise you of the right method for your small business structure.
Q9. What are the requirements for me to do my own payroll?
- In order for a small business entity to prepare its own payroll, it will require a small business accounting package such as Xero
- It is imperative that the Xero account is set up properly from the outset to ensure the smooth running of this aspect of the business.
- We will gladly assist your business in the establishment of your Xero account and provide the necessary training and ongoing support to ensure that the payroll function does not become a burden to your business.
Q10. Do I pay GST in invoices?
The short answer is Yes
- If you are business entity that is registered for GST then you are entitled to claim back any GST that you pay on your business expenses.
- The GST you collect less the GST you pay in your expenses is the amount you send to the tax office each quarter.
- You must keep all of your invoices/receipts for a period of 5 years to justify your claims on receipts greater than $75.00
Q11. How can I keep my accounting fees down?
There are many ways for you to be involved in the running of your business. As your business prospers you will find that your time becomes increasingly valuable to you. RTO Accountants are here to lift the burden of the administrative side of your business off your shoulders. This allows you to focus on running your business, and we hope, becoming more successful in the process. We also understand that some clients prefer to keep both hands on the wheel and we can tailor our accounting packages and support to suit the level of involvement that you require from us.
Q12. What is the best way to keep my records in order?
No matter the scale of the business, and in order to support the ongoing maintenance of your accounting affairs, it is imperative that every client has systems in place for filing their paperwork. If we feel that you could do with a ‘helping hand’ in this regard, we will gladly provide the right advice to ensure your records are maintained in an orderly, systematic manner.
Q13. What's the best business structure for me?
The most suitable business structure for you will depend on numerous factors. Here at RTO Accountants, we will work with you to gain the greatest possible understanding of your business needs as well as your personal goals to ensure that we can select the most appropriate business structure for your circumstances. This may be a:
- Sole trader
- Superannuation fund
- A combination of all these entities.
We can tailor our services to ensure that not only is your structure in tune with your personal goals, but also tax effective in the modern competitive business world.
Q14. Which RTO Accountants service package is best for me?
The level of involvement that we have in your business is entirely up to you. However, with our expertise and small business focus, we believe that the greater the role we play in your business, the more time you will have to focus on your core products/services. If you are unsure of which package is the most suitable, it may be best to give us a call to discuss your needs. Our phone number is 02 8207 6721 Remember, these packages are just a starting point. We can quite easily tailor a package to suit your specific requirements.
Q15. What records do you require to prepare my tax return?
If you refer to the client resources section of our website, you will see a comprehensive list of documents that we may require from you, depending on your personal circumstances. If there is something that you feel is relevant, but is not on our checklist, please let us know and we will advise you on whether those particular documents are needed by our office.
Q16. I'm based outside of Sydney, can you still help me?
We most certainly can. We have clients in all states across Australia, and given current technologies such as Xero accounting software, we are more than happy to assist you no matter where you are located. Modern communication makes this process pain-free as we are only ever a telephone call or email away from your business. We can also establish facilities whereby we can log into your business computers to assist you in any way we can.
Q17. What makes you the specialist in small business?
Based in Sydney and with over 25 years of experience as the accountant for small business, our knowledge and understanding of how business works as well as it’s complexities, is what clients find of most value. The advice, systems, processes and reporting we provide to our clients is what makes us the specialist small business accountant in providing accounting services.
Q18. What are the payment methods?
The accounting needs from one small business to the next vary significantly. As a result, payment plans to meet our clients needs are also flexible. RTO Accountants will provide a tailored plan for your business’s accountancy needs, allowing the flexibility required for your business. Generally, our clients are fixed with us for 12 months and can pay weekly, monthly or quarterly. Dependant on your needs, we supply an all encompassing small business accountancy service that allows you, the client, to get on with what you’re great at. Your easy payment methods are as follows:
- Credit Card – Visa or MasterCard
- Direct Deposit
For any further questions, don’t hesitate to contact us
Q19. I'm an existing business, can you help me?
As your accountant for your existing small business, here’s a rough guide of how we’ll help you once you join us:
- Establish what part of the business life cycle you are currently in, from startup, to growth, to maturity.
- Notify your previous accountant (if applicable) of our appointment, request all previous documentation and review previous accounts/tax returns to give us a better insight into your business.
- Assess reasons why your business is looking at changing accountants (if applicable) and address those issues as a priority
- Appoint ourselves as the registered tax agent with the ATO and ASIC, take control of the these relationships, liaise with the ATO to determine if all lodgements and payments are up to date, and if not, work with the ATO and you to have all lodgements brought up to date.
- Assess and amend any systems and their value to your business.
- We are always available to answer client queries and questions by email and telephone. We are also more than happy to attend on site for clients that find it hard to get away from their place of business.
Q20. What is FBT and how does it affect my business?
- Fringe benefits tax was first introduced in 1986
- It is a way of preventing many businesses from maintaining a relatively lavish lifestyle, having their business pay for it, and hence using the expenses as a way of minimising income tax obligations.
- The most obvious expenses that can be caught under the FBT umbrella are lunches and entertainment, motor vehicles paid for by business but available for private use of individuals, and other non-business expenses paid for on behalf of directors and employees of the business.
