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Your Secret Weapon to a Successful Business Lisa Patrick

Bookkeeping is something as a business owner we all face and need. It is recession proof and a necessary evil!  As a business owner we are so busy trying to make money that we forget that our bookkeeping can be our Secret Weapon to keeping our money.

Good bookkeeping leads to good business management and growth!

Below are 5 common mistakes made by bookkeepers:

 1.      They do not account for claiming meal receipts and not identifying it in a meal ledger such as a meal & entertainment,  meal travel, meal – living out allow, meal – isolated living, etc.

The government tax department believes a consumption of a meal is part personal.  Although for business expense the meal and the gst paid is 100% deductible by the company.  The Tax claim of the meal expense and the gst on the meal has to be reduced by 50% when prepared for tax purposes.  

In unusual incidents a meal claim for an “isolated” work site, you may claim 100% of the meal expense and 100% of the GST expense.

2.      Claim receipts as a business expense that actually have some personal use by the employees or owners.

It is not uncommon to have to discuss lifestyle related expenses and determine if any part of the expense is business related.

Travel and vehicle are likely ledgers that may have some personal portion that may have to be deducted and or taxable to the employees or owners.

3.      Claim an equipment purchase as an operating cost.

The popular mistake is inputting a computer purchase under office expense.  Because a computer provides more than one years use for the business as all equipment purchases, this expense must be claimed as an asset on the balance sheet rather than on the income and expense.

4.      Without Obtaining confirmation on the use of vehicle in the company,  specifically when claiming a vehicle with an over  $30,000 purchase cost you may be claiming to much GST and when the taxes are prepared the actual asset listing of that vehicle may have to be reduced in value to $30,000.  Although for business expense the vehicle and the gst paid is 100% deductible by the company.  The Tax claim of the vehicle purchase and the gst has to be reduced by the $30,000 threshold when prepared for tax purpose.  When a vehicle is used for a passenger vehicle, the amount eligible is restricted to $30,000 for tax purposes.

5.      Not Collecting GST on every sale within a GST registered company, cause you suspect gst is not a consideration, doubt that belief, collect gst.  

Selling a company used computer, used vehicle to any one, the owner or an employee is considered a taxable sale and gst is collectable.

C2online specializes tools for business owners to ensure they maximize on their deductions.. go to our categories and feel free to browse .. if you have any questions just contact us!


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