7 signs of a good accountant

Communication 

It’s obvious when someone is handling your money you need to stay in the loop! A basic but tedious task for some but not all accountants, is answering their clients questions no matter how basic or long they are. A good accountant will not only ensure that they answer your queries within a short amount of time, they will also keep an eye out on your business and check on you to ensure all the questions and worries you might have are solved.

Strategic Planning

A reliable accountant will be one that keeps track of your financial position throughout the year.

You yourself may be one of those people that leave things to the last minute when it comes to lodging your tax return or other financial information, but that shouldn’t be your accountant. Think about it that’s someone you’re paying to be on top of your finances which means they need to be organised and on top of things!

Passing down key knowledge to you

Many of us never really learnt how to effectively budget, there was never an exam for it so it never really was on the top of our ‘to do’ list. However, this is an essential skill for everyone not only business owners. As someone who pays an accountant to aid in your business’s finances, it is expected of your accountant that they teach you and work together with you on how to develop an effective budget.

Keeping up with the times!

From time to time tax laws change and new and effective ways of using financial information are developed, for example we at Superior Accounting Group adopted the cloud some time ago so we could improve our service for our clients. So, in saying this you should expect that your accountants are proactive in keeping up to date with the latest laws and technology.

Time management pro

Meeting deadlines is imperative in the accounting world, they not only have to meet your deadlines as a client but your accountant also must abide by the deadlines set out by the ATO.

Trust

Focusing on getting a ‘smart’ accountant can often lead to forgetting the importance of choosing an accountant that is trust worthy. After all they are dealing with your money! Like any good relationship having trust is vital.

Proactive 

There will always be better ways of completing tasks and an accountant that thinks outside of the box will ensure that they are continually coming up with new solutions to the everlasting problems you face.

Thanks for reading!

 

Thinking about expanding your child’s investment knowledge?

Saving money is great and teaches teens important traits such as self-control, responsibility and independence. However, in this day and age where there is so much opportunity to make good and bad investment decisions online and offline the key to a successful financial future depends on one’s ability to ‘grow their money’.

Forbes magazine found that children are more than capable of understanding investing concepts.

One tip in particular which is quite a simple one is to speak their language! Investing can be tricky in itself so there’s no need to over complicate it, start basic and build their knowledge from there. This can be done by using simple and current topics, for example, explain how the same house valued 15 years ago is worth much more now, these basic steps can be a building block for a wealth of knowledge anyone can acquire.

A good way to motivate children is to explain the difference between saving and investing, we all know that the interest you earn in your bank account is not much compared to your potential earnings through investments. However, it is also very important to address the risks and costs associated with any investment and that thorough research and planning is vital before investing.

Although the above information mentioned does sound a bit technical it is necessary, but it’s also important to make investing sound fun! This can be done by through games that are concerned with the stock market, these games can be downloaded on your phone and computer.

Even though these are just a few ideas, there really is no harm in introducing this topic to your children. There’s a world full of knowledge, get kids to embrace it!

Thanks for reading!

Benefits of a Self Managed Super Fund

Do you know where your money is?

A Superfund is your money, a forced saving, but do you really know what’s happening to it? Week after week we receive our pay packets, notice the superannuation section and just shrug it off. But what if I was to tell you that you can do MORE with it! What if you could take charge of it and not only watch it grow, but see it skyrocket!

Well the answer for you then is a Self-Managed Superfund. This means YOU get control of your super, and YOU get to decide where it’s held and how it’s invested.

As with any investment opportunity risks are associated, this includes the fees of running a self-managed super fund to making a secure investment.

Let’s have a look at the benefits of a SMSF:

  • Control

Control over your investments and your money and to take upon an opportunity that arises.

  • Flexibility

The ability to respond to market changes with your investments.

  • Growth

Growth of your super and of your investments! With the ability to garner a loan of up to 70% of the value of a property (for property investment) it now allows you to have the ability to make a larger purchase and investment for a higher return!

  • Tax Reductions

Personal investments come along with a 15% tax on all profits earned, however investments where the income is asset based and supporting a pension income stream may have significantly reduced tax dependant on your situation.

  • Combine Super Assets

A self-managed super fund trustee may combine their super assets with up to 3 other members to purchase assets and investments that you may not have been able to purchase solely.

  • Planning

Self-managed super fund members have a greater say regarding the execution of death benefits and how they are to be paid, and are not binding similar to traditional superannuation funds.

