April 20, 2021 at 10:30 am #1227097
I’ve recently set up my own company. This is just a side project at the moment and I’ll be using it to do a little bit of consulting, and to potentially apply for some R&D grants (I’m a scientist/engineer in the electronics sector).
I’d love to get some advice on how to handle the accounting at this early stage. For this year I’m only expecting 3-4K in company income, so hiring an accountant would take a sizeable percentage of that.
Is it common for people to handle their own company tax returns/invoicing at this early stage?
Are there any recommended tools/guidance for this?
Alternatively, are there accountants that will take on a relatively simple case like this at a low cost?
I have searched around on the web but have not had much luck finding something suitable.
In am Sydney based if that makes a difference.
Your advice and suggestions would be much appreciated.
DavidApril 20, 2021 at 1:09 pm #1227098Paul – FS ConciergeModerator
- Total posts: 3,128
Hi and welcome David.
At your stage of business there are a lot of Sole Traders and this is easier to do DIT tax for than through a Company.
PaulApril 20, 2021 at 1:27 pm #1227101
Thanks Paul, in my case I have had to go for a company (PTY LTD) as it is a requirement for certain R&D grant applications. It is also preferred for me with regards to liability.May 4, 2021 at 9:57 am #1227338FMJeffParticipant
- Total posts: 1
dp405 – it is common for folks to handle their own accounting at this stage – particularly when there are few invoices to record / pay / process etc. Freshbooks (https://www.freshbooks.com/) is a relatively easy way to start. If you outgrow it, you can move up to something more indepth such as Xero or Quickbooks online but I would suggest avoiding quickbooks desktop – it is far too detailed / requires accounting knowledge to use effectively.
hope that helps – cheers.May 4, 2021 at 10:31 am #1227339
Thanks for the info, I will check out freshbooks!
I have been looking at Xero, but naturally wanting to keep expenses down whilst the overall income is small.
When it comes to tax returns, is this possible to do myself? From some searching around the web it seems that I can, but only with the paper mail in forms. Not sure if anyone here can clarify that further?
Thanks again!May 4, 2021 at 10:49 am #1227340JamesMillarParticipant
- Total posts: 1,676
I can certainly understand the desire to minimise costs – nothing wrong with that. The problem will be if you get something wrong you could miss an important opportunity (and some things with tax law can’t be undone).
For example as an early-stage consultant, we would be looking at opportunities to claim any losses against other income – there are legitimate ways which is the secret sauce of our expertise. So say you make a $10k loss and we can claim against other income to produce $3k tax benefit – fees are paid for with only one strategy.
When involved in innovation there are other matters to consider as well. There are tax concessions for both R&D and ESIC’s (early-stage innovation companies).
It’s a dilemma for sure but I think you need to ask yourself…..what am I intending on doing with this business? If it’s a passion project (hobby) with no plan then it’s unlikely to produce much of a financial return which means every dollar you spend is dead money from a financial perspective. If there is some sort of plan and objective then you need to figure out what the business needs to look like to get there. Invariably that will involve some bigger figures and the need for financial expertise to navigate and optimise the tax and financial issues. That benefit will obviously come at a cost (and I don’t mean your typical H&R block $1500 see you next year solution).
There is no point being small for an extended period because it will just burn cash. Unless it’s for the love of it which means there is a positive non-financial return being made.May 10, 2021 at 11:40 am #1227460Mandy BarkerParticipant
- Total posts: 5
Hey David, saving pennies is always uber-important, especially when starting out.
I’m not an accountant, and I don’t even run as a company as I’ve been under sole trader set up for 6 years now and I’ve come to this after engaging several different accountants for advice.
But I wonder if you could reframe your thinking around skimping in the area of accounting?
Companies have some very specific requirements, returns and deadlines, it could be easy to miss or mess up a requirement and find yourself in hot water.
Think of getting professional advice upfront as an investment, an accountant can help you structure your business for the best performance moving forward, it is harder to implement things in retrospect. A good accountant could potentially save you more than they cost in good advice.
And maybe a bookkeeper can do the heavy lifting through the year, with your accountant doing the taxes at the end and ensuring you’re claiming what you’re entitled to.
For regular invoicing there are free/cheap options starting with a Word doc to apps like Rounded.
Hope you get where you are aiming in your business!
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