Articles on bookkeeping and best practice.

Running your own business is like being a one-person army. You’ve got to monitor your own inventory, do your own marketing, service customers on your own, and *gasp* do your own bookkeeping.

Here’s the thing, though. Unless you’ve got a solid background in bookkeeping, you should probably leave that last bit to seasoned professionals.

Sure, there are lots of bookkeeping software packages available online that might convince you otherwise. You know the sort. They all have the same marketing pitch: download our software and save time and money by doing your own bookkeeping!

Except that’s not exactly true for most people. Here are just a few pitfalls that come with DIY Bookkeeping.

The “Save Time” Fallacy

Unless you already know your way around bookkeeping software, navigating even the most popular one can be difficult from the beginning. First, you’d have to figure out which one suits your needs best. Then, you’d have to master its workings, which could take a while, they all have a steeper learning curve than you’d expect.

Do you really want to take the gamble on trial and error with BOOKKEEPING? Of course not. You could use that time to do what you do best – focusing on growing your business instead of letting the paperwork take up your time.

Tax Accuracy and Compliance Risks

Are you well-versed in the Tax Office’s business compliance requirements? Do you know how to check that the BAS is accurate? Have you got your ducks in a row for the next important tax deadline?

If you answered “yes” to all the above, good for you. (Also, what on Earth are you doing here, mate?) Otherwise, you would be in over your head if you insist on going your own way.

It’s important to realise that while most bookkeeping software packages will do a BAS report for you, it’s based on what you put into the system, so it’s not guaranteed to be correct. A good BAS Agent knows what to check for to make sure things are right before it gets lodged with the ATO.

There’s a reason why so many flunk their accounting subjects in uni. Accurate bookkeeping is hard, and Tax Office requirements can change at any time without prior notice. Furthermore, getting it wrong in the real world can lead to expensive consequences, which brings us to….

Added Costs

As a small business owner, you literally can’t afford to make mistakes with bookkeeping. It’s all too easy to pay too much tax, miscalculate your figures, or inadvertently leave out important information if you haven’t received proper training. Miscalculating your obligations can even end up hitting you in the pocket hard. Ouch.

Even the latest software package is no substitute for the knowledge required to avoid such costly errors. So, you wouldn’t really be saving money relying on that would you?

Generally, these errors will then be picked up by your tax agent when they do your tax return. But tax returns are only done once a year, and normally many months after the end of financial year so it’s harder to fix a lot of these mistakes. Finally, tax agents charge four to six times more than a bookkeeper per hour, so that mistake can cost much more than if you had hired a bookkeeper in the first place.

Granted, engaging a bookkeeper won’t come for free. But when you consider the benefits of having an expert on board to deal with all the complications of proper bookkeeping and reporting, NOT hiring one and going your own way might even be more expensive.

Besides, you can use all that extra time to get more customers, improve your product or service, or simply spend more time with your family.

Next Steps

We can help you see how to save both time and money with your bookkeeping (even if you want to do the day-to-day stuff yourself). CONTACT US today for a free 30min chat.

Most people assume that if they are paying for a staff Christmas party that it’s an automatic business expense.

With Christmas fast approaching most businesses will want to thank their staff for the hard work they’ve done throughout the year by celebrating with a party, dinner and drinks out on the town or maybe dancing until dawn at a nightclub.

Unfortunately the rules around recording celebrations and gifts as business expenses are not straightforward and can be confusing. In some circumstances you can end up paying extra tax on those expenses called Fringe Benefits Tax (FBT) because the ATO considers these gifts and parties an additional benefit to staff members that they’re not being taxed on.

Christmas Parties

There are a number of rules (and not all of them are very clear) about whether or not a Christmas party is a business expense or not and if it will be subject to FBT.

The main thing that it comes down to is whether the party includes ‘entertainment’ which is considered a fringe benefit for staff.

