Accounting Archives - True Tally Bookkeeping

Bookkeeper vs Accountant: What’s The Main Difference? (A Complete Guide)

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In the business world, understanding the difference between a bookkeeper and an accountant is crucial for efficient financial management. While their duties sometimes overlap, clear differences exist between them. Bookkeeping is a branch of accounting that focuses on recording everyday financial transactions, while accounting focuses on analyzing and interpreting financial information to provide insights and help make informed decisions. In this article, we will discuss the key differences between a bookkeeper and an accountant, their responsibilities, the qualifications they require, and how they can add value to your business. What Bookkeepers Do? Bookkeepers manage your business’s day-to-day financial records so they are organized and consistent. Their main duties include: Daily Tasks: Recording and classifying all business transactions Managing accounts payable and receivable Processing invoices and payments Performing bank reconciliations to ensure accuracy Monthly Activities: Preparing financial reports for business owners Running payroll for staff Preparing initial tax-related documents Some bookkeepers also provide basic financial insights and identify patterns in your business performance. What Accountants Do? Accountants are trained financial professionals who analyze your business data to provide guidance and ensure regulatory compliance. They often hold accounting degrees and professional certifications. Core Accounting Services: Preparing official financial statements, including income statements, balance sheets, and cash flow reports Filing tax returns and managing tax compliance Performing financial analysis and forecasting Providing strategic business advice based on financial information Strategic Services: Business planning and budget management Advising on investment and growth strategies Assessing risks and conducting financial planning Preparing for audits and representing clients Many accounting firms also provide bookkeeping services, allowing you to cover all of your financial needs in one place. Difference Between Bookkeeper And Accountant Bookkeeping A bookkeeper works closely with a business or individual to record financial activities on a daily basis. They ensure that records are accurate, easy to manage, and transactions are organized and up-to-date. Bookkeepers are especially helpful for small business owners who need help tracking and recording numbers. Their work can cover everything from payroll management to assisting with year-end reconciliations. In addition to recording transactions, bookkeepers may also prepare financial statements for accountants to review and provide professional advice. Bookkeepers may work as independent consultants, through companies, or as full-time employees. Common tasks of bookkeepers include: Recording all transactions, including income and expenses. Managing daily banking tasks. Reconciling records against third-party documents, such as bank statements. Preparing financial statements. Managing payroll responsibilities such as payroll cash and PAYG obligations. Providing BAS services (if registered as a BAS agent) and submitting Instalment Activity Statements (IAS). Managing superannuation contributions. Accurately calculating GST. Check Also: Top 8 Outsourced Bookkeeping Services in Melbourne (2026) Accountant Accountants review transactions and financial reports to interpret the financial health of an individual or business. They help manage cash flow and provide expert advice to improve the financial position of a business. This may include evaluating profit and loss statements or preparing and filing tax returns. For small businesses, an accountant may work on a flexible basis to provide financial guidance when needed. Larger businesses often need an accountant to ensure that all financial obligations are met. Accountants typically perform the following tasks: Preparing financial accounts and filing tax returns. Auditing financial information for accuracy. Compiling reports, business plans and detailed financial statements. Analyzing accounts, budgets and expenses. Offering tax planning and optimization strategies. Making financial forecasts and assessing risks. Managing insolvency and related financial issues. What Skills Are Needed To Be a Successful Bookkeeper? Bookkeepers need to have attention to detail and well-developed organizational skills. They must understand basic accounting principles and be comfortable using accounting software to record financial information accurately and efficiently. What Skills Are Needed To Be a Successful Accountant? Accountants typically hold a degree in accounting and must be licensed in Australia. They need to have a strong understanding of accounting standards and tax regulations to properly prepare financial statements and ensure compliance with government regulations. In addition, bookkeepers must have strong communication skills to work closely with business owners or accountants and ensure that all financial records are maintained properly. Educational Pathways in Australia Bookkeepers: Certificate IV in Bookkeeping or Accounting: This entry-level course, offered by TAFE and other accredited training providers, serves as a strong foundation. It teaches essential skills such as maintaining financial records, managing payroll and using accounting software effectively. Further study and certifications: After completing the Certificate IV, many bookkeepers continue their education with a diploma in accounting. Additionally, becoming accredited as a Registered BAS (Business Activity Statement) Agent or joining professional bodies such as the Institute of Certified Bookkeepers (ICB) can strengthen credibility and open up better career opportunities. Practical experience: Hands-on experience through internships or junior positions plays an important role in applying bookkeeping knowledge in real-world scenarios. Accountants: Bachelor’s degree in accounting or a related field: A three- to four-year undergraduate program is usually required. Curriculum includes financial accounting, management accounting, tax law, and auditing, which prepares students for professional accounting careers. Certification and Membership: After earning a degree, aspiring accountants earn professional certifications such as CPA (Certified Practising Accountant) or CA (Chartered Accountant). These certifications involve passing challenging exams and gaining relevant work experience. Master’s degree (optional): Some accountants choose to further specialize by earning a master’s degree in fields such as forensic accounting, finance, or tax law. Continuing professional development: Accountants maintain their certifications by participating in ongoing professional development, keeping up with industry changes and evolving regulations. Which Career Path Is Right For You? Choosing a career in bookkeeping or accounting depends primarily on your personal strengths and long-term career goals. Both paths are ideal for people who are organized and have a keen eye for detail. Is Accounting A Good Career? A career in accounting is a good fit for individuals who enjoy working with numbers and have an interest in finances. The financial sector is constantly evolving, and skilled accountants are always in demand in a variety of industries, including government, non-profit organizations, and private companies. Is Bookkeeping A Good Career? Bookkeeping is

