What exactly does a bookkeeper do?

How is it related to accounting? Can you not just do it yourself?

What is Bookkeeping?

Bookkeeping is the practice of recording and tracking financial transactions, in chronological order of a business.

As per the history archives, which is as far as 7000 B.C. The traditional records of bookkeeping were discovered in Sumer, Babylon, Mesopotamia and Assyria (Xero, n.d).

The essence of recording and tracking financials is vital for a business to grow. Many individuals running a small business, do their own bookkeeping. However, running your business is not only time consuming, but also leave you with several other responsibilities. Such as logistics, product, service, marketing and endless everyday tasks.

Unless you have a solid background or experience in bookkeeping. We would advise you to leave the part to the accountants.

Now, why?

If you are well versed with the ATO business compliance requirements? Also, are you well versed with “Business Activity Statements” aka B.A.S?

If your answer is yes!

Then you should totally consider this as a career option. However, if you are not sure and can’t keep up. We will explore a bit further, into how bookkeeping not only makes your life easier. But help you to save every penny worth in your business.

The duties of a bookkeeper can be quite diverse and not just handling books. They don’t only manage financial transactions but are also required to provide accurate and up to date financial information or statements. This not only helps the business owners plan their future goals and strategies. But also helps to manage their money in a much more efficient manner.

As a small business owner, you are well aware of the two essential foundational tasks of a bookkeeper – bank reconciliation and data entry.

What’s the difference between a bookkeeper and an accountant?

Aren’t they the same?

No, they are not.

The role of a bookkeeper is to record accurate financial transactions, documenting the ledgers and generating a financial report. More importantly, an administrative and a transactional responsibility to keep the data accurate and structured. The numbers and the data generated is where the role of an accountant take place.

An accountant will help you to create a strategy and plan management that can refrain you from some very big losses that you may not be even aware of! There is no comparison between the two. As each has their own sets of duties and responsibilities.

However, it is essential for business owner to handle their financials and accounts accurately. Therefore, hiring a bookkeeper, not only saves time, money but also in compliance with the tax and other laws.

If you are a small business owner and not sure if your are financials on track?

We at The TAP can assist you with your queries.

As per the Australian Taxation Office, the data of tax returns for the financial year 2019 – 20 was reported to be approximately $19.4 billion in work-related expenses. Also, an update issued by the ATO reveals that the 2021 data should reflect a decrease in work-related claims.

With the proposed changes in working conditions, there are certain expenses that companies and individuals may not be able to claim, especially in terms of work-related expenses. For example, the majority of the working individuals have been working from home and are ineligible to claim travel expenses. Although, circumstances, where individuals in professions have been required to travel, will be needing to provide proof of evidence.

What is a work-related expense?

An expense incurred “directly” towards your client or employment. Some of the basic examples include travel expense, occupational uniform, and dry cleaning.

What are the rules or criteria for claiming work-related expenses?

As per the ATO guidelines, there are three underlying criteria that an individual must satisfy:

1. The expense must “directly” relate to your income.

2. The expense was made by the individual and not reimbursed for the expense.

3. There must be proof of evidence or a record to prove your claim*.

Is proof of evidence required for a minor work-related expense?

As per the ATO requirement, individuals must provide written evidence, if their total claims exceed the $300 mark by ATO. The proof of record provided must prove the total amount and not just over $300.

What are the requirements of claims that fall under the $300 requirement?

No written evidence is required. However, in special circumstances, the ATO will require an explanation to declare the claim to be “reasonable” and “directly” related to the individuals work.

What are some of the personal expenses that cannot be claimed by taxpayers?

Even if an individual taxpayer was required to adapt hybrid working requirements such as working from home and office. They are ineligible to claim expenses for tea, coffee, lunch, toilet paper.

As per the provided ATO insights, taxpayers will NOT be able to claim mortgage interest, rent and property-based insurances.

*Please note, any false claims made can result in serious penalty and may affect your income tax status for the long term.

Still not sure, if a certain expense is eligible for tax deduction?

Speak to our qualified tax accountants for a more accurate review of your 2021 tax returns.

A sale made on Australian residential rental property (used for providing affordable housing solutions) may be eligible for up to an additional 10 per cent discount for tax purposes. For example, the discount percentage of 40 per cent will increase up to 50 per cent.

With the upcoming tax season of 2021, affordable housing owners are curious about their C.G.T additional 10 per cent discount. Our accounting experts recommend having a complete understanding of your eligibility and lodging your reports before time.

What is Affordable Housing?

According to the Australian Taxation Office (ATO), any unit, house or apartments (dwelling), where the given below conditions are satisfied is classified as affordable housing.

1.Any property that is a residential premise and taxable Australian real property (TARP) available for rent. However, this DOES NOT include caravans, houseboats and mobile homes.

2.Not a commercial residential premise

3.Registered community housing provider exclusively responsible for the occupancy and the management of the tenancy.

4.Entity/ties holding an ownership interest in the dwelling provides a certification showing the housing was used to provide affordable housing.

5.An entity that has no ownership interest and is in receipt of the National Rental Affordability Scheme (NRAS) for the NRAS year.

6.Passing a non-portfolio test where a managed investment trust (M.I.T) has an ownership-based interest and the tenant has no interest M.I.T.

Do I have any eligibility for an affordable housing Capital Gains Tax discount?

As per the Australia Taxation Office, you may be eligible to make a capital gain, when you sell an affordable housing rental property. Also qualifying for an additional up to 10 per cent capital gain discount, if the following conditions provided below are met:

In the case of making a capital gain –

Made by an Australian resident individual

OR

Recognised or distributed to the owner, either direct from a trust, MIT or indirectly from trust through an intervened partnership.

Must have also provided –

• Existing or new affordable housing dwelling.

• Rent price is below the market rent

• To eligible tenants on low to moderate incomes (based on household consumption and income).

• For a minimum period of 3 years (or 1095 days) from 1st January 2018 to continuous or aggregation of three years.

Do I need to provide a Community Housing Provider report?

Community Housing Providers, that issue affordable housing certificates must provide an annual report to notify the Taxation Commissioner, with the details of all certificates during the given income year.

As an affordable housing property owner, it Is suggested to keep your CHP annual report organized with a number of certificates issued during the reporting period, intermediary details, provider and investor details. This report is required under the law from 1st January 2018 and is required to be lodged electronically with ATO. More importantly, if you are due to submit your first annual report, covering the income year 2020 – 2021? Make sure, your CHP report is electronically lodged before 31st July 2021.

Are you a community housing provider? and need support with your annual report and capital gains tax?

Our qualified accountants can provide you with expert support for C.G.T concessions.