In a recent article, we explained how to make your Christmas party Fringe Benefit Tax (FBT)-friendly and avoid some unwelcome surprises. Employers may be confused, or unaware of the scope of FBT, how and when to pay it, and how to reduce it. Knowing the basics of FBT and how you can avoid and reduce it can be a huge money saver for your business.

What is a Fringe Benefit?

A Fringe Benefit refers to anything paid to your employees which does not fall under the categories of salary or wage. A Fringe Benefit can refer to many things including cars, accommodation, entertainment, financial aids (i.e. loans, expense payments and debt waivers). For a full list of fringe benefit examples, see the ATO website.

When do I have to pay Fringe Benefit Tax?

The FBT year runs from April 1 to March 31, and any FBT payments that are due should be made annually by May 21. If this is your first time time paying FBT, or if the amount of FBT you paid in the previous year was under $3,000, then you only need to make one payment for the year. If you paid $3,000 or more in the previous year, then you are required to pay FBT in quarterly instalments for the next FBT year. Payments must be made to the ATO on or before the due date to avoid Failure to Lodge (FTL) penalties.

How do I pay Fringe Benefit Tax?

It is a legal requirement that you keep written records of all Fringe Benefits, and lodge an annual FBT activity statement through the Australian Business Registry Service (ABRS).
Standard Business Reporting (SBR) enabled software including Xero and MYOB must be used to submit your FBT statements. There is a full list of software you can use to lodge your activity statement, however it is recommended to manage your FBT through a registered tax agent to ensure you meet all obligations.

How can I reduce Fringe Benefit Tax?

To reduce FBT, make sure you are well aware of all the benefits which incur FBT and plan your benefits accordingly. FBT can apply to cars, entertainment, loans and accommodation. Your payable FBT can be reduced by:

  • providing benefits that are income tax deductible
  • using employee contributions
  • providing a cash bonus
  • providing benefits that are exempt from FBT

The threshold for taxable Fringe Benefits is $2000, so keeping annual benefit value below that will immediately save you the obligation of paying FBT.

Fringe Benefits are a great way to reward your staff in a way that can be much more meaningful and relationship building than a cash bonus. However, it is crucial to keep a close eye on the benefits you provide your employees to ensure you don’t end up hurting your business as a result.

Our expert team knows all about Fringe Benefit Tax in Australia. Get in touch today to make the best decision for your business when it comes to FBT.

When it comes to preparing your business to hit the ground running in the new year, the best thing you can do is speak to your accountant. They know the ins and outs of how to properly prepare your business for the new year, whether you close for the holiday period, or if this is your busiest time of the year. However, there are a few things you can do to get ahead of the curve for 2022, including reviewing business processes, technology, spending habits and trends.

Review your business processes and tech

The new year is often regarded as the time to reflect and make new resolutions. As a business owner, one of your top priorities should be to take a close, honest look at the way you operate your business, where the bulk of your income comes from, where it goes, and how you can implement better spending habits and bolster income streams.

The technology you use is another factor to consider. Consider your payroll, bookkeeping, superannuation, record keeping, etc. The software available for keeping track of these aspects of business have evolved exponentially over the years, helping you to save time, money and even the environment through the use of digital and cloud-based platforms.

Assess your income and spending

Reviewing your current income streams and business expenses is key to identifying areas that need to be better managed and improved. Gathering and assessing this data can also allow you to identify both positive and negative trends, and develop ways to enhance what is working, whilst reducing unproductive spending.

Looking back often allows us to make predictions for the future, and enables businesses to make educated decisions when it comes to planning for the year ahead.

Update your business plan

A business plan should never be set in stone and the new year is a good time to review what did and did not work for your business, what other businesses are doing well, and how you can promote growth and prosperity. By keeping your business plan flexible enough to make changes as the business environment shifts, you are much better placed to weather most issues with relative ease.

Collaborate with your business accountant to make the most of their expertise when it comes to financial data analysis, predictions and planning. By employing the knowledge of a financial advisor, you become free to focus on the operations of the business plan. You can also rest easy knowing that your business is being guided by an industry professional with the experience and skills necessary to help your business thrive.

You don’t need to reinvent the wheel to get your business heading in the right direction in the new year. Follow these simple steps and you will find yourself well equipped to take on what 2022 has in store, or get in touch with the friendly team at QCA for the best, tailored advice to really kick start your new year!

Cryptocurrencies have been around since 2009 and represent a decentralised form of digital currency. They are not backed by any government, but instead rely on cryptography to process transactions securely. The idea is that they provide a way for people to trade money as quickly as sending an email, with no need for banks or other third parties to be involved in the transaction. This is why cryptocurrencies are often called “digital cash” rather than just cryptocurrency.

Cryptocurrency markets were once dominated by bitcoin, but now there are over 1,500 different types of coins available and more coming online every day. In fact most countries around the world already have at least one type of cryptocurrency being used in their economy!

What is cryptocurrency?

Cryptocurrency is a digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. The most well-known cryptocurrency so far is Bitcoin. Examples of other cryptocurrencies are Litecoin, Ripple and Dogecoin.

Why trade cryptocurrency?

In the past decade, online trading has become an increasingly popular way to buy and sell stocks, ETFs and options in developed countries. Today, there have been booming market prices for cryptocurrencies such as Bitcoin, Litecoin and Ripple. For example, Bitcoin peaked at more than $1000 per coin back in 2013 (Source: Investopedia). Today, it sits around the $200 mark. The cryptocurrency market is growing rapidly which presents a huge opportunity for businesses to establish themselves in an ever-growing market.

When you trade crypto as currencies as a company it provides many advantages including cheaper transactions and faster transaction times because there is no middleman processing your funds like banks would have. The market for cryptocurrencies is projected to grow significantly in the coming years which means it’s important for companies to start considering this new business model now!

Conclusion

We hope this article has helped give you some insight into the benefits for companies to offer crypto to their customers. Get in touch with our team of experts for more information about incorporating cryptocurrency into your business.

It’s nearly impossible to fully protect yourself against fraud, but there are some things that you can do to significantly reduce your risk. Taking precautions such as avoiding unsecure websites, being suspicious of emails from unknown sources, not providing personal or financial information when not necessary, and installing antivirus software that will regularly scan web pages, files and downloads on your computer, are just a few.

Keep your personal information safe

You should never give out your personal or financial information online unless you are absolutely sure that the site is legitimate. Check out some reviews about the business online if possible. Scammers may pose as reputable organisations in order to gain personal information, which is why it is important to know that businesses such as accountants and banking institutions will rarely – if ever – ask for sensitive account details via email.

Avoid unsecure websites and malicious emails

While many people are starting to use their smartphones for everything from web browsing to shopping, you should still be cautious when using your phone to make purchases. It can be relatively easy to hack into some mobile phones these days and this can give criminals access to your personal information. To protect yourself against fraud on your phone, avoid making transactions through sites that are not secure.

Use antivirus software

Viruses and malware are malicious software designed to cause harm to your computer. They can be disguised in emails as .exe files, links, or attachments. Some viruses can even replicate and cause your computer to crash. Install antivirus software on your computer and be sure to update it regularly. You can keep your information secure by scanning web pages, files and downloads with it before you open them.

What to do if you’re a victim of online fraud

First, keep an eye out for fraud attacks. Monitor your bank and credit card accounts for unusual activity on a regular basis. If you notice something that doesn’t look right, contact your financial institution immediately to report the incident. Doing so could help get your money back before it’s too late.

If you’ve already had money stolen from you online, there are a few things you can do to mitigate the damage. Contacting your financial institution immediately will help them start working with law enforcement to get your money back to you. If they suspect that any personal information has been compromised, they will contact you as soon as possible to let you know so that you can take appropriate actions. You should file a police report and talk with the ACSC (Australian Cyber Security Centre) if you are ever the victim of online fraud.

These are just a few ways to protect yourself from online fraud. Taking the initiative and being proactive about your personal cybersecurity can help you stay safe when making purchases, banking online or conducting any other type of business over the Internet. If you’re concerned about the security of your online data, get in touch with our friendly team for expert help and advice.

Two out of every five small businesses have experienced a cyber attack. That is a staggering statistic. So what are you going to do about it? Now is the time to make cyber security and risk reduction a top priority. It is time to review processes and platforms, and determine what scams or cyber attacks your business may be vulnerable to. Don’t put it off any longer, take steps now to protect your business against cyber attacks.

In 2020 you likely had to move business online to meet the needs of your customers. This means that most small businesses are now storing their most valuable data on digital platforms that often aren’t very secure. Worryingly, almost one fifth of small businesses spent no money on cyber security in the last twelve months. Yet, Scamwatch reports were up 25% in 2020 showcasing the dramatically increasing threat of cyber attacks on businesses.

The most common cyber attacks targeting accountants are:
  • Compromised business emails – cyber criminals access and redirect your emails using stolen or easy to guess usernames and passwords, which often leads to data theft or invoice scams.
  • Ransomware attacks – using phishing emails, cyber attackers attempt to hold your systems and data ransom until a payment is made.
  • Identity theft – scammers will pose as financial or legal representatives in order to access funds.

It is important for accountants and small business owners to understand what risks they currently face and the risk reduction measures they have available to them.

Here are three simple steps you can take to start increasing your cyber security awareness and reducing risk.
  1. Make a list of all the platforms and places you store data e.g. Google Drive, Shopify etc.
  2. Check your passwords to make sure that they are all different and change them if they’re not! Keep in mind, if you can easily remember it, it can probably be easily hacked. Try and use 11-character passwords (or longer) to keep password-cracking tools guessing.
  3. Use multi-factor authentication on everything. This is an incredibly effective way to block 99% of account hackers in their tracks!

Cyber security is a human problem, not a tech one. We’re the ones putting ourselves and our data at risk by using the same weak passwords or opening a suspicious looking file. By becoming more aware of cyber security and implementing risk reduction measures, you can greatly improve your protection against cyber threats.

Get in touch with QC Accountants today if you’d like to get your business set up for the next phase of its evolution.

One of the biggest financial challenges faced by small businesses is operating expenses. According to Semrush, 66% of small businesses face financial challenges, with 43% claiming the most prominent challenge is paying operating expenses. Operating expenses cover labour costs, employee benefits, insurances, necessary tools etc. With 2020 proving to be too much for some small businesses to sustain operations, now is the time to look at your operating costs and determine where you can add value for your audience, and reduce costs for you. Below are some tips to keep your costs down, and your profit margin up.

First, embrace some contemporary business practices which have been steadily reducing operating costs for years.

Utilise emerging technologies – innovations in bookkeeping softwares, business management and CRM systems have made processes quick, painless and effective. They’ve also dramatically reduced the amount of hours and manpower required to get a job done. Another benefit of contemporary digital technologies is the tendency for them to be paperless, eco-friendly innovations, saving you cost on deliveries, waste disposal and physical storage.

Another way to reduce operating costs is outsourcing certain practices to third party experts, who can get tasks done much more efficiently and effectively than in-house employees. This can be particularly helpful for marketing and creative services which is often a common pain point for small businesses.

When it comes to utilising vendors, make sure to shop for the best deal that will bring the most value to your business. Be aware that some deals seem cost effective but include features not relevant to your business, meaning you may end up losing money in the long run. Additionally, ensure vendor invoices are paid on time or early if possible. Some vendors offer discounts for early invoice payments, and most (if not all) will charge extra for late payments.

Finally, analyse your business and determine all operating cost inefficiencies. Check for practices which are out-dated, use old technologies or are no longer useful.

This is an ongoing practice, one where employee participation should be encouraged. First hand experiences of policies and procedures are the best way to determine their efficacy.

Considering small businesses are still in recovery from the year that was 2020, reducing operating costs and increasing profit margins is on every business owner’s mind. Following these practices will help your business rebuild in a self-sustainable way.

Cash vs. Accruals  – knowing your options.

Business owners with an annual turnover of under $2 million per year, have a choice whether to report their GST using a ‘cash’ or ‘accrual’ method. This can result in substantial differences in respect to Quarterly GST  and annual Income Tax refunds / payments.

What Is the Difference between Cash & Accruals Accounting?

Cash accounting is recognising the income and expenses in your business when they are physically paid rather than on receipt or issue of an invoice. Many business owners when starting out often use a simple, basic cash system, because it helps to keep track of cash flow.

An accrual accounting system recognises both income and expenses on receipt of an invoice or bill although not yet due for payment. This system will create debtors and creditors in your accounting software, showing what you owe and when, as well as funds owed to the business from your customers.

The benefits of accrual accounting

For small businesses in many industries (like the construction industry for example) there are strong benefits of reporting using an accrual basis. One example is that the cash may not be received in the month that the work is performed which can lead to fluctuating profitability (something that does not look good to either the bank or the ATO). Accrual accounting also assists small business to flatten out the profit, reflecting a more stable and secure business. Accrual accounting also highlights the cash-flow effects of collecting debtors and paying creditors.

The benefits of cash accounting

On the contrary, the benefits to cash accounting are simple to explain – If cash comes in for services performed – we record this as revenue, if cash goes out for goods or services we purchased – we record this as an expense. The cash method of accounting is very simple to administer.

Implications of accruals for GST

How you choose to register for GST may greatly affect the cash flow of your business, as GST is payable on sales for which payment has not yet been received, this could leave you out of pocket for a time. However, GST can also be claimed on unpaid expenses if you hold a tax invoice.

Whether you’ve registered for GST on a cash or accrual basis will also affect your financing of large purchases for your business. With accruals, GST is claimable upfront, so it might be of benefit to your business to use this method.

The method used to report your GST, is of course something that we will review & advice you on.

Income Tax

This has been a touchy subject for the Australian Taxation Office & the courts over the years and there is now a large amount of laws that apply to this subject. When preparing your Income Tax Return, we complementarily review your business situation & ensure you are using the correct method.

Would you like to know more?

I encourage you to contact me on 0404 935 495 or chris@qcaccountants.com.au for a further discussion about your personal situation.

 

Thanks,

Chris

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