We just lowered a clients GST bill by A LOT (like, over $20k). It turns out their old bookkeeper didn't realise the ATO ruled Facebook Ads did have GST in 2018. Did you know that?
Bloom Money recently started working with a growing eCommerce Apparel store in January after having trouble with their old bookkeeper, who didn't respond to queries quickly. Our first task was to reconcile the last three months (over 2000 transactions).
As a rapidly growing and very successful E-commerce store, they need to make decisions quickly. They need reliable information on a timely basis as the number one priority. They also need to have complete transparency on their money performance.
What we did:
After reconciling the file, it was evident there were many gaps in its "completeness".
Without boring you with the detail, we are thorough in our diligence to get the file right, so we ensured we checked every automation, every line item to ensure we understood exactly what was going on. Liv, our tax expert, uncovered the incorrect expense type for Facebook ads. Then we found some inventory invoices that the Accountant didn't ask the CEO about and assumed it had no GST due to lack of communication.
If you're in the eCommerce industry, you know it's a bit complicated. Foreign Currencies, Exchange rates, Taxes and fees are some of the many different elements to consider with your finances.
It's essential to engage a certified accountant to assist with your e-commerce store; they have experience in this area. Many areas are "complicated" in comparison to a regular business. For instance, some gateways and social media platforms charge GST, while some sales don't require you to charge GST. It's a niche area that requires a niche Accountant who is passionate about the industry. It's a lot to manage yourself, and hiring an Accountant could potentially pay for itself in benefits, but if you love your numbers and want to check it out for yourself, here are some things to check:
How to check if I am missing out?
1. Go to your Accounting system (i.e. Quickbooks or Xero) and search for "Facebook" ad expense (the easiest way is to run and Profit & Loss Report" and click the account)
2. Check the "GST code" column set to 'GST on Expense' and check if there is an amount next to GST?
3. Actually, sight a Facebook ad invoice and check the GST is there and matches the GST column in your accounting system.
Who does this apply?
GST on Facebook Ads applies to ANY business structure registered for GST. So if you are earning over $75,000 per year and registered for GST, you need to check that you're filing your expenses correctly.
Why does this matter?
You could be paying more GST in your BAS Return than you should. If you don't know how BAS works, we have provided a diagram below which illustrates how this can easily happen if you are not coding the "tax" column on your purchases/bills correctly.
As you can imagine, this is one of many savings that we've uncovered over the past decade of being virtual CFO's.
If this is a little out of your league, we're still here for you. Bloom Money offers bite-sized money coaching sessions to go through your books together and ensure everything is in the right place. Think of us as your business mentor. We give you guidance and feedback on areas to focus on to save and generate more money.
Click here to book in your first session today.