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  • #979695
    Crash Lander
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    I’ve just got my stuff back from my accountant, and was happy to find out that for my first full financial year in business, I managed to make a (teenie tiny) profit. Considering I was only doing it part time, i was thrilled.
    Anyway, people that I’ve spoken to about this have responded in the opposite way to how i had expected. they’ve all said things like “Sack your accountant! You don’t want to show a profit or the ATO will get your blood!” etc.
    Now, I understand that nobody likes to pay tax, but what are we in business for if not to make profit? How do you draw money from your business to pay your rent and buy your food, and not have it as a taxable drawing? I don’t understand!!!!

    #1116332
    Divert To Mobile
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    First I have to say I love your name, crash lander.

    If your accountant has claimed all possible expenses for your business and you are paying tax in the first year that is excellent. You said you pay rent, are you claiming some of that + electricity + home phone + internet against your business?
    If not, perhaps your friends are right.

    Steve

    #1116333
    Crash Lander
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    Not entirely correct. The profit was only $1800 and the turnover about 25k, so I don’t think there was any tax to pay. It was a part time venture with some other paid/employed work, so i am getting a nice refund from the combination, and some gst back too for the business. The business wasn’t paying the rent yet, as I was paying that from the employment /paid work, so it’s probably a little misleading. Yes he says he claimed a percentage of electricity for home office etc. It’s all just a bunch of numbers to me, I don’t really follow it all. I guess next tax time will be the true representation of things, and a test to see how good my book keeping skills are versus his accounting skills to minimise my tax are, as I’m now 100% self employed, as of 2 weeks before the end of the last financial year. As of next month, the payout from when I left the employment job runs out, so the business will be paying 100% of my expenses.

    #1116334
    MyGreatIdea
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    If your accountant has claimed everything to which you are entitled, then a tax bill is a wonderful thing !! Congratulations.

    I don’t understand why people complain about paying tax (not you, but the reactions to it). I would be ecstatic to have a large tax bill since it would mean that my business was making a substantial profit lol

    Wendy :)

    #1116335
    Just Launch
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    We used to have an old saying in our Accounting practice, it went along the lines of “that guys a fool for paying so much tax. He should earn less money!’

    As long as your expenses are maximised and you have discusses tax minimisation strategies with your Accountant then you are on the right track.

    John Whale CA

    #1116336
    Paul Wineberg
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    If you are showing a profit in your first year of trading, well done. This is something to be excited about. Not to be concerned your accountant is doing the wrong thing.

    I have been an accountant for many years now and I am often staggered to see people disappointed when they are told they have made a profit for the year. A profit should be every business owners goal. An accountant’s job is there for both tax minimisation strategies and also business growth.

    The main reason many people get disappointed when they show a profit is because they do not have the cash to show for it. There are some interesting reasons why many people don’t have he cash. The cash may be funding growth, funding new assets, paying down debts, buying boats for the directors, etc.

    An accountant should help the business owner look at where the funds are going. Many business owners look at their cash in the bank and use that to ascertain what they think the profit will be. Knowledge is power for the business owner, so the accountant should explain these things to clients.

    #1116337
    MatthewKeath
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    iandille, post: 0 wrote:
    Paying tax is an obligation. It is a duty for every citizens because through this, many people will be helped and many projects will be implemented.Anyway, it’s thrilling to know about your success in your part time job. Congratulations!I agree. Hospitals, transport infrastructure, social security, education, the list goes on.
    #1116338
    themot
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    Im surprised at some of the responses here. People seem thrilled to have to pay lots of tax.

    Do must all think the government is doing a wonderful job spending it!

    If you only did 25k turnover the accountant should be trying to do something more creative to hide what little profit you made I reckon. There are legal ways of doing it, they have to get a bit more creative that’s all…

    And if you want to get a bit dodgey about it why not? Do you think the tax office investigates business’s in their first year turning over 25k ??

    #1116339
    themot
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    iandille, post: 0 wrote:
    Paying tax is an obligation. It is a duty for every citizens because through this, many people will be helped and many projects will be implemented.Anyway, it’s thrilling to know about your success in your part time job. Congratulations!

