How To Add Subscription Cost To Xero
We want to make sure your expenses in
Xero are in detail
Let’s take for example, subscriptions.
At Inspire, we have about 15 to 20 accounts of subscriptions.
And in the chart of accounts, every account needs a number associated with it in Xero.
To avoid creating a mess of account codes, we would recommend indicating each subscription as:
- 485.1
- 485.2
- 485.3
- 485.4
It’s helpful to keep it consistent in numbering and to also separate each supplier/ subscription.
Similarly, we do this with wages to every single team member,
Most of our account codes will be split by each supplier.
It is a lot of work to set-up initially. But, you can set up rules.
For instance, if I receive an invoice from Inspire Accountants, that will automatically get linked to Accounting-Inspire.
If we get an invoice from Xero, it goes to Subscriptions-Xero.
The set-up is intense, but once you have the systems set-up well, it’s not a huge amount of additional work ongoing.
The clarity that you get from looking at a Profit and Loss statement, you’re going to easily pick up:
- anomalies;
- missing months if they’re not there;
- double-ups; or
- a supplier’s charged you twice
This is going to be so obvious if you’re going to be this granular in detail.
Personally, If I was to lump subscriptions in one item line such as the Xero Templates that they give you – I would have NO clarity on every transaction and it’s not going to mean as much to me.
Some of these suggestions might be intense, but they are amazing when it comes to running a business and getting clarity on your budget.
If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions.
From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax.
Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us.
What To Look For When Investing
We invited Phil Grant of NAI Harcourts Pinnacle to talk about investing in commercial property.
Here’s what he said about
what to look for when investing
- Good Location, Quality Tenant/s, Easily Relettable, Downturn Proof
Some of the major things that really need to be taken into consideration when you’re looking at commercial investments are the fundamentals. What are the fundamentals of a good investment?-
- That’s got to be a good location.
- If it is a tenanted investment already, make sure that you’ve done some research on the tenant.
- Are they good-quality tenants?
- Are they a local mom-and-dad business?
- Are they a national?
- Are they international?
- Is the building you’re buying easily relettable?
Let’s say that it’s already got the tenant and you go, “that’s a really good return.”
How about if the tenant does move out?
- Is it something that has been specifically designed for that tenant and going to be very hard to relet?
- Or is it something that’s fairly generic and you can relet it really easy?
- Is the business that’s in that investment property downturn proof?
I’d use that as a generalized term. But if the business world goes terribly, like we’ve had a tough run for the last couple of years, depending on which industry you’re in. Is it a business that will survive that? And if it is, that could be a consideration for you to look at.
I briefly mentioned that you’ve got different sectors. You’ve got industrial, you’ve got commercial and retail.
Retail
The retail sector in the last couple of years has been absolutely smashed.
Commercial
In the commercial sector, if we look at offices they have had to sort of evolving. Are they working from home? Are they working from the office? Are they working from both and switching?
Industrial
In industrial property, out of the three, the one that’s actually been what I would consider downturn proof at the moment. In some instances, it is where people are now basically dealing with third parties. The product will come in, the product will go out, or services will come in and out. It’s the one that’s seen probably the most change and growth in the last couple of years than the other two. But those are some of the things you got to look at.
- Undervalued property
- Property that requires repositioning
- If it’s too good to be true, it probably is!
- Check leases very carefully, check flood maps, and Research tenants, and Leasebacks.
As accountants, we’ve helped Physio clinic owners get a handle on the key numbers in their business. But, also going back to the core of what we do which is solving all the tax problems that pop up. We make sure that your service trust is being used appropriately.
We’ve also helped a lot of Physio clinic owners buy their physical space. We can incorporate that in their self-managed super fund, or we could do it under a structure outside of super. There are some different ways to do that.
We ensure you are paying the right amount of tax and not a cent more. Physio clinic owners, done well can be a highly profitable business. We guarantee that you’re not paying the extra tax that you need to.
If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions.
From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax.
Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us.
Why Trusts Are Great For Tax Planning
A trust allows us to plan the tax so well so that it can be distributed to whoever it is needed for each financial year.
Keep in mind, it needs to be, not only a distribution on paper, but the cash also needs to exchange hands. The money needs to be transferred from the trust bank account into the beneficiaries bank account.
If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions.
From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax.
Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us.
Modernisation of PAYG instalments
If you have a company running a business and you’re prepaying some tax for the current financial year, this is something that has been anticipated. The pay as you go (PAYG) instalments is the way that you prepay tax for the current year and usually, it’s based on last year’s returns that were lodged. The last year of business and the current year can be vastly different for a business in terms of performance and the business is still paying tax as if it’s trading as it was last year.
