When Should You Hire an Accountant?

Employing the services of a qualified accountant is a wise decision for most businesses, but not all. So, when should you hire an accountant?

1.Tax situation

You should hire an accountant if you have a complex tax situation with many different incomes and expenses. Although you can do your taxes, accounting software can only do so much. A qualified accountant may be able to sort out tax benefits you’re unaware of or alert you to tax laws that may affect your financial life.

An accountant can be the difference between running into tax trouble and avoiding it. They can also be beneficial when dealing with tax audits.

If you anticipate your income will increase by a certain amount in the coming year, an accountant will help you file taxes to ensure that your tax burden is not too heavy.

2. Complex investment

If you are a business owner, or a person with complex investments and financial situations, an accountant is a wise choice for helping you file taxes and do your taxes every year. Hiring an accountant will ensure that your tax filing is accurate and up to date.

3. No changes in profit

If you suspect that your business is not breaking even or making any profit, it’s time to hire an external professional. An experienced accountant will be able to provide you with advice on how to reorganise your business to make it profitable.

4. Financial planning

An experienced accountant can help put together a financial plan for your business, investment portfolio, or finances. They can advise how to handle your money best to maximise profit.

If you have more questions about when to hire an accountant, Shoebox Books is here to help. Our professional accountants and bookkeepers offer accounting, tax and bookkeeping services. Visit our website or contact us for more information.

What You Can and Can’t Claim on Tax at Christmas Time

Here are some festive expenses that you can and can’t claim during the holidays:

1. Christmas gifts

During this period, you might want to give your staff a Christmas gift and bonus for their hard work throughout the year. If the gifts are below $300, they are classified as non-entertainment gifts. Therefore, you can declare a tax deduction for amounts of less than $300 for employees. Gifts such as gift vouchers, a bottle of alcohol, hampers, groceries, games, flowers, beauty products and computers all fit the non-entertainment classification.

However, you cannot claim gifts that are categorised as entertainment. These gifts include theatre movie or sporting event tickets, holiday or accommodation or tickets to amusement parks.

2. Office party

Holiday parties are how businesses show appreciation for their clients and staff. But can you claim back the cost of the party? It all depends on your guest list. If you throw a Christmas party for your clients, you should account for the party as a value in your business records; add the price back on when you return to compute your profit for tax.

3. Offices

If your business has its own offices, you can claim tax relief. The Christmas decoration in the offices, including the Christmas tree and the lights, can be logged into your account as a day-to-day running cost.

However, you can’t claim your Christmas decoration if you work from home, even if it is your home office.

4. Stocking fillers

For instance, you gift your client a fancy gift. You can record the present as a business cost in your record. First, however, you need to meet some requirements. One of the requirements is that the gift must contain an advert for the business. If you don’t adhere to the condition when giving a present to a client, you cannot claim the gift or record it on your business cost records.

If you find tax a challenge, Shoebox Books is here to help. We are professional accountants and bookkeepers who will help you with your bookkeeping and taxation needs. Visit our website or contact us for more information.

Record Keeping for Tradespeople

Record keeping is essential for every business as it assists you to stay up to date on various activities in your business, such as tax returns and daily transactions.

For tradespeople, recording keeping should be a priority:

1. Tax records

It is the first type of record you should keep. Although the tax records are pretty essential, you should list all your invoices and receipts. Next, ensure you have tax records of your income and expenditure. Keep them digitally as it will be easier to access them this way.

2. Margin analysis

Margin analysis will help you identify how much money in profit you make from each job. Depending on your trade, you can break this down per customer or per type of job, and it should give you a good indication of where your money is being made. It will also help you identify where you overspend.

3. Expense

Go through your expenses one by one to see how much you spend. It will help you identify whether you spent your money effectively or not. It also enables you to cut costs hence saving money.

4. Time analysis

How do you spend your time? Perhaps you are charging your client per hour. Conduct a time analysis to ensure the strategy is effective.

How do you improve your performance in recording keeping?

1. Keep a trading journal

As much as you want to digitise everything, keep a physical journal to record activities from your trade. You can record entry price, exit price, a reason to trade, etc. You also get to notice patterns that might help you identify unusual patterns. A pen and paper is also an excellent way to keep accurate entries. Record the essential details.

2. Record results

People in all corners of life record everything except the results. Make it a habit to record results, including profits and losses.

If you need help in record keeping, look no further than Shoebox Books. Our professional accountants and bookkeepers will help you with all of your finances and bookkeeping. Visit our website or contact us for more information on how we can help you.

