Paul Zisson profile image

Paul Zisson
Top 10% Taxation

Founder & CFO at

Member Since November 2012

Bondi Junction, NSW, 2022

SHARE

247 FOLLOWERS

I have taken off the suit, lost the tie!. Corporate world escapee, commercially savvy, chartered acccountant with 25+ years experience, passionate about helping SME's realise their dreams, their potential. Sharing the love with like-minded, new age entrepreneurs. MobileCFO is not just about number crunching & tax returns. He is a a new breed of accountant that not only understands your numbers on a strategic level but explains them to you simply & provides commercial, all round biz advice

Qualified skills

Taxation
Accounting
Payroll
Bookkeeping
Business Consulting

Reputation

Top 10%
Top 20%

Paul Zisson answered this question

How do I obtain government grants for my small business?

Hi Ananda, you will be surprised how many government grants are available (100's) at local, state and federal government levels that are currently being under-utilised. Also, corporates offers grants where they see your business contributing to yours (eg banks). In an election year, the federal government is making lots of cash available at all levels where it creates value in the community, creates jobs, assists charitable organisations. They can range from $5K (council level) to $2M (commercialisation grant). Austrade offers grants for certain industries to boost local manufacturing. Federal offer lots of clean-energy, green business grants. Grants can be very specific so it is very important you tailor your application to meet their purpose.

The government grant finder assists help get an idea at a government level but there are many more. A few seminars I have been to say partnering with another accredited business like a charity, community group with increase your chances in the approval process. The key is submitting a succinct, well written, value offering in your application. There are service providers out that that do a grant analysis for you to see what are more appropriate for your business. They can also proof your application before submitting. It should be noted that grants are not easy win handouts, they are actually quite selective and hold you accountable to their criteria. It is a business for the government for government bodies like Austrade to meet KPI's and provide the government with ROI. But they are great options to consider when starting up your business when cash funding is not always available or limiting your potential. I recommend including a few grant considerations in your business plan as a funding option (yes, you will need a business plan!, government grants will nee to see them).

Happy to point you in the right direction if needed. Good luck with your new business!

Paul Zisson answered this question

Trevor Hartshorne
Trevor Hartshorne, Director at Rothlake Business Services

Accounting

What word do you use when searching on Google an Accountant?

It depends what you are seeking and for what purpose:

"Bookkeeper" for record keeping, account processing, invoicing, payments, cash books, banking, administration, BAS preparation etc. More junior level finance & administration, not normally qualified/certified accountants.

"Accountant" for financial statement preparation, cash management, management reporting, financial analysis, more technical financial advice, compliance such as tax returns, ASIC reporting, budgets & forecasts, planning. There are internal and external accountants (advisors/consultants who just do financial year-end accounts & tax planning for clients). They are normally certified as CPA's or CA (chartered accountants).

"Tax Agent" for preparing and lodging your income tax returns, BAS, company tax, FBT, anything tax related with ATO, they have a lodgement program with the ATO for clients and are registered to handle tax affairs, with extended deadlines for clients. Often accountants are also registered tax agents.

As to financial jargon to google (so many to mention:

Tax returns, EOFY (end of financial year), financial statements, bookkeeping, BAS, tax advice, financial management, cash flow management, books, record keeping, account processing, budgeting, business plans etc.

Try this link:

http://www.accountingcoach.com/terms/accounting-dictionary.html

 

Paul Zisson answered this question

Ananda Raj Pandey
Ananda Raj Pandey, Developer at SavvySME

Taxation

Does anyone have any tips on how I can save on tax?

Hi Ananda,

It would help to know what business you are in and its size/turnover. Here's a few tips to get your mind ticking:

1. Keep your personal and business expenses separate. I recommend separate bank accounts and credit cards etc. Mix them all up, it gets confusing & more time consuming for you or more costly accountant to sort out. You can claim bank charges, maintenance fees if they relate to this business income or salary&wages.

2. Keep good tax records, write on your receipts what the purpose of the expense of your business/deductible expense. Always ask for a receipt when you buy or use a service that is business/income related (don't throw them out!). A good cloud accounting software solution such as Xero or Saasu may be a good way to stay organised & keep your records up to date. You pay a nominal monthly rental and can claim its cost as a deduction. There is also good apps such as Expensify that take a picture of your receipts and organise them for you.

3. Review at your business structure. If you are small, then a sole trader may be more cost effective but it puts your personal assets at risk if it goes belly up. if you have a decent turnover a company may a good way to protect your business assets and keep them separate from personal. But there are costs of maintaining a company.

4. If you work from home, then there may home office expenses you could claim (pro rata from personal space) and office equipment you can depreciate. Motor vehicle expenses is another one if you use your car to run your business.

5. There are a bunch of small business concessions available for turnover less than $2 million, offered by the Tax Office. Depends on if you can follow them but you may need to get your accountant to look at their applicability for you. Check out the ATO website:

http://www.ato.gov.au/content/00231250.htm 
Anyway, as the guys have said, there are too many unknowns to be specific to your tax situation and if you saw how many volumes of tax legislation there are, you would run for your life. Just be honest, stay clean & transparent and get a good accountant/tax advisor and you have nothing to worry about and they can set up good practices for you to maximise your tax savings.

