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Getting ready for tax time. Accountant needed. What to ask?

Discussion in 'Accounting & Tax' started by Paterson00, 12th Jun, 2016.

  1. Paterson00

    Paterson00 Well-Known Member

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    Hi all

    I am looking to get a good accountatnt that is suitable for the needs of my wife and I. I have had a reccomendation for a local one who is able to deal with us as my wife runs her own business and we own two investments between us.

    I am not sure if the lady I have been reccomended would be the best fit for us. What should I be asking? The prior years I have always just gone to ITP accountants which are average I think. They never advised me to get a depreciation schedule which rings alarm bells to me. They have a property specialist in branch who never mention it at all any of the years. We now have depreciation schedules for both properties and one of those is in the UK and it was tricky to find someone able to do it.

    The reason I ask is, although I trust the reccomendation I am told that the accountant is expensive, perhaps as she deals with small businesses? Either way, I want to be sure that if I use her I am not paying too much when I could get a more targeted service elsewhere for the same price.


    Any thoughts?

    TIA
     
  2. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    The reason it seems expensive is she possesses qualifications and experience. Many franchise offices employ unqualified staff some only subject to management and review (perhaps) by the one skilled and qualified person. (ITP, H&R Block and other names are examples of franchised tax offices) Imagine if your dentist took that approach ?

    I would argue one of the key issues is cost so ask questions and determine if and how much extra. If you provide a diligent summary is it cheaper ? I often find clients are surprised when they are told their records are the leading cause of costs. Take along a copy and see if there are any issues or things YOU can improve to assist the accountant.
     
    Last edited: 14th Jun, 2016
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    Hit up the guy above if you need a decent accountant.

    Cheers

    Jamie
     
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  4. Shankiedoodle

    Shankiedoodle Well-Known Member

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    Hi Paterson,

    it depends on if she can give you a straight up quote or if its billed by the hour.
    If its anything like the firm I work at, most of the bill for tax returns for small businesses and property actually comes from clients coming back to us with ,"Oh and I just realised we forgot to give you our fee for subscriptions etc". If its just one error thats generally fine, but otherwise if mutiple changes are made, the return is normally checked by the accountant and a senior or manager before a partner level check.

    As Paul said, try organize your documents such that they are relevant to your properties.
    Things like
    Strata fees, land taxes, water rates, interest, gardening, repairs (THIS IS A BIG ONE, if it is an improvement, make sure you have statements. if simply replacing something faulty, just leave a note). Stuff like this being organized often times makes the difference between my client paying $300 or $100 for us to input the details because of queries.
     
  5. eskander

    eskander Well-Known Member

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    +1 for @Paul@PFI
     
  6. Paterson00

    Paterson00 Well-Known Member

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    That's fantastic advice guys thank you. The lady has come back to me with her fee and I am happy with it. she has advised me of similar things to yourselves in that it largely comes down to organisation and preparation.

    I am not sure if I have organised things as best I can but I have a spreadsheet for each property listing the income and expenses, I will have a third one listing the costs associated with my job, (phone used at work, laundry etc) and a fourth one listing all the income and outgoings of my wife's business. I have hyperlinks in the spreadsheet to all the documentation so the document can be referenced straight from the spreadsheet without taking half an hour trying to find the breakdown or type of cost should the accountant need to get further clarification on how the cost was incurred. Is there anything else I can do to help.

    In essence using the accountant for the return is one thing I would like but more importantly I am hoping she will become someone I can utilise for a source of information on how best to structure ourselves so taking the next move becomes easier. This forum is an amazing fountain of knowledge but to have someone looking hard into your specific situation will hopefully uncover things that I didn't even know I could benefit from. We are looking to expand my wife's business and take on an employee so knowing how to structure things in that area after looking into our situation and understanding our goals would be great.

    Thanks again guys, I hope I can help you out in return one day.
     
  7. Shankiedoodle

    Shankiedoodle Well-Known Member

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    Well.. apart from the focus on the properties, for your wife's small business.. if its at home, you can claim deductions for home office expenses (running costs) and occupancy costs. Of course this only matters if she's running the business from home. Otherwise, businesses generally arent too bad.

    Also, im assuming she isnt registered for GST ( Earn more than $75,000 = need to register). If she is going to have large capital spending, it might be wise to consider registering for GST. There is no minimum revenue required. But once you register you must stay registered for at least 12 months.