There’s a lot that goes into managing a self-managed super fund, but you’re not alone, we’re only a phone call away!

How strong is your super?

Where could your super take you?

Thanks for reading!

Which accountant is your glass slipper?

Alike many industries accountants can often be specialised.

For example, when we look at the trade industry, you don’t exactly want to hire a plumber to put in a new light socket for you… may not end well.

Or you don’t want to go see a podiatrist for your nose job.

They’re all deemed tradies and they’re all deemed doctors, but it’s all about finding which one best fits you.

And accountants are the same, whilst a lot are multi-skilled, or work within a company that offers the variance, it’s important to discuss your needs to find your perfect fit! After all we don’t want to be walking around in uncomfortable shoes forever do we?

Types of accounting include:

  • Financial Accounting

This is your more traditional accountant, the one that follows your financial transactions as closely as your prep grade buddy followed you when you were in year 6.  This includes your incomings, outgoings and liabilities to then having the ability to determine the financial position of the company. After school, they then grew up to be the people in university that would go through 3 pens in one lecture noting down everything the lecturer said, detailed and meticulous.

  • Management Accounting

We like to think of this type of accounting as those teachers, specifically maths teachers who just LOVE report writing time and the feeling of completing beautifully colour coordinated graphs and charts. They specialise in tracking a company’s financial position, using past indicators to also predict into the future. They use these graphs, charts and reports to make predictions to put your company on a path for financial security in line with your business objectives.

  • Tax Accounting

Now I like to think of the tax accountant as the one to play by the rules. The taxation laws are their best friends and they know them like the back of their hand. Now their job is to minimize your tax liability, but to make sure you’re doing it by the book. These are the ones that could have been lawyers in another life.

  • Forensic Accounting

Now this accountant was the one that loved playing Cluedo as a kid and always wanted to grow up to be a crime fighting superhero or detective, until they realised their laser vision just wasn’t coming through. So, they went to the next best thing to being a super hero, a forensic accountant! They can sniff out anything dodgy a mile away! Using their super power of analysing financial evidence they detect for fraud and embezzlement. They often analyse information for use in legal proceedings.

  • Social Accounting

The one at school that always had a bag full of Tupperware containing their lunch, without an ounce of glad wrap to be seen. One of the newer branches of accounting. This is the discipline measuring a business’ social and environmental performance by incorporating their impact of these factors in conjunction with traditional accounting methods. This has become key for many businesses as it is often a selling point as these factors become ever so increasingly important in today’s society. It’s the old with a new twist!

And so, the list goes on!

Hopefully you don’t have to kiss too many frogs before finding your Prince Charming who has the perfect glass slipper just for you!nature-3056347_1920

ATO WARNS: SCAMMERS ARE GETTING INCREASINGLY CUNNING

This week’s blog will be focused on providing you tips to improve your financial security. With technologically becoming a part of our everyday life it is imperative that we become aware of the crimes that can be committed while using it.

A range of tricks are used to make scams appear authentic. For example:

  • including a legitimate-sounding message at the start of a call, such as the call is being recorded ‘for training purposes’,
  • sending emails that appear to have come from the ATO, which when opened or downloaded infect your computer with malicious software.

These scams are then investigated by the ATO and other government agencies as appropriate, including the Australian Federal Police.” The ATO states that if you are in doubt about an interaction you have had with someone claiming to be from the ATO, or you think you have fallen victim to an ATO Impersonation scam, then it is imperative that you call the ATO on 1800 008 540 between 8:00am–6:00pm Monday to Friday to verify.

The ATO won’t email, text or ask you the following on social media:

  • update or provide personal information, supply your TFN, credit card or bank details
  • send you downloadable files or tell you to install software.

However, the ATO will email and text you if they need to contact you by asking you to contact them by phone in order to:

  • provide additional information for a BAS or GST enquiry, tax return or an application you have lodged
  • verify changes to an account.

What you need to look out for to avoid being scammed!

  • The ATO states that scammers can use Voice Over Internet Protocol (VOIP) phone numbers to make and receive calls from anywhere in the world
  • spoofing phone numbers to make phone calls and text messages appear to come from Australia
  • sending pre-recorded voice messages (robocalls) to large numbers of people asking for an immediate call back
  • sending copycat emails with attachments or links that
    • take you to fake login screens or web pages to trick you to downloading malicious software or giving them your personal information
    • contain programs that record your computer key strokes to get your personal information or login credentials
  • sending ransomware (malicious software) that stops your computer working until you pay a fee – often by Bitcoin
  • spoofing websites or login pages to get your personal information
  • accessing your public profile on social media to learn about you so they can meet proof of record ownership or break your passwords.