Paul Zisson answered this question

Phil Joel
Phil Joel, Director at SavvySME

Web Hosting

How do I get my own domain name?

I use www.netregistry.com.au and they also run a cheaper subsidiary www.ziphosting.com.au if you just want the domain name reserved with some basic hosting (you will need hosting as well if you want your site to go live and set up email accounts). Use the search function to check if the name you want is available. Generally, domains with .com and .com.au are more lucrative and domain names with small character lengths have great saleability (normally 3-8 characters) if that is an objective. Also use actual words in your domain name as this may help your google searches to drive traffic to your website.

If you want a cheap option to create/maintain your own website with free domain name and hosting, try the Microsoft Office 365 small biz product & you get the cloud version of MS suite products included for just $7.90/mth. You have to purchase the plan through Telstra.

http://www.telstra.com.au/business-enterprise/bundles/microsoft-office-365-small-business-offer/?tc=G|B|D|TBP|tsute|TelstraOffice365 

Paul Zisson answered this question

Robin Dickinson
Robin Dickinson, Owner at RAD International

Accounting

Is accounting software such as MYOB, Xero or Saasu an overkill?

Also, it is only considered "overkill" if you dont know how to understand and use your financial information. Embrace as it is very easy to neglect because its all too hard. Have someone (like me) explain the numbers to you simply and highlight the indicators that you need to keep track of to give you peace of mind that you are steering your business on the right course. Good luck!

Paul Zisson answered this question

Robin Dickinson
Robin Dickinson, Owner at RAD International

Accounting

Is accounting software such as MYOB, Xero or Saasu an overkill?

Hi Robin, i think it is a basic requirement of any small business. without it how will you know how your business is performing at any given time, how will you invoice customers, how will you manage your cash, how will you protect your assets, how will you comply with tax and accounting obligations. You could pay an external accountant to do this for you but it will cost your business much more and often they only look at it once a year/month etc. To be at the top of your game in your business and industry you need financial information that allows you to make informed and proactive decisions. I appreciate that you may not be good with numbers, administration, finance when you are a business owner...so let a bookkeeper or accountant take that stress off you mind so you can focus on spreading the word about your business. Allowing this to build up over time and using manual methods to record business information is risky, prone to error & could behind the eight ball. Trust me, these small accounting packages cost you a very small amount per month (cloud based - they used to be higher annual fees & maintenance on the PC software versions),  are very easy to use and interact with other applications, to tell you alot about how your business is performing. The businesses I have seen without a simple accounting software are the ones that get into trouble and have the bank manager banging on their door and a shoe box full of receipts & invoices costs alot more at tax time to sort through and clean up. By that time, its old news and real time is the minimum you should be aiming for in this modern age.

Paul Zisson answered this question

If a small business cant afford an accountant who can help?

Corporate secretarial firms can be useful if you are a corporate and large enough to justify their added cost. As CFO I have used a few of them at clients I have worked at. They were good on the ASIC compliance if you have to manage a few companies but they often come with monthly retainers unless you go on a timed basis. However, if you are a small business, then it is more likely you will be sole trader or partnership so ASIC does not apply in terms of annual company reviews, form 484's etc (if you care to remember all that stuff ;). ASIC has also automated these forms online on their website without the paper trail, so if you have some idea of finding them when a situation arises, funds are tight and you want to save some support costs, then a director/owner/co secretary can complete these forms simply enough by yourself online with ASIC directly for your company. Corporate secretarial firms are geared to the legal obligations of a company and are good at reminding you at want forms need to be completed, directors minutes etc. They also provide some bookkeeping and accounting support and from my experience, at a more basic, routine level, but tend not to be strategic financial advisors as your chartered or CPA accountant. You can also buy these templates pretty cheaply now online for all your minutes, notices, agreements at online legal sites such as www.lawlive.com.au (again keeping your costs low) and www.cleardocs.com for setting up a company.
The use of your accountant is primarily used for accounting, tax and strategic business advice so this is not to be grouped with corporate secretarial services but most accountants can handle this amicably at the same time if you require.
It all depends on your business structure, technical ability, budget, time/resources etc. With everything moving to online DIY is becoming more available to businesses to keep costs low. The challenge is knowing what you need to do and doing it correctly so you don't get into strife. All can be done quite cheaply yourself but it is recommended you at least consult an accountant or corporate services firm for guidance in setting you up.

Paul Zisson answered this question

Does every small business need an accountant ?

Of course, SME's will struggle without one. 95% of SME's fail through lack of expertise, resources, skills and time in their business. You should be proactive in business and know how it is performing at any given time so you can make the most educated decisions, avoid any curve balls thrown at your business and best of all, enjoy your business with peace of mind it is well looked after. The strategic value of an accountant is more than bean counting and reports, taxes etc, they should be your business advisor, your negotiator, your cash flow manager, your business planner, your right hand man/woman who you can trust the most and sound out your thoughts. Your accountant does need to be full time, it depends on the size & nature of your business and transactional volume. A bookkeeper can handle all this transactional processing and keep on top of it. The more it piles up the more complex and costly it becomes for your accountant to clean it up and get it back on track, maintenance is the key to a well oiled machine. A value of a good accountant should far outweigh their cost to your business. They should save you money and make you more efficient.
My mobileCFO is all about that, offering SME's a flexible, affordable solution when you need it, for how long you need me, onsite or via virtual cloud, we will always be in contact 24/7 when you need me. Most SME's can't afford a CFO level experienced accountant from the corporate world so even part-time, flexible access to one will be much more operational value to your business than a full time bookkeeper or expensive external accountant. I am your internal partner, your friend and trusted resources in business. I focus on your vision, big picture & simply and plans things for you with structure to make things easier for your business.
I have seen many SME's skimp on the use of an accountant and they are ones that call for urgent help when their business cops a blow or goes belly up. Your business needs protection whilst it grows...