    Off the top of my head thats all I can think of for now
     
  8. markson

    markson Well-Known Member

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    I like this idea. I am going to change my spreadsheets to hyperlink to a scanned copy of the receipt in DropBox.
     
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  9. Paterson00

    Paterson00 Well-Known Member

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    Thank you for that. I was under the impression that if you claimed the running costs of your home business as renting a room to yourself, or in our case the garage largely as it is a dog grooming and training business, then you would be up for full capital gains benefit on your PPOR should you ever sell it. If I am right in this I would say that the gains in claiming a few of the bills off of her tax bill would be heavily outweighed if we sold for a decent profit and had to pay the tax.

    She earned around $40,000 before running costs, fuel etc so we estimate so with the costs of her training, her depreciation on the IP of which she owns 75% and all the associated costs we have with purchasing that property this year and also setting it up as a rental then I would expect that here return will have almost no tax to pay anyway. I think her costs on the IP purchase will total about $24k of which she will utilise the 75% ownership on those costs as a deduction. I am no accountant but I believe this to be correct.
     
  10. Paterson00

    Paterson00 Well-Known Member

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    I need to put mine on Dropbox as a back up. At the moment if I lose my hard drive I will struggle to prove it all. It is all possible to get back but it would take some doing. I am not that familiar with dropbox yet although I have used it... tomorrows mission is now to learn how to do what you have suggested, I will then have two links in seperate columns, one to the hard drive then the second to the dropbox so I am able to access the info from anywhere. I will email a copy of the spreadsheet to myself then too so I have a back in the ether.. Hey... I know something clever, who knew..? LOL
     
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  11. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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  12. Shankiedoodle

    Shankiedoodle Well-Known Member

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    Uhm no not quite. For running costs accountants normally tend to just allocate a set rate which is 45cents per hour. If your wife runs her business 3 days a week your deduction would be 3 days x $0.45/hr x 52 weeks/year = $538.20.

    For items like rent and interest(AKA Occupancy costs), you would apportion it based on the sqm used out of the total area of your house used for the business. As a rough example, you measure your garage to be 10sqm, and your total house area is 100sqm. 10/100 Sqm = 10% of house area. In that case, you are able to deduct 10% of the costs related to the house as part of your business expenses.

    When it comes to capital gains, you would only pay CGT on 10% of the sale. so if your capital gain is 200k, you pay tax on 10%. The CGT discount also applies in this case.
     
  13. Paterson00

    Paterson00 Well-Known Member

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    I'll see the tip but if I do not claim the interest ( I didn't even know we could) then surely no CGT? We have intentions of not claiming any running costs of the house at all on the return. With her current deductions she will likely easily be below the $18200 threashold. She wont get a rebate on tax that she has never paid so claiming anything for the house seems futile if I understand it correctly.
     
  14. Paterson00

    Paterson00 Well-Known Member

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    Oh.. OK.. Cool tip. Not largely going to benefit us this year I think but sounds like it very much could in the future. We have a home office too dedicated to her business so that can go down too. do garden areas count as in, where the dogs go play and pee? Tape measure is coming out for a dust off soon it seems.
     
  15. Shankiedoodle

    Shankiedoodle Well-Known Member

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    The ATO looks at it such that as long as you make an assessable income from your home, a portion of it will be subject to CGT. it just depends how much. In this case since an income has been made, the ship has sailed for not having CGT. However, you have the option of choosing what % of your total house area was dedicated to the business. If you say just the garage and you give a reasonable estimate of 5%, then you would pay CGT on that 5%.
     
  16. MikeLivingTheDream

    MikeLivingTheDream BCOM MCOM MTAX CPA CTA Registered Tax Agent

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    small business cgt concessions might also be able to be applied. people worry about it for almost no reason and many accountants have no idea it doesnt matter whether you claim or not it is whether you were entitled to an interest deduction if you did. your assumption patterson is what many accountants tell their clients and they are wrong. cgt appliea even if you dont claim it.

    an area for which you claim running costs only isnt subject to cgt.

    in fact that is a great test question for any new accountant for a small business owner working from home
     
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  17. Paul@PFI

    Paul@PFI Tax Accounting + SMSF Business Member

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    Doesnt always work and may duplicate efforts.
     
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