How you can write off bad debts, by small business accountants in Sydney
Bad debt is basically a debt that cannot be recovered and is considered worthless to the creditor, this normally occurs when after all attempts made to collect the debt. Our small business accountants in Sydney will tell you how to write off bad debts
In order to write off a bad debt, you need to have valid proof that the transaction was indeed a debt and not a gift. There are two types of bad debts:
We’ll focus on small business bad debts, which means the debt must arise and have been included in your income or at least documented that this debt exists. In order for this bad debt to be written off, the debt must be deemed completely worthless and reasonable steps must have been taken to collect the debt.
Business bad debts include loans to clients, suppliers or business loan guarantees, these are ultimately taken as business losses and reported. Bad debts can be quite confusing at times, as the actions to which you can take are tricky. It is always important to consult business accountants with regards of what you should do.
Our small business accountants in Sydney know how to handle bad debts accordingly and always intend to get you the best result possible.