So a party that meets the following criteria is likely to be classified as a business expense and not subject to FBT:

  • It is held during business working days
  • It is held on the business premises
  • No alcohol is served
  • Only light meal or finger food is served
  • No other attendees (spouse, children, etc) invited other than staff
  • The cost per staff member does not exceed $300.

Even if you meet most of the previous criteria remember that if your party has any of the following things it’s no longer a business expense:

  • If alcohol is served
  • If staff members are bringing guests (like partners or children)
  • If it’s held off site from your business premises
  • However if your party includes any of the following things you may be up for FBT:
  • If the party is held at a restaurant or cafe
  • If the party is held at an entertainment venue ie cinema, night club, theatre or sporting venue
  • If alcohol is included no matter what type of venue

Christmas Gifts

The ‘entertainment’ rule also affects any gifts you give to staff. Any of the following gifts given to staff member (under $300) could be considered business expenses and would probably not attract FBT:

  • Gift certificates
  • Perfume
  • Wine
  • Beauty products
  • Clothes
  • Flowers
  • Food hampers
  • Plus other non ‘entertainment’ gifts

However gifts that could be considered as ‘entertainment’ like the following could attract FBT and would not be a business expense:

  • Tickets to the cinema (but not cinema gift cards)
  • Tickets to the theatre
  • Tickets to sports events

You should note however that the same restrictions do not apply when giving gifts to customers or suppliers but you do need to be aware that they are only a business expense if they are not ‘overly valuable’. There is no definition of exactly how much ‘overly valuable’ is so it’s best to play on the side of caution.

Plan ahead of time

Understanding what you can claim as a business expense will help you plan ahead of time how you will manage your cash flow in this upcoming Christmas period. It’s worth keeping in mind that business isn’t all about what you can write off as a business expense, sometimes it’s worth taking care of your staff, customers and suppliers without worrying about that and just footing the bill, you need to decide what’s best for your business.

Next Steps

If you want to invite us to your Christmas party, or just talk about how we can help with your bookkeeping – CONTACT US NOW

 

 

IMPORTANT: “This article is general in nature and should not be considered tax advice. You should always discuss any tax issues either with your Accountant or the ATO”.

Did you know that there are a lot of benefits to your business by donating to charities and not-for-profit organisations?

In this day and age people are becoming more socially and environmentally conscience making them more likely to engage with businesses that share their values.

Social responsibility is about looking beyond what you can do for your business but how you can benefit the community that you work and live in as a whole.

It’s impractical and not always feasible for you to actually get out there on the streets helping the homeless or doing your own cancer research. Instead there are a large number of not-for-profit organisations out there doing that already that you can support both financially and in-kind.

People value social responsibility and business can not only have an impact on their business but their community as a whole.

Here are a few business benefits from supporting not-for-profit’s and the community:

Employee Morale

A number of surveys show that employee morale is higher in businesses that donate to a not-for-profit or are engaged in community support. Employees are more enthusiastic and passionate about their work knowing that they are supporting the community through their work. It gives them a purpose outside of just turning up for ‘work’ and they view the company more positively than one that didn’t get involved in not-for-profits or the community.

Finally, potential employees are more inclined to work for a company engaged in community support so it can improve your options when looking for new staff.

Customer Recognition

Customers like buying from businesses that have similar values as them. With more and more people getting involved in community programs it should be no surprise that they would be more likely to buy from a company that also supports the community.

Donating to not-for-profit’s shows customers that you care about more than just your bottom line.

Boost Marketing

Marketing is all about connecting with people and community support can be a part of that strategic plan.

When customers are actively engaging in the charity works that you do, marketing naturally flows through word of mouth. People discover that your business is involved in charity events and your business’ popularity increases.

Tax Deductions

Any donations given to not-for-profit organisation classified as a Deductible Gift Recipient (DGR) are tax deductible. You can check if an organisation is a DGR by doing an ABN lookup at https://abr.business.gov.au/.

If the organisation isn’t a DGR you can still get a deduction for any advertising you do with them.

