Top Tips When Starting A Business From An Accountant

Starting a small business in Australia is an exciting yet challenging journey, and getting your finances right from the start is crucial. At SKD Accountants, we specialise in helping new businesses establish a strong financial foundation. Below, we share our top accounting tips to ensure your business starts off on the right foot.

1. Separate Your Business and Personal Finances

Opening a dedicated business bank account is one of the first steps every entrepreneur should take. This keeps your business expenses and personal spending separate, ensuring your financial records are clear and accurate. Not only does this make tax time easier, but it also helps you avoid mixing personal liabilities with business obligations—a common issue for many new business owners.

2. Choose the Right Business Structure

Whether you decide to register as a sole trader, a company, or a partnership, the structure of your business has long-term tax and legal implications. At SKD Accountants, we help you understand the advantages and disadvantages of each structure to ensure you make an informed decision that best suits your business and tax needs.

3. Invest in the Right Accounting Software

In today’s digital age, leveraging cloud-based accounting software like Xero, MYOB, or QuickBooks is critical. These tools automate invoicing, payroll, and cash flow management, saving you time and minimising the risk of errors. At SKD Accountants, we guide our clients in selecting and setting up the best software for their specific needs.

4. Understand and Fulfill Your Tax Obligations

Taxation can be one of the most complex aspects of running a small business in Australia. Whether it’s registering for GST if your turnover exceeds $75,000, or managing your BAS (Business Activity Statement) and PAYG (Pay As You Go) for employees, having a clear tax strategy from the outset is essential. We at SKD Accountants provide tailored tax planning and compliance services to ensure you stay on top of your obligations and maximise deductions.

5. Effective Cash Flow Management

Cash flow is the lifeblood of any small business. Monitoring your inflows and outflows on a regular basis helps prevent cash shortages, which are one of the leading causes of business failure. Use accounting software to track your cash flow and forecast future expenses. At SKD Accountants, we work with you to create a cash flow plan that ensures your business has the funds it needs to thrive.

6. Keep Accurate and Up-to-Date Records

Good record-keeping is not only a legal requirement but also a smart business practice. From tracking expenses and receipts to recording sales, maintaining organised financial records helps you make informed decisions and prepares you for tax season. At SKD Accountants, we help you set up efficient bookkeeping systems that simplify this process.

7. Plan for Taxes Early

Tax planning shouldn’t be something you scramble to do at the end of the financial year. By working with an experienced accountant like SKD Accountants, you can plan ahead, ensuring that you’re prepared to pay taxes without any surprises. We’ll help you forecast tax liabilities and set aside the necessary funds to avoid cash flow disruptions.

8. Seek Professional Guidance

Hiring a professional accountant early in your business journey can save you time, stress, and money in the long run. SKD Accountants provides expert accounting and advisory services tailored to the unique needs of small businesses in Australia. From compliance and tax advice to financial planning, we’re here to help you succeed.

Why Choose SKD Accountants?

At SKD Accountants, we understand the challenges that come with starting a small business in Australia. Our goal is to provide personalized, practical financial advice to help your business grow. We pride ourselves on being more than just accountants—we are your business partners, helping you navigate the complexities of finance so you can focus on what you do best.

Contact SKD Accountants today to schedule a consultation and discover how we can support your business from day one. Whether you need help with tax planning, bookkeeping, or cash flow management, we are here to ensure your financial success.

 

ATO Crackdown on Rental Property Owners: Avoid These Common Mistakes

ATO Crackdown on Rental Property Owners: Avoid These Common Mistakes

The Australian Taxation Office (ATO) has been tightening its focus on rental property owners, targeting common errors that lead to incorrect deductions and underreporting of rental income. With data-matching tools and extensive audits, the ATO aims to ensure compliance and prevent taxpayers from making costly mistakes.

Here’s what you need to know to stay compliant and avoid penalties:

1. Overclaiming Deductions

One of the most frequent errors involves claiming personal or non-rental expenses. For example, some property owners mistakenly claim the full cost of improvements or renovations as repairs and maintenance. However, the ATO clearly distinguishes between repairs (deductible immediately) and capital improvements (which must be depreciated over time). Make sure you understand which expenses qualify for immediate deduction and which must be capitalised.

2. Failure to Report Rental Income

Rental income, including money earned from short-term rentals (e.g., Airbnb), must be fully reported. Some property owners neglect to declare income from periods when their property was tenanted. Others incorrectly report only part of the rental income, especially when multiple stakeholders are involved. The ATO has robust data-matching tools that cross-check financial data from property managers, banks, and other institutions, so it’s critical to report all rental earnings.