    Yeah, I would be happy to pay more if our leaders in Canberra we’re doing a better job spending it. Ever worked for or with a government department? Talk about mediocrity reigning supreme! We’re way way over taxed in this country when you look at all the wastage going on. I say minimize everything and don’t feel bad about getting a bit creative around the edges. Let me tell you the government and it’s departments don’t cry every time they waste your hard earned coin on an overseas junket, mediocre performance and management.

    #1116340
    MyGreatIdea
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    themot, post: 133099 wrote:
    And if you want to get a bit dodgey about it why not? Do you think the tax office investigates business’s in their first year turning over 25k ??

    You’re joking, right? So because the ATO may not investigate you, then it’s okay to “get a bit dodgey”?

    My business reflects my core values through its vision, mission statement and general operation. Getting a bit dodgey is not on the list.

    Wendy :)

    #1116341
    Zava Design
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    Couple It, post: 133102 wrote:
    My business reflects my core values through its vision, mission statement and general operation. Getting a bit dodgey is not on the list.
    Unfortunately from conversations on other subjects, that doesn’t seem to be the view of more than a few on this forum.
    #1116342
    MyGreatIdea
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    Zava Design, post: 133104 wrote:
    Unfortunately from conversations on other subjects, that doesn’t seem to be the view of more than a few on this forum.

    I refer to them as the drink drivers of the business community – they think the law doesn’t apply to them and so long as they don’t get caught then it’s okay. The damage they cause around them isn’t a consideration.

    Wendy :)

    #1116343
    MatthewKeath
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    themot, post: 133100 wrote:
    Yeah, I would be happy to pay more if our leaders in Canberra we’re doing a better job spending it. Ever worked for or with a government department? Talk about mediocrity reigning supreme! We’re way way over taxed in this country when you look at all the wastage going on. I say minimize everything and don’t feel bad about getting a bit creative around the edges. Let me tell you the government and it’s departments don’t cry every time they waste your hard earned coin on an overseas junket, mediocre performance and management.Thats what voting is for. Saying you should break the law because you don’t like some of the ways it’s spent is the best way to end up like Greece.

    If you don’t want to pay tax, then stop using any services that rely on tax to exist.

    #1116344
    DavidM
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    MatthewKeath, post: 133109 wrote:
    Thats what voting is for. Saying you should break the law because you don’t like some of the ways it’s spent is the best way to end up like Greece.

    If you don’t want to pay tax, then stop using any services that rely on tax to exist.

    I hear that Hutt RIver http://en.wikipedia.org/wiki/Principality_of_Hutt_River may be a good option for people wanting to stay in the country, but minimize tax.

    #1116345
    Robert72
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    Some interesting views here, my thoughts are simple and commonsense.(At least I thought they were) Paying tax is a sure sign that your making a profit, which for most business people is the end goal apart from the fluffy stuff.*
    In the past I have seen too many people horrified about paying tax, that they go out spending on questionable expenses. I remember a mate feeling bad for upgrading a 1.5 year old farm ute because his accountant needed more deductions. Talk about spending a $1 to save 30 cents!*

    If increasing expenses for a deduction will in the long term increase income and therefore future profit thats great, but to spend for the sake of reducing profit on items that wont make any difference to the bottom line in a positive manner is not for me.

    In the above live example ,which I have seen many times I know that the value of the ute will depreciate in value a lot faster than any tax saved. Not to mention stamp duties and all the other costs when purchasing.

    There are heaps of ways to reduce tax such as purchase items that your business needs for the coming financial year (generally only works for one year) superannuation will limit tax to 15% up to certain caps but remember super will not help pay off your home loan. To live and pay home loans off we need after tax money/cash not deductions.

    Spend a $1 to save 30 cents, or make a profit pay 30 cents tax and invest 70 cents into an asset that grows and increases your income? *

    Cheers
    Rob

    http://www.meritumfg.com.au

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