[et_pb_section fb_built=”1″ custom_padding_last_edited=”on|phone” _builder_version=”4.23″ custom_padding_tablet=”” custom_padding_phone=”0px||||false|false” da_disable_devices=”off|off|off” locked=”off” global_colors_info=”{}” da_is_popup=”off” da_exit_intent=”off” da_has_close=”on” da_alt_close=”off” da_dark_close=”off” da_not_modal=”on” da_is_singular=”off” da_with_loader=”off” da_has_shadow=”on”][et_pb_row column_structure=”1_3,2_3″ _builder_version=”4.23″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” width=”100%” custom_padding=”||0px||false|false” global_colors_info=”{}”][et_pb_column type=”1_3″ module_class=”table-contents” _builder_version=”4.23″ background_color=”#f3f2f6″ custom_padding=”25px||25px||true|false” sticky_position=”top” sticky_limit_bottom=”section” sticky_position_tablet=”top” sticky_position_phone=”none” sticky_position_last_edited=”on|desktop” pac_dcm_carousel_specific_module_num=”0″ border_radii=”on|24px|24px|24px|24px” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.23″ text_font=”||||||||” global_colors_info=”{}” background__hover_enabled=”on|desktop”][\/et_pb_text][\/et_pb_column][et_pb_column type=”2_3″ _builder_version=”4.16″ custom_padding=”|||” pac_dcm_carousel_specific_module_num=”0″ global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text admin_label=”Intro” _builder_version=”4.27.4″ header_2_font_size=”32px” hover_enabled=”0″ header_2_font_size_tablet=”30px” header_2_font_size_phone=”26px” header_2_font_size_last_edited=”on|tablet” global_colors_info=”{}” sticky_enabled=”0″]<\/p>\n
Submitting a tax return sits at the heart of compliance with the Australian Taxation Office (ATO). Whether you are a sole trader, partnership, company, or trust, you need to be preparing for taxes every year to ensure your tax responsibilities with the Australian government are met.<\/p>\n
Let\u2019s run through the basics of tax returns, how they\u2019re performed, what\u2019s included, and how to submita<\/p>\n
Financial reporting may seem like a dry topic, but it\u2019s invaluable for any business owner to come to terms with what financial reports are, how to create them, and when to use them.<\/p>\n
In the same way, you need to do your bookkeeping<\/a> and compliance, to maintain visibility over your financial performance, you should also work financial reporting into your regular business admin schedule. Creating financial statements is how you map profitability, cash flow and business health.<\/p>\n [\/et_pb_text][et_pb_image _builder_version=”4.27.4″ _module_preset=”default” hover_enabled=”0″ sticky_enabled=”0″ title_text=”3 Main Types Of Financial Statements Or Reports 2″ src=”https:\/\/www.reckon.com\/au\/wp-content\/uploads\/2024\/07\/3-main-types-of-financial-statements-or-reports-2.png”][\/et_pb_image][et_pb_text _builder_version=”4.27.4″ _module_preset=”default” hover_enabled=”0″ sticky_enabled=”0″ admin_label=”Body”]<\/p>\n Financial reports, or financial statements, are financial records used to gauge the financial health<\/a> of a company.<\/p>\n Most financial statements are drawn from the data stored in your accounting software<\/a>. This data, properly mapped and presented, will give you immense oversight over your business operations and future trajectory.<\/p>\n There are three main types of financial statements or reports:<\/p>\n Let\u2019s break down the nature of these three important reports.<\/p>\n A balance sheet is a financial statement that details three important metrics at a given point in time – liabilities, assets, and shareholder equity (if you don\u2019t have shareholders, this simply means the business owners\u2019 equity).<\/p>\n There\u2019s a basic formula behind a balance sheet<\/a>: assets = (liability + shareholder\u2019s equity).<\/p>\n We look at the three primary components of a balance sheet:<\/p>\n Assets are things of value that a business holds. Assets can either be traded, sold for profit or used to generate valuable products and services. Assets can include cash, property, accounts receivable<\/a>, equipment, or inventory<\/a>.<\/p>\n Liabilities are your business\u2019s debts or outgoing expenses. These liabilities may include rent, taxes, loans, accounts payable<\/a> and payroll.<\/p>\n Shareholder equity refers to your business\u2019s net worth. If you were to sell off all assets and settle all debts, shareholder equity would be the capital left over.<\/p>\n An income statement, often called a profit and loss statement (P&L)<\/a>, is a report that details your business revenue, expenses and profitability over a given time. Your income statement will show your revenue from product or service sales and your expenses which were incurred in generating that revenue. This will then illuminate your profitability.<\/p>\n A cash flow statement is a type of financial report which details the flow of cash (and cash equivalents) in and out of a business.<\/p>\n Your cash flow statement<\/a> will shed light on your cash position, or how well you regularly generate cash to keep on top of your operating expenses and debts. This is a crucial document for understanding how well you manage your cash, such as where it\u2019s coming from and how it\u2019s being spent. Since cash flow is a primary concern for small businesses, this is a highly useful report.