Paul Zisson answered this question

What are tax implications for employees starting a business?

Employees are paid a salary or wage by a company and subject to PAYG tax withheld at tax rates depending on the salary level. The annual payment summary showing gross wages and PAYG tax paid is included in the employee's individual tax return. Their is no GST/BAS implications here.

If that same person started a business part-time then it all depends on the legal structure of that business - sole trader, partnership or company and the income levels. If a sole trader (contractor or small business owner), then your business income (net of business expenses) is added to your salary & wage income in your annual tax individual return to work out the final income tax you pay. If you are a partner in a business, then your share of partnership business income is added to your salary or wage in your annual individual income tax return. Both sole traders & partnerships are not legal entities in their own right so their is no legal separation of income, assets & liabilities of the business from yourself.

If your part-time business decided to incorporate a private company then that business income & assets and liabilities are limited to that legal entity. You can pay yourself a salary or wage out of the business but then you are responsible for taking out the correct amount of PAYG tax and submitting to the ATO, paying super, pay company PAYG tax if at a certain level. Or you can take a drawing to reduce the capital you contribute into the business or you may decide to pay yourself a dividend if the company makes a profit. Salary/wages, PAYG (payment summary) and dividends from this company are then added to your other payment salary in your individual annual income tax return. There are obviously additional costs of setting up and maintaining a company vs a sole trader/partnership but it gives that business legal protection and it becomes a more cleaner cut, saleable vehicle should you wish to exit that business.

If you carry on a business in any shape or form, you must register for GST if your business turnover (sales/fees) is at, or above the GST turnover threshold, of $75,000 or more. If your GST turnover is below $75,000 you can choose whether to register for GST or not but you must stay registered for at least 12 months if you choose to register. Yes, it means doing a BAS either annually or quarterly or monthly, depending on your turnover levels. You can claim the GST on all your outgoings/expenses but must collect and pay the GST on your business sales. Your employment salary has no bearing on this as it is not business  income.
I hope that makes sense.
Cheers
Paul

Paul Zisson answered this question

What is the difference between an accountant and a bookkeeper?

Bookkeepers are not qualified accountants but may have a business degree background or completed a bookkeeping course. They generally perform transactional-based processes such as accounts payable and receivable, bank reconciliations, some basic accounting and reporting, BAS tax reporting, back office administration. They don't normally provide technical advice (nor should you rely on them).
There are degree qualified accountants (Business Degree) and professional accountants (Post-degree qualified) with designations such as chartered accountants (CA's) and certified practising accountants (CPA's) etc. This requires further stringent training, studies and professional work experience. CA's & CPA's provide amongst many things - technical advice, strategic advice, tax and business planning, auditing, financial & performance analysis, management & financial reporting, compliance, funding, cash flow & asset management, higher level professional advice. They generally don't perform the bookkeeping functions as it would be too costly for you but they review their work for accuracy & can complete your annual or monthly accounts based on the work they have done and explain to you what the results mean from a performance perspective & offer recommendations of how the business can be improved and meet your expectations. You can use external accountants to do your annual tax returns, accounts/financial statements, BAS etc or you can hire one internally that can do this in-house and help shape and grow your business.

Paul Zisson answered this question

If a small business cant afford an accountant who can help?

Me! Your accountant is the most trusted source of information in a SME. I find that businesses that try and get by without one get into all sorts of a mess - admin chaos or inefficient, or lose sight of their business goals

Fact: 99% of all Australian businesses are SME's, 95% of these businesses fail & are replaced by a equal number of new entrants each year. Common cause - business owners are time poor, lack expertise & resources in all areas, work in the business & not so much on it.  
If I can give my business model a plug? get a flexible, part-time, CFO level accountant (for the same value as a full time bookkeeper) to focus on strategies and understand your numbers and explain in a simple way, then you will save in the long run and avoid making costly mistakes. Accountants are no longer account processors and tax returns, they should add value to your business and vision. Sure hire a bookkeeper to keep on top of your admin, BAS, transaction posting, possibly monthly or quarterly if you dont have a large transactional volume but they are generally not qualified accountants so if you need technical or strategic advice then its worth investing in your business by having a good accountant to lean on for negotiations, cash flow management, business improvement and business planning.

Paul Zisson answered this question

What are the most popular accounting software for SMEs?

