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  • #973154
    The Saint
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    Say the contracting company is paid 55k pa from the client per month.

    Operational costs per month are as follows: Wages are 35k, product costs are 10k, misc flights, bonus and what not are 20k i.e the company runs at a 10k loss per month

    What financial records does the company have to keep and how often do they have to be presented to the ATO?

    What is stopping a director paying themselves/employees a bonus to knock company profit down therefore avoiding 30% tax on profits?

    Also, say if a company is registered but only advertises or is stagnant for the first year (gains no work) what records will have to be kept? Are there any additional costs?

    Looking forward to your input ;)

    #1060049
    VehicleMods
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    From memory you need a tax invoice for any expense >$10 but the threshold may have changed. Basically you need an invoice for everything.

    You will need to prepare complete financial statements (P&L and Balance sheet) and lodge a company return every year. The easiest way is to get an accountant on board from day 1. If the company does not trade, you are still up for the annual company fees.

    There is nothing stopping a company from paying wages or bonuses to directors. However, it will be deemed personal income and subject to personal tax and if it is wages, subject to all of the requirements of PAYG reporting and tax deductions.

    I really would be taking advice from an accountant about this as one problem with a company is that losses are locked in the company’s books and can’t be used to offset your personal income. You might look at other business structures (which may also still require the creation of a company) dependent upon your particular circumstances.

    #1060050
    Alan Maddick
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    There is nothing stopping a company running at a loss indefinitely, obviously not usually the wisest move!

    Records would be as per normal (keep everything) and you would have to lodge tax returns as well as BAS returns if registered for GST

    #1060051
    aprbookkeeping
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    Re Small Company Accounting question

    Hi

    You will need to keep proper accounting records for the ATO, which includes all invoices, receipts, bank statements. While you will need an accountant to lodge your tax returns a bookkeeper can maintain your records and lodge your bas returns. Running at a loss is not preferable as you are obviously in it to make money and looking at what you are actuall spending is the first step as you may be able to cut some costs. If you are earning (gross) more than $75,000 per year you will need to be registered for GST and provide tax invoices. If you need any more assistance drop me a line. My email is [email protected].

    Goodluck with your business.

    Regards
    Sue

    #1060052
    CruzAccountant
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    Keep in mind the directors obligatons relating to company solvency.

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