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June 29, 2015 at 11:14 am #992139Up::0
Hi guys,
First like to say how awesome is this forum. I have just started my first business and need some tips on accounting for end of financial year. I opened up a small cafe and I have been trading for 4 weeks now from 2nd of June. I started my business venture last year September and have accumulated in about $60,000* in expenses to start my business in start up equipment, shop fit out, stock etc ….. Since I have been trading for only 4 weeks now and it is the end of financial year will I report my business as a Loss because of all the start up expenses I have invested in. So just for a basic example if I had made $2000 net profit in the 4 weeks trading would it minus the $60,000 in expenses = – $58,000 loss for the year? (of course in that $60,000 there will be tax deductible amounts etc but I am just trying to get a basic idea of how this all works)
Sorry if this isn’t making sense as the accounting side is my weak point. I appreciate for the read and advice.
Thank guys
GeJune 29, 2015 at 10:25 pm #1185031Up::0Yes that is how it works. Some of your startup costs will be considered as being capital equipment and are to be depreciated over a few years rather than 100% claimed in year one so your actual first year loss might be less than you anticipate. That loss would typically be carried forward to future years. Have you take any salary in this financial year? If so you may want to consider reversing it.
June 30, 2015 at 12:07 am #1185032Up::0Thanks for the reply Mr Tax, I have taken a small wage about $2000 can you explain to me the benefit of reversing it? Ok so my first year is a loss and if next year using the example above $58,000 if I do not profit above that amount to cover initial start up I would still be losing is that correct?
Thank you
June 30, 2015 at 12:20 am #1185033Up::0The main reason is that there is generally little point generating a tax liability in your own personal name if it can be avoided. However if you only had $2k personal income in your tax return then the tax on that would be nil anyway (so leave as is if that is your circumstance). As a matter of fact we would generally recommend that taxpayers maximise your personal tax free threshold by taking it up to about $20k (which will create a bigger business company loss that you can benefit from in future years). This can be worth thousands of dollars in tax benefits.
A little bit of Mr Tax planning goes a long way.
June 30, 2015 at 3:03 pm #1185034Up::0Ok thank you Mr Tax, that is great to know. Since I have only been trading for 4 weeks and I have $60,000 worth of tax deductible expenses from my start up, can I report a loss and claim this on my next financial year? or do I have to do everything within each financial year? Sorry if I am not making sense as this is all very new to me.
Thank you
July 1, 2015 at 2:38 am #1185035 -
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