Accounting, Bookkeeping

Construction Bookkeeping Services in Australia | Outsourced Bookkeeper For Construction

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Running a construction business means managing countless moving parts – projects, crews, deadlines and machinery. At Truetally Bookkeeping, we understand that. Managing your finances shouldn’t be an added burden. That’s why we offer specialized bookkeeping services designed specifically for the construction industry. Whether you’re a contractor, subcontractor or construction company owner, our skilled team is ready to make managing your finances easier. As expert bookkeepers for builders, we understand the challenges of job costing, variable cash flow and regulatory compliance in construction. With Truetally Bookkeeping, you get more than just contractor bookkeeping; you get a dedicated partner focused on your financial growth through complete bookkeeping solutions for building construction. Our Construction Bookkeeping And Tax Services Whether you are a builder, project manager, subcontractor, or run your own construction business, we offer a full range of tax and bookkeeping solutions specifically designed for the construction industry. We focus on helping you maximize deductions and minimize tax liabilities. Truetally Bookkeeping is dedicated to providing exceptional support, empowering you to make smart financial decisions and achieve long-term success. Explore our key services: Builders and Construction Tax Planning and Support We create a clear plan so you can set aside the right amount for the ATO, keeping you compliant and worry-free. Our customised tax strategies match your financial objectives, uncover potential savings, maximise deductions and advise on available grants or incentives. By staying up to date with tax regulations, we help you optimize returns and minimize payments, leaving more money in your pocket. Business Advice for Builders and Construction Running a construction business can be overwhelming. Our business advisors and bookkeepers at Truetally Bookkeeping review your operations and create a strategic plan to help you meet your financial goals. From project costing and pricing strategies to business structure and planning, we provide guidance that improves profitability and gives you more freedom. Construction Superannuation Support If your super or your employees’ super is falling behind, we step in to review and update everything, helping you avoid compliance issues. Bookkeeping Services for Builders and Construction Take back your time from tedious recordkeeping with our professional support. We maintain accurate and timely records for financial reporting, Business Activity Statements (BAS) and tax returns. Speak to the Truetally Bookkeeping team to find out how we can save you hours each week. Common Tax Deductions For Construction Workers: Motor vehicle expenses Protective clothing and safety equipment Sun protection for outdoor jobs Phone and internet expenses Equipment and machinery Training or courses for skill improvement or maintenance Licenses, permits and certificates (excluding driver’s licenses) Home office expenses Work-related travel and lodging Donations to registered deductible gift recipients Income protection insurance You may also like: What Does a Bookkeeper Do? Duties, Skills, Benefits & Outsourcing Benefits of Outsourcing Bookkeeping for Your Construction Business Free Up Your Time When our experts handle your bookkeeping, you free up valuable time previously spent recording and maintaining accounts. This allows you to focus on what matters most – whether it’s your business operations or personal priorities. By allowing us to manage your accounts, you can ensure that every transaction is accurately tracked and reported. Efficient Accounts And Technology We specialize in Xero accounting software, one of the most trusted cloud-based bookkeeping tools available today. We integrate add-ons like simPRO, WorkflowMax and Aroflo to effectively manage projects and job costing. Our expertise in connecting multiple systems ensures smooth and seamless data flow across all your platforms. Up-to-date Finance Be fully aware of your daily financial performance – from reconciled bank accounts, profit and loss statements and balance sheets to a clear understanding of accounts receivable and payable. You can invoice projects and milestones instantly. Xero works on any browser, allowing you to monitor your finances anytime, anywhere. Payroll Process Managing payroll for employees and contract workers can be difficult, especially across multiple projects. Our team understands employment contracts and ensures correct entitlements while complying with modern award provisions. Contractor Management At Truetally Bookkeeping, we verify ABN and GST registrations, identifying any potential issues before payment is made. We also monitor all relevant contractors and suppliers for the annual report of taxable payments. Improved Business Relationships Strong supplier relationships are vital in construction. Our expert bookkeeping helps you accurately manage multiple supplier payments, ensuring that no payments are missed. This allows you to take advantage of discounts and maintain positive business goodwill. Better Budgeting With real-time financial data, cash flow and budget planning for current and upcoming projects become easier. Accurate records also simplify activity statements and tax planning, giving you full control of your business every day. Business Performance Advice For more detailed management bookkeeping, our in-house accountants analyze data from Xero and your project management tools to assess performance on each project. These insights give you the knowledge to make informed business decisions. Rest assured, the Truetally Bookkeeping team is here to provide ongoing support with practical, actionable advice. Tailored Construction Bookkeeping Solutions Zero File Setup & Expert Advice: Start your bookkeeping journey off right with personalized file setup and professional guidance designed for construction businesses. Bank and Card Reconciliation: Keep all your transactions accurate and error-free with regular reconciliation. Accounts Payable (A/P) and Accounts Receivable (A/R) Handling: Stay on top of every payment and receivable with simple and streamlined processes. Payroll Services: Manage your payroll efficiently, whether you run a small team or a large construction team. Superannuation and Payroll Tax Compliance: Ensure timely and accurate super and tax filings to stay fully compliant. Financial Reporting: Clearly understand your cash flow, profit margins and job costs with detailed financial insights. BAS and IAS Submissions: Let us manage your tax lodgements with ease so you can focus on growing your business. EOFY Support: Confidently close the financial year with expertly prepared reports and summaries. Why Choose Truetally For Construction Bookkeeping? Financial management for construction is unlike any other industry – it comes with its own set of challenges. At Truetally Bookkeeping, we focus on simplifying these complexities and delivering accurate financial management suited to