Manage Your Cash Flow

You don’t have to be putting your cash flow in danger to support your community. If every small and medium sized businesses in Australia donated just a small amount we would easily eclipse even the largest donations made by big business.

One option is to tie your donations to an income producing activity. For example you might donate $1 for every product you sell or when a given service is performed. This allows you to donate more as you become more successful but also means you’re not donating more than you can afford.

Giving Back Is Good For Your Business and the Community

While there are benefits for your business by donating or engaging in community support, the greatest benefit is to the community itself.

You reap what you sow.”

Your business, your employees and your customers are all part of a wider community and when you support the community you are supporting them as well, the benefits to your business are just a bonus. 

Above all else it’s worth supporting the people in your community.

 

If you would like to read more about Alexilum’s community support program “Under Cover” – CLICK HERE

 

Next Steps

If you want to find out more about our community support program or to talk more about how community support can benefit your business Contact Us now.

Your company is thriving, and you are putting all your effort and hard work to achieve your business goals and your customers are happy. But by the end of the financial year, you also need to make sure you have a balance sheet that also makes you happy as well.

Nothing is worse than finding out that your activity statements haven’t been submitted properly and now the tax office is asking questions you can’t answer. This is exactly why you need someone who can be trusted with your business’ finances.

Bookkeeping is so much more than simple data entry. It’s also checking that everything has been entered correctly and is compliant.

You can either hire bookkeepers, accountants or registered BAS agents. Each option comes with its own benefits. Depending on the needs of your business, you can either hire bookkeepers or BAS agents or bookkeepers who are registered as BAS agents.

For that, you need a bookkeeper who is registered as a BAS Agent. A BAS Agent is the only person who is legally allowed to charge you to prepare and lodge Business Activity Statement.

Why you need to hire a a registered BAS Agent

While a bookkeeper can process, reconcile and report transactions, a BAS Agent can ascertain, advise and represent your company to the Tax Office in relation to a BAS Provision which includes payroll related advice and certainty. A BAS Agent can design the compliance system for your company around GST, as well as the other indirect taxes on the BAS and payroll matters.

A BAS Agent can also thoroughly review the reports of your business and provide certainty to the business about the obligations, entitlements of that business. While your Bookkeeper and BAS Agent can both process” transactions according to the compliance system that applies to the business. A BAS Agent can also design, advise and review your compliance system that sets up a series of precedents or guidelines for how to process or “code” transactions that come into a business.

A registered BAS Agents can handle all bookkeeping responsibilities. BAS agent has proper schooling and qualifications and they strictly follow guidelines and rules. Whereas, anyone can call himself bookkeeper or an accountant.

Bookkeepers can handle a handful of tasks while BAS agents are able to execute plenty of tasks. BAS agents are able more assistance, advice and services when it comes to the ATO, as compared to bookkeepers.

Bookkeepers are good at looking after the book, they can also do things that are related to business finances. Whereas, a registered BAS agent can present, advise, and assist you in a variety of matters due to his knowledge and expertise in the business field. They can help you deal with GST, Tax Payments, FBT Payments, as well as, all other aspects of payroll related to withholding tax amounts.

Next Steps

As a registered BAS Agent Alexilum can help your business ensure you are meeting your compliance obligations and our expertise can help you ensure you are using best practices for your bookkeeping. Contact us today to find out more.

Bookkeeping is more than meeting tax obligations every year. It is a fundamental part of running a business. With your books in a mess so then are your finances. A good bookkeeper makes life easy. Accurate, up-to-date financials means you can plan and make wise decisions.

The bookkeeping world can be a minefield, with not all bookkeepers created equal. The challenge is to find one who exceeds your needs to become an integral part of your team.

So, how do you pick a good bookkeeper?

Registered BAS/IAS Agent

The single most important thing is whether they are a registered BAS/IAS agent. This is easy enough to check. The Tax Practitioners Board (TPB) has a searchable register of all registered Australian bookkeepers.

