Home – New Forums Money matters Accounting question – Category for Business Name registration

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  • #979431
    EmbalmSkincare
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    Hi there,

    Could someone please tell me the tax category for Business name registration?

    Thank you in advance!

    Regards,
    Mel

    #1114246
    MyGreatIdea
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    I’m assuming by “tax category” you mean either:

    1. what expense do I put it to? which would be Registration Fees

    or

    2. what gst code do I use? which was GST Exempt under the old state system in WA, but should show on your notice of registration for the new national system.

    Wendy :)

    #1114247
    AGMBris
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    Hi Mel

    Although it is an expense (in inverted commas), you should capitalise it as generally (unless the law has changed since my days in the Chartered Accounting world), it is not fully deductible. You would be able to write it off over a certain time frame, I believe it used to be 5 years.

    So I would create an asset Called Business Registration or Incorporation Charges if a company and then write off the allowed amount each year, or your accountant will do so.

    Laws are of coursing changing all the time so it is probably worth a 5 min call to an accountant just to confirm all this is still current.

    Good luck.

    PS: have seen Wendy’s point and made me think, perhaps you meant GST, the same rules apply re: claiming GST on the portion you can expend each year as far as I am aware, and thus would be a “CAP” GST code, well in MYOB anyway.

    #1114248
    EmbalmSkincare
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    Thanks for your quick responses!

    yes, I meant Expenses. I only seem to have and expense for Government filing fees which I have used but assume it’s not correct. Nothing else in the list for expenses seems suitable.

    Should I create another chart of accounts for Expenses: Business set up?

    Thanks again!

    Regards,
    Mel

    #1114249
    AGMBris
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    Hi

    I would actually create an asset account for business registration and write off that asset (or technically expend the relevant permitted amount) each year at tax return lodgement.

    If you create an expense account you will need to adjust the P&L each year and thats a little more annoying.

    So for example if its a $1000 for incorporation and business set up and you are allowed to write off 20% a year – you would have an asset original cost of $1000 that becomes $800 net balance at the end of first year, with the other debit portion of that entry going to Incorporation/Business Expenses in the P&L for that year.

    You may want to check with an accountant as it it might be possible that under a certain amount can be written off completely to an expense account. Worth a check I think.

    Hope it helps

    #1114250
    apj
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    Hi there,

    I’m not sure if it’s a business name or a company incorporation cost that you are talking about so I’ll quickly cover off both.

    Business name registration costs – post to an expense account in your accounts. There is no GST as it is a govt. charge and it is fully tax deductible in the year paid as it relates to a period of time (i.e. you register the name usually for 1 – 3 years after which it expires).

    Company incorporation costs – this is a little more complicated. As mentioned above, these costs are not outright deductible as they are capital in nature and will be claimable over 5 years. Setup an asset account called ‘Incorporation Costs’ or similar and post the full payment there. You can either write off the appropriate amount each year or let your accountant worry about it. The fee you paid to incorporate, assuming you bought one from a lawyer or company setup specialist, will comprise both a non-GST component (the ASIC charge) and a GST component (the lawyer’s fee) and you should split the transaction appropriately.

    Hope this helps.

    Aaron

    #1114251
    AGMBris
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    Ah good point, thanks for clarifying that to me too Aaron

    I didnt realise the Business Registration is not of a capital nature and was wondering if it could actually be expended straight away.

    Sorry if I confused you Mel, hopefully it is clear now, feel free to throw any more need for clarification if you like.

    Ah tax compliance, what a joy…

    #1114252
    Shelfco
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    I think the advice here is dated now, you can write a lot of expenses off under the $1000 limit – and it specifically covers statutory fees separate to the dollar limit

    See ATO advice here https://www.ato.gov.au/Business/Small-business-entity-concessions/In-detail/Income-tax/Immediate-deductions-for-prepaid-expenses/?page=3

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