Table of Contents
Business Tax Return Checklist
Be tax savvy. Tax can be your biggest expense. For individuals tax is up to 48% and for companies 30%.
Talk to us about tax planning strategies that will help your business save money now, as well as in the long term.
Here is a list of items you’ll need to give us to prepare your business tax return:
✔ Trading income
✔ Other income (royalties, rent, interest)
✔ Stock on hand including any obsolete stock
✔ Subsidies if applicable (e.g. primary producer, small business)
✔ Capital gains from assets sold
✔ Repairs and maintenance
✔ Salaries (include FBT)
✔ FBT paid
✔ Rates, land tax and insurance premiums paid
✔ Advertising expenses
✔ Interest on borrowed monies
✔ Retirement payments
✔ Bad debt written off in the year
✔ Charitable contributions and donations (over $2)
✔ Legal expenses
✔ Lease expenses (motor vehicles, premises, equipments)
✔ Losses from previous years
✔ Superannuation contributions
✔ Car expenses
✔ Accounting fees, tax agent fees
✔ Travel expenses
✔ R&D expenditure by registered R&D company
✔ Bank fees
✔ Borrowing costs
✔ New loans
✔ Existing loan closing and opening statements for the financial year
✔ Provisions for long service and annual leave
✔ Creditors on hand
✔ Accrued expenses
✔ Fully reconciled mortgage or loan facilities
✔ Fully reconciled GST accounts
✔ Depreciable assets acquired or disposed (type, date, consideration)
✔ Capital Gains Tax assets acquired
✔ Lease commitments
✔ Fully reconciled bank accounts
What do accountants do?
Accountants are involved in the design and implementation of accounting systems. They prepare and analyse financial reports for businesses, governments and other organisations and ensure that businesses and individuals conform to accepted accounting principles.
Many people are under the mistaken belief that accountants simply provide tax preparation services. In addition to tax help, an accountant can help you manage all aspects of your financial life, saving you money now and helping you plan for the future. Personal services offered by accountants include financial planning, asset and investment management, risk management, retirement and estate planning to name a few.
For businesses, in addition to bookkeeping and financial services, a good accountant will offer business advice and consultancy. They will take care of your accounts and also offer advice from freeing up cash flow, raising capital for expansion and operating more efficiently and tax savvy.
Specialty services include business planning, auditing, taxation, superannuation and retirement.
At Encore Accounting we pride ourselves in being able to offer these consultancy services to businesses due to our wide and varied experience.
In our book Business Bullseye (to be released August 2009), we provide details on what is necessary to run a successful business.
Download a free copy of our e-book How to choose an Accountant.
Business structuring is the most important aspect of running a business. The entity you operate your business through needs will be based on:
- The administration cost of the structure
- The legal liability and business risks associated with running a business
- Tax optimisation
Tax is often top of mind with arranging a structure but in fact, the reverse is true. The old adage ‘to be penny-wise, pound foolish’ applies here.
You do not want a structure that costs more than it is worth, nor one that puts you at risk of losing everything to save some tax.
Encore Accounting can help you design a structure to meet your individual needs.
Typical structures may be a mix of the following:
✔ Sole Trader
✔ Family or discretionary trust
✔ Unit or fixed trusts
✔ Hybrid trust
✔ Superannuation fund
Generally, we do not recommend operating a business that has any risks, as a sole trader or partnership. The chance of losing your family home and all your assets are too great.
Download our free e-book to understand how the tax system works and how tax incentives can be used to maximise your after-tax income.
Policy statements are important
Firstly policy statements help you set guidelines on what is important to you both in your life and in business. If your aim is to achieve a goal, policy statements are part of keeping you on that path. If you don’t have a goal then you have no direction and certainly will fail.
There is an old religious saying “what matters if a man conquers the world if he looses his soul?” This is true in life and business. There is no point being a successful entrepreneur if you are miserable and unhappy in life.
At Encore Accounting we work with business owners firstly to set some goals. Generally we find that when your business is aligned to your life goals, you have a better chance of success.