PAYG does not necessarily mean you are saving tax but it is a cash flow help so you don’t have to prepay as much. Businesses and companies can opt into a real-time PAYG instalments system and calculations which is based off of the accounting software you use. It will be looked into by looking at the current year and then they will calculate the tax instalment that you are supposed to be paying based on the performance of your business currently and not for the previous year.
The great thing about this is, it helps you budget your cash flow and plan your cash a lot easier. For example, some clients are paying $15,000 in instalments, but they don’t have that money and start falling behind on their payments. While there is the ability to levy it down to a reasonable amount, this is more of a proactive approach. So in reality, it is being realigned to be closer to what your business is actually doing at the moment and in turn, managing cash flow is more important than ever.
NOTE: The PAYG Instalment default calculation of last year + 10% will be changed to 2% for 2023 FY
If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions.
From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax.
Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us.
The Impact Of Money Printing On Investors
We invited Nick Webb of RSM Financial Services Australia to share his thoughts on the impact of money printing on Investors
Here’s what he said:
An important focus, for a physio clinic business, is to make sure you are getting a great utilisation from your team. This means the number of hours you are paying them to work, versus the number of hours they are in consultations with their clients. The focus is maximising the dollars that they are brining in the business, for the hours they are working and the salary that you are paying them.
How does QE, or money printing, and QT affects decision making about what assets to purchase?
There is so much money out there in the system. The official figure out of the US was in 2021, they printed essentially 40% of their total currency in circulation, so it becomes a big problem. That’s why we see so many of these inflationary spikes at the moment because people are spending like drunken sailors as there’s so much money that’s being printed.
Ultimately, it very much goes and devalues currency. It’s about looking at different opportunities across the globe as well. So looking in some countries where they haven’t printed to the same extent as places such as the US.
In periods like we’re in at the moment, domestically, and in Australia, even though it is a shallow market, we’ve got a huge benefit from very high dividend or income-paying stocks. We’ve got the benefit of franking credits as well, which makes it nicer on the top line from a return perspective.
When we’re looking at QE and tightening on the other side of the coin as well, it’s very much just taking a broader macro view as to what does that flow through to how is that really going to impact upon listed investment markets and other investments that clients will have in their portfolios, such as direct property or any unlisted investments that they have as well.
But typically, jumping into that commodity space, for a lot of people, they like that because there’s a finite supply of things like gold and silver; whereas, when you turn the money printing press on, there’s an in infinite supply of currency. It’’s just weighing up the current state of affairs and where to from there.
Disclaimer:
The information contained in the video above is intended to be general in nature and is not personal financial product advice
If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions.
From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax.
Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us.
Every Business Owner Should Have This
Rainy Day Fund
When we went through the first few months of COVID and lockdowns, there was a valuable thing called a Rainy Day Fund. It is a backup account in case of an unforeseen event, you can get this easy-to-access pot of cash that can save the business. As a business, we shared this concept from 2015 or 2016 onwards wherein we were doing it at workshops. One of the awesome things is we were getting phone calls or emails unexpectedly from people who had come to those workshops back in the day, they started during the middle of lockdowns.
We’ve been putting away this money for years and it indeed saved our business. It will save our employees throughout turbulent times. I have never seen a better example of this coming in handy as an accountant, but it’s a fulfilling part where people do this and it saves them and exists for that purpose.
Start with excess cash and contribute regularly
The idea of a Rainy Day Fund is that you start with excess cash, a regular contribution that you almost don’t notice. The contribution goes from your main trading accounts over to a separate bank. So, it’s out of your normal, login and internet banking, you can’t see it build up.
Aim for 3 months expenses
The target to aim for is about three months’ worth of expenses. The thought process there is that if your sales are turned off for three months, will you be okay? Will your business be okay to fund those expenses and keep everything going throughout that time? So, that’s the whole reason for three months’ expenses. In that 90-day window or 3 months, you’re able to do something to turn that around or work that out.
If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions.
From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax.
Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us.
Save Tax With A Motor Vehicle Logbook
There are two ways to claim expenses for a motor vehicle
Cents per kilometre method
Your car depreciation, fuel, parking, tolls, repairs, insurance, etc. is grouped into one. You can claim $80 cents per kilometre, for every kilometre you have driven your car for business or work purposes. And it will not give you a big deduction.
Maintaining a logbook
If you’re someone who drives 10,000 – 15,000 kilometres in a year for business or work, we recommend maintaining a log book for 12 weeks. A logbook is basically for every time you enter your car, you need to write down the odometer of your destination and the purpose of the trip whether it is work or personal. At the end of 12 weeks, we look at the number of kilometres you have driven. Then, we evaluate and look at how many kilometres you drove for work or business purposes and the number of kilometres you drove for personal use.