What is Capital Gains Tax and How is it Calculated?

Capital gains tax is the tax that you pay on profits from selling assets such as properties or stocks. Capital gains are generally included in taxable income but, in most cases, are taxed at a lower rate.

Capital gains are acquired when a capital asset is sold or exchanged at a higher price than it was purchased. A capital loss is also realised when the asset is sold at a lower price than it was purchased.

How is Capital Gains Tax Calculated?

Calculating these taxes depends on the type of capital gain; short term capital gains or long term capital gains.

Calculating short-term capital gains tax is more straightforward than long-term gains. For long-term gains, inflation is computed due to the fact that they are held for a longer time. For short-term capital gains, the gain is added to the total income, and then the income tax is calculated based on the tax bracket it falls in.

There are different methods to calculate capital gains tax, including:

1. Discount

You will pay the full capital gain when you sell your capital gains tax asset in less than a year. However, if you held the same investment for over a year ith without selling or disposing of it, you could get a discount on your capital gains. If you have held your assets for over 12 months, you are eligible for the 50% discount.

To calculate capital gains tax, one subtracts the cost base from the capital proceeding, then deduct any losses made and apply the relevant discount.

Capital gains calculation

Asset sale price – cost base = capital proceeds

Capital gains discount

Capital proceeds x 50% = capital gain

2. Indexation

The indexation method applies to assets that have been held for a significant period. You may choose this method if you acquired your asset before 21 September 1999 and have owned it for at least 12 months. When calculating the tax, inflation will have an impact on the cost base of the asset.

3. Capital loss

If you have a capital loss, deduct them from your capital gain to reduce the amount of tax.

When to Pay Capital Gains Tax

Capital gains tax is payable as part of your income tax assessment. It is not a separate tax. You pay it with your income tax for the relevant income year.

If you need help with capital gains tax, our tax accountants at Shoebox Books are here to help. For more information on tax and bookkeeping services, visit our website or contact us.

Basic Bookkeeping Essentials

Bookkeeping is the process of recording the financial transactions of a business or individual. This helps to keep the books balanced and to track the money flow. A thorough understanding of bookkeeping is an essential skill for every owner of a small business.

It is also an essential skill for freelancers, consultants, and anyone else who needs to manage their finances. Bookkeeping is a tool used to keep an accurate record of the financial transactions of a business or individual.

Bare bookkeeping essentials is a topic that many small business owners often overlook. However, those who take the time to learn bookkeeping basics and follow a few fundamental principles will save themselves from disaster.

Bookkeeping can be an overwhelming and frustrating task to learn, but with a few basic principles and a little practice, anyone can become a successful bookkeeper.

A business will inevitably have to complete transactions with cash, be it in the form of paper money or coins. The three types of cash transactions are payments, collections, and disbursements.

How Does A Company Record Inventory?

Record keeping is a vital aspect of any company’s success. If an inventory is not accounted for, it can lead to mismanagement and lost profits. Businesses must be able to keep track of their inventory and know exactly how much they have available.

To keep track of inventory, a company may record the amounts of items sold and received. The accounting department uses these amounts to calculate the stock’s current work at the end of each year.

Why is it Important To Keep Track Of Accounts Receivable?

It is essential to keep track of accounts receivable to ensure that all the money owed to the company is collected. If not, the company can lose money by paying for goods and services before they are paid for.

Bookkeeping is a crucial element to any business. It’s essential to keep track of accounts receivable and other accounting records to stay on top of your finances.

Sometimes it can be overwhelming to keep up with your bookkeeping practices for your company. This is the reason why you should seek professional help from Shoebox Books. Visit our website to find a bookkeeper near you.

How can you make a Small Business Environmentally Sustainable?

Due to climate change and polluting the environment, businesses, big or small, have various ways they can reduce their impact on the environment. Here, we discuss or point out ways you can make a small business environmentally suitable.

Remote Working

Technology has made it easier for people to operate, control, coordinate and manage their business from home. Firstly, it reduces the time one takes to go to work. Secondly, no commuting is required which means you will have less reason to use your car. Smoke from the car causes air pollution, so the fewer vehicles on the road, the less carbon dioxide is emitted into the air.
If you are worried about bookkeeping and accounting, there are services such as cloud bookkeeping and software applications. With cloud bookkeeping, you can access your data anywhere at any time. Cloud bookkeeping has other benefits too. Your data will always be secure, and you will not lose your data under any circumstances unless you delete the information willingly. Secondly, cloud bookkeeping is fast and makes it easy to communicate with customers as well as suppliers, strengthening the business relationship.

