Specific Issues Impacting Small Business -> Tax
Tax and GST
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 by MYOB on 30 May 08 09:32 |
So you want to manage your accounts by doing away with accounting rules. As an accountant I would suggest accounting rules are the number one adopted language globally, wherever you go, whatever language you speak. But if you are to do away with them. You have a list, with pluses and minuses on it, and when you add it all up you have your net worth. SIMPLE.
| by coremind on 04 Apr 08 08:14 |
I'm curious: who out there in small business land is completely sick of MYOB, QuickBooks, Excel, shoeboxes or other "accounting solutions"?
I'd be interested to see what demand would be like for a system that did away with accounting rules altogether, avoiding the need for a book-keeper until such a point as it's economical to employ one because the opportunity cost on your time is greater than the cost of a book-keeper. Most small businesses I've dealt with do their own books because this condition isn't true.
Use an online system to input transactions (possibly automatically from the bank), perform free-form reports, then just dump a file to your accountant every 3 months that shows total income, total expenses, GST in, GST out and not much else. Never interact personally with your GST.
The hard part of accounting systems is all the complicated business (a.k.a. tax) logic. Factor that out and let your accountant deal with it.
There are a few system around online that just do invoicing (which can be a big help itself), but I'd want the whole thing in there.
Pay for the system by the month, build in e-commerce capability and be as un-accounting like as possible.
This is something I've toyed with for a while, but am not in a position to do it yet. That said, if someone wants to finance it, let me know ;-)
Regards,
David Kellam
Director
CoreMind
www.coremind.com.au
I'd be interested to see what demand would be like for a system that did away with accounting rules altogether, avoiding the need for a book-keeper until such a point as it's economical to employ one because the opportunity cost on your time is greater than the cost of a book-keeper. Most small businesses I've dealt with do their own books because this condition isn't true.
Use an online system to input transactions (possibly automatically from the bank), perform free-form reports, then just dump a file to your accountant every 3 months that shows total income, total expenses, GST in, GST out and not much else. Never interact personally with your GST.
The hard part of accounting systems is all the complicated business (a.k.a. tax) logic. Factor that out and let your accountant deal with it.
There are a few system around online that just do invoicing (which can be a big help itself), but I'd want the whole thing in there.
Pay for the system by the month, build in e-commerce capability and be as un-accounting like as possible.
This is something I've toyed with for a while, but am not in a position to do it yet. That said, if someone wants to finance it, let me know ;-)
Regards,
David Kellam
Director
CoreMind
www.coremind.com.au
| by Fanakapan on 19 Mar 08 09:47 |
In addition to Helen's reply I completely agree.
As a book keeper myself i have seen my industry demand quadrupal since the introduction of GST in 2000.
A good book keeper is well worth your investment and allows the accountant at the end of year to do accounting work not book keeping work.
I would like to advise however that as a business owner you should also educate yourself on understanding how to read a balance sheet and profit and loss report. You should also be looking at cash flow reports on a weekly to monthly basis.
Remember whatever your charges add the GST to the top don't include it in your price or you are out of pocket by 1/11th.
The first advise i give to clients of small family run businesses is to open a bank account dedicated to GST, PAYG and super. Make it a high interest bearing accnt and make the ATO's money work for you for three months.
As a book keeper myself i have seen my industry demand quadrupal since the introduction of GST in 2000.
A good book keeper is well worth your investment and allows the accountant at the end of year to do accounting work not book keeping work.
I would like to advise however that as a business owner you should also educate yourself on understanding how to read a balance sheet and profit and loss report. You should also be looking at cash flow reports on a weekly to monthly basis.
Remember whatever your charges add the GST to the top don't include it in your price or you are out of pocket by 1/11th.
The first advise i give to clients of small family run businesses is to open a bank account dedicated to GST, PAYG and super. Make it a high interest bearing accnt and make the ATO's money work for you for three months.
| by Helen185 on 14 Mar 08 11:56 |
Why not look at a GOOD bookkeeper. This will keep your paperwork, reconciliations up to date not to mention keep your accountant and the ATO happy, and the cost is a lot less than that of an accountant (who more than likely has one of their inhouse bookkeepers tend to the day to day stuff anyway).
A GOOD bookkeeper is worth their weight in gold, but a word of caution, there are bookkeepers and there are GOOD bookkeepers. If you are looking at contracting a bookkeeper, find out if they belong to a Professional Association such as the Institute of Certified Bookkeepers (http://www.icb.org.au or phone 1300 85 61 81), they can also help you find a GOOD bookkeeper also, make sure your potential bookkeepers has Professional Indemnity Insurance and also ask for the contact details of an accountant who is familiar with their work and also the contact details of one of their current clients. Be very wary of the 'cheap' bookkeeper (remember) you get what you pay for.
Good luck.
A GOOD bookkeeper is worth their weight in gold, but a word of caution, there are bookkeepers and there are GOOD bookkeepers. If you are looking at contracting a bookkeeper, find out if they belong to a Professional Association such as the Institute of Certified Bookkeepers (http://www.icb.org.au or phone 1300 85 61 81), they can also help you find a GOOD bookkeeper also, make sure your potential bookkeepers has Professional Indemnity Insurance and also ask for the contact details of an accountant who is familiar with their work and also the contact details of one of their current clients. Be very wary of the 'cheap' bookkeeper (remember) you get what you pay for.
Good luck.
| by tomquinlan on 28 Feb 08 15:50 |
Yes a good accountant will help. But the main work is getting all the transactions in your system so in reduces your end of year tax bill and gives you visibility of how your business is performing and where you can improve things.
MYOB is very popular for small business.
If you need help running or installing please see www.quinlanconsultingteam.com
MYOB is very popular for small business.
If you need help running or installing please see www.quinlanconsultingteam.com
| by adahbache on 27 Feb 08 22:36 |
I think the simple answer to the above - get a good accountant.
I actually purchased some software that allows me to enter all transactions into it manually and give the output to my accountant. The output actually lists the total sales, GST component (if applicable), expense details, GST component, employees and their salary.
My accountant uses this and does the rest for me.
As a result, my accountancy fees are significantly lower as I have done the ground work.
Thats the only advice I am able to offer - it is pretty time consuming and when under estimated, the actual bill can hit you by surprise.
I actually purchased some software that allows me to enter all transactions into it manually and give the output to my accountant. The output actually lists the total sales, GST component (if applicable), expense details, GST component, employees and their salary.
My accountant uses this and does the rest for me.
As a result, my accountancy fees are significantly lower as I have done the ground work.
Thats the only advice I am able to offer - it is pretty time consuming and when under estimated, the actual bill can hit you by surprise.
| by Jackson on 27 Feb 08 08:50 |
I have met with many small business owners in the last few years who have not coped with the GST system. The ATO are quite merciless these days and it can have disastrous results for otherwise hard working and skilled business people.
As an accountant I advise people that they have to keep on top of their book work to firstly lodge on time and also make provision for tax payments. I have to do exactly the same with my practice and I can sympathise with other business people because it isnt easy to find the time. Whether we like it or not all business owners are now required to act as tax collectors on behalf of the government for no compensation. The consequences of not playing the game can be brutal.
As an accountant I advise people that they have to keep on top of their book work to firstly lodge on time and also make provision for tax payments. I have to do exactly the same with my practice and I can sympathise with other business people because it isnt easy to find the time. Whether we like it or not all business owners are now required to act as tax collectors on behalf of the government for no compensation. The consequences of not playing the game can be brutal.
| by maxie on 09 Feb 08 09:10 |
If the country is reliant on small to medium entreprises to build solid businesses so they can pay taxes and employ people, then why doesn't the tax office compensate for the hours of stress relating to statutory compliance. We employ one capable person full time to calculate, reconcile, fill forms, lodge and pay GST, payroll tax, Superannuation, and all the other red tape. That's $65K on top of the external accountants & lawyers that are necessary to meet the Governments demands. When am I going to be paid? More to the point why would I risk further innovation, energy and capital when the ATO have the power to close us down if we miss payments? 
| by SMEadviser on 31 Aug 07 16:21 |
It has definately become harder for business owners to manage all of the various compliance / taxation issues. Tax must be seen and managed as a cost of doing business - it is unavoidable these days and becoming more so ! Best then, like other areas of the business, to budget and account for it, get good advice to make sure you are not paying too much, measure your business financially ( you can't improve what you can't measure and compare ) and focus on adding value to your investment.
| by VC002 on 30 Jul 07 19:17 |
Interesting views Skier and Runci. I don't think you're alone on that one. It would be interesting to see how others feel. Many believe there is no real personal incentive to work harder and take on extra risk, since any additional gains that could be made are lost to the government in the form of taxes, and efforts are often styimed by red tape. Does this possibly suggest we should just not bother?
i have found it harder and costing more, andi cant really see that anything has changed
| by skier on 19 Jul 07 19:54 |
Tax & GST are probably the most underestimated things that can affect a business and its' cashflow.
I don't think the actual systems have got harder. The accounting procedures and cash-flows need to be done regularly and carefully so as to not got caught being short of cash. A good accountant is important too.
We all know it is a dream, but it would be good for government to recognise small business and provide some sort of incentive or tax break/concession when we all 'bust our gut' to make a profit to help our business grow, and then get it ripped from under us because we have done what they really want us to do.
I don't think the actual systems have got harder. The accounting procedures and cash-flows need to be done regularly and carefully so as to not got caught being short of cash. A good accountant is important too.
We all know it is a dream, but it would be good for government to recognise small business and provide some sort of incentive or tax break/concession when we all 'bust our gut' to make a profit to help our business grow, and then get it ripped from under us because we have done what they really want us to do.
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