Kick start the new financial year

Setting goals is a great way to kick start the new financial year and is a great way to maximise your business success.  It gives you a clear direction and helps you to focus on what’s important.  However, when you run a small business it can be very easy to lose sight of your goals as you get pulled in different directions.

Check out our simple tips below to maximise the efficiency of your goals this financial year.

Align personal and business goals

Trying to do this can deliver more benefits than you might have anticipated.  For example, suppose your goal is to take a month’s holiday in September of this year – perhaps the first real holiday you’ve had in years.

If you’ve booked your tickets in advance, your goal has a fixed deadline and you’ll need to have the business ready by then so it operates without you.  So what do you need to do?  You might decide the critical steps are:

• Start delegating more tasks to employees, beginning gradually to test their competence.
• Create an operating manual so everyone can follow clearly defined procedures on all business processes.
• Improve the accounting system so you can check the health of the business while you’re away.
• Monitor the key performance indicators in your business so senior staff can quickly take action on any issue such as a dip in the gross profit margin.

Notice how aligning your personal goal of a holiday with business goals provides both purpose and motivation to empower your original resolution.  Your goal was simply to take a real holiday this year, but achieving it will deliver extra personal and business benefits:

• Learning to delegate to others means the business becomes less dependent on you, so you can take more leave.  Plus, the business will seem more valuable to others when the time comes to sell or pass it on.
• Improving the accounting system, such as moving to a cloud-based program, will lead to better money management, allowing you to monitor cash flows in real time from anywhere in the world.
• Capturing business processes in an operations manual should lead to greater efficiency, cost saving and more consistent customer service. Documented processes will also make it easier and faster to train new staff, allow employees to cover for those away from the business and allow you to franchise the business in the future if this is your aim.  You’ll also add significant value in the eyes of a future buyer.

Be SMART

When it comes to setting the actual goals for your resolution, use the SMART system (Specific, Measurable, Realistic and Time-bound).  It’s a timeless oldie but a goodie.

• Specific:  Be precise about what you want to achieve, because vague or abstract goals such as “I’ll get fitter this year” are destined to fail.
• Measurable:  Adding facts, figures or percentages to your goals allows you to track your progress.  What is measurable tends to get done.
• Realistic:  Your goals need an element of challenge to them, taking you out of your comfort zone, but they should also be attainable.  Lofty goals are usually the first to be discarded.
• Time-bound:  Deadlines are how we get things done.

Two more tips

1. Keep it simple

Break goals down into simple, smaller steps.  For example, to complete your operations manual by the time you leave, you should aim to complete one section a month for each process in your business, such as customer service, shipping, order follow-ups, credit management or inventory control.  Break this down further into smaller steps of what needs to be done this week/fortnight.

2. Use graphics

Creating some kind of graphic for each goal, such as a chart, a calendar or graph, allows you to see progress.  The visual impact of a graphic tracing your progress is a powerful motivator that keeps everyone on track towards the finish line.

If you would like help and support to ensure you achieve your business goals this financial year, speak to us today.  We help businesses just like yours to achieve more, save time and money.

If you want to kick start the new financial year, call us today or complete the “Contact us” form (it only takes a minute) to book a FREE no obligation business review.

Proven strategies to get a better tax refund from the ATO

Here are five simple tips that you should use to ensure you maximise your chances of getting a better tax refund from the ATO.

1. Claim deductions for everything you are entitled to claim

The simplest way to increase your tax refund:  Claim a deduction for every expense you are legally entitled to claim.

If you are required to pay for anything that relates to your work, keep the receipt.  If you aren’t sure whether you can claim a certain item, keep your receipt anyway – your accountant can advise you if you’ve claimed everything correctly.

Don’t go overboard:  You can only claim legitimate items that you have receipts for.  ‘Made up claims’ or ‘generous guesses’ lead to ATO reassessments, audits and surprising tax bills.  There are honest ways to boost your refund and that’s what your accountant will help you with.

2. Keep good records

Each year during tax time, many of our clients tell us that they spent countless hours tracking down receipts from the past 12 months.  Those people wasted hours of their time – and they probably missed out on hundreds, even thousands, of dollars in their tax refund!

People who lose money at tax time...

• aren’t organised
• don’t keep track of receipts
• don’t fill in car logbooks regularly.

If that sounds like you… you might be missing out on vital deductions that can boost your tax refund.

The solution is simple:  Spend just 5 minutes a week organising your receipts and logbooks.  You’ll save hours of frustration AND you’ll ensure you receive the best possible tax refund.

3. Get advice from professional accountants

Over 70% of Australians use an accountant to lodge their tax returns, with good reason!

Using an accountant to help with your tax return will not only save you time and stress, it will also ensure that you get a better tax refund.  Apart from checking your return for errors and accuracy, an accountant can also find extra deductions or tax offsets that you weren’t even aware of.  And the best part – any fees your accountant charges for your tax return are fully deductible on your following year’s tax return.

4. Don’t forget the small stuff!

A $10 donation to charity or a $5 textbook might not seem like much at the time, but each of these small purchases across twelve months can add up to hundreds of dollars – all money that you can claim as deductions on your tax return.

Whenever you buy anything related to your work, no matter how small it is, keep the receipt.  Keeping track of the small stuff is a sure fire way to ensure you receive the best possible tax refund.

Speak to us today to help ensure you get the maximum tax refund you are entitled to.  CONTACT US NOW.

5 Fatal accounting mistakes business owners make

In a recent survey of over 500 small business owners, flexibility and feeling in control ranked as the top reasons they love being in business.  Meanwhile, almost 60% said bookkeeping was hands-down their most hated task.

Most business owners understand that effective financial management is key to their success.  But lack of knowledge, frustration and even avoidance can add up to accounting mistakes that derail future growth.

Protect your business and reduce your stress by avoiding these five costly accounting errors.

1. Mixing personal and professional finances

From day one, business owners should have a separate bank account in which to deposit their income and pay their business expenses.

It’s also crucial to designate a business-only credit card.  Come tax time, separate statements will make submitting claimable expenses quick and easy, while reducing the risk of a painful audit.

2. Letting accounts receivable slide

It’s frighteningly easy to lose track of which customers have paid you and which are late.  Implement a strict policy and schedule for tracking and pursuing unpaid invoices.

• ask customers to pay at the point of purchase or no more than 30 days later;
• contact clients to confirm they have received your invoice and to agree on a payment date;
• follow up immediately when payment dates are missed; and
• keep accurate, up-to-date records of each client’s payment history.

Investing in a cloud-based accounting solution can make AR a breeze by automating your monthly invoicing – and contacting late payers with a reminder email.

3. Not using tech to track your expenses

Tired of chasing down missing receipts and struggling to justify claims come tax time?  There’s an app for that!  Choose from numerous options such as Receipt Bank, Shoeboxed or Expensify.

Many of these apps generate expense reports that are easy to share or sync automatically with accounting software.

4. Neglecting to strategise for long-term growth

Effective accounting means managing day-to-day finances while making provisions for future growth.  Software and cloud-based solutions offer easy ways to track your financials, but they also generate reports and provide analytic tools small business owners can use for future forecasting.

Familiarize yourself with the reports your software can generate to track long-term trends, identify and mitigate risk and discover new ways to increase profitability.  Talk to your accountant about which reports and metrics are most important for your particular business and how to utilize them.

5. Don’t go it alone

Small business owners are rarely trained accountants.  Don’t try to manage your company’s finances all by yourself.

Collaborate with a trusted professional, invest in quality IT solutions and spend some time familiarizing yourself with relevant tools and trends.

You’ll feel empowered, which is step one to forging a more love-filled relationship with small business accounting!

4 Simple Steps for Better Business Finances

If you’re like most small business owners, you spend the majority of your time managing daily operations, keeping customers happy, and looking for new ways to grow.  Spreadsheets, cash flow analysis, and financial projections are probably not your first passion.

However, measuring profitability, creating realistic budgets, and planning ahead for the future are crucial to your professional success.

Follow these four tips to get a handle on the numbers, and take control of your business finances.

1. Move to the cloud

How much of your time do you spend hunting down financial documents, poring over spreadsheets, and tracking expenses?

Constantly searching for and trying to integrate scattered data makes it nearly impossible to close out the monthly books quickly and efficiently.  Plus, reliance on spreadsheets is a proven liability.  Research shows over 88% of all financial spreadsheets contain errors.

Manage your business finances faster and more accurately by moving them to the cloud.

Cloud-based financial management systems have several benefits, including:

• Integration with all your other operational systems for the quick retrieval of the most current data;
• Automation of daily financial processes so you can step away from spreadsheets;
• Efficient expense tracking that improves accuracy and reduces revenue leakage; and
• Easy collaboration with team members and stakeholders.

2. Conduct regular financial reviews

Experts agree that vigilance is the key to effective business financial management.  Each month, set aside time to review your balance sheet, profit and loss statement, and cash flow statement.

Regular monthly check-ups will give you actionable insights into your business performance and growth potential.  This information is crucial for:

• Projecting future revenue, cash flow, and expenses
• Validating major purchasing decisions
• Anticipating and mitigating risk

You’ll need this key data, too, if you ever want to apply for a loan to expand and grow your business.

3. Bring a professional on board

On the surface, hiring an experienced bookkeeper or accountant may seem pricey, but their expertise could mean considerable long-term gains for your business.

A technical financial expert can optimize the efficiency and accuracy of your financial management, giving you peace of mind and added time to pursue growth opportunities.

Plus, most small businesses don’t need full-time professional help.  Part-time services are typically enough to help you manage crucial processes, plus a few extras, including applying for a business loan or overdraft, articulating and adapting your business plan and managing sudden growth – for example, hiring new staff, acquiring office space, or determining when to introduce a new product or service.

4. Final tips

Consider enrolling in a basic bookkeeping or accounting course so you can better understand the fundamentals of business financial management.  The knowledge you gain will feel empowering, and can help clarify discussions with your accountant.

Self-education is also key when it comes to investing in financial IT.  Be sure to do your research and consult an expert before investing in any new accounting solutions for your business.

Your knowledge, combined with professional support, is the very best route to sustainable, effective business financial management.

Tax Planning for 30 June 2016

Traditionally, 30 June each year brings forth a rash of initiatives through which the level of taxation for the current financial year may be reduced.  Consult your tax advisor about the following:

TIMING OF INCOME

Where possible, defer receipt of income until after year end.

TIMING OF EXPENSES

Where possible, incur expenses prior to year end.

BAD DEBTS

Review debtors and, where debts are unrecoverable, physically write off before year end to claim a tax deduction.

TRADING STOCK ON HAND

Scrap any obsolete or damaged stock by year end.

SUPERANNUATION

Ensure payments for employees or by self-employed persons are physically made (and received) on or before year end.

PRE-PAYMENTS

Immediate deductions are available for:

• Pre-payment of salary;
• Expenses <$1,000;
• Individuals, for non business expenses incurred on or before 30 June for the next twelve months – e.g. interest on rental property.

SUPERANNUATION REBATES

Contributions made on behalf of a low or no income spouse of up to $3,000 can attract an 18% rebate – i.e. $540.

SUPERANNUATION CO-CONTRIBUTIONS

The Government will contribute up to a maximum $500 to add to eligible employees’ personal contributions to superannuation funds of up to $1,000, subject to an assessable income (reportable fringe benefits, reportable employer superannuation contributions and salary sacrifice superannuation contributions) limit of $35,454, phasing out at $50,454.