For more information visit the ATO website.

Thanks for reading!

 

Carrying on a business from home Part 2

HOME OFFICE EXPENSES FOR EMPLOYEES ONLY

  • Work brought home
  • Not normal work place or place of business
  • 4 week diary to determine business use
  • 34 cents per hour for heating, cooling, lighting, etc. This includes depreciation of office furniture
  • If you have purchased a desk, chair, filing cabinet, lamp, etc please provide details and receipts so we can gain the best tax advantage for you
  • 4 week diary to determine phone usage (unless there is a separate 100% business use line)
  • Specific study area for business use
  • Not adaptable for private use
  • Used 100% for business
  • Regularly visited by clients/customers.

Renting Home

Claim the following expenses according to floor area:

  • Rent
  • Insurance- Contents (consider separate policy for business equipment, etc.)
  • Water Usage
  • Heating
  • Lighting Cleaning
  • Cooling

Own Home

Claim the following expenses according to floor area:

  • Insurance—Building
  • Insurance—Contents (consider separate policy for business equipment, etc.)
  • Water Usage
  • Rates—Council and Water
  • Loan Interest
  • Bank Fees
  • Borrowing Expenses
  • Body Corporate Fees
  • Pest Control
  • Gas and Electricity
  • Phone applies as above but would recommend a separate line
  • Depreciation
  • Computer
  • Fax
  • Printer
  • Photocopier
  • Carpet
  • Filing Cabinets
  • Desk
  • Chair
  • Couch
  • Dried Flowers and Vases
  • Bookshelves
  • Calculators
  • Paintings
  • Bar Fridge
  • CD Player/Radio
  • Microwave
  • Lighting and Light Fittings
  • Crockery, Cutlery and Glasses
  • Kettle
  • TV—Private Portion (4 week diary) DVD Player—Private Portion (4 week diary)
  • IPads, IPhones, Tablets, etc. (4 week diary)

 

WHY DO I NEED TO KEEP A 4 WEEK DIARY?

A taxpayer who carries on a business from home or is required to carry out part of their employment duties at home may be entitled to claim a deduction for expenses incurred in performing these income producing activities.

To be able to claim a deduction for work/business related expenses, the expense needs to be used to aid in earning your income. This is what the ATO call a ‘nexus’ between the income and the expense.

Some of the more common types of work/business related expenses that may be deductible are internet, mobile and home phone, home office expenses and computer expenses. If you are wanting to make a claim in regards to these types of expenses what type of records will you need to be keep and how do you calculate the amount to be claimed?

Apart from keeping receipts the main supporting document that you will need to provide the ATO upon audit is a 4 week diary. The diary needs to show how you have used the above mentioned items for a representative four week period, recording both business/work and personal usage, to work out what business/work related % is to be applied for the entire year. You must keep a diary for each new tax year.

Home Office Expenses

If you wish to claim the set rate per hour for home office you will need to record how many hours over a 4 week period you have used your home office for work/business and personal related purposes. This set rate is used to cover the cost of heating, lighting, cooling.

 

Thanks for reading!

Purchasing a property with leverage in a SMSF

As property investors ourselves, we continually look at ways to enhance and propel our own wealth. As a Superior Accounting Solutions client, you too benefit from this vigilance because we always consider these opportunities from our clients’ perspective and how they might benefit you.

Many of our clients are active property investors, so we feel it is important to bring to your attention that Self-Managed Super Funds can be borrowed to purchase an investment property. We have already assisted many of our clients to purchase property in a Self-Managed Superfund.

HOW CAN SUPERIOR ACCOUNTING SOLUTIONS ASSIST?

You may be a traditional property investor much like ourselves. As all investors know, the expense of holding an investment property in your own name comes directly out of your back pocket.

This is a fantastic opportunity which will provide you with the possibility of purchasing another investment property, where the expenses of holding the property does not come directly out of your pay-packet.

You may ask who is funding these expenses … by setting up a Self-Managed Super Fund to purchase a property, it allows you to utilise employer super contributions you are currently accumulating in an industry Super Fund.