<\/p>\n Far and away the easiest way to do reporting or create financial statements is by putting your accounting software to good use. In fact, this is one of its primary functions.<\/p>\n Any accounting software worth its salt should be able to generate income statements, balance sheets and cash flow statements from the data you\u2019ve stored in your solution<\/a> through your regular bookkeeping.<\/p>\n (To make sure you generate accurate reports, you need to be vigilant in thoroughly and accurately recording financial and sales data in the first place.)<\/p>\n Without financial reporting through the creation of a financial statement, trying to assess your financial position, including history and future trajectory, would be futile. By creating P&L statements, balance sheets and income statements, you can lay bare your financial health and use these insights to make better decisions<\/a>.<\/p>\n The insights will not only help you see your net income (or where you can make cuts to overheads or improve profitability and cash flow), they\u2019ll also assist with budgeting and forecasting<\/a>.<\/p>\n Such financial reports or statements are also instrumental in securing loans<\/a>, courting investors, or selling your business<\/a>. In a way, financial reports are somewhat like educational grades and test results \u2013 they tell you where you need improvement and also what\u2019s working well. Neglect financial reporting at your peril!<\/p>\n Despite being a small business necessity, financial statements do have limitations. These statements may differ and be read differently to separate people. Some people may look at cash flow results favourably, while others may see them as in dire need of improvement.<\/p>\n If they don\u2019t include a significant list of other business priorities or metrics, financial reports don\u2019t always paint the full picture of how your business is performing. They won\u2019t tell you about staff performance or culture, nor will they tell you about customer service<\/a> or product quality. They may give hints about sales and marketing performance, but they certainly won\u2019t tell you the whole story. Then there’s the broad and undetailed nature of financial reports in general\u2026 they don\u2019t often drill down into accounts receivable for example, or take into account your best days for sales.<\/p>\n The easiest way to keep on top of your business\u2019s finances is to embrace cloud-based accounting software \u2013 ideally from the day you start up.<\/p>\n Regardless of your financial reporting aspirations, accounting software is essential. It\u2019s Integral to bookkeeping, taxation, payroll, GST<\/a> – and a number of important financial and compliance obligations.<\/p>\n The upside to storing all this key financial data in your accounting software, of course, is that you can report on your financial performance with relative ease. Just be sure that you\u2019re diligent and comprehensive when it comes to recording transactions and related data, or you won’t have accurate financial reports.<\/p>\n Hot tip: create a monthly or daily financial report to spot imminent issues and ensure regularity behind your reporting.<\/p>\n Lastly, you’ll always benefit greatly from the sage advice of a business advisor<\/a>. The reports and statements you’ve generated will be invaluable in your discussions.<\/p>\n Enlisting a professional accountant or business advisor to create assurance around your reporting and financial decision-making is one of the best things you can do as a business owner. Not only are they adept at compliance, they’re also excellent at solving cash flow issues, reducing overheads, tweaking your business model, and advising on the use of accounting software.<\/p>\n Tax filing is simply the submission of your tax forms, or tax return, to the relevant government authorities to deduce your taxable income and tax bill. In the case of Australia, this function is performed by the ATO.<\/p>\n A tax return needs to be lodged by businesses and individuals each tax year, which is defined as between 1 July and 30 June.<\/p>\n So why do you need to file your tax returns every year? Why is this important and what function does it serve? It comes down to taxes and how much you owe the government.<\/p>\n When you earn business income<\/a>, you need to add income tax on these earnings. This is so that when it\u2019s time to lodge your tax return, the ATO can ascertain exactly how much tax you need to pay to them for the year.<\/p>\n The preparation of your tax return will depend on what type of business you operate<\/a>. Generally, you can either do your own taxes or rely on a registered tax agent to lodge on your behalf. In this article, we\u2019ll outline different business types and how to prepare your tax return for each.<\/p>\n The information you\u2019ll need to include on your tax return will depend on your business structure, and will also become immediately clear once you undertake the process or talk to an accountant or tax advisor<\/a>. However, as a business owner, you\u2019ll most certainly need to keep records of your income and expenses.