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THE END FOR CASH ONLY BUSINESS

Ahead of the Black Economy Taskforce delivering its final recommendations, the Government continues to scrutinise businesses who deal largely in cash-only transactions.

The crackdown on cash is part of the Government’s campaign to create a fairer playing field for businesses in Australia – large and small – to protect workers by ensuring that employers pay superannuation and other benefits, and to recoup $5 billion lost in unpaid tax due to illegal business practices.

You can expect a visit from the ATO if your business meets any of the following criteria:

  • operate and advertise as a “cash only” business;
  • ATO data matching suggests you don’t take electronic payments are part of an industry where cash payments are common;
  • indicate unrealistic income relative to the assets and lifestyle of the business and owner;
  • fail to register for GST or failing to lodge activity statements or tax returns;
  • under-report transactions and income according to third-party data;
  • fail to meet super or employer obligations;
  • operate outside the normal small business benchmarks for your industry; and
  • you are reported to the ATO by the community for potential tax evasion.

Contact us if you would like to know more and to discuss how your business can transition out of a cash-only model.

 

Industries under the spotlight

The ATO has identified the building and construction, hair and beauty and restaurant industries as high risk, meaning they see that is easier for these businesses to hide cash-only transactions.

Examples:

Here are some examples provided by the ATO based on their previous round of visits to businesses:

Failing to lodge and not reporting cash income

A licensed carpenter failed to lodge tax returns for a number of years. The ATO demanded lodgment and when the tax returns were lodged, it was clear that income from cash jobs was not included. An audit for the 2006 to 2013 financial years revealed that the taxpayer had over-claimed GST input tax credits in addition to not declaring cash income. The ATO said the taxpayer’s record keeping was very poor and they couldn’t explain how some materials and vehicles were funded. The audit resulted in the taxpayer owing additional tax and penalties of over $190,000.

Business owner’s lifestyle did not match their reported income

A nail salon business with a number of outlets was selected when data matching indicated anomalies. The ATO’s initial investigation confirmed that the owner kept incomplete records and declared income that did not support their lifestyle and assets. The ATO said it uncovered more than $2 million of undeclared income. After imposing penalties for reckless behaviour of over $241,000, the total amount of GST, income tax and penalties payable by the owner was more than $728,000.

Poor tracking of cash payments

During an ATO visit to a restaurant, the ATO said it became apparent that the owner needed to improve their record keeping practices as cash was kept in a cardboard shoe box. The ATO’s profiling work showed five merchant IDs, which the taxpayer said belonged to five different restaurants operating under the one entity. All had the same poor record keeping processes in place. The ATO’s analysis identified several bank accounts, and third-party information identified deposits in excess of $300,000 for 2014 and 2015. It identified $1.3 million of understated income for 2014 and $1.5 million for 2015. The ATO calculated cash not deposited by developing a “cash deposit timeline” for each restaurant. It turned out that no cash had been reported to the ATO, and only EFTPOS income had been included in tax returns and activity statements.

Benefits of a non-cash business model

We understand that changing a business model requires planning, but there are many benefits to changing to a non-cash model that can help your business to grow, such as:

  • tax incentives you might have missed out on, by not accurately declaring your full income;
    happier customers – people expect to be able to pay by card;
  • electronic payment and record keeping facilities give greater visibility over the health of your business;
  • avoiding law suits and penalties for non-payment of employee entitlements, or allegations of underpayment.
  • You will undoubtedly be able to access more customers if you consider putting your business online.
  • How can I transform my business?

The best place to start the transition is with your record keeping methods. This means recording every sale and purchase accurately in your accounting software. By providing receipts when you make a sale and requesting an invoice every time you make a purchase, you will have a clear audit trail from which to declare all income and expenses. And if you need assistance – we are here to help you plan and provide advice on what you’ll need to do to ensure the best outcomes for your business.

One of the most attractive features of cash is its immediacy in terms of making transactions. But there are compelling changes ahead in the non-cash world.

Cashless business model incentives

Thanks to a billion-dollar infrastructure upgrade of Australia’s payments systems, from January 2018 customers of the “Big Four” banks and 50 smaller institutions will be able to benefit from the arrival of real-time funds transfers between accounts. This means that even when transfers occur between account holders from different institutions, or on weekends, public holidays, or anytime of the day or night, the funds should appear in real time. As a result suppliers and vendors can be paid swiftly and your own customers will be able to extend the same courtesy, meaning that delays to payment will be a thing of the past.

Plan your transition

Whatever your circumstances, we can help you plan, provide advice and assist your business to transition to a non-cash model.

