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We’ve received lots of training course inquiries from new business in this last couple of months and a question that came up recently was “do you have a course that explains how much I can claim”. The person was asking about how much of the cost of their car can they claim as an expense because they use it for their business.
The answer to this question reminded me of how “flexible” the taxation laws are in Australia. You can “claim” any amount that you want and unless you are audited by the ATO you could possibly get away with it!!
The correct way is to determine how much of your costs are actually associated with your business and use that percentage. The ATO goes on to explain how to do this in detail.
Rising Cost of Petrol and Power
We are going through a time where costs are going through the roof for MOST of our staple costs: Interest on mortgages, petrol costs, electricity, and even cars are costing more money because supply has been affected by the pandemic and the war in Ukraine.
There is also a constant change in the number of people starting new businesses in the Gig Economy as well as just becoming contractors so they can choose who they work with and when they work. This is made possible because of the labour shortages and that power is now going back to employees.
The great benefit in working as a contractor and running your own business is that you can claim the cost of your expenses to reduce the amount of tax you pay at the end of the year.
Claiming your Expenses
When you are an employee earning “Pay As You Go” wages you can’t normally claim the cost of your home internet, power and mobile phones as an expense. This means that you pay tax on your total income and then use that “after tax” income to pay for these expenses.
As a business owner you can claim these costs straight away and only pay tax on your Net Income (profit). Robert Kiyosaki has written several books and made himself a household name by helping people understand the financial benefits of doing this.
To claim the cost of your expenses you need to:
- Make sure they are legitimate business expenses
- Keep a record of these expenses (usually in accounting software)
- Have a record of your receipts or tax invoices (source documents).
Daily Transactions or End of Month Bank Reconciliation
Depending on the size of your business and how much time you dedicate to your accounts you’ll record these transactions either during your day to day operations or at the end of the month when you reconcile your accounting software to your bank statements.
All popular accounting programs enable you to do this and in the last few years they’ve all upgraded their software to enable you to keep a digital record of the source documents too.
These tasks make up the majority of the tasks performed by accounting support and junior bookkeeper staff and are covered in the Beginner Certificate Courses in Xero, MYOB and QuickBooks Online.
MYOB Business Essentials and Xero are Popular
Online or cloud-based accounting software is popular because it puts your accounting software in the palm of your hand. Your mobile phone is with you everywhere you go and it has a great camera so it is the perfect tool to take a picture of every receipt you get.
If you are starting a bookkeeping business or want the best chance of getting a local (or online) accounting job then a MYOB & Xero Training Course BUNDLE will give you the skills and confidence you need to do the work.-- Did you like what you read? Want to receive these posts via email when they are published? Subscribe below.