Anyone who charges to provide BAS services must be registered with the TPB. This ensures they understand tax system compliance, and have the qualifications and experience to do a good job.

The last thing your business needs is for there to be mistakes in BAS/IS reporting for it can cost you if the Tax Office imposes penalties.

More than a Data Entry Monkey

A good bookkeeper is more than a data entry monkey. They can think for themselves, provide analysis and comply with tax legislation. It is important they have the experience to back any claims they make.

Can they answer your questions? Understand and use different types of accounting software? Ask questions when you do not provide enough information? Know where to find the answers to complex situations?

Question and Check Qualifications

To become a BAS Agent, a bookkeeper must have an accounting or bookkeeping qualification. Ask any potential bookkeeper about their qualifications. Do they have any specialist skills? Will these be useful to your business now or in the future?

You need someone who understands debtor control, profit and loss and balance sheets to start with. You may also need someone who can deal with payroll, superannuation and WorkCover.
Services offered

The first thing to do is write down what you want a bookkeeper to do. And, if you are not sure, a good bookkeeper will guide you to ensure you cover all your basic needs. But you may need more than just the basics. For example, you may want them to analyse your data to provide insights on a quarterly basis so you know exactly how your business is tracking. Check they offer a full range of services so you do not need to find someone else to cover specific areas.

Integrity and reliability

Check your potential bookkeeper has integrity. Check their reviews and ask for references to see if they do the right thing for their clients. You want to work with someone who shows you respect, and you can respect and trust in return.

Question their reliability. Will they do the work when you need it done or when it is convenient for them? You do not need the stress of your books getting behind. It can cause all sorts of problems with regular reporting and come tax time.

These are the most important things to keep in mind when picking a good bookkeeper.

Next Steps

Alexilum are experienced and qualified bookkeepers who can assist you in your business. Contact Us Now to find out more.

There are too many people who think bookkeeping is just data entry and figure calling themselves a bookkeeper is an easy way to make a quick buck. The reality is that bookkeeping is much more than this. A bookkeeper should have a good understanding of your business and daily needs. You need someone who can bring experience from their work in the past. Someone willing to become an invaluable working partner for your business.

Your bookkeeper is the keeper of your finances, compliance and tax office reporting. They need to meet company policies as well as local government regulations. You want them to become an important part of your business. Bookkeepers analyse, interpret and code your transactions for compliance with reporting requirements.

When a bookkeeper does a good job, it makes life easy. You can make wise financial decisions as you have an accurate picture of the health of your finances. They can even provide good advice based on the state of your books. But when a bookkeeper fails to complete your books on time or makes mistakes, this can be disastrous for your business.

A good bookkeeper is aware of the principle ‘garbage in, garbage out’. Something that a cheap bookkeeper who only does data entry may not understand or, even know about. You may not provide adequate or correct information at times so need someone working with you who knows when something is not right. Someone who can analyse the situation and knows what questions to ask you to get the information they need. A bookkeeper who ensures your financial records and transactions are always correct.

Australian Tax Office Reporting

Cheap bookkeepers who only do data entry may not have a clue about anything else and may not know the complexities for creating Business and Income Activity Statements. This is not a good thing as these are time consuming and you cannot afford for someone to make mistakes. This can bring trouble with the tax office and cost you more in time, money, worry and stress.

Then there are Taxable Payments Annual Reports which is affecting more and more businesses. These are to report the total payments made to contractors for their services. Someone who can only do data entry cannot complete these with accuracy.

You may make Pay as you go (PAYG) instalments to the tax office towards your annual tax burden. So, you need someone who understands the system to keep an accurate account of PAYG summaries throughout the year.

It is unwise to leave tax office reporting and payments to someone who can only do data entry. These take complex calculations and someone who knows exactly what they are doing. The last thing you need is for your business to fail compliance. This can get you in trouble or behind in payments with the tax office.

When small business owners and solo operators take on bookkeeping themselves, this can be a poor use of time. Hiring a cheap bookkeeper who may only be a data entry monkey can be a disaster. You need an experienced bookkeeper to keep your financials in line to give you peace of mind.

Next Steps

Alexilum is a registered BAS Agent, Xero Silver Partner & Certified, MYOB Partner & Quickbooks Certified – We have the experience to take care of your bookkeeping needs from Brisbane to anywhere in Australia. Contact Us Now to find out more.

In your business, it’s important to make smart financial decisions. Many include finding ways to cut costs, increase your margins, and ways to make sure you are maximising your profit while adding value to your customers.

It can be a temptation to find cheaper services for your business. It might even be a good decision, like a more affordable cleaning service for your office. If the service does not meet your expectations, you can easily find another service that provides good value for a good price. It’s a small risk. But clearly, there are certain services that can be perilous if you try to save money on the short-term but suffer bigger losses in the long-term. Bookkeeping is one of those services and this article explores why cheap bookkeepers are not a better value.

Valuable Bookkeepers Get the Job Done Right the First Time

Bookkeepers organise and keep track of the expenses and cash flow of your business. A good one will make sure everything is accounted for, that every expense gets directed to the right account, and prepares financial information to make sure you are informed of the finances of your business.

A cheap bookkeeper does not have the same experience and value as a seasoned and trained bookkeeper. Because of this, you may risk the chance that financial information is processed incorrectly. This will ultimately raise the prices of your accountant to fix these mistakes. In the long run, you may lose money on the “cheaper” service.

Good Bookkeepers Ask Great Questions

One difference between a valuable bookkeeper and a cheap one is their questions. A valuable bookkeeper will do his/her homework about your business, learning the ins and outs of your finances, cash flow, and industry standards. They will ask questions that will improve the way you run your business, encouraging innovative ways to record, interpret and process financial information. If you hire a cheap bookkeeper, you run the risk that they will do the minimum required for your business, eliminating the opportunity you have to grow.

Cheap Bookkeepers Won’t Add Input

Cheap bookkeepers are focused on getting the job done quickly with a quality that reflects the price you paid for. A good bookkeeper will understand your financial reports and find ways to improve the business.

Cheap Bookkeepers Can Be Unreliable

Cheap bookkeepers tend to be unreliable with communication, with no timely responses to your emails and vital questions. They are often behind on the books and at fault when payments bounce, neglecting the cash flow of your business. Your bookkeeping software might have a significant amount of old transactions. All this inconsistency can prevent your business to adequately record financial information and can ultimately hinder your business.

Cheap Bookkeepers Cost a Lot of Money

Ultimately, with the possibility of a higher accountants cost, expenses accrued from late bills or mishandling finances, and inaccurate financial reports and data, cheap bookkeepers can cost you a lot of money and headaches. It’s worth getting a quality bookkeeper. It’s one area in your business that you don’t want to skim. After all, would you chose the cheaper doctor or the quality doctor when you get sick?

Great bookkeeping will always add value to your business. That’s why at Alexilum, we are committed to providing quality to all our customers. We work with countless industries, endless system implementations, and provide outstanding communication to find your need and opportunities. Through needs analysis, process design and loyal confidentiality, we would love to partner with you to provide an outstanding bookkeeping service.

Contact us today to find out more about how we can help your business.

We’ve previously discussed why you should keep your business and personal finances separate, now there’s another reason.

The Australian Taxation Office (ATO) has announced that they will target business owners with unexplained wealth. In an attempt to recover and minimise lost revenue, it warns careless reporting is not acceptable. Making incorrect small claims can add up to more than $2.5 billion a year in unpaid taxes. While the small cases may not seem worthwhile on an individual basis, it adds up to a huge gap in revenue every year.

The ATO’s data matching tools are unparalleled in Australia, now the ATO is using social media to track people’s lifestyles. New systems allow it to see discrepancies between claims and what it sees on social media. An example is someone claiming a low income, but when checking social media the person has photos of their expensive toys online. Claiming a family holiday as a business expense may also have the ATO questioning your unexplained wealth which could lead to a ‘please explain’ letter.

No longer will it be so easy to claim a spouse and child joining you on overseas business trips as a tax write off. While the business completed on the trip may only take a few days, family are not involved in this. Some people use a business account to pay for everything or claim the whole family trip as a business-related expense. The ATO sees these as opportunistic claims and people need to keep clear records that separate personal from business expenses.

Use Business Bank Accounts Only for Business Expenses

We’ve discussed why you should keep personal an business finances separate before and this is the easiest way to draw a clear line between business and personal expenses.

The ATO is focusing on travel claims so it is important to use business bank accounts only for business. Many fall into the trap of using a business account when mixing business with pleasure, while some intend to pay back the business from a personal account, it can be difficult to reconcile. When this happens, you need the services of a good bookkeeper to reconcile bank accounts according to the receipts. If not, it is easy to forget the difference between business and personal claims when it comes to doing your tax.

Beware of posting photos having fun on business trips on social media. It is not known how the ATO plans to track social media accounts to look at business owner’s lifestyles. But people have a habit of posting everything they do for the world to see. Everything you post becomes public knowledge.

An example the ATO uses of unexplained wealth is a family business with the parents claiming only $65,000 and $55,000 taxable earnings but their children attend private schools and the family goes on holiday overseas every year. If the ATO thinks something isn’t right they can check Facebook for more information when it suspects business claims do not add up.

People need to make sure any business expenses claimed are actually business-related. If not, they may receive a letter from the ATO asking for an explanation. The letter will include a schedule containing the information from your tax return, data it has and any discrepancies.

The best way to keep business accounts up-to-date is to have a good bookkeeper to keep business accounts updated.

Get Compliant

If you would like us to check your books to ensure compliance please contact us now for a free consultation on how we can help you.

The 2018 Autumn edition of the Business Bulletin is prepared by the Australian Bookkeepers Network.

The full bulletin can be downloaded at the bottom of the page however highlights include:

Federal Budget

Instant Asset Write-Off

The $20,000 Small Business Instant Asset Write-Off has been extended for another 12 months. Businesses with an aggregated turnover of less than $10 million will be able to take advantage of the write-off until 30 June 2019 provided that the depreciating asset was acquired and installed ready for use in your business by this date. Before the Budget, this threshold amount was due to revert down to $1, 000 from 1 July 2018. The $20,000 write-off was originally introduced on 12 May 2015 and originally applied to small businesses with an annual aggregated turnover of less than $2 million. Since then the write-off was extended to businesses with an aggregated turnover of less than $10 million.

No Deduction for Non-Compliant Payments to Employees and Contractors

Under this measure, from 1 July 2019 businesses will no longer be able to claim tax deductions for payments to their employees where they have not withheld any amount of PAYG (where PAYG withholding is required).

Deductions Disallowed for Holding Vacant Land

From 1 July 2019, deductions will be disallowed for expenses associated with holding vacant land in circumstances where that land is not genuinely held for the purpose of earning assessable income. An example of a denied deduction is interest on money borrowed to acquire that land. This measure will apply to land held for residential or commercial purposes. However, the “carrying on a business” test will generally exclude land held for commercial development.

Resourcing the ATO

A strong theme to emerge from the Budget is the additional funding that is being allocated to the ATO to help enhance their compliance activities. The Government seems intent on properly resourcing the ATO.

Crackdown on Circular Distributions for Discretionary Trusts

From 1 July 2019, the anti-avoidance rules that currently apply to other closely-held trusts that engage in circular trust distributions will be extended to family trusts. This will prevent the currently available strategy where family trusts act as beneficiaries of each other in a “round-robin” style arrangement whereby a distribution can be returned to the original trustee in a way that avoids any tax being paid on that amount.