What Are the Most Essential Budgeting Aspects that Small Business Owners Need to be Mindful Of?

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A number of small business owners operate on cash and uncertainty. Entrepreneurs typically need to invest all their time in managing all the myriad aspects that go into running a business. Therefore, many of them might feel justified in debating the merits of budgeting. After all, how can one prepare a budget for the next six months when one is clueless about what’s going to happen in the following week? However, making a budget is essential for any commercial establishment.

 

 

How Bookkeeping and Accounting Services Providers Can Help Small Business Owners with their Budgeting Requirements

Preparing budgets is essentially about being on top of your earnings and expenses. It helps business owners gain some amount of control on their financial affairs. Business budgeting enables business owners to keep the business as solvent as possible. You don’t need to be a financial genius to prepare a budget. You could simply prepare a spreadsheet detailing your earnings and expenses by yourself. Or, you could ask your accounting services provider to prepare one for you. These professionals will not only prepare a budget tailored to guide you for the rest of the year. They will also ensure that it:

  • – Remains as factual and grounded as possible
  • – Covers all aspects of the business to keep the budget relevant
  • – Keeps aside a portion of the profits to cover emergent and incidental expenses
  • – Utilises previous business reports to prepare forecasts, thereby identifying ways for you to save money and resources and,
  • – Remains flexible so that you can make the necessary amendments based on actuals as the year proceeds

 

 

Obtain Peace of Mind by Engaging the Best Sydney Accounts for Your Tax Planning and Business Advisory Needs

Whether you need help with preparing a company tax return or budgeting, DSV Partners is the firm to bank on. We offer a diverse range of services. Our cost effective services remain tailored to suit small and midsize business owners in Australia. We offer assistance with making your business tax compliance. We provide accounting services for small businesses as well. With us, you can expect leading edge financial and accounting solutions without having to go through all kinds of hassles. Our premium-quality service and prompt turnaround times can help you stay on top of all your financial compliance requirements. To see why we’re the bookkeeping service provider of choice for numerous businesses, click here.

 

 

 

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Register Profit and Growth Improvements by Engaging the Best Sydney Accounting Services

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Business establishments typically need to register profit and growth improvements with each passing year. When it comes to enhancing profits, small business owners often look at increasing their sales. But, this is only one element. They will need to focus on other strategies that could help them reap a windfall.

 

 

How Accounting and Bookkeeping Services Can Help Business Owners Identify Ways to Bring About Profit and Growth Improvements

Many small and midsize business establishments outsource their bookkeeping and accounting requirements to professional firms. But, because these firms are not a part of their own setup, they tend to think of them as external parties. So, when the business owner needs to ramp up sales, they will hardly consider involving their team of Sydney accountants in the process. This can be quite a costly omission. This is especially so because in many cases, your accountants can help you find ways to improve your bottom line. They could typically accomplish this by:

  • Analysing your business operating expenses to segregate those that are exorbitant based on industry benchmarks
  • Minimising your losses arising from bad debts by implementing effective debt collection system
  • Reviewing your product and service lines to drop the underperforming products and services
  • Restructuring your finances to save you interest on your business loans
  • Reviewing your suppliers and material purchases to negotiate a better deal on all your purchases
  • Maximising your current price levels by assessing whether your prices are in line with current market expectations and,
  • Calculating the rate of return on all your advertising expenses to assess whether they are generating sufficient sales and profits

 

 

DSV Partners – The Leading Providers of Accounting Services for Small Businesses in Sydney

When it comes to generating profit and growth improvements, don’t merely depend on your sales team. Instead, tie-up with an accounting firm that understands your business and financial goals perfectly. At DSV Partners, this is precisely what we accomplish in each of our client relationships. Because we understand your goals perfectly, we can take care of all your personal and business financial needs too. Our experienced team can offer your business the best accounting solutions. In addition, we can help you with the preparation of your tax returns as well. With us, you can expect fully personalised and highly efficient services tailored to your requirements. Click here for more information on our accounting services.

 

 

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5 Best Bookkeeping Practices and How Bookkeeping Services Can Help You

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Bookkeeping is definitely one of the most important tasks for any entrepreneur. It’s no secret that professional bookkeeping services can help your business run like a well oiled machine. It might be a tedious task but its importance can never be overstated. If you run a small company, it is particularly important for you to maintain your accounts. After all, this will determine your income, profits, and your tax return for the year.

In addition to hiring professional accounting and bookkeeping services, here are some tips you can follow to make sure that your books are in perfect order.

