For a small business operating from a home office, what is the calculation or taxation rules relating to claims for a portion of power, electricity expenses?
You can claim the electricity relating to your home office based on either the floor area of the office as a % of the whole house or based on the actual electricity usage.
The actual usage might be a bit tricky to work out. If you’ve just started the business it’s probably easier to see how much your electricity bill goes up since starting the business to when it was just all-home consumption.
Other deductions you can claim will depend on whether your home is your principal place of business, and whether or not you have an area set aside exclusively for the business. Here is a guide from the ATO based on these different work setups:
I have a small business with billing less than $70K annually so I don’t have to register for GST – but the work I do is with large corporates so they expect me to be billing them GST. Is there any reason NOT to be signed up for GST in this instance?
You’re right that with turnover less than $75,000p.a. registering for GST is not compulsory – however you can voluntarily register for GST.
Sometimes the Clients do see being registered as a sign of legitimacy for your business, especially if your customers are large companies or government.
There’s no disadvantage of registering. A business has to keep its accounting records for tax purposes anyway. Being registered for GST will just mean that you need to do a BAS each quarter – so you’ll need to keep those books up to date to do the BAS on time.
The other thing is making sure that you factor the 10% GST in your pricing. If you’re mostly dealing with other businesses then they can claim back the GST you charge them & they should not be put off by the GST being added on to your price. Private customers cannot claim back the GST – so they may resist price increases more.
Check out my podcast from last week’s radio segment on this very matter:
What would you advise a small business run by a creative person to do about the piles of receipts? I hate office work! Help!
I’d suggest you get a bookkeeper so you can concentrate on the creative & they can keep the books up to date, as well as do any other office stuff you don’t like doing.
However, if you want to keep a handle on your business finances yourself there is some great software that can assist in cutting down the time you need to be spending on the books.
The best program that we use at the moment for automating as much of the bookkeeping process as possible is Xero. This program downloads a copy of your bank transactions each day – so most of the data is already entered. You can memorise your regular transactions so that as soon as it sees them it knows what it was for and basically does all of the data entry for you.
You can also use this program to do your invoicing and payroll. It has some really good graphs that will show you the snapshot of your business performance.
Check it out – if you like it we can assist you with licensing and training: