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As we head into the new year, we thought it would be a great time to recap some of our most frequently asked accounting questions from 2022.

10 most frequently asked accounting questions

Q: Is my personal tax return due on the 31st of October, or do I have longer?

A: If you are not on a tax agent list, you must ensure that you lodge your personal tax return by 31 Oct. If you are an existing client of ours (or a new client that has been added to our list); then in most cases, you have until May 15 of the following year to lodge your personal tax return. You must be added to a tax agent list PRIOR to 31 Oct to be granted the extension.

Q: Do you need to see my receipts to prepare my tax return?

A: We don’t generally need to see your receipts, however, if there is something key and important, we will ask if you’ve not provided it. Excel summaries are the best way to summarise long lists of information for your tax return. You can attach these to your tax submission with our team.

Q: I am a sole trader; how do I pay myself a wage and super?

A: As a sole trader, you do not technically pay yourself a wage. There is also no requirement to pay yourself superannuation (though we strongly recommended this).

For more information, download your free new sole trader guide from our website.

Q: I’ve been running as a new sole trader for a little while now. I don’t really know what I am doing. How do I get my books in order?

A: It is crucial that you set up a clear, effective system for capturing information about your business income and expenses.

If you’re a small business, with very few transactions, an excel spreadsheet may just do the trick; however, in many cases that we see, online bookkeeping software such as Xero is imperative. Xero is far easier to use than you’d think!

For more information, download your free new sole trader guide from our website.

Q: I’ve recently purchased a rental property, what information do you need for my next tax return?

A: Create a file and carefully store all your property purchase and capital improvement data in one location.

Create a second file and here, you should store all information relating to general income and expenses for your property. These costs will include mortgage information, repairs & maintenance, rental agent statements, council/water rates, strata, and similar.

Group your income and expense information by financial year. From the first financial year that you rent out your property to tenants onwards, we will require a summary of your income and expense information for entry into a “rental schedule” within your tax return. An excel spreadsheet is a great way to summarise this information.

Q: I’m considering moving out of my home and renting it out, will I have to pay capital gains tax later if I sell it?

A: Under the “6-year exemption rule”, you can move out of your home and rent it out to tenants for a period of 6 years or less without being liable to pay Capital Gains Tax in relation to the period that you did not live there. More information can be found here.

Q: What business structure will work best for me?

A: As a general rule, if your business is small, unlikely to grow and expand rapidly, you don’t pay staff, and your business activity and dealings don’t carry many risks then most likely a sole trader structure will suit you the best.

Conversely, a company might be the optimal structure for you if the opposite scenario applies. A partnership can be a simple business structure for two family members opening a small business together, however, this does not have “perpetual succession” like a company does (i.e., directors of a company can retire, and new directors can come on board).

A Trust is another more complicated but potentially beneficial option that involves a trustee conducting business on behalf of its beneficiaries. There is no “one size fits all” and often different tax advisors will hold different viewpoints. If you’re unsure of what structure to go with, download our new business setup guide from the resources page of our website or send us a WhatsApp chat for further clarification.

Q: My company made a loss, but I still need to pay tax, why?

A: We get this one a lot. If you have been maintaining your own books, and you are a company director (note: NOT a sole trader); and you don’t pay yourself a formal, regular wage; but rather, transfer random amounts of money from your company bank account to your personal bank account – you are effectively pulling money from your company without paying tax on it. Under most circumstances, these drawings need to be re-classified as a wage paid from your company to yourself, on which tax is attached. This rule applies only to companies, not any other business structure.

Q: I absolutely hate maintaining my own books, what will you guys charge me to take over all my accounting, tax, and bookkeeping?

A: We are currently working on a program that will enable you to grab your monthly bookkeeping cost estimate straight from our website by entering your key business information. Until then, download our Virtual CFO brochure and submit your cost estimate request through to our team. We’d love to help!

Q: I’d prefer to do my books myself and learn Xero, do you guys offer bookkeeping training?

A: We do not currently offer one-on-one bookkeeping training, however, watch this space because we are planning on bringing to you a number of affordable and simple bookkeeping and business training programs in 2023!