Yes, I agree Saasu and Xero are the 2 leaders in the cloud-based accounting software market. MYOB was not built for cloud and was very successful prior with SME's but more expensive for software, support maintenance costs. It has released a cloud version which is not on par with the 2 above. MYOB live is very simple in structure & reporting whereas S & X are interactive with other mobile app tools & software. MYOB's legacy has to dismantle its PC building blocks which has made it difficult to compete with S & X which were developed specifically for the cloud. S is Sydney based company and X is NZ based but both very popular and similar 

Paul Zisson answered this question

Nick Chernih
Nick Chernih, Founder at LinkBuildSEO

Taxation

Is the cost to build an online store tax deductible?

Hi Nick,

Put simply & generally speaking, all business related costs will become tax deductible at some point (either outright or depreciated/amortised over time), it comes down to the "timing" of when these costs will be tax deductible.

Preliminary to commencing business (initial costs):

Any "initial" development costs incurred to build a website, feasibility studies conducted & expenses incurred to "start-up" a e-commerce business (eg. set up a company/register a business) will be considered to be of "capital" in nature and will NOT be eligible for a tax deduction immediately until the website is "live" and the business has commenced & it generates a business income. These capital development costs will sit on your balance sheet as an "asset" of the business until that time the e-shop doors open!

The tax office sees your e-commerce website as an "asset" so the tax deductibility of costs of acquiring, developing or constructing a e-commerce site also depends on their nature, so it will be important to determine what expenditure is on "computer hardware", "software" and "content" as the tax office treats each of them differently.

1. Computer hardware - used to host a commercial website is treated as "plant & equipment" for tax purposes & will be depreciated over its "effective useful life" to the business (i.e. you pro rata claim a % of the cost as a tax deduction each tax year from when the unit of plant was "installed ready for use")*. eg. servers, computers, routers, backup drives, peripheral equipment, connections to internet.

2. Computer software - will be tax deductible & amortised over a period of 4 years if the software was used as a part of a commercial website (incurred post 13 May 2008, 2.5 years prior). This also includes salary & wages paid to staff in developing the software, software packages to create/design websites, testing/debugging, architecture, validation, interaction with users through a authentication process, supportive lifecycle documentation. This can be tax deducted on a straight-line basis (25% each year, pro rated) or elect to form a "software pool" (Year 1 = 0, Year 2 - 40%, Year 3 - 40%, Year 4 - 20%) from when it is ready for use.

3. Content - expenses incurred in developing initial content depends on whether it is a new or existing business. For your new start-up, the expenses will be "capital" as explained earlier and not deductible until such time the website is ready for use. When your business is up and running, existing and you want change the content, then these general expenses will be immediately deductible in that tax year they were incurred. eg. sound, video files, graphics, catalogues of goods for sale, inventory lists for customer online searches, collection of data.

Existing business:

"Ongoing" support, maintenance, insurance and hosting fees are 100% tax deductible once in the tax year they were incurred. This includes annual ISP and domain registration fees.
Expenses incurred on updating the content on a website should be immediately deductible.

Modifications & Alterations:
If your business is existing and later down the track you want to significantly modify/extend functionality/replace the e-commerce website then these costs may be considered "capital" in nature if they alter the structure of the site and similar treatment to above will apply. eg. a replacement & more sophisticated shopping cart, stock management database. This will be depreciated from when the new database is installed and the remaining tax value of old shopping cart will be immediately tax deductible at that time.

*As to the depreciation rates to use for a tax deduction, it will depend on your situation. There is a simplified tax system (STS) for small businesses that allows a 15% tax deduction automatically in the tax year website cost was incurred (without pro rata from time of payment to 30 June that year). There is also a choice in the method of depreciation - Prime Cost (even spread, quicker schedule of deductions) and Diminishing Value (reducing balance, slower schedule of deductions). Ok, I may lose you here so I will not go too heavy.. :-)
I hope this makes sense. Basically, if your e-commerce site is ready to open its doors, then your tax deductions will start to flow, but not before. Some will be deducted over time (asset based) and some will be immediately deductible (ongoing/maintenance costs). Good luck! Cheers, Paul

No results found.

Paul Zisson answered this question

How do I obtain government grants for my small business?

Hi Ananda, you will be surprised how many government grants are available (100's) at local, state and federal government levels that are currently being under-utilised. Also, corporates offers grants where they see your business contributing to yours (eg banks). In an election year, the federal government is making lots of cash available at all levels where it creates value in the community, creates jobs, assists charitable organisations. They can range from $5K (council level) to $2M (commercialisation grant). Austrade offers grants for certain industries to boost local manufacturing. Federal offer lots of clean-energy, green business grants. Grants can be very specific so it is very important you tailor your application to meet their purpose.

The government grant finder assists help get an idea at a government level but there are many more. A few seminars I have been to say partnering with another accredited business like a charity, community group with increase your chances in the approval process. The key is submitting a succinct, well written, value offering in your application. There are service providers out that that do a grant analysis for you to see what are more appropriate for your business. They can also proof your application before submitting. It should be noted that grants are not easy win handouts, they are actually quite selective and hold you accountable to their criteria. It is a business for the government for government bodies like Austrade to meet KPI's and provide the government with ROI. But they are great options to consider when starting up your business when cash funding is not always available or limiting your potential. I recommend including a few grant considerations in your business plan as a funding option (yes, you will need a business plan!, government grants will nee to see them).

Happy to point you in the right direction if needed. Good luck with your new business!

