Accounting Tips for Newly Appointed Barristers

It is essential to have a fundamental understanding of accounting if you are just starting out as a barrister. The following are some suggestions that will assist you in getting started. The first step is to carefully record all of your earnings and expenditures. This will help you maintain organisation and keep you informed of the state of your finances. Second, make sure that you have sent in invoices for each of the services that you provided. You will have an easier time being paid for a job that you do as a result of this. Maintain a current awareness of the many laws and regulations pertaining to accounting, and do so regularly. In the long run, this will assist you prevent any compliance problems that may arise.

It is not a simple process to become a barrister. You will need to be knowledgeable about a lot of different things if you want to be able to succeed in life. Having a solid grasp of accounting fundamentals is a need for this, among other things. You are in luck since there are certain fundamental guidelines that you can adhere to in order to get your financial situation under control if you are just starting off. This article will provide an introduction to accounting for barristers as well as some useful hints for getting started with the subject.

Congratulations, if you have just been appointed to the position of barrister. You have reached a significant milestone, and as a result, you now have a fresh chance to assist people who are struggling. On the other hand, getting a job as a barrister is not the conclusion of your journey; rather, it is just the beginning. You are going to need to become an expert in the field of accounting if you want to be successful. At first, this could appear to be an insurmountable obstacle, but if you have access to the correct tips and advice, you'll be able to swiftly learn everything you need to know about it. Continue reading in order to obtain some useful advice on accounting for barristers.

Advice on Financial Matters for Recently Elected Barristers

Congratulations are in order for you if you have recently finished your Readers' Course and added your name to the Roll of Counsel. You clearly possess a vast amount of specialised knowledge of the law and have put in a lot of effort to get to where you are today.

As a lawyer, you are required to conduct business under the structure of a sole proprietorship and submit an application for your own Australian Business Number (ABN) (Australian Business Number). It's possible that during the course of your legal career, you've never worked as a sole proprietor (for example, you might have worked as an employed lawyer in a partnership or incorporated legal practice).

Even if you have had experience operating as a sole proprietor in the past, it is critical to keep a clear understanding of all of the financial repercussions associated with this business structure. The following is a list of the most helpful accounting advice that we can offer.

Register for the GST, and Make Sure You Account for it Using the Cash Method

You will be able to claim the Goods and Services Tax (GST) that you have already paid for your business's expenses as "input tax credits" on your quarterly Business Activity Statement if you are registered for GST (BAS). You are required to submit your BAS to the Australian Taxation Office at the end of each calendar quarter (ATO).

Cash basis accounting is typically considered to be the simplest method for accounting for the GST on your income and expenses. This indicates that you should:

• Only when you have received payments from your customers should you report GST income on your BAS; you should not report it on the day that your invoice was sent out.
• Only after you actually pay the expenses should you record the GST component of them (not when you receive invoices with future payment dates).

Prepare A Budget For Your Very First Tax Payment

When you start conducting business as a sole proprietor, you are required to report all of your revenue on your individual tax return at the conclusion of the first fiscal year in which you begin conducting business as a sole proprietor. This income will be subject to taxation at the highest rate applicable to your tax bracket, and the tax that you owe will have to be paid all at once on the day that your tax return is due.

This one-time tax payment could end up being quite costly, especially if any of the following apply:

• early on in the current fiscal year, you begin your career as a barrister operating under your own name; or
• You are used to having your income taxed on a biweekly or monthly basis by your employer under the pay-as-you-go (PAYG) system since you have worked in the past as an employee for an incorporated legal practise and are familiar with the process.

It is essential to prepare a financial plan for your first annual tax requirement after becoming a barrister (you may do this, for instance, by making an educated guess on your future tax liability based on your anticipated level of income and by thereafter moving a predetermined amount of money into a separate bank account on a consistent basis.).

Please keep in mind that since your first tax bill as a sole proprietor or barrister will be for all of the taxable income you have made for up to a year, it might be rather large. This is due to the fact that the bill will include all taxable income. The ATO will start sending you a weekly tax bill based on the income taxes you generated during your inaugural year of employment once you have submitted your first annual tax return, making it much easier for you to create a tax budget.

Claim every allowable business cost you have

Be sure to itemise and deduct each and every one of your legitimate company costs. Take, for instance:

• assets owned by a company that qualify for the quick asset write-off method
• your cell phone contract
• if you work from home on a regular basis, expenses related to your home office
• your own garb, which may include wigs, vests, and gowns, among other things
• costs associated with professional associations
• subscriptions to legal publications such as books and journals
• insurance rates for professional indemnity and income protection coverage respectively.

Because you are a legal practitioner, you are aware that minimising taxes is both ethically permissible and legally permissible, whereas avoiding taxes is against the law and carries severe consequences.

Be sure to maintain accurate records.

Two important advantages can be derived from maintaining accurate records:

• It helps to make the process of preparing your annual tax returns as well as your quarterly business activity statements considerably easier. and
• If you are ever subjected to an audit by the ATO, having this on hand will assist you in proving the legitimacy of your expenditure claims. After you have submitted each BAS or tax return, you are required by law to maintain records of your expenses (such as invoices and bills) for a minimum of five years after you have done so. If you get paper receipts, you should scan them so that the information doesn't become unreadable over time.

Engage A Tax Agent And An Accountant

The following are some of the potential benefits that can result from using the services of a competent accountant and tax agent:

• guaranteeing that your business is in full legal compliance with ATO rules.
• saving you time and enabling you to concentrate on the tasks that are most important to you.
• lowering your overall tax burden by ensuring that you make the most of all of your allowable deductions.
• assisting you in the development and implementation of efficient record-keeping processes and systems.
• extending the dates by which taxpayers are required to lodge their BAS and tax returns with the ATO (the ATO imposes penalties for late lodgements and payments).

Make Super Contributions That Are Tax Deductible

If you had been working in an incorporated law practise in the past, your employer would have been responsible for contributing the mandatory 9.5% of your salary to your retirement account. You will, however, be responsible for determining whether or not you wish to make contributions to a retirement fund if you go into business for yourself. There are two primary arguments in favour of doing so:

• Contributions to superannuation and earnings from superannuation in Australia are subject to taxation at a concessional rate of just 15%. This rate is lower than even the lowest marginal tax rate.
• A tax deduction for retirement savings contributions in the amount of up to $25,000 can be claimed annually by taxpayers. The maximum allowable amount of concessional contributions is equal to this sum.

Building a nest egg for retirement in a manner that is tax-efficient can be accomplished through the use of superannuation. However, in order to have a more in-depth conversation about superannuation, you will need to consult with a competent financial advisor.

Get the Right Insurance Coverage

You are aware that in order to work as a barrister, you are required to have insurance that covers professional liability.

However, you shouldn't overlook the possibility of purchasing a enough amount of income protection insurance either. If you become temporarily unable to work as a barrister due to an injury or illness, this will safeguard you from financial hardship.

Any insurance cover that is tied to a business can also be deducted from taxes.

Create a Financial Strategy

Creating a financial plan is an essential step in the process of both accumulating wealth and safeguarding it. You should consult an impartial and experienced professional for guidance in order to assist you in making sound financial choices for both your business and your personal life. When it comes to planning for your financial future, it is never too early or too late to get started.

Legal Structure

Barristers are expected to conduct their business legally as sole proprietors. This means that in order to begin practising, you will be required to get an Australian Business Number (ABN). You also need to determine whether or not to register for the Goods and Services Tax (GST), and if you do, you need to start filing your quarterly business activity statement (BAS). If you anticipate that your yearly turnover will be larger than $75,000, then you are required to register for GST. Even while registration is not required for transactions below this amount, it is important to keep in mind that if you do not register, you will not be able to collect input tax credits for transactions such as chamber rent and clerking costs.

As a general rule, barristers use the cash method to account for the GST in their practise. When completing your BAS, you are only required to record GST on your income and expenses when it has been properly collected and paid. You are obligated to make an allocation of input tax credits for any expenses (like your mobile phone plan) or assets (like your laptop) that you buy that are used for more than one type of activity (e.g. part business and private).