We encourage our personal Tax clients to carefully consider the possibility of establishing your own SELF MANAGED SUPER FUND.

WHY?? Because you can:

  • TAKE CONTROL…. just as you have with all your other wealth creating vehicles, and become the motivational force to ensure that you achieve your goal of obtaining another rental property, thus securing your retirement future and that of your children, as you can incorporate them in the journey.
  • Potentially access much HIGHER LEVELS OF LIFE INSURANCE to cover your growing property portfolio, business etc., thus providing your family with greater security.
  • Have absolute discretion with regard to your INVESTMENT CHOICE.

SO WHY DO WE PREFER PROPERTY AS OUR FORM OF INVESTMENT?
Investing in property allows you the power of using OPM … Other People’s Money.
Let’s say you have $140,000 in your Super Fund: If you invested in Shares = You would have $140,000 worth of shares

Make the most of this fantastic opportunity to purchase an investment property, pay less tax than a traditionally purchased rental property, and significantly INCREASE YOUR RETIREMENT WEALTH!

Carrying on a business from home Part 1

As a general rule, expenses associated with your home are private and you can’t claim a tax deduction for them. However, if you operate a business at or from your home, you may be able to claim a deduction for some of the expenses relating to the area you use for business purposes. These expenses are divided into Occupancy expenses and Running expenses.

 Occupancy expenses are expenses related to your ownership, rental or use of the home and are not incurred because of your income-earning activities. In other words, you would have these expenses regardless of whether you were carrying on a homebased business.

Occupancy expenses include:

  • Rent
  • mortgage interest
  • council rates, and
  • housing insurance premiums

Running expenses are expenses related to using facilities within your home for business. Carrying on a business at or from your home means that these expenses may be higher than if you were not doing so.

Running expenses include:

  • cost of using a room (such as electricity and gas costs for heating, cooling and lighting)
  • decline in value of plant and equipment (for example, desks, chairs, bookcases, computers, lathes and grinders)
  • decline in value of curtains, carpets, light fittings, etc.
  • cleaning costs
  • cost of repairs to furniture and furnishings.

 Does the area set aside have the character of ‘a place of business’?

 The area must have the character of ‘a place of business’. While this will depend on your particular circumstances, an area of your home is likely to have the character of a place of business if it is:

  • clearly identifiable as a place of business (for example, you have a sign identifying your business at the front of your house)
  • not suitable for private or domestic purposes
  • used almost exclusively for carrying on your business, or
  • used regularly by your clients.

How much can you claim?

Rent, mortgage interest, insurance, council rates

If eligible to claim occupancy expenses, you can claim the percentage of rent, mortgage interest, council rates and insurance that relates to the area you use as a place of business.

Utilities (gas, electricity)

If the business percentage is based on anything other than the floor area (for example, on actual electricity use) you will need to clearly document your claim to show how you arrived at the amount.

Where you don’t have an area of your home set aside exclusively for business, you can’t claim on a floor area basis as this area is also used for non-business purposes. In this case, you’ll need to show how you arrived at the amount you’re claiming for gas and electricity.

You’re allowed a deduction only where you incur additional running costs because of your business activities. For example, if you work in a room where other family members are watching television, you would probably not have additional heating costs as a result of that work activity.

Furthermore, the business use of the home work area needs to be substantial and not merely incidental. For example, you couldn’t claim 34 cents an hour simply because your fax machine is on 24 hours a day, 7 days a week, to receive business faxes.

Phone

If you use a phone exclusively for business, you can claim a deduction for the phone rental and calls, but not the cost of having the phone installed. This is because the installation cost is considered a capital expenditure. If you use a phone for both business and private calls, you can claim a deduction for business calls and part of the rental costs.

Business plant and equipment

If you use plant and equipment solely for business purposes, you can claim the full amount of depreciation. But if you also use equipment (such as a computer, printer, photocopier, grinder, circular saw) for non-business purposes, you have to reduce the depreciation deduction by an amount that reflects this non-business use.

Planning for the inevitable Part 2

What is a Power of Attorney and should I have one?

One simple analogy is that a Power of Attorney is like a “living will”, it allows you to empower another person or persons (called an “Attorney”) to legally take charge of your affairs whilst you are still living.

Appointing a Power of Attorney is useful in many day-to-day situations and is a precautionary safeguard.