MOTOR VEHICLE EXPENSES

Where significant employment or business use of a personal motor vehicle is claimed, maintain a log book for twelve weeks to maximise the tax deduction and keep records of all expenses.  The log book must be renewed every five years.

Record the financial year end odometer reading.

Small businesses (turnover <$2m) can claim an instant deduction for motor vehicles used for business 100% and costing up to $20,000.

PLANT AND EQUIPMENT

Review your asset schedule to scrap obsolete, worn out, lost or stolen items to maximise your depreciation claim.

Delay the disposal of any plant and equipment likely to be profitable in terms of written down value until 1 July.

Small businesses (turnover <$2m) can claim an immediate deduction for assets acquired, first used or installed ready for use, costing under $20,000 (GST exclusive).

HOME OFFICE EXPENSES

If carrying on a business from your home, pro rata tax deductions for interest or rent, insurance etc are available but impact on the main residence exemption from capital gains tax.

DIRECTORS / EMPLOYEES’ ENTITLEMENTS

Ensure any 2016/2017 salary packaging arrangements are in place before the commencement of the new tax year.

Bonuses and fees for the 2015/2016 year need to be approved at meetings and in place prior to 30 June 2016.

PRIVATE COMPANY LOANS

Any loans to shareholders or associates during 2014/2015 need to be repaid on or before 30 June 2016, unless a formal loan agreement is in place.

SALE OF INVESTMENTS

Delay the sale until after year end where a gain is anticipated to defer tax for a year.

Crystallise any capital losses in the tax year to offset against any gains made in the same year.

Timing of disposal under a contract for capital gains tax purposes is generally the date of making the contract, not settlement.

CAPITAL GAINS TAX CONCESSION

Assets need to be held for at least twelve months to access the 50% discount for individuals and trusts and the 33⅓% discount for superannuation funds.

CEASING BUSINESS / SALE OF BUSINESS ASSETS

Consider redundancy payments for employees.

Plan “golden handshake” payments for after the tax year end.

Small business capital gains tax relief measures may be available for:

• 15 year exemption
• 50% reduction
• Retirement exemption
• Replacement asset rollover

PAYG PAYMENT SUMMARIES

Summaries and summary statements for employees are required by the ATO by 14 August, otherwise substantial penalties apply.

SUPERANNUATION FUND EXPENSES

All expenses of a fund ought to be paid by the fund in order to claim a tax deduction.

DEPRECIABLE PLANT COSTING $300 OR LESS

Salary and wage earners and rental property owners will be entitled to an immediate deduction if plant for work related purposes costing $300 or less is purchased before 1 July 2016.  Some purchases you may consider include:

• Beepers and pagers;
• Books and trade journals;
• Briefcases/luggage or suitcases;
• Calculators, electronic organisers;
• Software;
• Stationery; and
• Tools of trade.

CLOTHING EXPENSES

Purchase and pay for work related clothing/expenses prior to the end of the income year, such as:

• Compulsory, non-compulsory (and registered) occupational specific and protective clothing;
• Other expenses associated with such work related clothing such as dry cleaning, laundry and repair expenses.

SELF-EDUCATION EXPENSES

Consider pre-paying the following self-education items before the end of the income year:

• Course fees (but not HELP fees), student union fees and tutorial fees;
• Interest on borrowings used to pay for any deductible self-education expenses.

Also bring forward purchases of stationery and text books (i.e. those which are not required to be depreciated).

OTHER WORK RELATED EXPENSES

Employees can pre-pay any of the following expenses prior to 1 July 2016:

• Union fees;
• Subscriptions to trade, professional or business associations;
• Magazine and newspaper subscriptions;
• Seminars and conferences;
• Income protection insurance (excluding death and total/permanent disability).

Note:  When pre-paying any of the above expenses before 1 July 2016, ensure that any services are provided within 12 months of the payment and before 1 July 2017.  Otherwise, the deductions must be claimed over the period of the pre-payment.  Any expense under $1,000 is exempt from pre-payment rules.