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Do You Have A Goal For Your Business?

Posted on November 5, 2023 by admin

Have you ever wondered about the origin story of your business? What drove you to start it in the first place? It’s a question that often gets overshadowed by the day-to-day hustle and bustle of entrepreneurship.

Many entrepreneurs set out on their journey to build a better future, pursue a passion, or gain financial independence. More money, more free time, and more control over your work are often the driving forces behind starting a business. In an ideal world, you’d have it all – control, shorter work hours, more money, and the pursuit of your dream job. But, as many entrepreneurs can attest, the reality often doesn’t align with this picture-perfect scenario.

In most cases, business owners find themselves working longer hours, struggling to maintain their income, and feeling like their business has taken control of their lives. Instead of answering to a single boss, they now answer to a multitude of customers, each with their own demands and expectations.

Owning a business provides you with more control, but it also comes with increased responsibilities and obligations. The workload can be overwhelming, but it’s a part of the entrepreneurial journey. So, how can you navigate these challenges and ensure your business doesn’t become a burden?

This is where consulting with a trusted business adviser comes into play. They can help you tackle seemingly impossible situations and give you choices, taking the fear out of the equation.

Your business likely started as a dream, one that probably didn’t involve becoming a slave to your work or earning less than your previous job. It’s essential to reflect on your initial motivation and assess where your business currently stands.

Take a moment to relax, reflect, and think about the direction you want your business to move in. What are your long-term goals? Once you have a general idea, it’s time to put some effort into planning how you’ll get there. Think about where you want your business to be in five or even ten years.

As Benjamin Franklin once said, “If you fail to plan, you are planning to fail.” This timeless wisdom holds true for businesses as well. Regardless of your business’s stage, revisiting the planning process can be a valuable strategic tool. Every business needs regular planning to thrive. A well-documented business plan can significantly improve your chances of achieving your goals.

Your business plan should outline your strategy for the next few years. It can be a tool for seeking financial support or simply a roadmap for your business’s growth. The plan should spell out your objectives and the necessary actions to take your business from its current state to where you envision it.

Creating a business plan can help you focus, clarify your ideas, and identify priorities. It will give you a sense of direction and a benchmark to measure your progress.

Don’t forget – while there are ideal times to prepare a plan for your business, it’s never too late to start. Consider developing not only twelve-month plans but five- and ten-year plans as well.

If you need assistance preparing or developing your business plans, don’t hesitate to consult with trusted business advisers who can guide you on your journey to success.

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Understanding Charitable Donations Deductions

Posted on July 17, 2024 by admin

Charitable donations are a wonderful way to support causes you care about while also potentially reducing your tax burden. 

Understanding how to properly claim these donations on your Australian tax return ensures you can maximise the benefits while staying compliant with the Australian Taxation Office (ATO) regulations. 

Here’s a comprehensive guide on charitable donations and taxes in Australia, along with key points to watch out for when claiming them.

Understanding Charitable Donation Deductions

Eligibility for Deductions

To deduct a charitable contribution in Australia, the donation must be made to a Deductible Gift Recipient (DGR). These are organisations that are entitled to receive tax-deductible donations. The ATO provides a list of DGRs, which typically include:

Types of Donations

You can claim deductions for various types of donations, including:

  1. Cash Donations: Money given directly to a charity.
  2. Non-Cash Donations: Goods or property given to a charity (e.g., artwork, shares).
  3. Volunteer Expenses: Costs incurred while performing voluntary work for a DGR (e.g., travel expenses).

Limits on Deductions

There is no limit on the amount you can claim for charitable donations in Australia. However, you can only claim deductions for donations up to the amount of your taxable income.

Key Steps for Claiming Charitable Deductions

1. Keep Detailed Records

Maintaining thorough records is crucial for substantiating your charitable donations. Required documentation includes:

2. Ensure the Organization is a DGR

Before donating, verify that the organisation is a DGR. The ATO provides a tool called the ABN Lookup, where you can check an organisation’s status.

3. Valuate Non-Cash Donations Accurately

When donating property, you must determine its fair market value (FMV). Overestimating the value can lead to ATO scrutiny. Use reliable methods for valuation, and consider getting an independent appraisal for high-value items.

4. Understand Special Rules for Certain Donations

Common Pitfalls to Avoid

1. Donating to Non-DGRs

Donations to individuals, political organizations, or non-DGR entities are not deductible. Ensure the recipient is a DGR.

2. Lack of Proper Documentation

Failure to keep adequate records can lead to denied deductions during an ATO audit. Always obtain and retain the necessary receipts and acknowledgments.

3. Incorrect Valuation of Non-Cash Donations

Overstating the value of non-cash donations is a common mistake. Use reliable methods to determine FMV and get appraisals when necessary.

4. Ignoring FMV Rules

For non-cash donations, ensure you use accurate and reasonable methods to determine FMV. Overvaluation can lead to penalties.

5. Misunderstanding Volunteer Expense Deductions

You can claim expenses incurred while volunteering for a DGR, but not the value of your time. Ensure you only claim allowable expenses.

Charitable donations can significantly reduce your tax liability while supporting worthwhile causes. By understanding the rules and maintaining proper documentation, you can ensure that you claim the maximum allowable deductions.

Always consult with a tax professional if you have complex donations or specific questions about your situation. This way, you can confidently support the causes you care about and enjoy the associated tax benefits.

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