 

  1. Do not put your bookkeeping till the end of the financial year- you might miss out on crucial details, because they slipped your mind.
  1. Take some time off every week, and put all the information into your books. This move will help you keep all your information in one single place. Moreover, this will enable regular reviews of your financial situation, so you can make immediate changes.
  1. Make sure you keep track of all official finances, with the bills and necessary documents. Put all of these away separately, so you’re not scrambling for the bills at the last minute. You will need bills, invoices for goods and services purchased, previous taxes paid, bank accounts, card statements and stock records, to name a few.
  1. Make sure you are aware of the taxation policies that apply to you. As an Australian business, if your annual turnover is above $75000, you will have to apply for GST registration. You will have to lodge Business Activity Statement (BAS) on a monthly or quarterly basis with ATO. All these rules will have to be complied with so you don’t get into trouble at the EOBY (end of business year).
  1. Get professional bookkeeping services assistance if possible- Australian tax laws can be quite complicated and losing track of your obligations will get you into a lot of difficulty.

 

Trusted bookkeeping services can help your business succeed, and give you great peace of mind. At DSV Partners, we are here to provide you whatever service your company needs. For more information, get in touch with us today.

 

 

 

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How To Trigger An ATO Audit?

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An ATO audit or review can be taxing for any business, specially for small and medium size businesses, mainly due to lack of appropriate level of internal controls and accounting practice. An ATO audit may not only cause a financial hardship but business disruption as well. To manage the audit/review process, you will require the business to either deploy its resources or hire an external advisor, both will have significant cost implications.

 

 

Common reasons for ATO audit

Some of the common reasons that triggers ATO audit for private businesses are:

  • – Have financial performance that is out of sync compared with your industry;
  • – Variance between tax returns and business activity statements;
  • – Have poor record of lodging returns on time;
  • – Don’t pay the right amount of superannuation to your employees;
  • – Consistently show operating losses;
  • – Own motor vehicles, but don’t lodge FBT return;
  • – Big fluctuations between years;
  • – International transactions;
  • – Wrong disclosure in your tax return

 

Make sure you’re prepared for an audit

As a business owner, you don’t want to trigger an ATO audit for your business. Having a tax risk management process involving your business advisors is a good way forward. Have a good accounting system and periodical reconciliation process is in place, ensure that all supporting documents are available (for five years, some records may need to be kept longer).

 

As an experienced tax accountant and advisor for small and medium size businesses, DSV Partners proactively assists its clients in reducing the risk of a tax audit. We ensure our client records are updated and reconciled on periodic basis; your business performance is compared to industry peers, where available. If a client is selected for an ATO audit, we assist our clients in handling the process.

 

Should you have any questions or need assistance wait a tax audit or review, get in touch with DSV partners today!

 

 

 

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Accounting Challenges for Companies in next two years

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As the implementation date for three major accounting standards closing in, management and board of directors may face challenges not only in implementing these changes but also in reporting and disclosures in their financial statements.

The major accounting standards are:

  • – AASB 9 Financial Instruments (applies from years commencing 1 January 2018, early adoption is permitted);
  • – AASB 15 Revenue from Contracts with Customers (applies from years commencing 1 January 2018, early adoption is permitted); and
  • – AASB 16 Leases (applies from years commencing 1 January 2019, early adoption is permitted)

 

These standards can significantly affect the reporting of values of financial instruments, loan loss provisions, revenue and accounting of lease arrangements. For some companies, the impact on their reported results will be even more significant than was the case with the first time adoption of IFRS back in 2005.

 

What does it means to companies:

 

IFRS 9 Financial Instruments (AASB 9 in Australia) is a project completed in stages over the past decade, to replace IAS 39 (AASB 139 in Australia), is one of the most complex standard and will have an impact on the recognition and measurement of financial instruments. For example, under AASB 139, there are four categories of financial assets, whereas under AASB 9, only two. The new impairment requirements for financial assets are based on a forward looking “expected loss model” (rather than the current “incurred loss” model).

 

Under AASB 15, the revenue will be recognized when control of goods or services is transferred, rather than on transfer of risks and rewards, under AASB 118 Revenue.

 

AASB 16 will supersede AASB 117, the main implication of the changes will be that all leases (subject to certain exceptions) will be capitalized i.e. no more operating leases (subject to certain exceptions) under the new standard.

 

The management and board of directors should plan in advance for these changes. The matters to consider for any implementation plan may include required changes in system (eg. how the required information will be captured by the accounting system), business impact, disclosure required in financial reports prior to the effective dates of the standards, disclosure upon adoption of the standards on effective date, impact on any fundraising and compliance with the financial requirements.