No business can succeed if the business owner is not passionate about what they do. With this passion success follows, without it failure or mediocrity are assured. If you hate your job or what you do, our advice is to get out of it. You must find your passion. We have processes to help with this and also hold seminars that can be life changing.
If your decision in business is to achieve a certain level of profit, freedom or retire at a certain age, you need to document the policies that will keep you aligned to that goal.
Writing policy statements in business is a continually evolving process. When something happens that is not aligned, write a policy statement to keep you aligned. These may range from how your staff members treat customers, to setting strategic plans for your business. They are all part of keeping you aligned to your goal and keeping your business aligned to its goal.
At Encore Accounting we have continued to write policy statements on all aspects of our business. They free us up, so that every decision is made once. The entire team within Encore Accounting knows how every aspect of the business is to be run. These policy statements are a set of parameters that the key members have agreed upon of how the business will operate. They are also a method for the owners to keep the business moving the way they intend.
Do you know where your business is heading? Is this your goal or the goal of others?
Save on accounting & bookkeeping fees
Having a good accountant or bookkeeper is key to helping you and your business function more efficiently and cost effectively. Costs for bookkeeping and accounting services will depend largely on the types of service you require.
There are a couple of basic rules that will help you keep accounting and bookkeeping costs to a minimum and help us to service you better:
- Keep clean, clear, accurate records
Accountants and bookkeepers generally charge by the hour. The easier it is for the accountant or bookkeeper to read and understand the information you bring in, the quicker the service will be performed. Find out what you can do in advance to make the work easier. We have checklists, check-sheets and are more than willing to help you in this regard.
- Use an automated system for record keeping
The goal is to make your or your company’s information as accessible as possible. Computerised systems allow you to pass information back and forth quickly and easily.
- Keep us informed of business and personal financial decisions
Think of your accountant as a trusted business advisor. Talk with us about your plans for the year ahead. We can help you develop financial and tax saving strategies that will make sure that you set up the best business and financial scenario for your particular situation. Never be afraid to talk to us. We can say from experience that talking to us about your plans and ambitions very often leads to incredible new insights and how to do things better. We are your business mentors.
- Be prepared
In advance of your scheduled meetings with us or your bookkeeper, write down as many of your questions that you can think of. You will want the meeting to be organised and flow smoothly and take notes so that you will remember details.
Our billing is either time based or product based. If you need a detailed breakdown or explanation, do not hesitate to ask. We aim to always exceed our client’s expectations. If your expectations are not being met talk to us.
The above starts with a strategic plan, a business plan and implementing a management by statistics system (KPI’s).
Running a business is similar to many aspects of life. Business is a game to play to achieve an end. The games philosophy is the achievement of targets or goals. Management of the business becomes management of the statistic associated with each part of the business.
Knowing the game you are playing, setting the rules, making sure your entire team is playing the same game are key elements. As a business owner, if you do not set the game, your staff will, and the game they play may not be aligned with your goals. As a business owner it is your role to keep everyone in the business on target with the goal of the business.
For further information on how to run your business better, go to our Free Book Downloads and download a copy of our book Business Bullseye – How to Succeed in Business. This book outlines all of the above and shows you how to ensure your business creates life for you, rather than taking it away from you.
What do I need for my tax return?
We suggest you print off a copy of our individual or business tax check-list for a comprehensive listing of the things you might need. Some of the most common items you will need include: personal details (plus spouse and dependent), income (wages, investments), interest, work-related expenses, charitable contributions, medical expenses, and childcare expenses.
What is a tax agent?
Registration as a tax agent is a separate matter to holding a practicing certificate to practice as an accountant. The taxation office registers appropriately experienced and qualified persons to hold a tax agent registration. By law, only persons who are registered tax agents can charge a fee for preparing and lodging taxation returns.
This is totally unrelated to accounting qualifications and unrelated to accounting duties, tax structures, or functions performed by most accountants in practice.