Paul Zisson answered this question

Trevor Hartshorne
Trevor Hartshorne, Director at Rothlake Business Services

Accounting

What word do you use when searching on Google an Accountant?

It depends what you are seeking and for what purpose:

"Bookkeeper" for record keeping, account processing, invoicing, payments, cash books, banking, administration, BAS preparation etc. More junior level finance & administration, not normally qualified/certified accountants.

"Accountant" for financial statement preparation, cash management, management reporting, financial analysis, more technical financial advice, compliance such as tax returns, ASIC reporting, budgets & forecasts, planning. There are internal and external accountants (advisors/consultants who just do financial year-end accounts & tax planning for clients). They are normally certified as CPA's or CA (chartered accountants).

"Tax Agent" for preparing and lodging your income tax returns, BAS, company tax, FBT, anything tax related with ATO, they have a lodgement program with the ATO for clients and are registered to handle tax affairs, with extended deadlines for clients. Often accountants are also registered tax agents.

As to financial jargon to google (so many to mention:

Tax returns, EOFY (end of financial year), financial statements, bookkeeping, BAS, tax advice, financial management, cash flow management, books, record keeping, account processing, budgeting, business plans etc.

Try this link:

http://www.accountingcoach.com/terms/accounting-dictionary.html

 

Paul Zisson answered this question

Ananda Raj Pandey
Ananda Raj Pandey, Developer at SavvySME

Taxation

Does anyone have any tips on how I can save on tax?

Hi Ananda,

It would help to know what business you are in and its size/turnover. Here's a few tips to get your mind ticking:

1. Keep your personal and business expenses separate. I recommend separate bank accounts and credit cards etc. Mix them all up, it gets confusing & more time consuming for you or more costly accountant to sort out. You can claim bank charges, maintenance fees if they relate to this business income or salary&wages.

2. Keep good tax records, write on your receipts what the purpose of the expense of your business/deductible expense. Always ask for a receipt when you buy or use a service that is business/income related (don't throw them out!). A good cloud accounting software solution such as Xero or Saasu may be a good way to stay organised & keep your records up to date. You pay a nominal monthly rental and can claim its cost as a deduction. There is also good apps such as Expensify that take a picture of your receipts and organise them for you.

3. Review at your business structure. If you are small, then a sole trader may be more cost effective but it puts your personal assets at risk if it goes belly up. if you have a decent turnover a company may a good way to protect your business assets and keep them separate from personal. But there are costs of maintaining a company.

4. If you work from home, then there may home office expenses you could claim (pro rata from personal space) and office equipment you can depreciate. Motor vehicle expenses is another one if you use your car to run your business.

5. There are a bunch of small business concessions available for turnover less than $2 million, offered by the Tax Office. Depends on if you can follow them but you may need to get your accountant to look at their applicability for you. Check out the ATO website:

http://www.ato.gov.au/content/00231250.htm 
Anyway, as the guys have said, there are too many unknowns to be specific to your tax situation and if you saw how many volumes of tax legislation there are, you would run for your life. Just be honest, stay clean & transparent and get a good accountant/tax advisor and you have nothing to worry about and they can set up good practices for you to maximise your tax savings.

Paul Zisson answered this question

Phil Joel
Phil Joel, Director at SavvySME

Web Hosting

How do I get my own domain name?

I use www.netregistry.com.au and they also run a cheaper subsidiary www.ziphosting.com.au if you just want the domain name reserved with some basic hosting (you will need hosting as well if you want your site to go live and set up email accounts). Use the search function to check if the name you want is available. Generally, domains with .com and .com.au are more lucrative and domain names with small character lengths have great saleability (normally 3-8 characters) if that is an objective. Also use actual words in your domain name as this may help your google searches to drive traffic to your website.

If you want a cheap option to create/maintain your own website with free domain name and hosting, try the Microsoft Office 365 small biz product & you get the cloud version of MS suite products included for just $7.90/mth. You have to purchase the plan through Telstra.

http://www.telstra.com.au/business-enterprise/bundles/microsoft-office-365-small-business-offer/?tc=G|B|D|TBP|tsute|TelstraOffice365 

Paul Zisson answered this question

Robin Dickinson
Robin Dickinson, Owner at RAD International

Accounting

Is accounting software such as MYOB, Xero or Saasu an overkill?

Also, it is only considered "overkill" if you dont know how to understand and use your financial information. Embrace as it is very easy to neglect because its all too hard. Have someone (like me) explain the numbers to you simply and highlight the indicators that you need to keep track of to give you peace of mind that you are steering your business on the right course. Good luck!

Paul Zisson answered this question

Robin Dickinson
Robin Dickinson, Owner at RAD International

Accounting

Is accounting software such as MYOB, Xero or Saasu an overkill?