- FBT is an expensive tax to administer due to its complexity
- We often advise clients to do what they can to avoid having expenses that will come under the FBT income tax laws. Not just because of the 46.5% tax rate of FBT, but also because of the administrative efforts required to ensure compliance with the law.
If you feel that you may be paying for expenses that are subject to FBT can I strongly urge you to consider a better way of running your business. Having said that, some individuals may well be happy to pay the FBT if it means saving them some personal tax, but for the average small business owner, FBT is a headache that can and should be avoided.
Q21. What is the best way to go about creating a business plan?
- A business plan is often prepared when someone is looking at starting a new business or purchasing an existing business.
- Unfortunately, once small business owners get their hands dirty in the running of the business they can lose focus and forget about the business plan.
- A business plan should be set up for the long term, sure, have short term goals as part of the plan, but your ultimate aim is to achieve the long term goals.
- Any short term goals or objectives should also be checked to ensure that they are in synergy with the long term goals of the business.
- The business plan can, and should, cover all aspects of the business
- accounting and tax
- marketing and promotion,
- opportunities for expansion or diversification,
- ethical standard for the business and in more recent times, many business owners are even adding environmental impact statements as part of their business plan.
- A business plan should be a fluid document that is regularly referred to and updated.
- It can also be a great tool to show to your employees. by doing so, you show them that the business has a future and allow them to focus on the areas of the business plan that pertain to their role within the business.
It’s always good to run your business plan by your small business accountant so that you can work together to achieve your business and personal goals.
Q22. I am a business owner and want to change my small business accountant, can you help me?
If you are not satisfied with your current accountant and you want to change from your existing small business accountant, it is important you do so. Firstly, you need to contact your current accountant to let them know you will be changing accountants. Make sure that there is no current work pending completion and hence surprise billing. We will meet with you to have a chat about your current situation and the reasons you are wanting to change from your existing small business accountant. We have an open rapport with our clients which we believe is critical to making the relationship between us as your accountant and you our client, a success. As small business accountants in Sydney we communicate with all our clients in a clear, timely and understandable manner. This allows you to receive a better education in what it takes to run your business successfully in partnership with us.
Q23. What is Single Touch Payroll (STP)?
- Single Touch Payroll (STP) is being introduced by The Australian Taxation Office (ATO) to streamline the administration of employee payroll, tax and superannuation obligations.
- STP basically requires employers to report salary and wages, PAYG withholding and super information directly to the ATO at the same time the employees get paid.
Who does STP apply to and from when?
- It is compulsory for all employers with 20 employees or more based on a headcount as of 1st April 2018 (called ‘substantial employer’) to report via STP from 1st July 2018.
- Once you become a substantial employer, you are required to report through STP even if your employee numbers drop to 19 or less, unless the Commissioner of Taxation grants you an exemption.
- For employers with fewer than 20 employees at 1 April 2018, they may voluntarily report via STP from 1 July 2018.
- The Government has announced that it intends to expand STP to include employers with less than 20 employees from 1 July 2019.
What does this mean for employers? 1) Your payroll software must be STP-enabled or compliant to send the required information directly to the ATO. Right now, payroll software and service providers are updating their products and a list of STP enabled software will be ready closer to 1 July 2018. 2) Employers report salary and wages, PAYG withholding and super information at the same time the employees gets paid (based on their pay cycles). The ATO gets greater visibility of PAYG withholding and super information. This allows the ATO to perform data-matching to see if all Superannuation Guarantee Charge (SGC) and PAYG withholding obligations are met. Please note that SuperFunds are required to report to the ATO on the allocation of employers’ super contribution as they occur, so non-payment or late payment of super guarantee by employers can easily be identified by the ATO. 3) Employers may no longer need to provide payment summaries to employees because the ATO will provide this to the employees via MyGov accounts. Employers will also no longer be required to submit an annual PAYG report to ATO. 4) With STP, employers have the option to pay PAYG withholding more regularly (likely to be built into STP enabled software). There is no change to current payment due dates so if you are on quarterly BAS reporting, the payment due date is still the BAS payment due date. 5) Super payment due dates also remain unchanged, generally the 28th day after the end of a financial quarter. Employers that do not pay super or pay super late, can expect to receive penalties/interest charges, given the higher visibility to the ATO. 6) New employees will have the option to complete TFN declarations and Super Choice forms online. Timeline 1 April 2018 – complete a headcount 1 July 2018 – STP is compulsory for employers with 20 employees or more 1 July 2019 – Employers with 19 employees or less may be required to report through STP Definition of an employee This information will help you understand which employees to include in your headcount on 1 April 2018. The term ‘employee’ includes individuals that are employees under the ordinary (common law) meaning of ‘employee’. The definition of an employee:
- full-time employees
- part-time employees
- casual employees who worked in the month of March, prior to the headcount on 1 April 2018
- employees based overseas
- any employee absent or on leave (paid or unpaid)
- seasonal employees (staff who are engaged short term to meet a regular workload, for example, harvest workers)
- does not include
- independent contractors
- staff provided by a third-party labour hire organisation
- casual employees who did not work in the month of March, prior to the headcount on 1 April 2018
- company directors that are not your employees
- office holders that are not your employees
- religious practitioners
- any employee who ceased work prior to 1 April 2018.
Further information can be obtained from https://www.ato.gov.au/about-ato/about-us/in-detail/strategic-direction/streamlined-reporting-with-single-touch-payroll/?=redirected