Accounting, Bookkeeping, Cash Flow Essentials, GST, Payroll

Top 7 Outsourced Bookkeeping Services Firms in Sydney (2026)

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Many Sydney businesses face a number of challenges when managing their bookkeeping – from rising salary costs and a lack of skilled professionals to the constant pressure to meet ATO compliance deadlines. On top of that, business owners face ongoing recruitment challenges, seasonal workloads and the demand for accurate financial reporting. It’s easy to see why many companies are now choosing outsourced bookkeeping as a more practical and cost-effective approach. By allowing experienced professionals to manage their accounts, businesses save money, gain expert knowledge and receive timely, accurate reports without the burden of recruiting or training new staff. In this blog, we’ll discuss which bookkeeping tasks you can outsource, the key benefits of doing so and the key questions to ask your virtual bookkeeper before making a decision. Top 7 Outsourced Bookkeeping Services in Sydney 1. Truetally Bookkeeping Truetally is your trusted partner for complete financial management solutions. We specialize in bookkeeping services, accounting services, payroll outsourcing services, cash flow management services and tax services that help businesses stay organized and financially strong. Our expert team ensures accurate records, streamlined payroll processing and effective tax planning so you can focus on growing your business. At Truetally Bookkeeping, we believe in providing reliable, transparent and efficient financial support tailored to your business needs. Whether you are running a startup or an established company, Truly offers smart financial solutions that help your business stay on track and thrive. Website: https://truetally.com.au/ 2. Jacoby Cameron & Co Taking care of your complete financial well-being. Jacoby Cameron & Co. At , we focus on giving your business the right advice when you need it, not just when you ask. We guide you through every part of your business, and because we build a personal connection with each client, our advice is specifically tailored to your business needs. Website: https://www.jaccam.com.au/ 3. Business Turnaround Services We are the only consultancy firm in Australia focused on building and implementing operational and strategic systems that help struggling businesses become stable, successful and profitable. We specialise in turning serious financial challenges into sustained, long-term profits for companies with annual revenues between $3 million and $20 million. Our business turnaround services are supported by a full team of professionals including bookkeepers, management accountants, IT automation specialists, managed IT specialists and digital marketing professionals. Website: https://businessturnaround.services/ 4. RippleBytes Ripplebytes is an innovative technology company dedicated to reshaping the digital world. We build smart, scalable solutions that accelerate efficiency and growth in today’s fast-paced digital age. From cutting-edge fintech systems to tailor-made software solutions, we combine modern technology with user-centric design to keep our clients ahead. At Ripplebytes, every project is a step towards creating meaningful digital experiences – one byte at a time, making waves across industries and shaping the future. Website: https://ripplebytes.com/ Also Read: Bookkeeper vs Accountant: What’s The Main Difference? (A Complete Guide) 5. CCS Partners – Chartered Accountants Established in 1992, CCS Partners is a trusted accounting firm with offices in Sydney CBD and Hurstville CBD. As an experienced and well-established firm, CCS Partners has built a strong reputation for providing expert professional advice and highly personalised services. We work hand in hand with our clients to provide taxation, accounting, audit and assurance, SMSF solutions and succession and estate planning support. Website: https://www.ccspartners.com.au/ 6. Aero Accounting Group – Tax Accountants We pride ourselves on delivering superior results for our clients, helping them move forward to achieve their dreams and ambitions. The way people interact with financial products and services is changing, and we are excited to be a part of this transformation. We aim to be your trusted partner in all things money, serving as a true ‘enabler’ on your journey to wealth growth and financial success. Are you ready to enhance your financial experience? We are always ready. Website: https://aerogroup.com.au/ 7. Operacy Staffing Operacy Staffing is a company that supports small businesses in Australia by helping them outsource specific tasks and duties to remote professionals from the Philippines. These remote workers are experienced in a variety of fields and can assist with tasks such as customer service, data entry, scheduling, and other business operations. By connecting small businesses with skilled and reliable remote staff, Operacy Staffing helps them increase their efficiency and productivity. It also provides businesses with a cost-effective way to handle a variety of responsibilities while maintaining quality and smooth workflow. Website: https://www.operacy.com.au/ Outsourced Bookkeeping Functions Offered by Sydney Firms Bookkeeping outsourcing companies in Sydney offer a full range of financial management services, including general ledger maintenance, accounts payable and receivable handling, financial reporting, tax filing, expense tracking and bank reconciliation. Below is a breakdown of the main virtual bookkeeping services available in Sydney and how they work together to provide better financial control and clarity: General Ledger Management: When Sydney businesses outsource general ledger management, they eliminate messy books and receive streamlined, accurate and ATO-compliant financial records that are always audit-ready. Accounts Payable: Accounts Payable outsourcing ensures that all invoices are managed correctly, GST credits are recorded correctly, and supplier payments are processed on time without errors or delays. Accounts Receivable: By delegating receivables management, companies maintain consistent cash flow, reduce overdue payments, and strengthen their working capital position through stable collections. Bank Reconciliation: A skilled remote bookkeeper reviews bank transactions daily, allowing businesses to always have a clear view of their actual cash balances, helping them make smart and timely financial decisions. Payroll Management: Outsourced payroll services manage superannuation, PAYG, STP submissions, award rates, holiday entitlements, and NSW payroll tax. This keeps your business in compliance with Fair Work and ensures that employees are paid accurately and on time. Financial Reporting: Professional outsourced bookkeepers prepare customized financial statements and provide insights to accelerate growth while meeting Australian compliance and reporting standards. Accounting Automation: Virtual bookkeeping teams use accounting automation tools to streamline processes, reduce manual work and increase accuracy by lowering overall operational costs. Tax Preparation: Outsourced tax specialists manage BAS, GST, and year-end tax liabilities, ensuring full compliance and helping businesses secure