 

DSV Partners can provide you with a range of financial audit and assurance services that will assist the management and board of directors in managing their responsibilities. Our partners are ex Big 4 partner and senior manager with extensive experience in audit and assurance services. For any further information on the upcoming changes in the accounting standards or any other financial audit and assurance related needs, contact Deepak Saboo or Michael Collinson on 02 9633 489 or email directly to dsaboo@dsvpartners.com.au.

 

 

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Small Business Entity Concessions

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Dealing with supply chains and sales can consume almost all of the time that a small business owner has. In many cases, these entrepreneurs have to deal with almost every little detail pertaining to their business. So, from trying to find new clients to maintaining their accounting books, these individuals often find themselves hard pressed for time. It is evident that these individuals will hardly have the time for dealing with the applicable tax laws. In addition, these entrepreneurs might not even be aware of the concessions that are available for small businesses. As a result, they might end up paying more tax than is necessary and miss out on the grants available for small businesses. To avoid such instances, these individuals should consider hiring Sydney accountants or tax professionals such as DSV Partners.

 

Small Business Owners Rely on Sydney Accountants to Capitalise on Various Tax Concessions

Small businesses can access a range of concessions including payment and reporting options. This applies to sole traders, partnerships, companies or trusts. To qualify for these concessions, you will need to confirm your business is a “small business entity” for the year. In general, your aggregate turnover must be less that $2 million.

The tax concessions that these business entities could capitalise on include:

  • – Simplified trading stock rules by estimating the value of your trading stock at the end of the fiscal year
  • – Immediate deductions for prepaid expenses
  • – A two-year amendment period for reviewing an assessment
  • – Capital Gains Tax (CGT) concessions
  • – GST and excise concessions
  • – PAYG instalment concessions and,
  • – Fringe Benefit Tax (FBT) concessions
  • – Small business income tax offset 

Other Grants and Assistance 

Apart from tax concessions provided by ATO, there are over 100 different grants and assistance available for small businesses. These grants and assistance are available through various Government departments. Some of the available grants and assistance are:

  • – Small Business Grant of up to $2,000 for hiring a full time or casual employee
  • – Incubator support a funding to improve prospects of Australian start-ups in International markets
  • – Research and Development (R&D) Tax Incentive
  • – Small Biz Connect, providing free or low-cost advice, information and support for small businesses in New South Wales
  • – Tradex Scheme provides an upfront exemption from customs duty and GST on eligible goods imported and then exported within one year or other approved period
  • – Disabled Australian Apprentice Wage Support, payments for employers who employ an Australian apprentice with a disability 

Obtain Reliable and Cost Effective Accounting Services for Your Small or Medium-Sized Business

Not all Sydney accountants are equal. This is because many of these accounting firms do not take the time to discern your business and financial goals. As a result, they might help you prepare your books and tax returns. But, they might not help you capitalise on the various concessions that are available for small businesses. In contrast, DSV Partners collaborates with you as a business partner. DSV Partners have contacts not only with ATO but with other Government agencies, such as Office of State Revenue, and have organised talks and by these agencies for the benefit of our clients.  Our accounting and tax professionals will help you meet your business and personal financial needs. We specialise in providing highly efficient and personalised accounting solutions. With us, you’ll find it easy to meet all your tax and accounting responsibilities. For more details, call us at 02 9633 4893.

 

 

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Resolve Your ATO Reporting Obligations

 

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Most salaried individual will have reporting obligations to ATO and pay income tax. In many cases, computing and reporting a person’s tax liability is not that difficult. Similarly, commercial establishments be it a company, partnership or sole traders, also need to report and pay various taxes. It is a well-known fact that the Australian tax laws are complex and this usually presents some difficulties for small and medium-sized business establishments. On one hand, small businesses do not have the financial resources necessary for employing full-time accountants. On the other, if they fail to meet their obligations under Income Tax Act, they could fall foul of the Australian Tax Office.

 

 

Activity Statements – An Essential Element of ATO Reporting

Every Australian business needs to register for an Australian Business Number (ABN) and a Tax File Number (TFN) for lodging its annual income tax returns and activity statements. If your business or enterprise has a GST turnover of $75,000 or more you must register for GST. The tax reporting to ATO is through Activity Statements and Income Tax Returns.

There are two types of activity statements that business owners need to complete. These are Instalment Activity Statements (IASs) and Business Activity Statements (BASs). IAS is used to report and pay amounts withheld from employee’s wages and salaries, PAYG Income Tax Instalments and FBT Instalments. BAS is used to report the following:

  • – Goods and Services Tax (GST)
  • – Pay As You Go (PAYG) income tax instalment
  • – PAYG tax withheld
  • – Fringe Benefits Tax (FBT) instalment
  • – Luxury Car Tax (LCT)
  • – Wine Equalisation Tax (WET) and,
  • – Fuel tax credits

Business owners will need to complete and lodge the BAS/IAS on a monthly or quarterly basis. Often preparation and lodging you activity statements timely and correctly can be a difficult and confusing process.

