End of year tax planning opportunities

tax planning

As we approach the end of another financial year we wanted to share with you some end of year tax opportunities, which could assist you in minimising your tax liability.

We have highlighted some areas to focus on however we encourage you to schedule a meeting as soon as possible to assess your options and the steps you need to take well before the 30th June, 2019.

You can read more about these opportunities by clicking on the link below;

Tax Planning Guide 2019

To assist you we have put together a list of strategies to consider and note:

  • To maximise benefits for the 2018-2019 year, we suggest that you prepare a preliminary estimate of your taxable income for the year ending June 30, 2019 to determine if you have a tax ‘problem’.

A review of your latest financials (if current figures are not available, then last year’s figures will suffice) to determine the need for tax planning tactics such as pre-paying some expenses before June 30 for deferring some revenue until after 1st July.Key Dates edm

 

*Trustee Resolutions (Where Applicable)
Trustees of Discretionary Trusts must resolve to distribute the current year’s Income via a signed Trustee Resolution. If no resolution is in place to determine who is to be assessed on the trust income, then the trustee will be assessed at the highest marginal rate of 47%. Distributions will need to be determined based on an assessment of expected final income of the trust and its beneficiaries.

Where a trust is making a distribution to a new beneficiary, we will need to lodge a ‘Tax File Number Information Form’ with the ATO before 28 July.  If you elect to prepare the Trust Resolution yourself, please provide us with a copy of the Resolution by 30th June otherwise the Trust may be taxed at 47%.

We urge you to contact us to discuss any strategy you are planning to implement before June 30, 2019.

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Smart strategies to control your cashflow when times are tough

5-strategies-for-better-cash-flow

Sadly, even profitable businesses can go broke if they do not effectively manage their cashflow during tough times – and it’s affecting many small businesses right now.

Not surprisingly then, cashflow is one of the biggest challenges currently facing business owners, with some 92% reporting that they frequently experience stress due to cashflow concerns.  If you’re like many of the business owners we’ve talked to recently, you may have had to reduce the scope of your operations, source additional funding, take a pay cut, or even make long-standing staff redundant.

However, it’s not all doom and gloom.  The good news is that while cashflow may be the first to take a hit when times are tough, the actual key to surviving is to implement strategic cashflow management policies and systems;

Here’s our top 12 strategies for you to consider;

  1. Set goal-oriented budgets and proactively manage them.  Profit and loss budgets are still very important but right now your focus should be on developing your cashflow budget, which will allow you to plan for your cash requirements and shortfalls in advance.
  2. Focus on increasing sales and income – a feat that, even during tough times, is possible.  Be proactive, provide real value to your customers and identify creative ways to increase your retention rate, generate leads, and increase conversion.
  3. Avoid easy tactics like discounting, which can be dangerous to business profitability – even a 10% discount can result in your business having to increase sales by 100% to achieve the same gross profit pre-discount.
  4. Set your terms of trade at the outset, terms should include when you expect to be paid and your ability to add interest.
  5. Stick to your payment terms.  Don’t let your customers pay you late.
  6. Use a contracted debt collector on slow payers.
  7. Set aside a percentage of all cash you receive into a separate bank account to cover your tax payments.
  8. Manage your work in progress by billing regularly, reducing the number of jobs you have on at one time.
  9. Only hold enough stock to cover the time it takes between the sale of an item and when you get delivery of the same item.
  10. Measure how long in days on average it is taking to sell each stock item and reduce obsolete stock.  You’re better off to convert that slow moving or obsolete stock back into cash.
  11. Finance the cost of fixed asset purchases using over terms similar to how long the asset will last before it needs replacing.
  12. Set a budget for income and expenses and stick to it.  If a new cost is not in your budget then find a saving somewhere else.

 

cash flow

 

Managing poor performance

leadership-essay

It’s a firm belief that when anyone starts a new role they come to work with the intention of doing a great job.  They’re keen to make an impression, to make a difference, and to enjoy themselves.  After all life is too short, right?  If the average person spends 40,000 hours of their life working, they’d better do something they like.

Nobody likes to fire someone but, more importantly, nobody likes to be fired.  

