<![CDATA[Swanson Advisory - Accounting and Business Advisory Services for Small Business and Entrepreneurs Cronulla - Blog]]>Mon, 05 Oct 2020 00:15:10 +1100Weebly<![CDATA[Director Duties]]>Thu, 16 Jul 2020 02:17:09 GMThttp://swansonadvisory.com.au/blog/director-duties
Make sure you know your Director Duties
• Insolvent trading occurs when owners allow their businesses to incur debts when it is unlikely that they to they can pay for them
• Liquidators can make directors personally accountable for company debts
• Covid uncertainty means NOW is the time to make sure of your solvency.

Swanson Advisory can help you:
• Cashflow Forecasting to help you manage your upcoming cash obligations
• How to utilise 5 levers to maximise your profitability

To find out more about your director duties please visit ASIC's website  
https://asic.gov.au/regulatory-resources/insolvency/insolvency-for-directors/directors-what-are-my-duties-as-a-director/

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<![CDATA[GST Fundamentals - How to Avoid Common Pitfalls]]>Tue, 30 Jun 2020 05:03:51 GMThttp://swansonadvisory.com.au/blog/gst-fundamentals-how-to-avoid-common-pitfalls
GST requirements can be confusing! Make your next BAS the easiest one yet!
Read our guidance
below to ensure you avoid the common pitfalls!
Click the below image to request a copy of our GST Quick Reference Guide. 
Tax Invoices
You must have a tax invoice to claim a GST credit for purchases that cost more than $82.50 (including GST). If your tax invoice does not specify the amount of GST included in the price of your purchase by only stating that the price includes GST, you can work out the GST amount yourself by dividing the price by 11. The answer is the amount of GST credit you can claim (provided you use the item wholly for business purposes).
GST Free vs GST - NT
GST Free items are those that don't attract GST, such as raw food, healthcare services and water services. The GST N-T tax code should be used when the transaction is not reportable, for example: cash transfers between your business accounts, depreciation, directors fees, security deposits and most government charges.
Cash vs Accruals
Know your reporting method. This is either Cash or Accruals and will affect the timing as to when you are required to declare the GST on your transactions. Smaller tax payers generally fall under the Cash Basis, as this matches their GST payments and refunds with their cash inflows and outflows. They are entitled to received GST credits (upon paying expenses) and required to pay GST (upon receiving cash from their customers). The accrual method on the other hand entitles you to receive the GST credit as soon as you have incurred the expenditure and requires you to pay the GST as soon as you provide the goods/services.
Set Up Your Accounting System Correctly
Did you know that most accounting software allows you to set a default GST code for each separate account? This can be a big time saver if set up correctly and will help ensure that you are claiming the correct amount of GST. However, to claim GST you need to ensure that you receive a valid tax invoice (includes an ABN) and also shows that GST has been charged. It is best practice to attach these tax invoices to the relevant transaction in your accounting software. 
Non Deductible Expenses = No GST Claimable
You cannot claim GST for any non-deductible expenses such as entertainment or private use portions of motor vehicle expenses. When you enter expenses which have a private portion, you can actually spilt the two portions of the expense between two separate accounts: one private with no GST claimable and one business-related with GST claimable. Ensure that you meet the ATO's record keeping requirements when determining the private portion of expenses. Refer to our resources section for a comprehensive ATO guide. These items should be coded as GST - NT ( Not Reportable).
Bank Fees, Merchant Fees, Interest paid and received 
No GST is charged or claimable on standard bank fees. However, GST is claimable on merchant fees, as this is actually a service. It is best practice to have separate accounts to recognise these expenses as they have different GST treatments. No GST is charged on interest paid or received.
Government Charges
No GST is charged on Motor Vehicle Registration, Land Tax, Council Rates, Water Rates, ASIC Fees or Stamp Duty. If you are in doubt you can refer to the tax invoice provided. These items should generally be coded as GST- NT apart from water rates, which are GST Free
Insurance Premiums
Insurance premiums may include a portion of stamp duty which as mentioned above does not attract GST. When entering transactions to record insurance premiums, ensure you refer to the tax invoice and separate the stamp duty portion into a different line item that is not applicable for GST.
International Transactions
As GST is an Australian tax you will not be charged GST on transactions you incur whilst travelling overseas. Importation of goods valued at more than $1,000 will however attract GST. Generally GST is not required to be levied on the exportation of goods or services, as long as they are exported within 60 days of either the supplier receiving payment or issuing an invoice, whichever occurs first. The transaction is still required to be reported at G1 Total sales.
Keep your records
Keep all your tax invoices and other GST records for five years as per ATO requirements.
Request a copy of our GST Quick Reference Guide
Click the image below!
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<![CDATA[End of Financial Year Top Tax Tips - Act now to Click & Collect on a Tax Windfall]]>Thu, 04 Jun 2020 03:57:33 GMThttp://swansonadvisory.com.au/blog/end-of-the-financial-year-top-tax-tips​After enduring drought, fire and COVID-19 a tax return may not be high on your list of priorities, but it should be!
 
