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  • #988064
    Jordan Harman
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    Hi Guys,

    I have recently started a sole trading company whilst I am still employed full time.
    I currently use Wave to record my sales and expenses etc. I have a separate business bank account and record all of the transactions from this account in wave.

    If, for example, I used this business bank account to pay for a hotel or dinner then how would I record this in my accounting software? Should I just declare this as wages or entertainment or….???

    I am not yet registered for gst, do I just complete my tax return at the end of the year or do I need to do more?

    Any help would be greatly appreciated.

    regards

    Jordan

    #1165442
    Luth6322
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    Hi Jordan

    This question should probably be in Money Matters.

    If it’s private in nature I would be inclined to put it to a Drawings account which should appear somewhere under your Equity accounts.

    Alternatively, you could put the transactions to an expense account and indicate that it’s not tax deductible so your Accountant can treat it appropriately at the end of the year.

    Putting it to Entertainment, might trigger a requirement to lodge a Fringe Benefits Return.

    Cheers

    Carrie

    #1165443
    Jordan Harman
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    Thanks for your help. It is greatly appreciated.

    One more question.

    We have built a couple of smartphone apps and would like to know what we should class these expenses as. Would it be computer software? or quite simply services?

    #1165444
    Luth6322
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    Hmm thats a bit more of a tricky question and is difficult to answer without knowing more about your business.

    I’m not 100% sure but these are the two scenarios that come to mind:

    1. If your in the business of creating apps for clients, such as a software developer then it would be an ordinary business expense.

    2. If you’ve created the apps for use within the business, or for re sale its probably more likely going to be capital in nature, because you’ve created an asset that your business will receive a benefit for. How much you capitalise can also be a little complicated, and I would probably get some advice from an accountant that understands your business a little more.

    Hope that makes sense.

    Cheers

    Carrie

    #1165445
    Bronwyn Baird
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    Hi Jordan

    Let me see if I can answer these questions for you – however as Carrie stated not knowing your business details does make it hard.

    Firstly well done on separating your business expenses from your personal. This is the first thing I recommend my clients – and it also makes it far less complicated for the bank feeds you will be getting into Wave.

    If the hotel and dinner are business related then you are able to allocate these to travel expenses. If they are personal in nature then of course they will need to go to your loan or drawings account.

    The questions relating to the expenses to create the app. As Carrie noted depending on the nature of the expenses they could be classified as capital in nature, an asset – or even Intellectual Property (IP). If they are ongoing costs that are needed for the app to be rolled out then they would be cost of sales.

    There are new rulings on these type of expenses so you would need to provide further information to your accountant.

    Please feel free to call me if you would like to discuss this further.

    thanks

    #1165446
    Jordan Harman
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    Thanks Bronwyn and Carrie for your answers.

    I currently don’t have an accountant and am looking for one who would be willing to login to my Wave account and take what they need from there.

    Again, I am a complete newbie to this stuff and have a another question.

    Lets say my buisiness makes only one sale of $15000 in the financial year. I am not gst registered. What sort of tax would I pay at the end of the year due to this sale?

    Regards

    Jordan

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