Accounting, Cash Flow Essentials, Managing a Business

Compliance Corner: Essential Bookkeeping & Tax for Australian Marketing Agencies

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Australian agencies face a unique set of compliance challenges, particularly around GST, international services and contractor payments. Getting this wrong won’t just lead to an audit; it can also hurt your financial bottom line. Here’s a checklist of essential bookkeeping and tax compliance areas that your marketing or SEO agency should master. 1. The GST Minefield: Domestic vs. International Your service location determines your GST obligations. Your bookkeeper should apply GST correctly to every transaction. Australian clients: The standard rule is to charge 10% GST. International clients (exports of services): If your client is outside of Australia (even if the work is delivered digitally), the service is usually GST-free (or “input tax”). This is important for agencies with overseas clients. Problem: Many agencies mistakenly charge GST to overseas clients or, conversely, do not claim GST back on local expenses related to GST-exempt income. Bookkeeping best practice: Use a specific tax code in your accounting software (e.g., “GST Free Export”) and ensure that the client’s location is clearly indicated on your invoices. This makes your quarterly Business Activity Statement (BAS) accurate and safe for ATO review. 2. Digital Services And Foreign Currency If you run campaigns that pay for services in foreign currencies (e.g., buying Google Ads in USD, paying a developer in INR), your bookkeeping must be accurate. Foreign Currency: When processing foreign currency transactions, your bookkeeping records should include two figures: the foreign currency amount on the date of the transaction and the AUD equivalent. You should use one of three consistent methods: daily exchange rate, 28-day average, or an acceptable rate from a public source. Impact: Fluctuations in exchange rates create a foreign exchange gain or loss. This should be properly recorded in your profit and loss statement, as it is a taxable event. 3. Contractor vs. Employee: SGC Risk Like many professional services, your agency relies on contractors (freelance designers, copywriters, specialist coders). This is a key compliance area for the ATO regarding the Superannuation Guarantee Charge (SGC). Rule: If you pay a contractor primarily for their labour, even if they have an ABN and issue an invoice, you may still be legally required to pay a superannuation guarantee (currently 11%). Bookkeeping priority: Use the ATO’s Employee/Contractor Decision Tool for every new engagement. Don’t rely solely on contracts. If the tool indicates an employee relationship (for super purposes), your bookkeeping system should track and make provision for SGC. Penalties: Failure to pay SGC for a deemed employee results in SGC, plus interest and administration fees, which are not tax-deductible. 4. Classify expenses For Deductions Digital agencies have unique expenses that must be classified correctly to maximize tax deductions. Research and Development Tax Incentives: If you develop new or significantly improved software, proprietary tools or unique processes for SEO/AI, you may be eligible for generous Australian Research and Development (R&D) tax incentives. You should carefully track related labour costs and direct costs. Software and Subscriptions: Clearly break down your expenses into: Operating expenses (now deductible): Monthly SaaS subscriptions (SEMRush, Ahrefs, Adobe, etc.). Asset purchases (depreciation over time): High-value purchases such as new computers, servers or large software licenses. Takeaway: Compliance is not a burden; it is a shield. By implementing these rigorous bookkeeping practices, your agency ensures it is ATO compliant, reduces unnecessary tax and penalty costs, and is positioned to focus entirely on client success. Read More: NDIS Bookkeeping: Why ‘Good Enough’ Isn’t Good Enough for Compliance

The Compliance Crossroads: 2025 Bookkeeping Priorities for Allied Health in Australia

Accounting, Cash Flow Essentials, Managing a Business

The Compliance Crossroads: 2026 Bookkeeping Priorities for Allied Health in Australia