You need to act now to qualify for generous incentives such as, $150,000 instant asset deductions.
 
Don’t miss out! Organise your business expenses before the tax year ends on 30 June 2020
Time to qualify for $150,000 instant asset tax deductions
 
Is there a significant business asset that you have been thinking of buying for months? You could easily be entitled to a $150,000 instant tax deduction per asset for purchases made before 30 JuneHowever, this deduction reduces to a mere $1,000 per asset after 31 December. If the asset costs more than the threshold, the deduction will have to be spread over the asset’s useful life, which could be 10 years.
 
Specific eligibility criteria applies, including:
  • assets must be installed and ready for use by 30 June 2020
  • assets must be purchased for less than $150,000
  • the $150,000 threshold applies for businesses with an aggregate turnover of less than $500 million 
  • car purchase deductions are limited to an asset value of $57,581.  
Personal Super Contributions
Making additional superannuation contributions before June 30 could mean valuable extra tax deductions. Note these deductions are available only for contributions made out of after-tax funds, meaning that contributions paid by your employer or salary sacrificed do not qualify. Be careful, as you can contribute only $25,000 a year to super (which includes employer-paid and salary-sacrifice super). Significant penalties apply for exceeding this cap.
 
You must notify your superfund that you intend to claim this deduction and you must receive acknowledgement of this request from your fund. Further eligibility criteria can be found on the ATO's Website. Note, super deductions are only considered “paid” once they are received by your fund. For Employers this is also true make sure that your June super is paid prior to 30 June to be deductible this financial year, for those using the small business super clearing house payments are required to be made by 23 June 2020 to be deductible for the 30 June 2020 year.

Employee Super
Employers are required to pay their employees' super before 30 June to be deductible this financial year. For those using the ATO Small Business Super Clearing House, payments are required by 23 June 2020.

Prepay Expenses
If your cashflow allows, you should consider pre-paying some of your business expenses for the 2020/21 financial year before 30 June 2020. Deductions are available for expenditure up to 12 months in advance if you are considered a small business entity. Common prepayments include insurance, subscriptions, professional memberships and rent.
 
Business Use of Personal Assets
A common missed tax deduction is not claiming the business use of your personal assets. Do you use your mobile phone for work? Do you need to drive your personal vehicle for work? Have you been working from home?
 
In recognition of COVID- 19 requiring many people to work from home, the ATO has introduced a shortcut method for claiming deductions for this. Provided that working from home was required to fulfil your employment duties and you were not carrying out minimal tasks such as checking your emails, you can claim a deduction of 80 cents for each hour worked from home between 1 March and 30 June 2020. This method covers internet, phone, stationery, computer consumables and other expenses. To qualify, you must keep a record of the of hours you have worked from home as a result of COVID-19, such as diary notes and timesheets. For further eligibility requirements, refer to the ATO's website.
 
Review Debtors
It's always good practice to review who owes you money. If you have been chasing debtors to no avail, you can write them off as a bad debt. This will increase your expenditure and lower your taxable profit.
 
If you have a lot of slow-paying debtors it may be time to consider factoring, where you receive a fraction of your outstanding debtor balances upfront (as high as 95%), while a debt recovery company chases the debts for you. Sometimes the debt collector will pay you a bonus once they collect.
 
Depreciation and Obsolete Assets
Do you maintain a listing of all your fixed assets? You may still be depreciating assets your business no longer uses. These assets could potentially be written off, bringing forward depreciation deductions that would otherwise be applied to future years.
 
Time Value of Money
The Time Value of Money is a statement you may have heard before. Essentially, it means money is more valuable to you today than the same amount tomorrow. This applies now more than ever. If you anticipate a tax refund, the sooner you have this money, the sooner you can use it for other purposes, which could be income-generating, such as buying new business assets or investing.
 
Countless other tasks and people will compete for your attention this June, but do yourself a favour and put tax at the top of your list. It could mean cash in your bank accounts six months sooner, which could also mean another six months of more productive equipment and higher sales, or six more months more of investment income.
 
If you have any questions about your tax please get in touch with Swanson Advisory or your existing accountant. Swanson Advisory is dedicated to helping you, your business and employees thrive!

Liability limited by a scheme approved under Professional Standards Legislation
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