For example, you drove 70% for business purposes. The logbook will allow you to claim 70% of all motor vehicle expenses. If you have spent $1,000 on fuel in a year, 70% is a deductible expense, insurance is 70% and even on a car depreciation as well. Another example is if you buy a car worth $50,000 Then you can claim the 70% as a write-off. We don’t have a write-off limit, so we can claim the full 70% in one financial year, and the car limit is $60,000.
Maintaining a log book would be helpful. You need to be consistent for 12 weeks and you can use the same log book for up to 5 years as long as you’re still driving the same car. If the usage of the vehicle hasn’t changed and you’re still using the same percentage for business purposes, and if you haven’t maintained a log book, we would highly recommend you to do so.
If you’re keen to explore changing accountants, we have a non-obligation process to do that. The first step is booking a strategy call with one of our accounting team. It’s a free 20-minute zoom or phone call where you get to meet us to manage your questions.
From that point, you can consider doing a “Look Under The Hood” with us. There is no obligation to change accountants, but we give you a second opinion if you’re paying too much tax.
Throughout that process, we can identify any problems we see with your current setup. Anything that your current accountant hasn’t claimed, or tax you may have overpaid, and strategies of how we might fix that going forward. We can run through with you once you book with us.
How To Make Your Employees Work Efficiently
For a lot of businesses, employment costs are the biggest expenses in their business. We noticed that if you do not have processes around making your employees more effective and efficient, there’s a lot of value that is being missed out on. Empowering your employees to either upsell, utilise their time fully and not shying away from sales conversations can massively impact your bottom line which is something to watch out for.
The best thing to do is training your employees on doing things more efficiently. We recently had a client who has a pool business and he has a lot of technicians servicing the pools in residential areas. He had a business process where the invoicing did not happen on the spot; rather the technician used to go back to the shop and tell the admin person to do the invoicing. This caused delays and sometimes missed payments. So, by changing that for their business, they could get back so many admin hours and they could upsell more services on the go just by giving their employees the ability to raise an invoice on the spot.
Consider how you can be more efficient with your employees and how you can maximise the use of their time. Good employees are hard to find and they’re expensive at the same time. Make sure that you’re doing everything in your power to make your employees efficient. Because at the end of the day, you cannot be at every site and your employees represent the business. So, think about how you can leverage them to increase your revenues.
Got a burning question you want to get off your chest? Book a complimentary 20-minute strategy chat with an Inspire Accountants at https://inspire.accountants/chat/
How to convert website traffic into leads?
Have a compelling offer
This is your chance to stand out from the crowd. Offer something your competitors are not. If you sell products, offer a free demonstration OR show them a video of how your existing clients use the product. Bear in mind that, you do not have to offer a discount to have a compelling offer.
Make contacting you easy & flexible
Some prospects prefer calling than submitting a request form and waiting a few business days. Others, prefer the online approach and for those, we recommend using the Facebook messenger or another chat option so you can quickly get back to them. As always, make these options easy to spot on your website.
Ensure your prospects can easily find what services or products you offer
Ask a non-biased friend, family member or a stranger to give honest feedback in regards to your website. Their task should be to go on your website and within the first 20-30 seconds, be able to tell you exactly what you offer.
To price or not price (your service or product)
This will depend on whether your price is competitive in the market or not. Some businesses might lose customers purely because of the price without really hearing a pitch or knowing the value of your product/service. If you are focusing on volume and competitive pricing, then opt to list your price. However, if your goal is to attract quality customers who will pay premium prices for a great service, then opt for either a price range OR simply do not list any pricing.
Cryptocurrency Tax Accountant
It’s rare to see a client where crypto is their ‘day job’ – but more and more of our clients have portfolios, are trading, or are engaged in some form of investment or business with cryptocurrency here in Australia.
Quick Links
In this blog, we’ll cover
- Crypto tax myth busters
- Broad tax concepts for context
- Specific tax outcomes with:
- HODLing (long term holding)
- Mining
- Trading
- NFT’s
- Staking
What we won’t cover
- Specific tax recommendations (all tax is general, not specific, as the specific circumstances can sometimes change the answer)
- Recommend what coins to buy, what exchange to use, and that you should invest in crypto
- Any financial advice
- Launching an ICO
- Basics or 101 of crypto investing
Crypto Myth #1
“I’ll only pay tax when I convert it to AUD”
- Cryptocurrency is like a currency
- The timing of the tax event is when you dispose of any asset or currency
- So, if you sell Bitcoin to buy Ethereum, you’ve still sold / disposed of your Bitcoin
- If your business is paid in Japanese Yen, you still need to pay business tax even though you haven’t converted it to AUD
Crypto Myth #2
“If I make a gain, but put the money into another coin, I delay the tax bill”
- The timing of the tax event is when you dispose of any asset or currency
- Regardless of what you purchase next, you’ve still made a gain at the time of selling
Crypto Myth #3
“I don’t have to pay tax because the ATO will never know about my portfolio”
- “We are alarmed that some taxpayers think that the anonymity of cryptocurrencies provides a licence to ignore their tax obligations.” Mr Loh (ATO) said.