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Navigating The Cycle of Multiple Funders And State Compliance For Australian allied health providers, each invoice you generate may be linked to a different regulatory body, a different pricing structure and a different set of compliance rules. Your bookkeeping system is a critical gatekeeper that protects your practice from financial and legal risk. Here are four key bookkeeping and compliance priorities for all allied health practices to focus on in 2026. 1. Multi-Funder Invoicing: Accuracy Is Profit You are dealing with more than just private fee-for-service. Your system must be configured to handle the nuances of each major funder: Medicare (EPC/CDM): Accurate tracking of the number of services claimed against annual limits, proper use of item numbers and proper linkage to the practitioner are required. Audit of false billing risks by the Department of Health. NDIS: Requires specific item codes, spending limits and detailed service records. Ensure your system can easily separate NDIS-funded income and expenditure. Private health funds: Requires specific provider numbers and often involves integration with third-party claims platforms (e.g., HICAPS). Your bank reconciliation process should match bulk fund payments with individual client invoices. WorkCover / CTP: These payers typically have state-specific fee schedules that change annually (e.g., WorkCover Queensland fees are updated mid-2026).6 Your system must be updated immediately to avoid claiming at outdated rates. Bookkeeping best practices: Use practice management software that integrates with your cloud accounting platform (Xero, MYOB). This single-entry system reduces errors and ensures that all revenue streams are coded to the correct service category. 2. Payroll Tax Red Zone: Reviewing Your Contractor Model The most significant financial threat to many Australian allied health businesses in 2026 is a crackdown on payroll tax. State revenue offices across Australia are actively investigating service contracts with contractor clinicians. Problem: If a contractor is considered an “employee” for payroll tax purposes (based on their level of control, provision of equipment, etc.), the practice could be liable for years of backdated payroll tax, plus significant penalties and interest. Bookkeeping priority: Accuracy in classification. You should take care to separate actual employee wages from contractor payments. Your accounting software needs specific general ledger accounts for each. Actionable step: Get immediate legal and tax advice to review your contractor agreements. Bookkeeping alone cannot solve this, but accurate financial data will be essential for your advisor to assess your risk exposure and restructure if necessary. 3. ATO Compliance: Don’t Let Interest Cost You Too Much The Australian Taxation Office (ATO) has tightened its rules on interest deductions on tax debts, making tax planning and timely compliance even more important for cash flow. Change: From mid-2026, interest charged by the ATO (General Interest Charge/GIC or Shortfall Interest Charge/SIC) will generally no longer be tax deductible. Impact: This significantly increases the real, after-tax cost of carrying ATO debts (e.g., overdue BAS or PAYG instalments). Relying on an ATO payment plan as a form of business financing is now too expensive. Bookkeeping priority: Real-time tax liability tracking. Your bookkeeper should regularly forecast your upcoming GST, PAYG withholding and superannuation guarantee contributions. Use separate bank accounts to temporarily hold these funds, ensuring you are never short when the compliance deadline arrives. 4. Record Retention And Security Compliance requires evidence. All financial and service delivery records should be stored securely and easily accessible for audit. Five-year rule: All records (invoices, receipts, BAS, payroll records, service contracts) should be kept for at least five years from the date of their creation or registration. Security and privacy: As a healthcare provider, you have sensitive patient data (financial and clinical). Your digital bookkeeping and practice management systems should comply with Australian privacy laws (e.g., the Privacy Act). Use reputable, cloud-based software with strong encryption and multi-factor authentication. Next Point: Bookkeeping is the engine of your allied health practice, but compliance is the fuel. By prioritizing accurate multi-funder invoicing, addressing payroll tax risk, proactively managing your tax obligations, and maintaining secure records, you are securing your business for a successful 2026 and beyond. Read More: Moving Your NDIS Bookkeeping from Reactive to Proactive

Accounting

Moving Your NDIS Bookkeeping from Reactive to Proactive

Capital Gains Tax in Australia: How To Calculate Capital Gains Tax

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Capital gains tax (CGT) applies to the profit you make from the sale or disposal of property. Any sale or disposal of property can trigger what is known as a CGT event. If you sell a property for more than your purchase price, the difference is your capital gain, and this amount is subject to tax. At the end of the financial year, you can use this guide to help you prepare your tax return or to have an informed discussion with a tax advisor. We strongly recommend seeking professional guidance for your individual tax situation. CGT Property Not all property is subject to capital gains tax. The most common exemption is a family home. The Australian Taxation Office (ATO) maintains a list of properties that are subject to and exempt from CGT. Common examples of properties that can give rise to capital gains or losses include: Investment properties Shares Collectibles What Are Capital Gains And CGT? Capital gains are profits made on the sale of investments. For example, if you buy an investment property for $450,000 and sell it five years later for $520,000, your capital gain would be $70,000. The property you live in is usually exempt from CGT, as it is not considered an investment. Capital gains tax is a tax paid on profits from investments. It is important to note that CGT is not a separate tax. Instead, any capital gains are included in your regular income tax. These gains are added to your assessable income in the year you sell the property, just like the property. This means that your capital gains are taxed at your marginal tax rate, rather than a separate CGT rate. How Much Is Your Capital Gains Tax? Many factors affect your remaining CGT, including the length of ownership, your marginal tax rate and whether the transaction results in a profit. To calculate capital gains or losses, subtract the original purchase price and associated costs – such as stamp duty, conveyancing fees, valuation reports and building inspections – from the sale price. The result is your capital gain or loss. Length of ownership is important because if you have held the property for more than 12 months, you are eligible for a 50% CGT discount. If you have owned the property for less than 12 months, you pay full CGT on any gains. The Australian Taxation Office (ATO) levies this tax. It is advisable to consult an accountant to estimate your capital gains tax before selling an investment property. Read More: Moving Your NDIS Bookkeeping from Reactive to Proactive How Is The Capital Gains Tax Rate Calculated? CGT is triggered by a CGT ‘occurrence’. This usually happens when you sell an asset, but can also happen if the asset is gifted, destroyed, lost, or when you cease to be an Australian resident. CGT applies by taxing the increase in value from the time you acquired or created the asset. Capital gains are calculated in the year in which the contract for the sale of the asset is signed. If there is no contract, it is determined from the date the asset changes ownership. The taxable amount changes, but the resulting capital gain is included in your income and taxed at your applicable marginal rate. This additional amount to your assessable income is called the ‘net capital gain’. Your capital gain is calculated as follows: Step 1 Subtract the cost basis from the sale proceeds. The cost basis includes the purchase price of the property, any costs involved in buying or selling it and other incidental expenses. This gives the total capital gain. Step 2 Deduct any eligible capital losses. Step 3 Apply any applicable discounts. Resident individuals can claim a 50% discount, while superannuation fund holders get a 33 1/3% discount. The property must have been held for more than 12 months to qualify. Companies are not eligible for this discount. Step 4 The resulting figure after deductions and discounts is your net capital gain. Key Points The capital gains tax calculator helps you estimate the CGT liability for a property sold by taking into account the purchase cost, sale proceeds and taxable income. The CGT payable depends on the period of ownership, the type of entity and your marginal tax rate. You can manage CGT through exemptions, concessions or strategic planning, particularly for primary residences, but accurate record-keeping is essential. Given the complexity of the CGT rules, it is highly recommended to seek advice from a qualified tax professional. Further Reading: Sole Trader vs Limited Company in Australia: Key Differences & Which Is Better Frequently Asked Questions Q1. How much CGT will I pay? The CGT you pay depends on your property, your marginal tax rate and how much capital loss you can claim. Your marginal tax rate is important because it is the capital gains that are added to your assessable income in the financial year. Holding a property for more than 12 months allows eligible individuals to claim a 50% discount on capital gains. Q2. What is a CGT event? A CGT event occurs when you sell or transfer an asset, such as shares or investment property. It marks the point at which you make a capital gain or capital loss. Other events include the distribution of capital gains from managed funds. More details are available on the ATO website. Q3. What happens if I make a capital loss? A capital loss occurs when you sell an asset for less than its cost. You can only offset a capital loss against other capital gains; it cannot reduce tax on other types of income. Excess capital losses can usually be carried forward to offset gains in future years.

