Accounting Tax BAS Software for Contractor

SydBoy on 18/04/2020 - 21:11
Last edited 18/04/2020 - 21:20

I am currently working on contract basis through recruitment firm. I was provided with option to work on PAYG or ABN. I started working as PAYG but looking to work on ABN in next financial year to maximize tax benefit.

I did look around and by ATO definition I won’t comply with 80/20 rule but certainly that doesn’t stop me to have a company and work on ABN.

I met few accountants and their fees varies anywhere between $1000 to $3000 just to set-up company and then every three month they will do BAS for which they will charge minimum $1500 per year plus extra for any additional they need to do such as reconciliation, paying & generating payslip for one of my family member.

As I am not running mega business I prefer to DIY my accounts. I need advise on best software that I can invest to manage my account, tax component plus manages my payslip generation and manages pay for family member who will manage my accounts.

Appreciate if you can advise software that I can invest so I use for following purpose:

  1. issue weekly invoice to my recruitment firm for my time.
  2. allows me to pay fortnightly/weekly/monthly to my family member who will manage my admin and works as PAYG.
  3. allows me to pay myself weekly from company account including my super.
  4. allows family member to submit their time sheet or something and then pay them.
  5. allow all my expenses that I will have on my business credit card to be entered into bas and tax filling purpose. Obviously saves receipt would be added advantage plus credit card transaction summary. automatically works out GST in & out for my work.

My recruitment firm credit pay into my account and I prefer to have software that automatically pays me and my family member and keep all paper work electronically and generate yearly/quarterly statements and run BAS.

Never done this before so any advise would help and suggestion for any software available in market that best meets my need. I will only be paying one person and that will be below $18k per year so my BAS would be less complicated compare to people who runs their company and employ many people. happy to invest in software as long as it automize most of my work and minimize need to engage accountant.

suggestion for good bank to setup business account which also provides flexibility to connect with software would be helpful as well.

TIA

Financial

Comments

  • MrHyde on 18/04/2020 - 21:14
    +1

    Xero

  • Smulder on 18/04/2020 - 22:01
    +1

    Some thoughts:

    Are you really setting up a company, or just running a business with an ABN under your own name?

    If you are going to set up a company, will you be doing all the ASIC paperwork yourself?

    Sounds like you are earning PSI income. A company is likely not a good vehicle. Additional cost with no real benefit, given that you will have to pull out all profit to yourself as wages anyway.

    Is your family member a legitimate employee? If not, paying family members when earning PSI income is problematic.

    I agree with Mr Hyde, Xero will do what you need.

    Good luck.

    • SydBoy on 18/04/2020 - 22:12
      -1

      Yes, I am earning PSI inncome. The employee will be my wife who don't work currently so I will be saving tax on $18k that I will pay her.
      By paying my wife I will be reducing my taxable threshold which will end giving me a more childcare benefits.

      At the moment I pay $18k approximately to childcare for three days a week without any benefit from Centrelink as my wife doesn't work.

      So by working as company I will not only save tax on $18k but also get childcare rebate plus reduce my oveeralll tax.

      Xero charges $72/month which is $864 a year.

      Anything cheaper?

      • Baysew on 18/04/2020 - 23:57

        Deductions that can't be claimed against PSI

        Example: Non-principal work

        Rodri provides marketing consultancy services which generates PSI. Rodri employs his wife Jenna to assist in the business. Jenna issues invoices, banking receipts and administers the home office.

        Rodri can't deduct the wages he pays to Jenna as issuing invoices, banking and administering the home office is not principal work.

        • SydBoy on 19/04/2020 - 09:34

          You are correct but does this means ATO expecting family member to do the work for free ?

          This seems new addition to PSI rules as I knew few people who do claim for their partner time they spend doing admin work.

          • MrHyde on 19/04/2020 - 12:17
            +1

            @SydBoy: Not a new thing - its been there for atleast the last 6 years I have been doing PSI. Anyone doing this is just rolling the dice on them not being auditted or getting caught.

          • anotherone on 23/04/2020 - 14:08

            @SydBoy: Looks like your DMs are off. would like to chat about this.

      • MrHyde on 19/04/2020 - 12:17

        Xero for Sole Traders is like $20 - $25 a month. Not sure where you got the $72/month figure. I pay less than that for a small business with 10 employees.

        • SydBoy on 19/04/2020 - 12:23

          I was looking at premium $67/month as it allows for two plus employee, process superannuation etc plus you need to pay $5/month for expenses and 10/month for project.

          Basic don't allow for pay roll.

  • miwahni on 18/04/2020 - 23:08

    Can I suggest you find yourself a bookkeeper who is also a registered BAS agent? They charge way less than an accountant to lodge BAS, and they usually have subscriptions to software packages that they can onsell to their clients for a lot less than what you'd pay. The cost of having a bookkeeper doing your books, lodging your BAS and then passing the completed accounting files over to tax accountant once a year, plus the cost of the tax accountant actually lodging your return, is usually a fair bit less than having an accountant do it all for you.

    • miwahni on 18/04/2020 - 23:09

      PS AFAIK all of the big four banks' account feeds can be downloaded into Xero with minimal fuss.

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