Tax on Earnings

One problem that frequently arises in a barrister's first year of practise is an absence of appropriate financial planning in regard to the payment of income tax. If you operate your business as a sole proprietor, any profits you make from providing services will be subject to personal income taxation at the highest marginal rate applicable to your situation. When you finally file your individual tax return, which can be anywhere from 11 to 23 months after you launch your firm, you will be required to make the payment to the ATO that corresponds to the income tax that was due on the business profit that was earned during the first year of operation. After that, a one-time, all-at-once payment is expected to be made for it. Even though for some people this is a frightening prospect, it should serve as a reminder of how essential it is to create a budget and set aside money for taxes at the same time that one is making revenue. In the future, this will help to prevent any unpleasant surprises or difficult financial strains that may arise.

Tip – When budgeting for tax payments, a frequent strategy is to open a business bank account and set aside money towards the GST and income tax bills as you make the revenue. This can be a helpful method for budgeting tax payments. If you have a mortgage that comes with an offset account, you might also use that to your advantage in order to get the most out of the benefit. If you maintain communication with your clerking office, they will be able to divide payments made to you between the numerous bank accounts you specify, if you so request.

Tip: When you are planning for your tax payments, in addition to other taxes, you will need to potentially include in a HECS payback, dependent on the ATO repayment levels. You absolutely must act in this manner if you want to steer clear of any unpleasant surprises (e.g. The Medicare levy, Medicare surcharge, Temporary budget repair levy etc.)

Company deductions

When trying to maximise the amount of money you keep after paying taxes, it is essential to ensure that you are claiming the maximum number of tax deductions for which you are eligible.

The following are examples of expenses that are frequently overlooked but that can be eligible for reimbursement under specific conditions:

• Expenses related to working from home
• Expenses related to motor vehicles,
• Mobile phone expenses,

Additionally, with the implementation of the small business asset write-off in May of 2015, companies with fewer than twenty thousand dollars in annual revenue are eligible to receive an immediate write-off for any assets purchased for use in their company that cost less than twenty thousand dollars. Therefore, products like wigs, gowns, vests, laptops, mobile phones, books, journals, and chamber furniture can be claimed as an immediate tax deduction without the requirement to depreciate the items over a number of years. This is because these items are considered to be used.

A helpful hint: If you run your business as a sole proprietor, one of the largest deductions you can take is for your superannuation payments. When going it alone for the first time, this is a common worry for newly licenced barristers. Your employer made contributions to your superannuation account throughout the course of your career, but you are now responsible for managing the account. Depending on the state of your cash flow, it can be worthwhile to have a conversation with your financial advisor about a strategy that will help you make the most of your business deductions, reduce your tax obligations, and build up your retirement savings.

Tip: If you want to make the most of your tax deductions and guarantee that you don't overlook any of them while you're filing your income tax return, it is imperative that you keep detailed records for your company.

Keeping of Records

Whether or not a software application is required to handle your records effectively is a question that we get asked very frequently. When starting a business, it is essential to reduce your costs to a minimum. As a result, it is more than sufficient to store your records using a straightforward spreadsheet that you keep up to date or an application that you run on your smartphone.

Invoices, receipts, clerking statements, and bank statements are some examples of the documents that must be kept for a minimum of five years for purposes of compliance with business and taxation regulations.

Tip: If you want to keep the most accurate record possible of your income, expenses, and GST responsibilities, contact your accountant for an excel template.

As a helpful hint, when you are organising your filing system, you should think about scanning or photocopying your receipts because they tend to become illegible with time.

Advertising Your Law Firm

As accountants, we work in a sector that is extremely saturated and cutthroat in terms of competition. Although we have the mentality of a small organisation, we have the capabilities of a large corporation. We are conscious of the fact that the advertising could be the deciding factor in whether or not your business is successful. Our proficiency in marketing is one of the aspects that sets us apart from the competition in Brisbane's accounting industry.