Accounting, Uncategorized

Company vs Trust: Which Business Structure is Right for You?

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Discover the key differences, benefits, and responsibilities in this essential guide, and learn which structure best suits your goals. Are you confused about how to structure your business to protect your assets, attract investors, or reduce taxes? Deciding between a trust and a company can shape your financial future and long-term growth. Keep reading to discover the strengths and weaknesses of both structures and understand how to choose the right one for your business in 2026 and beyond. What Is a Trust? A trading trust is a business setup where a trustee manages and owns assets on behalf of the trust. The trustee, who can be an individual or a company, is responsible for running the business. The trustee: Can buy and sell assets; Manage the trust’s assets; and Distribute income or capital to beneficiaries or unitholders. The trust itself is not a separate legal entity – the trustee is. The trustee: Manages and directs the trust’s activities; and Assists in full legal liability for its debts and liabilities. In many cases, the company acts as a trustee, which helps limit personal liability for business owners. There are several types of trusts commonly used in business, such as: Discretionary trusts: allow for flexible income and capital distributions. Unit trusts: operate like companies but have unitholders instead of shareholders. Specific trusts: have set beneficiaries and fixed distribution rules. Hybrid trust: combines features of both discretionary and unit trusts. What Is a Company? A company is a separate legal entity, separate from its directors and shareholders. It has its own rights and liabilities – just like a person. A company can buy property, sign contracts and act under its own name. When a company incurs debt, the debt belongs to the company, not its directors or shareholders. This separation provides strong protection for owners while giving the business a professional, scalable structure. Why Is Your Business Structure Important? Whether you are starting a new venture or restructuring an existing business, choosing the right setup is essential. The business structure you choose will: Affect how much tax you pay; Determine how well your personal assets are protected; and Impact your ability to attract funding or investors. Regularly reviewing your structure ensures that it still fits your business goals and personal circumstances. Both trusts and companies offer unique benefits but also have different legal and financial responsibilities. Always consult an accountant or advisor before setting up or changing your structure to avoid hidden costs or compliance issues. Next Read: Beyond the Books: The 3 Key Numbers Every Australian Allied Health Practice Must Master in 2026 Advantages of a Company Business Structure Limited Liability A company operates as its own legal entity, separate from its owners. The profits and debts of the company belong to the business, not the shareholders. This separation protects shareholders from being personally liable for the company’s debts or financial obligations. In simple terms, if the company borrows money, the personal assets of the shareholders are protected. Taxes Companies receive lower corporate tax rates compared to personal tax rates. This means that the business pays less tax on its profits than a sole proprietor. For example, a sole proprietor pays tax through their personal income, while a company pays tax independently under the corporate tax system. This structure can help reduce the overall tax burden for profitable businesses. Disadvantages of a Company Business Structure Complexity There are more legal and regulatory duties involved in running a company. The Corporations Act outlines a number of responsibilities for directors – such as acting responsibly, being honest and avoiding misuse of their role or company information. In addition, companies must comply with ATO regulations, which include filing annual tax returns and making superannuation payments for eligible employees. Companies must also meet ASIC requirements by keeping financial records up to date and notifying the company of any major changes. Due to these legal demands, it is advisable to seek help from professionals who can ensure compliance and smooth registration. Costs Forming and running a company involves both set-up and ongoing costs. Set-up costs include business name registration, legal assistance and professional advice. Ongoing costs include routine administrative costs such as filing annual company tax returns, which can cost hundreds of dollars each year. In addition, ASIC annual review fees (previously $267 for private companies in 2020) add to the annual cost of maintaining a company. Advantages of Trust Business Structures There are many advantages to operating a business through a trust: You can distribute income among beneficiaries to reduce overall taxes using the most tax-efficient rates. Trust structures offer greater privacy than other setups. Beneficiaries do not directly own the assets, so business assets are protected from the beneficiary’s bankruptcy. However, unit trusts can be treated as personal assets and can still be used by creditors in bankruptcy cases. Disadvantages of Trust Business Structures A major disadvantage of operating through a trust is that there are mandatory income distributions each fiscal year. Trusts must distribute profits to beneficiaries annually; otherwise, undistributed income may be taxed at the highest marginal rate. Trusts also need their own tax file number and must file an annual tax return. Other disadvantages include: High setup costs and complex ongoing administration. Complications when changing or dissolving a trust. Limited borrowing options. The trustees outlined in the trust deed have limited powers. Business losses cannot be distributed, and profits may be subject to higher taxes. A trust can only operate for a maximum of 80 years. A trust is only personally liable for debts unless a corporate trustee is used, which limits liability. Company vs. Trust: Which Business Structure Suits Your Needs? Deciding between a company or trust structure can have a significant impact on your business – legally, financially, and strategically. Your best choice will depend on your personal objectives, financial plans, and how you want to manage profits and liabilities. If your goal is to have flexibility in the distribution of profits and potentially take advantage of the 50%

