Home – New Forums Money matters A basic accounting question & cashflow manager

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  • #967301
    GabStar
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    Hi there
    I have a very simple question that Im sure many of you can answer for me. Im starting up a small business as a Vitrual Assistant and I am not sure if I need to charge GST. I have not registered for gst with the ATO as they told me I dont need to if my takings are less than 75,000. So do I need to charge my hourly rate plus gst??? And what happens if I do take over 75,000 and I havnt charged gst on my invoices or I take less than 75000 and have charged clients gst. Do I need to pay that to the ATO anyway. Should I just register for gst and be done with it even if I dont takein 75,000. I know this is a very basic question and I should really get myself an accountant…next on my list of “to do’s.”

    Another question. Has anyone used Cashfllow Manager software? I dont really want to use MYOB or Quickbooks as I think they are a bit over the top for what Im doing.

    I appreciate any help to clear this for me.

    Cheers Gabrielle

    #1025280
    Felicity_Sapphire
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    Hi Gabrielle,

    If you are not registered for GST, you cannot charge GST on your rates.

    In relation to registering for GST, you need to check each month to see whether you have reached the $75000 threshold and if you do, you must register for GST within 21 days.

    From ATO’s GST for Small Business booklet:

    You reach the GST turnover threshold if either:

    1. your turnover for the current month and the previous 11 months is $75,000($150,000) or more – current GST turnover, or

    2. your turnover for the current month and the next 11 months is likely to be $75,000 ($150,000) or more – projected GST turnover.

    Once you hit the $75000, you must register for GST and only then do you start including GST on your invoices.

    If you are under $75,000, you can register voluntarily so that you don’t have to worry about the threshold.

    You need to keep in mind also that if you aren’t registered for GST, you cannot claim the GST in your expenses (but the full amount including GST becomes tax deductible).

    I have not personally used the Cashflow Manager, so can’t tell you anything about it.

    Good luck with your business and if you have any more questions, please feel free to contact me.

    Regards,
    Felicity

    This does not consitute professional advice, but is for general information purposes only.

    #1025281
    TimFairweather
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    Gabrielle,

    ‘very simple questions’ in accounting are best put to your accountant. Often though, they are not explained in a nice simple way so I’ll give it a go!

    1. Whether you should be charging GST depends on whether you are registered for GST or not. Registering for GST is a quick discussion to have with your accountant.

    What is GST about – passing the tax along to the END-CONSUMER – so businesses do not get taxed

    a) Ability to claim input tax credits on creditable acquisitions (purchases with GST that are business related) ie you buy business stuff, you can claim the GST on it back

    b) Ability to offset those credits against the GST you have collected from sales you have made with GST ie you sell stuff, you add GST onto it and you send that back to our mates at the ATO

    c) Completing a BAS – Business Activity Statement either monthly, quarterly or annually – explaining to the ATO out of the business stuff you bought and sold, how much they get back.

    Disadvantages:
    a) More tax to learn or understand
    b) More obligations from the ATO – that carry fines for non compliance
    c) Varying substantiation rules for receipts, invoices and supporting documents

    Preparing a BAS, or Business Activity Statement is an ADVANTAGE because it forces the business owner to get their books completed. Registering means learning about tax, which means getting better at business.

    Business = profit = tax <-- the more you know the better! I’ve had clients come to me after 3 years of NO personal tax returns, NO business tax returns, and NO BAS’s lodged. It may offend some readers but you are not running a business if you are not getting these done. In my experience, once a client get’s their BAS done, they naturally begin to get their tax uptodate, look at their cashflow and look at their margins. BRILLIANT. Yes BAS’s can be a pain to a new business owner but if it is going to teach you the numbers that drive your business it’s a plus. Should you register for GST? Definitely get yourself an accountant who can explain it to you simply. Or contact me ia my site.

    If you are looking for simple accounting packages try Xero or Saasu.

    MYOB / Quickbooks – great for payroll, inventory and many bookkeepers can use it if you need help. We are MYOB Professional Partners like most bookkeepers, people naturally choose MYOB because of the brand, even though they are difficult to use for non-accountants.

    Xero – great for service businesses like yourself, online, easy to use – give me a shout if you would like some help choosing one. We are partnered with Xero and can offer you a cheaper rate. More online service businesses like yourself will move to these monthly, online providers because they are just more fun.

    Saasu – great for small businesses with uncomplicated payroll – a few salaried staff, online – harder to learn but still easy to use.

    I hope that helped!

    #1025282
    Dardee
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    The GST part of your question has already been answered so I won’t go into that.

    As for Cashflow Manager I have a new client who uses and personally, I think it is too basic. It really is just a cashbook program rather than an accounting package. I would get a proper accounting package even if you think you don’t need it.

    As Tim mentioned, look at Xero. They offer a “Cashbook” version if you don’t want to create invoices in it or you can go for the full version which does invoicing.

    If you do choose a cashbook program think about how you will be preparing your invoices and how you will get them into your cashbook. Then work out if it actually saves you anything by doing this over a full accounting package.

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