<\/p>\n Other reporting requirements (such as PAYG and GST<\/a>) will be covered by your BAS statements<\/a>, not your tax return.<\/p>\n Tax returns can be lodged in a few ways. How you choose to lodge is also based on your business type or structure.<\/p>\n In terms of lodgment procedures, there are also several options. The procedure you choose will depend on your circumstances, personal preferences and business structure.<\/p>\n [\/et_pb_text][et_pb_image _builder_version=”4.27.4″ _module_preset=”default” hover_enabled=”0″ sticky_enabled=”0″ title_text=”Business Reporting 2″ src=”https:\/\/www.reckon.com\/au\/wp-content\/uploads\/2024\/07\/Business-reporting-2.png”][\/et_pb_image][et_pb_text _builder_version=”4.27.4″ _module_preset=”default” hover_enabled=”0″ sticky_enabled=”0″ admin_label=”Outro”]<\/p>\n Sole traders lodge the same income tax return as individuals. Sole traders, will need to fill out an additional supplement called \u2018business and professional items schedule for individuals\u2019, but only need to file one tax return<\/a>.<\/p>\n To lodge your tax return, you can:<\/p>\n Fill out a paper tax return and mail it to the ATO<\/p>\n If your business is a partnership, you\u2019ll need to lodge a partnership tax return. The partnership doesn\u2019t pay tax as an entity, instead they will lodge a \u2018partnership tax return\u2019 to deduce tax payable, and then the individuals who comprise that partnership lodge individual tax returns.<\/p>\n To lodge your partnership tax return, you can choose from the following options:<\/p>\n Fill out a paper tax return and mail it to the ATO<\/p>\n If you\u2019re registered as a company, you must submit a company tax return. This is distinct from an individual tax return, which you must also lodge to report any salary that you may have earned from the company or other sources.<\/p>\n To lodge your company tax return, you can choose from the following options:<\/p>\n Fill out a paper tax return and mail it to the ATO<\/p>\n If you operate a trust, the trustee must submit a trust tax return. While trusts typically do not pay tax as an entity, you must still submit a tax return to detail the trust\u2019s net income, which is passed through to the trust beneficiaries. Each beneficiary of the trust will then have to prepare an individual tax return to report this income and pay tax on it.<\/p>\n To lodge your trust tax return, you can choose from the following options:<\/p>\n <\/p>\n This, once again, depends on your business structure.<\/p>\n <\/p>\n Good quality accounting software<\/a> is becoming indispensable in the preparation of income tax returns for businesses.<\/p>\n Accounting software can easily help you create income statements and expense records, which are required for tax filing, while SBR-enabled software can be directly used to file tax returns. It is thus highly recommended that you use accounting software<\/a> to help prepare data<\/a> and reports for your tax lodgment.<\/p>\n Accounting software is also useful for storing records, such as receipts, that are required to be held as proof of business expenses.<\/p>\n
2) The Chart of Accounts will display tabs for every account type.
3) You can personalise your COA by clicking the spanner icon. Now you can select and deselect what you see in your COA.
4) If you want to add a new account, just click on Add. You can designate the account as a header or sub account. You can have up to five sub account levels.
5) You can now edit the account details as required.
6) You can re-order your accounts as you see fit, to suit your business or common needs. Simply click on any account tab and select the reorganise option.<\/div>\nUnderstanding financial statements<\/strong><\/h2>\n
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Balance sheets<\/strong><\/h3>\n
1) Assets<\/h5>\n
2) Liabilities<\/h5>\n
3) Shareholder equity<\/h5>\n
Income statement<\/strong><\/h3>\n
Cash flow statement<\/strong><\/h3>\n
Put your accounting software to use<\/strong><\/h2>\n
What\u2019s the purpose of financial reporting?<\/strong><\/h2>\n
Limitations of a financial report<\/strong><\/h3>\n
How can I stay on top of my business finances?<\/strong><\/h2>\n
What is tax filing in Australia?<\/strong><\/h2>\n
Why do we care about the preparation of tax returns?<\/strong><\/h3>\n
How to prepare taxes for small businesses<\/strong><\/h3>\n
What to include in the tax return<\/strong><\/h3>\n
How to lodge your tax return<\/strong><\/h2>\n
Sole trader tax returns<\/strong><\/h3>\n
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Partnership tax returns<\/strong><\/h3>\n
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Company tax returns<\/strong><\/h3>\n
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Trust tax returns<\/strong><\/h3>\n
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When is the due date to lodge a tax return?<\/strong><\/h3>\n
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How to use accounting software to help with your tax preparation?<\/strong><\/h2>\n