- “While it appears that cryptocurrency operates in an anonymous digital world, we closely track where it interacts with the real world through data from banks, financial institutions, and cryptocurrency online exchanges to follow the money back to the taxpayer.”
- Don’t forget: Your “sleep at night tax” is a tax!!
Crypto Myth #4
“My crypto is a hobby so I don’t have to pay tax”
- The ATO’s view is that crypto is personal use if it is kept or used mainly to make purchases of items for personal use or consumption (i.e. used to buy clothes, music, games etc). Not to buy / sell / trade in.
- It is NOT a personal use asset where:
- It’s intended use is to purchase income producing investments;
- you intend to keep it for a number of years with the intention of selling it at an opportune time based on favourable value
Crypto Myth #5
“My SMSF cannot invest in crypto”
- No laws prevent it
- Read the trust deed (or the trustees can amend it to include it!)
- Investment must meet the ‘sole purpose test’
- Cannot acquire from a related party
- Need to consider it in the investment strategy
- Needs to be ‘owned’ in the SMSF – ensure correct names on exchange accounts, wallets, etc.
- Keep a very good record. Your SMSF is audited!
Tax Concept – The Right Structure
What Tax Rates Each Pays
Individual
One of the big reasons why we might go for trust or company is because of the alarming tax rates where individuals pay up to 47% tax, depending on their income.
Company
Companies have two different rates depending on what the company does. If it’s purely an investment company (so it doesn’t run a business, a business of trading cryptocurrencies, or a business of mining crypto currencies) the 30% tax rate is applicable. The 25% tax rate is for small businesses (so the business of trading, or mining for instance). You need to have most of the company’s income as business income to access this lower 25% tax rate.
Trust
Trust doesn’t necessarily not pay tax, but a trust gives its profits to other individuals, companies, or other entities in the family group, and then they pay the tax on the trust’s behalf.
SMSF
15% tax is what we call the Accumulation phase – where you’re growing your balance in super throughout your lifetime. The 0% is for the pension phase. When you’re drawing on your super, you’re a certain age or older, and you’ve met the conditions of release for super, you will have an option for your super to be taxed at 0%.
Tax Concept – Revenue or Capital
Money you receive is treated as either revenue account (ordinary income) or capital account.
Revenue Account
- e.g. normal ‘business’ income
- Trading income (includes bots)
- Mining income
- Income from staking
- Tax is paid on income, less expenses to derive that income
Capital Account
- HODLing (buy and hold, longer term)
- Intention is to profit over time on eventual sale
- Allowed a discount on gain, if held over 12 months
- Tax is paid on sale value, less cost base, adjusted for any discounts
Bob trades and makes a $1M profit.
Bob also works and earns a $120K salary.
Tax just on the crypto profits – depending on structure:
Sole Trader – $465K in tax
Company – $250K in tax
Tax saving if company (revenue account) = $215K
Tax Concept – Capital Example
Bob HODLs for 10 years and makes a $1M capital gain.
Bob also works and earns a $120K salary.
Tax just on the crypto profits – depending on structure:
Sole Trader – $230K in tax
Company – $300K in tax (if investment company, and companies don’t have CGT discount)
Extra tax if a company = $70K
So what is the “Normal” Tax Treatment?
How to reduce your Crypto Tax
- Know the rules
- Get on the front door (don’t bury your head)
- Get your structure right (ideally from the start)
- Do tax planning with a good accountant
- Report accurately to avoid fines/penalties
If you’re trying to make it look like something it isn’t, that’s when you need to be worried (i.e. capital instead of revenue for your benefit)
How to track your transactions for Tax
- If your affairs are simple, use exchanges who give good reporting
- Use crypto tax specific apps
- Koinly.io
- CryptoTaxCalculator.io
- CoinTracker.io
- (Pay the fee, it’s cheaper than an accountant working it out!)
Want to learn and watch more about cryptocurrency tax?
- Watch the full webinar recording ‘Cryptocurrency Tax Masterclass’ on our facebook page
- 6 Tips To Reduce Your Crypto Tax
- Tracking Crypto Transactions For Tax
- Tax Warning For Crypto Hobbyists
- Can You Delay Crypto Tax Bills?
Get Cashed Up