Previously, persons who had worked in accounting offices preparing taxation returns could (without any qualifications) attest to this experience and become registered. This has been changing with the taxation office tightening up the requirements for registration. However, agents, who registered under the previous regime, can still hold their registration.
A tax agent is not an accountant. While most accountants are tax agents, the reverse is not always true.
What is accounting?
Simply put, accounting is the art of recording, summarising, reporting, and analysing financial transactions. Financial Statements are a record of the past and help map a future direction based on past events.
Businesses use accounting data to communicate about financial activities and make informed decisions about the future.
The day to day record keeping involved in accounting is called bookkeeping.
What is the difference between an accountant, a CA, and a CPA?
The title accountant is not defined by law. A person working in a company as a bookkeeper without any qualifications can call themselves an accountant. This relates to the job being performed. This is different for a lawyer who must hold a law degree to be able to call themselves a lawyer.
Because of this, if you require an accountant to look after your tax returns and business structures you can choose a person with varying qualification levels, from none to university and postgraduate training.
Accountants who hold either a Chartered Accountant (CA) designation or a Certified Practicing Accountant (CPA) must be degree qualified, have completed a postgraduate course, and hold a practicing certificate from either of the above. Nearly all the large accounting firms are Chartered Accountants. They are also governed by the ethical and quality assurance regimes of these two bodies. Accountants who simply call themselves accountants who are not members of the above 2 peak bodies are not subject to theirs. Would you engage a doctor who is not a member of the AMA?
Engaging either a CA or CPA ensures your accountant has completed an undergraduate degree is accredited with either body, works to a code of ethics, is up-to-date with accounting and business practices, and takes continuing educational classes to retain their practicing certificate.
Encore Accounting is registered with the Institute of Chartered Accountants in Australia and hold a practicing certificate issued by them.
What should I take to my accountant to do my tax return?
We suggest you print off a copy of our individual or business tax check-list (see above) for a comprehensive listing of the things you might need. Some of the most common items you will need include: personal details (plus spouse and dependent), income (wages, investments), interest, work related expenses, charitable contributions, medical expenses and childcare expenses
Why have an accountant?
A good accountant does more than just prepare taxes and prepare financial statements. They actively analyse, interpret and convert financial data into actionable business intelligence. Accounting services include tax planning, business consulting and personal financial advice.
A good accountant is your business mentor. Look at our testimonial page for details from our clients on how we have changed their financial circumstances.
End of Financial Year Tax Tips
Tax planning should be an all-year exercise. It is part of the cost of doing business and can in many cases be your biggest burden. You need to focus on ways to ensure you are paying the minimum tax that is within the law. As a Business Owner, you also need to ensure that you take advantage of all the tax incentives and other options that are available to help you maximize the after-tax profits of the business.
These are our top 6 suggestions:
- Defer income
Unless you think that next year you will move into a higher personal income tax bracket you may want to defer income until after June 30. Interest, dividends, royalties, insurance proceeds or rent all count so until the money is physically received (paid/credited) it can be deferred.
- Accelerate Deductions
So that you can get deductions and claim them in the current financial year: write off bad debts; scrap stock and plant equipment of nil value, ensure home office costs, superannuation payments, and others are paid by year-end. Pre-paid expenses are also deductible in the year in which they are paid. This includes things like subscriptions, business travel, business-related seminars, or other expenses like educational courses that relate to your business or work.
If you have extra cash, donate money to an ATO approved charity on or before 30 June. Save the receipts and use the charitable donations as deductions on your tax return.
- Sale of investments
You can delay capital gains tax by delaying the sale of investments such as shares until after 30 June. Of course, if you have a loss you may want to sell these before 30 June, to bring to account that loss to offset any capital gains.
- Tax Rebates
It pays to know what you are entitled to. What you can claim will depend on your family circumstances and income but some of the most common things to think about are childcare expenses, private health insurance, medical expenses, dependent spouse rebate, low-income rebate, tax offsets for senior Australians and entrepreneur tax rebates.
- Superannuation – see our section on superannuation.