Current Compliance Requirements for Companies
1. Identify the current statutory requirements for tax compliance and list and calculate the tax liabilities for Houzit Pty Ltd under taxation legislation
2. Identify the current compliance requirements and liabilities for this organisation under the Corporations Act 2001.
3. Review commercially available financial management software to select the most suitable software for Houzit Pty Ltd.
4. Explain how you can apply the following principles of accounting in developing the budgets required for this task:
5. Explain and discuss the implications of probity when preparing and revising budgets
6. List the critical dates and initiatives that will require or generate resources for Houzit Pty Ltd in the next financial cycle
7. List the items you would recommend for inclusion in the budgets for Houzit Pty Ltd
8. List the new or modified internal controls that could improve risk management for Houzit Pty Ltd including the maintenance of audit trails.
The current compliance requirements and the liabilities for the company under the Corporations Act of 2001 are given as follows:
Income Tax: This is known as the tax that each and every company and entity has to pay on their net income that is earned within a year.
GST: This is the tax that is paid by the companies, which provides any kind of services and goods. This tax can be different with respect to the sort of services and goods and certain things that could be free from this kind of tax.
Company Tax: This tax is paid by the organizations on the total assessable income and the tax rate is fixed and the percentage is 30% of the overall income.
Superannuation: This is the tax that is paid by the companies on behalf of their employees and it is computed by the payroll process of the companies.
The tax that is calculated for the company has been given as follows:
Income Tax: $436,878
Payroll Tax: $98,705
Superannuation: $187,020
Fringe Benefit Tax: $28,000
Luxury Car Tax: $12,000
In accordance to the Corporations Act 2001, the companies need to maintain the statement of the financial performance and the financial position statement with them. The records that are required to be maintained are explained as follows:
- Financial Statement
- Cash Record
- Debtor/ Sales Record
- Creditors Record
- Superannuation and wages record
The assessment of the current software accounting process that is utilised by Houzit Pty leads to the discovery and development of the software and the hardware that can be implemented by the companies. The organization in an effective manner exploits the most innovative and the current software but is limited to the utilisation of only computers and does not use phone or any other electronic gadgets. The non-existence of the servers and the latest and innovative technologies may not be supportive in protecting the data and even ensures financial confidentiality of the organization. The company can even exploit the SAP software but as the company is small, the incorporation of SAP can be expensive. The other software is the arrow business software creators that have user experience with dynamic and standardised menu dock able panels and unified integration to MYOB and Quick Books.
Tax Liabilities for Companies
These two software are notable towards what they perform. Both the software have similar weaknesses and strengths. But after the development of the accounts of the business there can be little disapproval that is seen in one of these products for Houzit. It is seen that Quick Book is not supported in Macbooks and MYOB on the other permits multiplication inventory and on the other hand the Quick Book does not do the same. MYOB permits several entities at one time but Quick Book does not. Therefore, for Houzit Pty Plc MYOB is recommended after assessing the other kinds of software.
- Matching principle
- Account groups
- Time periods
A precise and authentic budget can be constructed by utilising the matching principle that will be helpful in mitigating and reducing the unfavourable variances. An example can be taken as for the fact that the matching principle helps the company to identify the percentage of the expenses which are gained from sales.
The account group has a key role to play in order to reduce and mitigate the chaos, which can be constructed during the framing and computation of the final accounts. By taking assistance of the account group, the company is able to discover the supportive incomes and the expenses, which Houzit undertakes during the accounting year.
The time period is utilised primarily in discovering the debtor payment period, which is significant and mandatory for the company in order to maintain their extent of liquidity. The collection time of the debtors primarily helps the maintenance of the budget and addresses the adequate cash availability during the current accounting year.
Probity is primarily helpful in explaining the implications and consequences of the budget. They have been explained as follows:
- It brings forth transparency and purity and even addresses a clear image and liability of the overall financial report, which is disclosed by the organization.
- It is helpful in eliminating partiality and introducing validity and authenticity in the data and the records which are constructed by the company.
- It is significant to explain the security and the confidentiality of the data which are used in order to calculate the actual and the overall budget of the company.
The significant time for the construction of the budget is generally subsequent to the disclosure of the financial records and statements at the end of the accounting year. The date of constructing a budget can be helpful to the company in projecting the overall expenditure, which are paid out during the several quarters of the accounting year.
The dates are as follows:
- $100000 taken as loan on December 31st
- Advertisement budget increased by $70,000 in the year 2011/12
- Rise in the amount of wages and salaries to $172,500 in the year 2011/12
The entire amount of tools and items that can be incorporated in the future and the coming budget are highlighted as follows:
- The incorporation of an accounting process that will be used as a tool for the purpose of budgeting in order to perform accurately and in a precise manner.
- The utilisation of practical and fair valuation mechanism for the projection of the budget that can be helpful in reducing the variances that are unfavourable in nature.
- The improvement and development on the privacy and safety that can be helpful in reducing the extent of influences that may take place during the computation of the budget.
- Amenities for the employees
- Transpiration
- Office costs
- Water bill
The enhanced internal controls that could develop the process of risk management for the organization are:
- The company needs to follow the regulations and the rules
- The company even needs to incorporate and apply all the processes
- The operating hours and the time sheets need to be noted as well.
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