So, why do many business owners loathe the fact that they have to ‘manage performance’ or ‘open the door of opportunities’ or ‘free up the careers’ of some team members?

It’s quite simple; somewhere between induction and the time when performance starts to slip, the enthusiasm to put in a great day’s work is gone.  The fire in the belly goes out.  If we can discover why this happened and prevent it from happening again, then we’ll spend much less time managing poor performance.

boss v leader

As a leader, we must be committed to acting above the line (by taking ownership, accountability and responsibility for the poor performance).

Now, answer these questions in relation to your interactions with this poor performer:

  1. Do you demonstrate above the line behaviour and a positive, can-do attitude 100% of the time?
  2. Does your business have a concise Core Purpose statement (why your business exists for your clients) that your team member believes in and can see how they are contributing to?
  3. Have you clearly articulated your vision and goals for the business?
  4. Have you given the team member regular opportunities to align their personal and career goals with your business goals?  We must ensure their personal purpose in life aligns with your business’s purpose.
  5. Have you set clear expectations as to the five most important KPI’s or targets that the team member needs to achieve?  It is important to define a great day’s work for them.
  6. Does the team member understand and agree with these targets you’ve set for them?
  7. Have you created a process to ensure that the team member can see how they’re tracking to reach these targets?
  8. Most importantly, when the performance is lacking do you talk about it with the team member? Or, do you whinge behind their back to everyone else and generally live in denial (below the line)?

Of course there will be times when external influences affect performance – this is when people need your support.  Or, perhaps you made a poor recruitment decision – if you follow the 8 steps you will come to the right answer together with the team member.

Remember – a poor leader can take a great team and destroy it, causing the best team members to leave and the remainder to become disengaged or, worse, toxic.

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Is your business ready for single touch payroll?

single_touch_payroll

In Breaking news this week…….Single Touch Payroll legislation has passed through Parliament, so our Blog today is a must read for employers of less than 20 employees.

Single Touch Payroll (STP) legislation passed through Parliament this week for employers of all size.  This legislation has applied to businesses employing more than 20 employees since 1 July 2018 and now, with legislation passed through parliament this week, from 1 July 2019 all employers will be required to comply with the Single Touch Payroll requirements.  The ATO website says the following in relation to Single Touch Payroll:

Single Touch Payroll (STP) changes the way employers report their employees’ tax and super information to us.

Using payroll or accounting software that offers STP, employers send their employees’ tax and super information to us each time they run their payroll and pay their employees.

The information is sent to us either directly from the software or through a third party, such as a sending service provider. Software providers can tell you more about how they offer STP reporting.

So what does this mean for small business and employers?

If you currently have employees (including companies where the directors are paid by a salary) and you are not using an online or digital payroll service you will need to update the way you pay your employees and run your payroll system.  The introduction of this reporting system has specifically been designed and implemented to increase the data matching capabilities of the ATO in relation to employers meeting their tax and superannuation obligations.  Whilst this may seem like an additional compliance requirement for employers, research conducted by Xero has revealed that once implemented employers using digital reporting estimate they save on average 3.1 hours per week on payroll requirements.

What should all employers do?

  1. Assess your current payroll system
  2. Confirm the current payroll system being used has the capability to meet the STP reporting requirements
  3. If the current payroll system doesn’t meet the STP requirements contact your client manager at Sage Business Group to discuss your payroll and accounting options

The time to act is NOW – as of this week Single Touch Payroll is a legal requirement for ALL employers from 1 July 2019.  A payroll system compliant with the requirements of Single Touch Payroll MUST be implemented ready for the first payment after 1 July 2019 so it’s important to act now to be ready for the new year.