3. Incorrect Apportioning of Expenses

If your property serves both personal and rental purposes (e.g., a holiday home rented part-time), you can only claim deductions for the rental portion. Similarly, expenses such as loan interest must be proportioned correctly. Claiming the entire loan interest when only part of the loan relates to the rental property is a mistake flagged by the ATO.

4. Inadequate Record-Keeping

Proper documentation is essential to substantiate all claims. The ATO expects property owners to retain receipts, invoices, and detailed records of income and expenses. Missing documentation can result in disallowed deductions, which may lead to penalties.

5. Misunderstanding Capital Gains Tax (CGT)

When selling a rental property, many owners overlook their capital gains tax obligations. If the property was used to generate income at any point (even partially), CGT may apply. Be sure to calculate your CGT accurately, taking into account the periods the property was rented.

How to Stay Compliant

To avoid being caught in the ATO’s crackdown, follow these steps:

  • Keep accurate and detailed records of all expenses, rental income, and related transactions.
  • Understand the distinction between immediate deductions (like repairs) and capital expenditures (which must be depreciated).
  • Report all rental income, including earnings from short-term rentals or shared properties.
  • Consult with a tax professional to ensure that your tax return is accurate and compliant with ATO guidelines.
 

By staying informed and ensuring accurate reporting, rental property owners can avoid penalties and maximise eligible deductions.

If you’re unsure about your obligations, SKD Accountants can help you navigate the complexities of rental property taxation and ensure that you’re fully compliant with ATO regulations.

For more information, get in touch with us today!

Top 7 Common Tax Mistakes Made by Businesses and How to Avoid Them

Navigating the complexities of business tax can be challenging, especially for small and medium-sized enterprises. Many businesses make common tax mistakes that can lead to significant financial penalties or missed opportunities for savings. At SKD Accountants, we’re committed to helping you optimise your tax strategy and avoid costly errors. In this article, we’ll explore the top tax mistakes businesses make and how you can steer clear of them.

1. Failing to Keep Accurate Records

One of the most common tax mistakes businesses make is poor record-keeping. Inadequate records can lead to incorrect tax filings and missed deductions. It’s essential to maintain detailed records of all financial transactions, including receipts, invoices, and bank statements.

Solution: Invest in reliable accounting software and consider consulting with a professional accountant to ensure your records are up-to-date and compliant with tax laws.

2. Missing Important Tax Deadlines

Missing tax deadlines can result in penalties and interest charges that can add up quickly. Many businesses fail to track these critical dates, leading to unnecessary financial strain.

Solution: Set reminders for key tax deadlines or work with an accountant who can manage your tax calendar for you. At SKD Accountants, we offer comprehensive tax services to help you stay on track.

3. Incorrectly Classifying Employees and Contractors

Misclassifying employees as independent contractors is a common mistake that can lead to significant tax penalties. The Australian Taxation Office (ATO) has strict guidelines on what constitutes an employee versus a contractor, and getting it wrong can be costly.

Solution: Familiarise yourself with ATO guidelines or consult with us to ensure your classifications are correct.

4. Overlooking Deductions and Credits

Businesses often overlook eligible deductions and credits, leading to higher tax liabilities. Commonly missed deductions include home office expenses, vehicle costs, and business-related travel.

Solution: Keep detailed records of all expenses and consult with a tax professional who can help you identify all eligible deductions and credits. SKD Accountants can guide you through maximising your tax benefits.

5. Not Separating Personal and Business Finances

Blurring the line between personal and business finances is another frequent mistake that complicates tax filing and can trigger audits. Mixing expenses can make it difficult to track deductible business expenses accurately.

Solution: Open separate bank accounts for your business and ensure that all transactions are properly categorised. This separation simplifies the accounting process and helps in accurate tax reporting.

6. Ignoring Superannuation Obligations

Employers are required to make superannuation contributions for eligible employees. Failing to meet these obligations can result in fines and additional charges.

Solution: Stay informed about your superannuation obligations and set up regular payments to ensure compliance. An accountant can assist in managing these payments and keeping you updated on any changes to superannuation laws.

7. Incorrect GST Reporting

Errors in GST reporting, such as claiming GST credits on ineligible expenses or not reporting GST on sales, are common mistakes that can lead to audits and penalties.

Solution: Regularly review your GST reporting process and consult with a professional to ensure accuracy. SKD Accountants can help you with thorough GST reporting and compliance checks.

Avoiding these common tax mistakes can save your business time, money, and stress. Partnering with a professional accounting firm like SKD Accountants can help you navigate the complexities of business tax with confidence. We offer tailored tax services to suit your business needs, ensuring compliance and optimising your tax position.

Ready to take control of your business taxes? Contact SKD Accountants today for a consultation, and let us help you avoid these common pitfalls and achieve your financial goals.