Cash Flow Essentials

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

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 2025. 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-2025).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 2025 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-2025, 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 2025 and beyond. Read More: Moving Your NDIS Bookkeeping from Reactive to Proactive