Hi Robin, i think it is a basic requirement of any small business. without it how will you know how your business is performing at any given time, how will you invoice customers, how will you manage your cash, how will you protect your assets, how will you comply with tax and accounting obligations. You could pay an external accountant to do this for you but it will cost your business much more and often they only look at it once a year/month etc. To be at the top of your game in your business and industry you need financial information that allows you to make informed and proactive decisions. I appreciate that you may not be good with numbers, administration, finance when you are a business owner...so let a bookkeeper or accountant take that stress off you mind so you can focus on spreading the word about your business. Allowing this to build up over time and using manual methods to record business information is risky, prone to error & could behind the eight ball. Trust me, these small accounting packages cost you a very small amount per month (cloud based - they used to be higher annual fees & maintenance on the PC software versions),  are very easy to use and interact with other applications, to tell you alot about how your business is performing. The businesses I have seen without a simple accounting software are the ones that get into trouble and have the bank manager banging on their door and a shoe box full of receipts & invoices costs alot more at tax time to sort through and clean up. By that time, its old news and real time is the minimum you should be aiming for in this modern age.

Paul Zisson answered this question

If a small business cant afford an accountant who can help?

Corporate secretarial firms can be useful if you are a corporate and large enough to justify their added cost. As CFO I have used a few of them at clients I have worked at. They were good on the ASIC compliance if you have to manage a few companies but they often come with monthly retainers unless you go on a timed basis. However, if you are a small business, then it is more likely you will be sole trader or partnership so ASIC does not apply in terms of annual company reviews, form 484's etc (if you care to remember all that stuff ;). ASIC has also automated these forms online on their website without the paper trail, so if you have some idea of finding them when a situation arises, funds are tight and you want to save some support costs, then a director/owner/co secretary can complete these forms simply enough by yourself online with ASIC directly for your company. Corporate secretarial firms are geared to the legal obligations of a company and are good at reminding you at want forms need to be completed, directors minutes etc. They also provide some bookkeeping and accounting support and from my experience, at a more basic, routine level, but tend not to be strategic financial advisors as your chartered or CPA accountant. You can also buy these templates pretty cheaply now online for all your minutes, notices, agreements at online legal sites such as www.lawlive.com.au (again keeping your costs low) and www.cleardocs.com for setting up a company.
The use of your accountant is primarily used for accounting, tax and strategic business advice so this is not to be grouped with corporate secretarial services but most accountants can handle this amicably at the same time if you require.
It all depends on your business structure, technical ability, budget, time/resources etc. With everything moving to online DIY is becoming more available to businesses to keep costs low. The challenge is knowing what you need to do and doing it correctly so you don't get into strife. All can be done quite cheaply yourself but it is recommended you at least consult an accountant or corporate services firm for guidance in setting you up.

Paul Zisson answered this question

Does every small business need an accountant ?

Of course, SME's will struggle without one. 95% of SME's fail through lack of expertise, resources, skills and time in their business. You should be proactive in business and know how it is performing at any given time so you can make the most educated decisions, avoid any curve balls thrown at your business and best of all, enjoy your business with peace of mind it is well looked after. The strategic value of an accountant is more than bean counting and reports, taxes etc, they should be your business advisor, your negotiator, your cash flow manager, your business planner, your right hand man/woman who you can trust the most and sound out your thoughts. Your accountant does need to be full time, it depends on the size & nature of your business and transactional volume. A bookkeeper can handle all this transactional processing and keep on top of it. The more it piles up the more complex and costly it becomes for your accountant to clean it up and get it back on track, maintenance is the key to a well oiled machine. A value of a good accountant should far outweigh their cost to your business. They should save you money and make you more efficient.
My mobileCFO is all about that, offering SME's a flexible, affordable solution when you need it, for how long you need me, onsite or via virtual cloud, we will always be in contact 24/7 when you need me. Most SME's can't afford a CFO level experienced accountant from the corporate world so even part-time, flexible access to one will be much more operational value to your business than a full time bookkeeper or expensive external accountant. I am your internal partner, your friend and trusted resources in business. I focus on your vision, big picture & simply and plans things for you with structure to make things easier for your business.
I have seen many SME's skimp on the use of an accountant and they are ones that call for urgent help when their business cops a blow or goes belly up. Your business needs protection whilst it grows...

Paul Zisson answered this question

What are tax implications for employees starting a business?

Employees are paid a salary or wage by a company and subject to PAYG tax withheld at tax rates depending on the salary level. The annual payment summary showing gross wages and PAYG tax paid is included in the employee's individual tax return. Their is no GST/BAS implications here.

If that same person started a business part-time then it all depends on the legal structure of that business - sole trader, partnership or company and the income levels. If a sole trader (contractor or small business owner), then your business income (net of business expenses) is added to your salary & wage income in your annual tax individual return to work out the final income tax you pay. If you are a partner in a business, then your share of partnership business income is added to your salary or wage in your annual individual income tax return. Both sole traders & partnerships are not legal entities in their own right so their is no legal separation of income, assets & liabilities of the business from yourself.

If your part-time business decided to incorporate a private company then that business income & assets and liabilities are limited to that legal entity. You can pay yourself a salary or wage out of the business but then you are responsible for taking out the correct amount of PAYG tax and submitting to the ATO, paying super, pay company PAYG tax if at a certain level. Or you can take a drawing to reduce the capital you contribute into the business or you may decide to pay yourself a dividend if the company makes a profit. Salary/wages, PAYG (payment summary) and dividends from this company are then added to your other payment salary in your individual annual income tax return. There are obviously additional costs of setting up and maintaining a company vs a sole trader/partnership but it gives that business legal protection and it becomes a more cleaner cut, saleable vehicle should you wish to exit that business.