 

 

DSV Partners – Resolve Your Tax Obligations and Bookkeeping Woes with a Tax Agent in Sydney who has your best interest in mind

You can avoid stress and eliminate risks simply by being confident that your reporting obligations are sorted out and activity statements are lodged correctly.

 

When you require top-notch accounting services for your small business, you’ll need the services of an expert. This is precisely why many small businesses rely on DSV Partners for their accounting and tax-related requirements. Unlike other accounting firms, we invest a lot of time and effort towards understanding your business and financial goals. Knowing your objectives enables us to navigate the complex tax and regulatory laws that small businesses need to comply with. From maintaining your accounts accurately to providing you with optimised tax planning solutions, we do it all. For more information, call us at 02 9633 4893.

 

 

 

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Accounting For Small Business: What Can Trigger A Tax Audit?

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The ATO is always on the lookout for business which might be consciously cheating the tax system by claiming non-applicable deductions and credits or by underreporting its taxable income. A good thing is that it releases of a list of risks every year about what they will consider in their tax audits. When it comes to accounting for small business, business owners have to be aware of some warning signs that could invite an audit.

  1. Underreporting income: The ATO keeps track of businesses’ income each year. If it finds a major reduction in income in a particular year, it can order a tax audit to take a closer look at its finances. In many such cases, businesses are found to be underreporting their income to save tax money. In tax audits, ATO focuses on things like expenses claimed which are over the industry benchmark, capital gains and property transactions, among others.
  1. Over claimed entitlements: While it’s possible to write off certain business expenses, people take advantage of this and would illegally write off expenses by including expenses related to their hobbies and personal interests in business expenses. This is illegal and can invite a tax audit. Likewise, it’s also important to claim home office expenses correctly. A tax expert specializing in accounting services can help you claim such expenses so that you can qualify for deductions. In addition, it is important to lodge Business Activity Statement (BAS) in a timely manner.
  1. Excessive donations: The ATO keeps track of all the charity donations that a business makes each year. If you’ve made more than generous donations in a particular year, it can trigger an audit. So, ensure you keep all records and receipts of donations for any explanation needed at the time of claiming deductions.
  1. Disparity in numbers: Ensure you double check all the numbers in various forms before submitting. To avoid mathematical errors, it’s always recommended to let professional accounting services handle your taxes. Contact a tax agent who specializes in accounting for small business to file various forms. They will make sure that all the numbers add up correctly.

 

For more guidance and first-class accounting services in Sydney, don’t hesitate to contact DSV Partners today!

 

 

 

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4 Ways to Utilize Your Tax Refund

Sydney Accountants

If you’re wondering about the best ways to use your tax refund money, you’ve come to the right place. As one of the most trusted Sydney accountantsDSV Partners has advised a number of clients about how they should spend their tax refund for maximum benefits. The ultimate aim here is of course to make you more financially stable. So, before you head to buy your next unnecessary gadget and start making spur of the moment buying decisions, here are some of the most productive ideas to make your tax refund actually work for you.

  1. Eliminate or reduce high interest debts: The best thing you can do to reduce your financial burden is to pay off your high interest debts. Paying off your car loans, credit card debt or student loans is a great way to put your tax refund to work.
  1. Fund your retirement account: In these times, you need a lot of money to lead a comfortable life after retirement. Even for a modest lifestyle after retirement, you should have at least $300,000 in Australia. These numbers are enough to scare anyone but a great way to maximise the growth potential of your superannuation fund is to start contributing towards it from early on. Consult with a financial adviser before transferring your tax refund to superannuation fund. Trust us; you’ll thank yourself for this decision in the future.
  1. Make work related purchases: If you’ve been thinking of purchasing some work related equipment, such as electronic items, tools and computers, using this year’s tax refund for this purpose is a wise decision. If you purchase work equipment at the start of the year that cost you at least $300, you can claim maximum deduction for depreciating assets on your next tax return.
  1. Invest: If you are financially sound with no credit loans, you may think of making some wise investments by opening a brokerage account. If you’re a beginner, start with online brokers as they are efficient and affordable for small investors.  Consult a financial adviser before you make investments.

DSV Partners are Australia’s most trusted specialists in accounting and bookkeeping services. For more information, get in touch with us today!

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