Adds up to better business Being in BusinessSeminars Australian College of Mental Health Nurses ACT Conference Canberra, 19 March 2010 powering better business online
This seminar contains… Tax Office Definitions Accounting speak; Legal concepts; & Left brained thinking stuff! And lots of question for you to think about now and later...
Adds up to better business When are you in business? powering better business online
What Constitutes a Business? HOBBY BUSINESS The difference is determined by your intent and behaviour when carrying out an income generating activity
Tax Office says… • There is no simple ruling on whether you are in business but it will ask... • Does the activity have a significant commercial purpose or character? • Do you have more than just an intention to engage in business? • Does it have a purpose of profit as well as a prospect of profit? • Is there repetition and regularity to the activity? • Is it planned, organised and carried on in a business-like manner? • If YES to any or most the ATO is likely to consider that you are in business.
Personal Service Income Test • ‘Income is personal services income if it is mainly a reward for an individual’s personal efforts or skills, regardless of whether the income is received directly by the individual or by a company, trust or partnership (personal services entity).’ • You qualify as a personal services business if: • you meet the results test, or • less than 80 per cent of your personal services income in an income year comes from 20 per cent or less of your clients; and • you meet one of the other three personal services business tests (the unrelated clients test, employment test or business premises test). • NOTE: If you don’t meet the tests the ATO may rule that you are not in business and business deductions will not apply to assessable income.
Practical Indicators of a Business • Does the activity/entity have an Australian Business Number (ABN)? • Does it have an Australian Tax File Number (AFN)? • Does it have a Bank Account? • Does it have a Registered Business Name? • What Type of Business Structure is it?
Adds up to better business Why operate as a business? powering better business online
Tax Deductibility Under Income Tax Law, a person can claim deductions for expenses that are necessary for carrying on a business to produce assessable income, provided these expenses are not of a private, domestic or capital nature.
Other reasons to be in business? Carefully weigh the Facts against the Fiction for you
Adds up to better business Establishing a business powering better business online
Business Structure Decision continued… You should seek specific advise on business structure and other options available such as Trusts
Basic Business Compliance Requirements Each business may have a range of other regulatory or professional compliance requirements depending on size, location, industry, etc.
Adds up to better business Business Financial Plan and Accounting powering better business online
Accounting Terms and Formulas Income, Expenditure, Assets, Liabilities and Equity. Equity + Profit = Assets - Liabilities Profit = Income - Expenditure
Accounting Terms and Formulas The Era of Self Assessment
Accounting Recordkeeping Get a suitable accounting application and a trusted accounting adviser at the establishment stage. Ensure you keep all business financial records for at least seven years
Sources of Advice and Support • Your professional association (ACMHN) • Capital Region Business Enterprise Centre • www.business.gov.au • www.ato.gov.au • www.asic.gov.au • Commercial business advisers (accountants, lawyers, banks, consultants, etc.)