If you carry on a business in any shape or form, you must register for GST if your business turnover (sales/fees) is at, or above the GST turnover threshold, of $75,000 or more. If your GST turnover is below $75,000 you can choose whether to register for GST or not but you must stay registered for at least 12 months if you choose to register. Yes, it means doing a BAS either annually or quarterly or monthly, depending on your turnover levels. You can claim the GST on all your outgoings/expenses but must collect and pay the GST on your business sales. Your employment salary has no bearing on this as it is not business  income.
I hope that makes sense.
Cheers
Paul

Paul Zisson answered this question

What is the difference between an accountant and a bookkeeper?

Bookkeepers are not qualified accountants but may have a business degree background or completed a bookkeeping course. They generally perform transactional-based processes such as accounts payable and receivable, bank reconciliations, some basic accounting and reporting, BAS tax reporting, back office administration. They don't normally provide technical advice (nor should you rely on them).
There are degree qualified accountants (Business Degree) and professional accountants (Post-degree qualified) with designations such as chartered accountants (CA's) and certified practising accountants (CPA's) etc. This requires further stringent training, studies and professional work experience. CA's & CPA's provide amongst many things - technical advice, strategic advice, tax and business planning, auditing, financial & performance analysis, management & financial reporting, compliance, funding, cash flow & asset management, higher level professional advice. They generally don't perform the bookkeeping functions as it would be too costly for you but they review their work for accuracy & can complete your annual or monthly accounts based on the work they have done and explain to you what the results mean from a performance perspective & offer recommendations of how the business can be improved and meet your expectations. You can use external accountants to do your annual tax returns, accounts/financial statements, BAS etc or you can hire one internally that can do this in-house and help shape and grow your business.

Paul Zisson answered this question

If a small business cant afford an accountant who can help?

Me! Your accountant is the most trusted source of information in a SME. I find that businesses that try and get by without one get into all sorts of a mess - admin chaos or inefficient, or lose sight of their business goals

Fact: 99% of all Australian businesses are SME's, 95% of these businesses fail & are replaced by a equal number of new entrants each year. Common cause - business owners are time poor, lack expertise & resources in all areas, work in the business & not so much on it.  
If I can give my business model a plug? get a flexible, part-time, CFO level accountant (for the same value as a full time bookkeeper) to focus on strategies and understand your numbers and explain in a simple way, then you will save in the long run and avoid making costly mistakes. Accountants are no longer account processors and tax returns, they should add value to your business and vision. Sure hire a bookkeeper to keep on top of your admin, BAS, transaction posting, possibly monthly or quarterly if you dont have a large transactional volume but they are generally not qualified accountants so if you need technical or strategic advice then its worth investing in your business by having a good accountant to lean on for negotiations, cash flow management, business improvement and business planning.

Paul Zisson answered this question

What are the most popular accounting software for SMEs?

Yes, I agree Saasu and Xero are the 2 leaders in the cloud-based accounting software market. MYOB was not built for cloud and was very successful prior with SME's but more expensive for software, support maintenance costs. It has released a cloud version which is not on par with the 2 above. MYOB live is very simple in structure & reporting whereas S & X are interactive with other mobile app tools & software. MYOB's legacy has to dismantle its PC building blocks which has made it difficult to compete with S & X which were developed specifically for the cloud. S is Sydney based company and X is NZ based but both very popular and similar 

Paul Zisson answered this question

Nick Chernih
Nick Chernih, Founder at LinkBuildSEO

Taxation

Is the cost to build an online store tax deductible?

Hi Nick,

Put simply & generally speaking, all business related costs will become tax deductible at some point (either outright or depreciated/amortised over time), it comes down to the "timing" of when these costs will be tax deductible.

Preliminary to commencing business (initial costs):

Any "initial" development costs incurred to build a website, feasibility studies conducted & expenses incurred to "start-up" a e-commerce business (eg. set up a company/register a business) will be considered to be of "capital" in nature and will NOT be eligible for a tax deduction immediately until the website is "live" and the business has commenced & it generates a business income. These capital development costs will sit on your balance sheet as an "asset" of the business until that time the e-shop doors open!

The tax office sees your e-commerce website as an "asset" so the tax deductibility of costs of acquiring, developing or constructing a e-commerce site also depends on their nature, so it will be important to determine what expenditure is on "computer hardware", "software" and "content" as the tax office treats each of them differently.

1. Computer hardware - used to host a commercial website is treated as "plant & equipment" for tax purposes & will be depreciated over its "effective useful life" to the business (i.e. you pro rata claim a % of the cost as a tax deduction each tax year from when the unit of plant was "installed ready for use")*. eg. servers, computers, routers, backup drives, peripheral equipment, connections to internet.

2. Computer software - will be tax deductible & amortised over a period of 4 years if the software was used as a part of a commercial website (incurred post 13 May 2008, 2.5 years prior). This also includes salary & wages paid to staff in developing the software, software packages to create/design websites, testing/debugging, architecture, validation, interaction with users through a authentication process, supportive lifecycle documentation. This can be tax deducted on a straight-line basis (25% each year, pro rated) or elect to form a "software pool" (Year 1 = 0, Year 2 - 40%, Year 3 - 40%, Year 4 - 20%) from when it is ready for use.