Suitable Products

Use products that do not harm the environment. It is recommended to use recyclable materials that reduce waste and maintain a circular economy. Cleaning products should also be free of toxins.

Reduce, Reuse, Recycle

First, the business has to reduce the usage of disposable materials. Instead of using disposable cups and plates, employees should use glass utensils and products that can be washed.

Reusing items in the business instead of throwing them away is very environmentally savvy. It is also a great idea to encourage employees to print paper on both sides. Any items from your lunch such as containers or bottles should also be recycled.

Compost

Create compost for organic matters. This includes fruit peeling, vegetables, and other organic produce. There is a difference between peels in the compost and those in the dump. The dump’s banana peels decay slowly and produce methane gas while those in the compost decay quickly and become soil in the garden.

Sustainable Packaging

Ensure the packaging materials for your products are safe and reusable. Recycled paper and cardboard are suitable packaging materials.

In the journey to making your business environmentally sustainable, Shoebox Books is here to assist you with bookkeeping. This includes cloud bookkeeping. We are professional accountants and bookkeepers, and a Tax Company who will help you with all the bookkeeping and tax-related needs. Contact Shoebox Books today to find a tax partner.

Examples of Tax Fraud and How to Spot Them

Tax fraud comes in many kinds and each attracts a different kind of penalties and consequences. Some of these can be intentional while others can be a result of a simple error in decision making. It is therefore important to understand the examples of tax to avoid dire consequences that can result from these frauds. 

This article will highlight some examples of tax fraud and how to spot them. These include;

1. Tax Evasion

The willful failure to pay taxes is a major fraud. When a accompany or an individual fails to fulfil the following tasks, it is considering as tax evasion which can translate to high fines and consequences. 

• Intentional failure to pay taxes owed
• Failure to report all the income
• Making false claims

2. Frivolous Tax Claim

False records and lying to tax agencies are serious found that can cause a lot of problem to you and your business. It is therefore important to make sure that you provide the correct details to your accountant or tax manager to avoid consequences. 

3. Underreported Income

Another type of tax fraud is unreported tax. This means that there is some type of income that you are not disclosing. Misreporting of an income is another way of underreported income and this can cause a lot of problems with the authority. 

This is a crime that can be noted during auditing and this can cause high fines and event detention. 

4. Fake Charities

This is another tax found that is common and can attract great consequence. Most people claim to make charities and contributing to different causes such as pandemic and others in the aim to evade tax. 

5. Phishing

This is the use of other person credentials and financial information through fake email or website. This information can be used for tax details and other frauds and tax crimes. 

There are several other types of tax found that you should be careful of. The best way is, to be honest. Pay tax as requires and declare all your income and earnings. As a business owner, you should also be vigilant and have a trustworthy team. This will avoid being conned and reduce tax found amongst your employees. If you need help on all tax-related tasks as well as bookkeeping services, contact Shoebox Book. They are a team of experienced and professional bookkeepers who will help you in your business.

What is tax evasion?

It is the act of not accounting and paying for tax. In almost all countries, tax evasion is considered a crime. Some of the ways people that don’t pay tax are punished are fines and jail terms. Tax evasion is considered a crime because it brings losses to the government. It results in a tax gap. As underpayment of tax is seen as tax evasion, nonpayment of tax is also seen as tax evasion. Before taxpayers can be accused of tax evasion, there must be proof that they didn’t pay tax intentionally. 

Tax evasion examples

Not all transactions are written down by the bookkeeper. When goods are bought in cash, the retailer or consumer might forget to keep a record. If a taxpayer doesn’t open up to a tax agency, any refusal to pay tax will be seen as a move to conceal income. Another form of tax evasion is claiming more than you’re supposed to claim. If you’re entitled to $4,000, the result of your bookkeeping shouldn’t be more than that. 

Tax avoidance

Even though tax avoidance and tax evasion are similar, they are different. Unlike tax evasion, tax avoidance is not a crime. Tax avoidance involves lowering tax rates. It is a safe way to decrease the total amount of tax that you pay. 

Types of tax evasion  

Fraud by tax preparers

Some tax preparers deliver false financial accounting and steal money for themselves. Since almost everyone paying tax depends on them, they find it easy to steal a lot of money. Some tax preparers even lie to their clients and increase the amount that they should pay as tax.

Employment tax fraud

Managers and directors have to deduct tax from the salaries of all their workers. If they don’t deduct the tax, they can be accused of tax evasion. Another method employers use to avoid tax is to pay their workers in cash. Such an employer won’t ask for the service of a bookkeeper. 