Strong Stance on Tax and Super Debts

More than $133 million will be provided to the ATO over four years for it to continue a raft of measures that will sustain and increase debt collections and the timeliness of those collections. This is forecast to reap an extra $1.6 billion in unpaid Superannuation and tax over the coming four years. With such large amounts of revenue set to be recouped, it is recommended that businesses with tax and superannuation debts owing, pay these debts if they are able to do so.

Reigning In The R&D Incentive

The calculation for companies claiming the R&D Tax Incentive will change commencing for financial years beginning on or after 1 July 2018. Also, a maximum cash refund for “smaller” R&D claimants will be capped at $4 million per financial year (a “smaller” R&D claimant is an entity with aggregated annual turnover below $20 million).

Limiting Partnerships Access to Small Business CGT Concessions

Partners in Partnership structures that alienate their income by creating, assigning or otherwise dealing in rights to the future income of a Partnership will from Budget Night no longer have access the Small Business CGT Concessions in relation to these rights.

Cash Payments Limit

In a measure recommended by the Government’s Black Economy (Cash Economy) Taskforce, the Government will introduce a limit of $10,000 for cash payments made to businesses for goods and services that they provide.

Broader Business Conditions

In good news for the business community, the Budget papers forecast that the economy will grow at 2.75% in 2017/2018 (current financial year); jumping to 3% in 2018/2019 and 2019/2020.

 

Open your copy of the Winter 2018 Business Bulletin here.

When you start your own business it’s easy to get your business and personal finances mixed together.

Growing a new business takes a lot of work and it’s easy to forget about where bills are being paid from or you might think that using your personal credit card won’t be a problem.

Having your business and personal transactions mixed together can be a real headache especially when calculating your BAS or EOFY return.

Whether you have an established business or just starting out with your brand new venture, it is essential for you to keep your business and personal finances separate before it gets too complicated or you get caught out by the ATO.

The trick is to carefully track all your business expenses separately from your personal. Although, they both may seem to you almost the same, specially if you are a sole trader. Keeping your business and personal finances separate can save you a lot of hassle and time when it comes to managing your money.

One of the simplest things you can do to help keep your business and personal finances separate is to have a dedicated bank account for your business.  Using your personal account rather than a business account for your business expenses can create confusion at tax time, and will leave you wasting time at the end of the financial year trying to separate everything apart.

Calculate Business Bookkeeping

Four Reasons to Keep Your Business & Personal Transactions Separate

Maximise on your Tax Deductions

When your business expenses are clearly laid out, it becomes easier for you to do your BAS and end of year taxes. If you have your personal and business transactions all mixed up together you could spend hours going through your bank statements trying to classify each transaction. It is not only frustrating but also a complete waste of your valuable time. There is also a risk that you may miss items in your bank statements and lose out on your deductions.

Minimise Risk of Inappropriate Transactions

With the ATO using data matching on unexplained wealth of small business owners it’s important that non business transactions are not being inadvertently included in your activity statements or end of financial year figures. If you have your business and personal finances mixed up you may accidentally include something that you shouldn’t.

Makes You Appear More Professional and Your Business More Official

Even though you’re starting out with your business on your own, having a business account for payments and deposits, will help your business appear more professional to your clients and partners. It will also give you an opportunity to put your business out there and be taken seriously.

Improves Your Credit Card Rating and Enables You To Apply For Finance

When your business grows, you may need funds from investors or a loan from the bank. When you have a business account, your credit rating is visible and you can apply for finance if your credit rating is good. Additionally having a bank account will also help you to easily demonstrate to the bank your full financial records.

Hard at Work Bookkeeping

How to Keep Everything Organised

All of this is not to say that there aren’t legitimate scenarios where you would be transferring funds between your business and personal accounts or paying for business expenses with your personal credit card. Alexilum can show you how to juggle your business and personal funds while keeping everything above board and easy to manage.

Get in touch with us today to enquire about how we can help you keep your bookkeeping and payroll accurate and easy to manage.