Accounting, Cash Flow Essentials, GST, Managing a Business, Uncategorized

Sole Trader vs Limited Company in Australia: Key Differences & Which Is Better

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Are you interested in the exchange? Choosing between a sole trader and a company structure can be overwhelming because each option has its own advantages and disadvantages. Every business has unique goals and financial priorities that influence the best choice. Many entrepreneurs start out as a sole trader because it is easier and cheaper. However, as their income grows and their tax liabilities increase, they often begin to reconsider whether switching to a company structure will provide better financial and legal benefits. The most important difference between the two structures is how taxes are applied, specifically the company tax rate. In this article, we will explore the key differences between operating as a sole trader and forming a company. Understanding these issues will help you decide which structure is best for your business’s current situation and long-term plans. What Is a Sole Trader? A sole trader is someone who independently owns and operates their business. They manage everything from day-to-day operations to strategic decision-making – giving them complete control and flexibility over how the business runs. This structure is straightforward and cost-effective, making it ideal for individuals starting out with a small business. However, it also carries more personal risk because there is no legal separation between the business and the owner. As a result, any debts, financial liabilities or legal issues that the business incurs are the personal responsibility of the owner. If the business suffers losses or is sued, the owner’s personal assets – such as their home, car or savings – can be used to pay off those debts. What Is a Pty Ltd Company? A Proprietorship Limited Company (Pty Ltd) is one of the most common business structures in Australia. It offers key advantages compared to running a business as a sole trader. In a Pty Ltd setup, the company is treated as a separate legal entity from the individuals who manage it. This means that it can enter into contracts, own property and even face legal action in its own name. The biggest advantage is that if the business owes money, the owners are not personally liable for those debts. Their personal belongings, such as their car, home or savings, remain safe. A Pty Ltd company offers stronger personal protection and tax savings opportunities than operating as a sole trader, although it involves higher costs and stricter regulations. Setting up this type of business requires registration fees, regular paperwork and compliance with legal obligations. Despite the additional costs, many business owners choose this model because it attracts investors and allows for long-term financial planning. You may also like: Capital Gains Tax in Australia: How To Calculate Capital Gains Tax Sole Proprietorship vs Company in Australia: Key Differences When starting a business, choosing the right structure is one of your first and most important steps. In Australia, the two most common options are operating as a sole proprietorship or registering as a company. Aspect Sole Trader Company (Pty Ltd) 1. Initial Setup Costs Setting up as a sole trader is simple and inexpensive. You don’t need an ACN or ASIC registration. Getting an ABN is free, and a separate bank account is optional though useful. Starting a company costs more — around $474–$597. You must register with ASIC and obtain an ACN. Opening a dedicated business bank account is required and may include maintenance fees. 2. Record-Keeping Requirements Managing records is easier with less compliance. You include business income in your personal tax return. Keep financial records for a minimum of five years. Update your business details within 28 days when changes occur. Record-keeping is more detailed and regulated. You must file a separate company tax return. Maintain tax documents for 5 years and financial records for 7 years. Companies must complete ASIC’s annual review and document major meetings. 3. Ease of Starting You can register quickly with just an ABN. A business name is needed only if you don’t use your personal name. Having a separate bank account is recommended for financial tracking. A company requires ACN registration with ASIC. You’ll also need an ABN and possibly a registered business name. A dedicated business account is mandatory. You must register for GST if turnover exceeds $75,000. 4. Business Revenue Handling All profits go directly to you as personal income. You can claim business expenses to reduce taxable income. Withdraw funds freely as personal drawings. The company owns the revenue, not individuals. Directors receive payments through salaries or dividends. The company files its own tax return. Company and personal funds must remain separate. 5. Setup & Operating Costs An ABN is free to obtain. Registering a business name costs $44 yearly or $102 for three years. You can use your personal bank account, though separate accounts are ideal. Name reservation costs around $61. Company registration ranges between $474–$576. A separate bank account is mandatory. Expect higher setup and ongoing compliance costs. 6. Liability for Business Debts You carry full personal liability for all business debts. Creditors may claim your personal assets like your car or house. Liability is limited to the company’s assets. Directors aren’t personally liable unless duties are breached. The company may liquidate assets to cover debts. 7. Control vs Liability You make every decision and have complete control. You also take on all financial and legal risks. Directors and shareholders share control. Company laws and governance rules must be followed. Personal assets are generally protected from company debts. 8. Taxation Business profits are taxed at your personal tax rate. The rate increases as your income grows. You report business income on your personal tax return. The company pays corporate tax at a fixed rate (25–30%). Directors and shareholders pay personal tax on income they receive. Can be more tax-efficient if profits are high. 9. Insurance Needs You must arrange your own insurance. Workers’ compensation isn’t automatic. Consider public liability and income protection coverage. Companies must provide workers’ compensation for staff. Directors can take additional coverage for liability protection. The company handles employee