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Setting solid foundations to measure success

Test and measure

Running your own building/construction business can be complicated.  Many builders are still very much ‘on the tools’ while still running the day to day operations, which can lead to long nights and early mornings.  There are several simple actions you can take to ensure success, growth and customer satisfaction.  Here are 7 fundamentals that you should consider when running your business;

  1. Firstly, ensure that you have a documented list of goals, plans and targets that you can clearly measure against your results.
  2. Make sure you have an accurate record keeping system recording your numbers, this way you can make informed and educated decisions about your business.  Poor record keeping is one of the biggest causes of business failure.
  3. Ensure that you are getting paid on time. Manage your credit effectively by creating policies and procedures covering terms and conditions for providing goods and/or services, invoicing and payments and debt recovery.
  4. Create a cash flow forecast.  Your cash flow forecast is one of the most important management tools in your business.  It shows the expected flow of cash in and out of your business.  It highlights potential issues, giving you the time to find ways to either prevent problems or minimise their impact.
  5. Are you seeking new business?  Sometimes it’s easy to get trapped servicing existing customers.  Develop a clear marketing strategy to grow your business even further.
  6. Finding your Niche.  If there is something that you specialise in make sure to let your audience know.  Promoting your business as a specialist in one specific Niche will ensure that you get the phone call when someone needs that service.
  7. Are you hitting your margin goals?  It can be difficult to hit profit goals when times are tough, but if you are constantly lowering your prices at the expense of remaining profitable, you will not be in business much longer.

 

Better Builder Workshop image

General advice disclaimer
General advice warning: The advice provided is general advice only as, in preparing it we did not take into account your investment objectives, financial situation or particular needs. Before making an investment decision on the basis of this advice, you should consider how appropriate the advice is to your particular investment needs, and objectives. You should also consider the relevant Product Disclosure Statement before making any decision relating to a financial product.]

 

 

How SMEs can manage their cash flow during the festive season.

 

 

cash flow

If you’re a small business owner, managing cash flow can be one of the many things that keeps you busy day-to-day, and sometimes awake at night.

With Christmas just around the corner, seasonal fluctuations may be about to impact your bottom line, meaning good news for some and bad news for others.

We wanted to share this editorial from smartcompany that focuses on stories of business owners who share your dilemma, along with their tips on managing cash flow and staying afloat as things fluctuate.

To read the full editorial from smartcompany click on the link here

If your business is struggling with cash flow contact Sage Business Group on (03) 9744 7144 to discuss your personal situation with one of our experienced team members.

 

 

 

How Xero helped this brewery keep a transparent culture

ero blog

When Ale Industries started out, it was rare to find a brewery that had a taproom slinging a triple-hopped IPA. Today, these are some of the staples of an ever-evolving industry.

Early on, Morgan foresaw a career for himself in brewing. After getting into homebrewing at the age of 18, he knew that he wanted to own a brewery of his own one day. He knew he would need some commercial experience, and at 21 he was finally able to start looking for work.

To put things in perspective, when Morgan was looking for work there were about eight breweries in the San Francisco Bay Area – so jobs were few and far between. Today, there are more than 200. Morgan eventually secured a volunteer position at a local outfit, and over time worked his way up to the coveted position of Brewmaster.

As Brewmaster, Morgan was charged with decommissioning old equipment and bringing in the new – one day, this gave him an idea. He could take that old equipment and get his own brewery off the ground. After some understandable resistance, the owner came around to the idea and in 2009, Ale Industries’ first beer was brewed.

Morgan says, in the years since, the change the industry has gone through has been huge.

“When we first started, Facebook wasn’t around – everyone was on Myspace,” Morgan remembers. “Social media marketing wasn’t a concept. If you wanted to get your name out there you went to beer festivals, got out and about talking to people, or took out print ads.

“The Internet 2.0 was really in its infancy. Companies had websites, but they were more like landing pages. Spreading the word is completely different today. That’s just one aspect of the business that has changed.”

The other is how we keep track of our financial situation.  Enter Xero Accounting Software.  According to Morgan, using Xero on mobile puts the power of accounting right into the hands of their salespeople or ‘foot soldiers’. They can easily pull up Xero when they’re out visiting customers, place an order or even check on whether they have an outstanding invoice or whether the account is within terms.

This cuts down time chasing up accounts payable and accounts receivable – things that would otherwise get buried, Morgan says. They have also created report templates that enable salespeople to see, in real time, how they’re doing in terms of the goals set for them.

If you would like to learn more about how Xero Accounting Software can help you reach your business goals then register for our FREE Xero Workshops.  Click here to find out more.