There are many and varied circumstances, both Expected and Unexpected in which you may need to empower another person or persons to act on your behalf. Consider the following situations for example:

You are a sole Director Company or a Corporate Trustee

Appointing an attorney, enables your business to continue to operate in your absence or incapacity, that another person can manage your superannuation, receive or provide information to the Taxation Department and submit important documents on time.

You want someone else to be able to act

You’re a single parent, or have other responsibilities, and you wish to have the assurance that in an emergency, your financial and other affairs will not be “frozen”, that someone else can make decision as to your care, access your bank account to provide for your children’s immediate needs, pay the bills and otherwise keep your household or business running. You are expecting important documents or a contract to sign, but unavoidably you are going to be on an aeroplane for the next 24 hours and will not be able to sign when required. An attorney could sign on your behalf.

You are absent or unable to attend to matters yourself.

You are overseas/interstate and you decide to sell up your Australian/Victorian assets or an emergency requires you to access Australian funds in a hurry, and circumstances do not allow you to do this yourself – An attorney could do this for you.

 You are injured or confined.

A motor vehicle accident or a hospital confinement or other physically incapacity may disrupt you managing your own affairs unless you have appointed an Attorney to act on your behalf.

You become ill

 Illness may mean that you are unable or are going to be increasingly unable to go about your normal day to day business – an Attorney could act for you.

You become mentally incapacitated

 Advancing age or certain health conditions or an accident may rob you of your ability determine matters for yourself, unless you have prepared in advance medical/health-care directions which detail the decisions that you want made by your Attorney if and when you are unable to do so for yourself.

The following are examples of health care decisions that you can make in advance that will be carried out by your attorney, should you become mentally incapacitated: What medical treatment you will and will not accept; Whether or not you want to be resuscitated by heroic means; Whether or not you consent to a termination of pregnancy; Whether or not you consent to removal of tissue while you are still alive for donation to someone else, or Which nursing facility you wish be admitted to if it becomes necessary.

Since we all have many responsibilities and accidents and illness can strike without warning it is sensible to appoint another person to legally act on your behalf for financial matters and/or personal matters including health care. This appointment can be for a specific purpose only or can be of a general and continuing nature, depending upon your needs.

What are my Options?

There are various options to choose from and the right choice or combination for you depends upon your individual needs.

 The main types are:-

Enduring Powers of Attorney.

They are used if you want to appoint an attorney for personal matters (including health care) and/or financial matters (can be different attorney for each) and it is intended that the power continues even if you should subsequently lose mental capacity.

General Power of Attorney.

These are used if you want someone to be able to act on your behalf ONLY while you have full mental capacity and ONLY for financial matters. You would use a General Power of Attorney if you wanted to appoint an attorney for financial matters and for a limited time or specific purpose.

Please contact our office if you don’t have a current solicitor and we can recommend one.

 

Planning for the inevitable Part 1

We should think about the “future” – planning for the inevitable and making sure that your paperwork is in order.

It is an important consideration, although people rarely like to think about it. Everyone will die. Although you cannot change that fact, you can ensure that upon your death your wealth passes smoothly and efficiently to your loved ones.

Here are some important considerations:

Current Will—do you have a Will? If you do have a Will, is it current?

Have your circumstances changed since your Will was drafted?

Remember that marriage generally invalidates Wills and Wills may be wholly or partially ineffective due to the death of a beneficiary, or a specifically gifted asset no longer existing.

Trusts established by Wills—does your current Will set up trusts upon your death? Leaving assets on trust instead of giving them directly to a dependant can be very desirable. Trusts in Wills are often used where beneficiaries cannot manage money themselves, have addictions, are being sued, etc. Trusts in Wills can also allow tax effective planning.

Family trusts—the person who can hire and fire the trustee of a family trust has ultimate control of the trust.

Do you have this role? Who will have the role after your death?

Powers of Attorney—do you have any in place? These can be invaluable if you lose the capacity to make decisions or are overseas.

Individual trustees—do any of your trusts and/or your DIY super fund have individual trustees instead of a company acting as trustee? Companies never die and changing the directors of a company is a lot easier than changing individual trustees of a trust where someone has died.

Superannuation pensions—do you receive any superannuation pensions? Upon death, what will happen to them? Do you want your pension to continue to be paid upon your death (e.g. to your spouse)? Or, are you happy for your pensions to be paid a lump sum?

Read out next blog to find out how a power of attorney can help you!