Is your accounting software old hat? By Steve Marsten.

A few clients have been chewing my ear about the drudgery of accounting software and the time it takes them to deal with paperwork but seriously – small business needs to take its collective head out of the sand and check out the cloud!

Small business accounting software that’s not available via the cloud can be tedious. Traditionally, it  sucks up far too much of your business’ time and effort. This doesn't add value, and takes the fun out of being in business. Cloud software can save your company time and money. Most of all – cloud software has allowed our clients to actually spend more time on and in their business and less time on the drudgery of doing paperwork. It means less time dealing with bookkeepers and more time on strategy, sales and marketing.

So naturally the next question that comes up is - what is this thing called the cloud? Think about when you use internet banking. Every time you access this data, you’re using the cloud. The cloud is a platform to make data and software accessible online anytime, anywhere, from any device. Your hard drive is no longer the central hub. You have the control provided you have access to the internet.

But where is my data kept? For some reason we are more concerned about where our data is kept when using cloud based accounting software then where our banking details are kept. Truth is most of our data is spread around the globe. Yes much of it is in Australia however depending on the companies you deal with, many of us maybe surprised to find that our data is being accessed by call centers from around the world regardless of where it is stored. Much is in highly securitised servers - and no one can give an iron clad guarantee that it will always be safe.

Problems with traditional accounting software

• The data in the system isn’t up to date and neither is the software.
• It only works on one computer and data bounces from place to place. For example, on a USB drive. This is not always secure or reliable.
• Only one person has user access. Key people can't access financial and customer details.
• It's costly and complicated to keep backups (if done at all).
• It's expensive, difficult and time consuming to upgrade the software. Cloud updates overnight usually and doesn’t have any downtime.
• Customer support is expensive and slow.

Xero is a breath of fresh air to cloud accounting; Reckon and MYOB are quickly trying to catch up. At Sothertons we assist all businesses in assessing the best and most cost effective software to make the bookkeeping less of a chore and more of a value add. Call the experienced team for more information on 4972 1300.

What are you leaving on the table for the tax man? By Steve Marsten.

Tax season is well and truly underway and its refreshing to see plenty of new clients. Now many taxpayers have had their tax prepared in prior years by non tax accountants or they have chosen to prepare the returns themselves online. Seems so easy! However we note that many taxpayers are missing out on some critical tax deductions as a result. They are leaving plenty on the table for the Tax man!

Tax Professionals with experience tend to ask much better quality questions to flesh out the many unthought-of deductions that do not get claimed yet they are incurred in carrying out ones income producing roles.

We feel it’s vital that you claim deductions for everything that you’re entitled to. Based on our recent start to the season we have noted that many taxpayers have overlooked several claims in the past.

These include:

1.    Professional memberships and subscriptions.  If you’re a member of a professional or trade association as part of your work, you can claim a deduction for the amount you pay in subscriptions. This also covers union fees if you’re a member of a trade union, as well as subscriptions to trade or professional magazines or – if you’re an investor – subscriptions to key publications like Money magazine.

Another key deduction that taxpayers should be conscious of is to consider prepaying your fees or subscriptions for next year before June 30, you can claim a deduction this year, which can be a useful timing benefit.

2.    Tax advice and preparation. If you paid for a tax professional to complete last year’s tax return, you can claim a deduction for the cost in this year’s return. What’s even more beneficial is, you can also claim a deduction for any travel costs you incurred getting to and from your agent. Also don’t forget that if you’ve paid for any tax advice during the year, that too is usually deductible.

3.    Income protection insurance. This one is often forgotten by taxpayers at tax time. If you pay for insurance premiums for a policy covering the loss of income, those amounts are tax deductible. But be careful; that doesn’t include life insurance, TPD or trauma insurance. It also excludes policies paid from your superannuation fund.

These are just some of many expenses that do get overlooked often. Feel free to speak to one of the experienced team at Sothertons and make sure no claim is missed. Call us on 4972 1300.

The more we Share, the more we Have. By Tina Zawila

In my last article I discussed the “Sharing Economy” with a focus on becoming an Uber driver and I cautioned new entrants into this market to be aware of their taxation obligations.   

This “peer-to-peer economy” or “collaborative consumption economy” as it’s also known, is not limited to ridesharing, and is growing at a rapid rate with the improvements and access to technology, and the growth in the number of participants. 

And whilst most of us are familiar with the likes of Uber, Airbnb and eBay, there is almost no limit on the products or services you can access via this shared economy, including peer-to-peer loans, shared office space for businesses, knowledge and talent sharing (freelancing), crowd-funding, and even pet-sitting!

It is suggested that the advantages of the sharing economy include:

• New and Better Opportunities – providing access to things that might not be practical to own or obtain, for example obtaining a peer loan when you cannot access finance via traditional means.
• Cheaper goods and services – on the basis that it can ‘cut out the middle man’ and that you only use (and pay for) something, or someone, as necessary, rather than deal with the cost of ownership or employment.
• Extra income for providers – by allowing them to unlock the potential of unused assets by sharing it when it is not in use, or to exploit a talent that isn’t used in their day job.

Of course there are disadvantages too:

• Privacy and Safety Concerns – people on both sides of the transaction have to forfeit some privacy.  If you rent out your house on Airbnb, you are inviting strangers into your home!
• No, or few, Guarantees – when you share with others you assume the risk that you won’t get paid or that your assets are damaged.

As I have mentioned previously, it is also very important that you understand the tax implications of your activities in the sharing economy.  In Australia, you need to consider whether you need an ABN, if you need to register for GST and what you need to declare in your income tax return and what you may be able to claim.

If you are interested in the sharing economy, make sure you seek professional advice.  Call the team at Sothertons on 07 4972 1300 today.