Corporate fraud

To avoid paying tax, some professionals carry out a lot of fraudulent acts. As some of them report an income less than what they truly got, some state too many deductions in their bookkeeping. There are even professionals that go as far as using bankers and accountants to avoid tax.

Abusive schemes

It involves the use of difficult financial transactions to avoid tax. By having access to secrecy laws and making use of them, assets can be hidden to avoid tax payment. You should be careful of trusts that promise to decrease the amount of tax that you pay.Shoebox books doesn’t only provide bookkeeping service for small businesses. They also provide tax services. No matter where you go in Australia, you can always use our services. You can contact us on 1 300 65 35 83 or visit Shoebox Books.

Is It Necessary To Get A Tax Accountant?

Filing and preparing your tax reports can be a very difficult task. It is therefore necessary to look for a tax accountant to help you in preparation for your business tax.

The following are the main reasons why it is very necessary to get a tax accountant. 

1. Save Yourself Time

A tax accountant will help you to deal with all the obligations of your business, such as paying taxes and bookkeeping. This will save you a lot of time, if you were originally doing your taxes by yourself. With your newly saved time, you can focus on yourself, your family, or scaling your business.

2. Tax Accountant Will Help Reduce Tax Liability

Tax accountants are experts who will be able to look into your financial transactions, and find ways to reduce tax liability. They will also evaluate business transactions, and recommend ways to effectively run your business.

3. Prevent Tax Penalties

A tax accountant will be focused on preparing and filing tax reports. They will also ensure that tax is paid within the required timeline. If you do this by yourself, you can often forget to pay your taxes, which can result in penalties. 

4.   Helps You Grow Your Business

Tax accountants will give you incredible advice for various aspects of business expenditure. They can propose various ways that you can follow to grow your business, without incurring much loss. This information is useful in growing a business. 

5.  Never Have Tax Anxiety

As a business owner, the last thing that you need is to have anxiety due to unpaid taxes. The best solution to this is to hire a professional tax accountant to deal with tax details. You will have peace of mind, and have a good night sleep knowing that someone will take care of your business taxes. 

Tax accountants can also offer other services such as bookkeeping. As a business owner, it is crucial to ensure you get a professional bookkeeper and tax accountants to assist your business. If you are wondering where to find a reputable and knowledge tax accountant, no need to worry. Shoebox Books is the best place to get professional and experienced bookkeepers and tax accountants. Get in touch with Shoebox Books today for further details.

Covid-19 Impact on Financial Stress

According to various studies conducted, it is clear that a great deal of people are going through serious financial stress resulting from the Covid-19 pandemic.

Covid-19 brought about a lot of unforeseen circumstances that lead to job loss, retrenchment, layoffs and health crisis. All these impacted the financial stability of most people as they tried to survive this hard time.

The ways Covid-19 has contributed to financial stress;

1. Unemployment

Most companies have shut down rendering many people to be jobless. This is stressful to many as they have to look for alternative income sources.

2. Economic Impacts Due To Covid-19 Restrictions

Various Covid-19 restrictions have created a lot of stress on the economy. This has made life more difficult for most people. Products and services have become more expensive and others have become accessible.

3. Many Changes Have Been Observed

There are several changes that people have been forced to make. In all the industries, there have been changes that require finances. For example, the new remote working required people to invest in new hardware which can be an expensive and unplanned form.

Despite all these problems caused by Covid-19, more people are begging to find ways to better manage their finances to be prepared for unforeseeable circumstances.

Some of the things being done reduce financial pressure as a result of Covid-19 include;

1. Money Management Education

People are being taught about better money management skills to stay on top of their finances. This includes budgeting, saving and investing their money in smart ways.

2. Importance of Financial Well-being

Poor financial well-being has a lot of impact on people’s health and livelihoods. Also, bad financial management can cause people to perform poorly in the workplace due to stress. This can lower productivity and create work-related pressure.

3. Healthy Living

Covid-19 has impacted both the financial and physical well-being of most people around the world. Therefore it is important to take care of your physical health by following good practices and eating right. Good physical health has a positive impact on your mental health and can relieve stress.

Several things have been affected by Covid-19 and now that most of the things will not come back to normal, what is left of us is to adapt to the new normal.

For help with dealing with the financial crisis caused by Covid-19, Shoebox Books has got you covered. Get in touch with Shoebox Books today to get access to their professional financial services to help you navigate any financial stress caused by Covid-19.