The majority of solicitors and barristers build their businesses based on their reputation and referrals from satisfied clients. Even though these components are still very vital in this day and age, you really have to move your marketing efforts online in order to be successful. Local searches such as "solicitor Moonee Ponds" are sending more and more traffic to your website, which is frequently the first point of contact a potential new client has with your business. As you are aware, in the world of business, you only have a single opportunity to make a good first impression, and your website serves as both your "online shopfront" and a "silent sales person," working around the clock to promote your company.

Over the course of the past several years, we have assisted dozens of customers in the development of high-quality, cost-effective websites for lead generation that are optimised for use on mobile devices such as smart phones and tablets. We are able to assist you with the planning and construction of your website, as well as with the optimisation of your website for Google and the other search engines, and with the development of your content, including the production of videos and digital publications. We will help you design features like lead magnets, calls to action, and landing pages for your website if it does not already have them. In addition, we will introduce you to traffic-driving methods like remarketing and search engine optimisation so that more people will visit your website.

We are able to assist you with the creation of your company name, logo, and motto, as well as your corporate brochure. In addition, we are able to assist you in the writing of blogs and newsletters, as well as aid you in harnessing the power of social media to earn more referral business. It's likely that your company won't be able to realise its full earnings potential if you don't put any of these marketing strategies into practise.

Considering Opening a Law Office

One of the client groups that we specialise in serving is comprised of solicitors and barristers. Furthermore, as a result of the fact that we have guided hundreds of entrepreneurs through the beginning stages of starting their own businesses, we have developed a solid reputation as experts in the field of business startup.

There are a lot of things you need to think about if you want to become a solicitor and either establish your own practise or join an existing one. You need to decide on a business structure for your company, finish registering for taxes and GST, think about getting insurance, choose an accounting software programme, and potentially investigate your financing alternatives.

We can help you in all of these areas as accountants and business consultants, in addition to providing guidance on the drafting of a business strategy, a marketing plan, and a cash flow budget. It can be a confusing maze of concerns, but we can help you navigate it. If you are thinking about hiring people, we are available to help you with human resource problems such as payroll, WorkCover, and superannuation guarantee responsibilities if you do decide to hire employees.

Over the course of the past two decades, our group of accountants has assisted dozens of solicitors in establishing successful businesses from the ground up. You can count on us to provide you with expertise, professional tax knowledge, marketing expertise, and most significantly, an in-depth comprehension of the legal sector.

Building a strong foundation is essential when constructing a home, and the same is true when beginning a new business. In a business context, these foundations consist of having an acceptable tax structure and accounting software, sufficient and suitable insurance coverage, as well as a marketing plan and a website that generates lead opportunities.

Your selection of corporate structure is of the utmost importance, and you have a variety of alternatives to select from, such as operating as a sole proprietorship, partnership, corporation, or trust. We always recommend that you "start with the end in mind" when selecting the most appropriate structure for your business. This is because Australian tax laws are complex, and modifying your company structure at a certain time in the future can trigger a taxation of capital gains event that could prove to be very expensive. We always recommend that you "start with the end in mind" when selecting the most appropriate structure for your business.

Whenever we are asked for guidance on different business formats, we always keep the following in mind:

• Income Tax Reduction
• Make the Most of Asset Protection
• Accept the Addition of New Investors or Business Partners
• Respect all Legal Requirements Applicable to Your Industry
• The Risk Level in Your Sector
• Think about Your Future Right to Discount Capital Gains Tax Breaks

As a direct result of this, we frequently discover that the organisational structure is a solution that strikes a balance between the respective weights given to each of these concerns.

Your decision on the accounting software to use is yet another important foundational component of your firm. Inaccurate record keeping is one of the most common reasons for the failure of businesses in this country. Having up-to-date and accurate financial records enables you to make educated decisions regarding your company. The incorrect selection of software can have devastating effects, and all too frequently, we discover that owners of businesses produce records that we refer to as "computerised shoeboxes." These records cause annoyance, waste time, and result in additional expenditures. This runs counter to our goal of reducing the amount of time and money you need to spend on bookkeeping and GST compliance for your business.