3. Content - expenses incurred in developing initial content depends on whether it is a new or existing business. For your new start-up, the expenses will be "capital" as explained earlier and not deductible until such time the website is ready for use. When your business is up and running, existing and you want change the content, then these general expenses will be immediately deductible in that tax year they were incurred. eg. sound, video files, graphics, catalogues of goods for sale, inventory lists for customer online searches, collection of data.

Existing business:

"Ongoing" support, maintenance, insurance and hosting fees are 100% tax deductible once in the tax year they were incurred. This includes annual ISP and domain registration fees.
Expenses incurred on updating the content on a website should be immediately deductible.

Modifications & Alterations:
If your business is existing and later down the track you want to significantly modify/extend functionality/replace the e-commerce website then these costs may be considered "capital" in nature if they alter the structure of the site and similar treatment to above will apply. eg. a replacement & more sophisticated shopping cart, stock management database. This will be depreciated from when the new database is installed and the remaining tax value of old shopping cart will be immediately tax deductible at that time.

*As to the depreciation rates to use for a tax deduction, it will depend on your situation. There is a simplified tax system (STS) for small businesses that allows a 15% tax deduction automatically in the tax year website cost was incurred (without pro rata from time of payment to 30 June that year). There is also a choice in the method of depreciation - Prime Cost (even spread, quicker schedule of deductions) and Diminishing Value (reducing balance, slower schedule of deductions). Ok, I may lose you here so I will not go too heavy.. :-)
I hope this makes sense. Basically, if your e-commerce site is ready to open its doors, then your tax deductions will start to flow, but not before. Some will be deducted over time (asset based) and some will be immediately deductible (ongoing/maintenance costs). Good luck! Cheers, Paul

TOPICS FOLLOWED

Online Business

Online Business 9343 FOLLOWERS

Legal

Legal 5937 FOLLOWERS

Sales and Marketing

Sales and Marketing 8733 FOLLOWERS

Finance and Accounting

Finance and Accounting 8225 FOLLOWERS

Information Technology

Information Technology 7691 FOLLOWERS

Startup

Startup 6868 FOLLOWERS

Business Management

Business Management 11137 FOLLOWERS

Ecommerce

Ecommerce 7547 FOLLOWERS

Selling Online

Selling Online 7610 FOLLOWERS

Social Media

Social Media 7694 FOLLOWERS

Web Design

Web Design 7528 FOLLOWERS

Web Development

Web Development 7574 FOLLOWERS

Web Hosting

Web Hosting 7426 FOLLOWERS

Business Structure

Business Structure 5409 FOLLOWERS

Intellectual Property

Intellectual Property 5351 FOLLOWERS

Buying a Business

Buying a Business 5355 FOLLOWERS

Customer Acquisition

Customer Acquisition 6946 FOLLOWERS

Graphic Design

Graphic Design 6875 FOLLOWERS

Video Production

Video Production 6856 FOLLOWERS

Advertising

Advertising 7012 FOLLOWERS

Branding

Branding 7023 FOLLOWERS

Market Research

Market Research 6912 FOLLOWERS

Digital Marketing

Digital Marketing 7072 FOLLOWERS

Public Relations (PR)

Public Relations (PR) 6910 FOLLOWERS

Cashflow Management

Cashflow Management 5626 FOLLOWERS

Taxation

Taxation 5583 FOLLOWERS

Insurance

Insurance 5564 FOLLOWERS

Superannuation

Superannuation 5563 FOLLOWERS

Banking

Banking 5583 FOLLOWERS

Accounting

Accounting 5621 FOLLOWERS

Government Grants

Government Grants 5582 FOLLOWERS

Website

Website 6258 FOLLOWERS

Cloud Computing

Cloud Computing 6166 FOLLOWERS

App Development

App Development 6153 FOLLOWERS

Product Development

Product Development 6460 FOLLOWERS

Startup Branding and PR

Startup Branding and PR 6493 FOLLOWERS

First 100 Days

First 100 Days 6460 FOLLOWERS

Bootstrapping

Bootstrapping 6422 FOLLOWERS

Research and Innovation

Research and Innovation 6465 FOLLOWERS

Customer Retention

Customer Retention 7373 FOLLOWERS

Importing

Importing 7264 FOLLOWERS

Business Growth

Business Growth 7390 FOLLOWERS

Market Trend

Market Trend 7339 FOLLOWERS

Business Partnership

Business Partnership 7346 FOLLOWERS

Lifestyle and Health

Lifestyle and Health 7357 FOLLOWERS

Risk Management

Risk Management 7322 FOLLOWERS

Franchising

Franchising 7270 FOLLOWERS

Business Coaching

Business Coaching 7389 FOLLOWERS

Business Planning

Business Planning 7416 FOLLOWERS

New Business Ideas

New Business Ideas 6525 FOLLOWERS

View more

people with similar expertise

Kirsty Fox 29 FOLLOWERS

Michael Prior 40 FOLLOWERS

Pam Pitt 47 FOLLOWERS

Ian Harris 19 FOLLOWERS

Shaun Farrugia 9 FOLLOWERS