Starting a new business can be very overwhelming. Without proper knowledge of the business world, one can land in hot waters in no time! One of the largest and most common factors that all business owners should be well versed in is taxes. Upon hearing the word taxes, a myriad of confusing thoughts rushes through your mind. Every business entity has a different set of taxes that they need to pay to the government. Now, this may vary from business to business and from country to country too. What you need to know is the right terminology and the right procedure when filing for taxes. Thus, hiring an online small business tax accountant would be a wise choice.
Most successful businesses hire professionals, such as accountants and bookkeepers. This is to keep a check on their business transactions so that when they file for tax returns, they benefit from it. Unfortunately, new businesses do not have the luxury to splurge on certain expenses. And, one of them is hiring a full-time accountant or a bookkeeper. Here is where an online small business bookkeeping service or an online small business tax accountant can be of great help.
Essential tax terms for you to understand
The professional online small business bookkeeping service that you hire will be well-aware about each of these tax terms. However, it is essential for you to know them too. A few business tax terms that might just give you a head start on running a new establishment are as follows:
#1 Company tax
Business in Australia has to pay a company tax. This rate for it is set by the government in Australia while a non-resident company will have to pay taxes on its source income in Australia. This tax rate is usually the same for all companies, but it may change under specific situations like the annual income of the business.
#2 Capital Gains Tax
Capital Gains Tax (CGT) is applicable to any kind of gain made in terms of capital by discarding any assets of the business. Foreign businesses may be subject to CGT on sources that they use to carry forward any business or task in Australia.
#3 Goods and Services Tax
The Goods and Services Tax (GST) is a national consumption tax imposed on the goods and services consumed in Australia. A business must register for GST with the Australian taxation office. Certain businesses are eligible for a GST concession as well.
#4 Payroll Tax
This is a state tax on the wages an employer pays to his employees. The calculation for it is done on the basis of the total monthly wages paid. This tax should be paid if total Australian wages exceed the exemption limit in the concerned territory or state.
#5 Other business taxes
Depending on the type of business you run, your business may be subject to various other taxes such as the Fringe Benefits Tax (FBT), Wine Equalization Tax (WET), Luxury Car Tax (LCT) etc.
The errors that small business owners usually end up making
Errors are bound to happen in the run of every business. However, these errors can be minimized by letting an online small business tax accountant take charge of the finance and accounts related matters. Given below are the common errors that small businesses must avoid:
#1 Not using a contract.
When you start a new business, it is important for you to have a well-compiled contract. The terms of all agreements in the contract must be well thought. Contracts ensure that the work you take up is not too farfetched and is within the budget of the company. These legal documents prevent your business from going into a shattering loss.
#2 Not knowing how to deal with payment delays.
Owning a private business can sound exciting. But it has its own cons. Initially, the incoming payment schedules are one of the biggest problems faced by the business. One must be prepared for these transactions to be delayed. It is highly unlikely that a new startup will earn money just as rapidly as an established one. It takes years for the inflow of cash to stabilize. So, until then, a business owner must be patient and should always have alternative plans to face any problems. To avoid such problems, a business should always stick to their contract.
#3 Not considering legal issues you may face before starting a new business.
Even if you play by the rules and always keep your company’s contract in mind, you may land up in legal trouble. These blunders can easily be made to disappear by hiring an attorney. However, attorneys can be a huge investment for a small business. One must always keep aside a certain amount of money to tackle any problems faced by the law.
#4 Not knowing how to differentiate between independent contractors and employees.
It is important to understand the needs of your business. Both employees, as well as independent contractors, have their own perks. For instance, an employee is loyal to the company and works for a wage set by the company. However, an independent contractor works on multiple projects for various businesses on his/her own. Now, independent employees can be cost-effective, but they may not provide the company with the same loyalty. It is for you to decide what is best for your business.
#5 Being unprepared for new tax types.
It is complicated for a new business to get their taxes right in the first go. However, there are many tools like an online small business bookkeeping service to help you prepare and track your expenses. An online small business tax accountant is a safe and cost-efficient option, as well.
#6 Using orthodox methods to carry out business functions.
Correct tools are the building blocks of a successful business. In order to increase your efficiency and productivity, it is important that your business makes use of the right technology and tools. Some of the popular tools include Freshbooks, Tax Receipts, Outright, Our Deal and Evernote.
An online small business bookkeeping service can be useful in many ways. However, the most beneficial point here is that it is cost-efficient. If you are on a lookout for a reliable and experienced online small business tax accountant, hire My CFO to handle your accounting matters. The firm has well-qualified accountants who can provide you with a thorough experience when it comes to business financing. Most full-time accountants turn out to put a dent in a new business’ profits. An online small business tax accountant will provide your new business with top-notch services without bagging an unbelievably hefty payroll. My CFO is a service that will fulfil all your business financial needs and guide you through the path of becoming a successful and established corporation.