Accounting, Cash Flow Essentials, GST, Managing a Business

ATO Directors’ Fees: What Are & How To Pay Them (Everything You Need to Know)

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Paying directors’ fees can often seem complicated, especially when you’re trying to get your business fully compliant with ATO requirements. Many business owners have similar concerns: should directors be paid? And if so, what’s the right way to handle those payments? It’s important to get this right because directors’ fees can be claimed as a tax deduction, helping you to reduce your business’s overall tax burden. However, paying directors’ fees isn’t as simple as just transferring money. There are a few steps you need to follow, and the ATO has specific tax rules for how to report and claim these fees. If you skip these steps, you could miss out on valuable deductions or run into compliance issues. In this guide, we’ll explain the rules around directors’ fees, how they should be paid, and the right way to claim them for your business. What Are Directors’ Fees? Before diving into the rules and procedures, it is important to understand how directors can receive payment. Typically, directors are compensated in one of the following ways: Salary Directors’ fees Dividends Each method rewards directors for their work but involves different tax implications and compliance requirements. Why Do Companies Pay Directors’ Fees? Companies pay directors’ fees to ensure that board members are appropriately compensated for their leadership, insight and strategic decision-making. This remuneration structure ensures transparent and balanced compensation for directors’ valuable input while providing flexibility in both financial management and tax planning. It also helps companies avoid the stringent rules of Section 7A of the Income Tax Assessment Act, which creates a more tax-efficient way for directors to earn income. Essentially, directors’ fees help align the company’s financial goals in a way that is consistent with and beneficial to the directors’ legitimate access to the company’s funds. How Are Directors’ Fees Structured And Paid Under Australian Law? Executive Directors In Australia, the structure of directors’ fees is based on the director’s level of involvement in the company. For executive directors involved in day-to-day business, fees are often paid in addition to their regular salary and must include mandatory superannuation contributions. This setup ensures fair compensation for both their executive duties and board responsibilities. Non-Executive Directors Non-executive or non-executive directors, who focus on strategic oversight rather than day-to-day management, usually receive only a director’s fee. However, these fees must also include superannuation contributions in accordance with the Superannuation Guarantee (SG) requirements set out in Australian law. All payments made to directors – whether executive or non-executive – must comply with corporate governance rules and Australian tax laws. This includes the correct calculation and payment of Pay As You Go (PAYG) withholding tax and reporting to the Australian Taxation Office (ATO) via Single Touch Payroll (STP). In addition, the company’s board must formally approve all director fees and record them in meeting minutes, ensuring that the remuneration is consistent with the company’s constitution and shareholder agreements. By following these rules, companies maintain transparency when remunerating their directors, meet legal obligations and adhere to strong corporate governance standards. Director Fees And Salaries: What’s The Difference? Many business owners often confuse director fees and director salaries or wages. It is important to understand this distinction because each is treated differently when it comes to taxes, legal obligations and retirement. Director Fees: These are payments made solely for their role as a director on the board. Directors may not have any other day-to-day work or management duties in the company. This is especially common for non-executive or independent directors who focus solely on governance, not performance. Director Salary or Wages: When a director also serves in an executive or operational position (such as CEO, managing director or other senior role), they receive a regular salary or wage for those duties. These payments are processed in the same way as any other employee’s salary. Sometimes, directors may receive both types of payments – a director’s fee for board work and a salary for management responsibilities. For example, a managing director in a private company often earns both. Always record these separately in your company’s accounts to keep things clear and consistent. Also Read: Sole Trader vs Limited Company in Australia: Key Differences & Which Is Better How Are Director Fees Determined? The process for determining director fees depends on the structure, size, composition of your company and whether it is privately held or publicly listed. Private And Small Companies: In small or private businesses, the board usually determines the amount and how it is paid. This may also be set out in the shareholders’ agreement or company constitution. Directors can set their own fees, provided they are consistent with these governing documents. Public Companies (e.g. ASX-listed): For listed companies, shareholders must approve the total pool of director fees during the AGM, as required by the Corporations Act and the company’s constitution. It is important to ensure that director remuneration is consistent with company policies, market standards and is clearly disclosed to shareholders (and sometimes the public). A transparent and consistent process helps prevent conflicts and supports long-term governance integrity. Formalising this framework in your constitution or shareholders’ agreement is not only best practice – it also protects your board from future disputes as the company expands or new directors join. How to Pay Director Fees: A Practical Guide When paying director fees – whether for yourself as a founder or for non-executive directors – it’s important to follow the correct legal and tax steps. Get Approval: Review your constitution or shareholders’ agreement to confirm the appropriate approval process. Then, pass the necessary board or shareholder resolutions. Set The Amount: Decide the amount of the fee and how often it will be paid. Process Through Payroll: All director fees should be passed through Payroll, even for owner-directors of the business. Register for PAYG withholding if not already done. Report to The ATO: Include director fees in your Single Touch Payroll (STP) reporting and issue an income statement or PAYG payment summary. Think About Superannuation: If super applies, make