"Are you Inviting the Tax Man to your Company Christmas Party?" Article by Tina Zawila

The team at Sothertons had some fun on the weekend and enjoyed our annual Christmas Party.  Every year for as long as I can remember we have had a fancy dress theme and this year it was “Grease” the movie.  Yes, we had Sandy and Danny, Rizzo and Kenickie, Frenchy, the geek Eugene and even Elvis made an appearance!

However, there was one character that we didn’t want at the party ... The Tax Man!

The annual company Christmas Party falls under the definition of Entertainment for taxation purposes...yes, there are income tax implications associated with having a good time, and you can be left with more than a hang over the next day.

Generally, entertainment and recreation expenses are not income tax deductible except in very limited circumstances, no matter who the recipients are and irrespective of whether there is a genuine connection with business activities.

Therefore, the cost to an employer of providing team social functions (including the annual Christmas Party) is a non-deductible entertainment expense.   Similarly, providing Christmas gifts to employees where the gift provides entertainment by way of food drink or recreation (eg a holiday, tickets to sporting events, the theatre or cinema or the cost of a night out at a restaurant) would not be tax deductible.  However, the cost of relatively inexpensive Christmas gifts (such as a bottle of wine/spirits or a food hamper) that will be consumed by an employee at home will not be treated as entertainment. 

But wait there’s more...you may need to consider Fringe Benefits Tax (FBT)...

Where entertainment expenses are incurred in providing a fringe benefit to an employee or associate, the entertainment expense will generally be income tax deductible as an ordinary business expense, but may be subject to fringe benefits tax (FBT).

There is an exemption available within the Fringe Benefits Tax Assessment Act in respect to “Minor Benefits” – these are defined as benefits with a value of less than $300 and are “infrequent and irregular”.  Generally speaking, a gift for an employee upon the birth of a child, or a milestone birthday, with a value of less than $300 would be considered to be a “minor benefit”.

Whilst minor benefits are exempt from Fringe Benefits Tax, they are not tax deductible, and the input tax credit (GST) cannot be claimed.

FBT legislation was introduced in 1986, but still proves to be confusing to many business owners.  If you need assistance, please call us at Sothertons on 4972 1300 and we will help you minimise the “mess” the tax man leaves behind after your Christmas Party!

"Is it time for a Makeover?" Artilce by Steve Marsten

I see people everyday that are operating businesses in Gladstone – some doing extremely well and some not so good. What often confounds business owners is why their efforts aren’t yielding the past good results. Often it’s not the effort that’s the problem – it’s the thinking. People still often believe that yesterday’s strategies will yield tomorrow’s results.

Business’ whose sales are flat lining or tanking need to refresh their tactics otherwise they cannot expect their businesses to grow. Things have changed dramatically and recently I sat down with a long standing Gladstone Business owner and discussed the changes in their business that had kept it going since the mid ‘80’s.

We discussed the fact that selling services today have changed considerably. Once - 85% of his sales came from the yellow pages. This he found had reduced to less the 15% and half of that was “yellow Pages” online. Today customers are buying directly off the website. They are texting his mobile from the website using Smartphone’s; sending emails. He has had to have a constant eye on the emails and be flexible to ring people as soon as possible after they send the email. They request quotes off the internet. The speed of his site is now a priority when updating it. This, from a couple who 12 years ago considered themselves as computer illiterates!

When sales were dropping in the late ‘90’s early 00’s, they started to consider whether they should close their business. They sat down with their advisory team and adopted a completely new bunch of strategies.               

They started to look at each area of their business and determine how they could refresh their services. They even timed how long it took to do things; they monitored and rated their customers’ experience. This assisted in fixing issues promptly and improving customer satisfaction levels.

The other major issue they took on was determining what their culture was. They had a “Team Culture” day which helped establish the business’ culture. What it meant to be an employee; what it meant to be respected and what the business meant to their community. The staff immediately improved their output as they felt the owners were listening to their concerns and acting on them. Mind you some employees resigned as well. This was a good thing – it meant the ones who stayed wanted to work there.

Overall business has grown at an average rate of 8% since 1986. Overall they believe that business owners need to consider whether a few small tweaks are required to tune up your business or is it time for a complete makeover?

"WITY - What's Important To You?" Article by Tina Zawila

Another acronym! We seem to love these here in Gladstone. This one was a new one for me.

I picked it up at the PrimeGlobal Oceania Conference in Sydney last week. PrimeGlobal is an international association of independent accounting firms. Firms across Australia, New Zealand (and even guests from Canada and the USA) converged on Sydney to listen to thought provoking speakers covering a range of topics including economics, taxation, accounting, audit and most importantly, how we can add value to our clients.

This simple, yet powerful acronym made me think - isn't that what relationships are all about? Knowing what is important to the other person?

Whether it is business or personal - asking this simple question will certainly enhance the relationship. It shows that you are genuinely interested, and based on this knowledge; you can offer your support, knowledge, experience, guidance or simply a listening ear to help them preserve, pursue or protect what's important to them.

For me, this question could prove to be quite enlightening if asked of my teenage daughters - what's important to them right now is, more than likely, very different to what's important to me. Knowing what's important to them helps me understand their decisions and actions and allows me to support, guide and protect them.

When asked of my clients, their responses provide me with invaluable information (beyond the usual financial data) and empowers me to assist them in developing strategies and actions to achieve their goals and protect what is important to them right now. It also enables us as a firm develop and provide our clients with products and services that are useful, relevant and valuable to them.

So when was the last time you asked someone "What's Important To You?”

I encourage you to ask this question of your customers/clients - their answers could make all the difference to your business relationship and help you to support and serve them. After all they are the life blood of your business. It is as simple as remembering WITY.

Start your new business engines - Article by Steve Marsten

With everything happening in Gladstone over the past 18 months, there has been an increase in the number of enquiries buying or starting a business. Major projects that boost the local economy encourage confidence in people to follow their dreams and actually act on them.

As everyone knows there are scary statistics about new starts and their failures however and the big problem is that most people under capitalise their business and forget why they started in the first place. The first thing they cut back on is the marketing. I have heard people say – “we’re just going to have a quiet opening and let word of mouth work its magic”. This is what is known as “Hope Marketing”. Soon they have a quiet closing because people didn't know they existed! 

Plan the opening – it’s important. In towns the size of Gladstone – people talk. They use social media. The word will get out quickly IF you have a well planned opening event. Consider who should be there. Who should “open your business”?

Consider some pre-launch sequences to build anticipation. There should be at least 3 spread over a period of no more the 6 weeks and no less then 3 weeks. It may be a flyer; a video ad on YouTube or something physical that you give away in the main street.  The aim is to focus on the “opportunity or experience you are offering. How will your custom be “different” after the experience or the opportunity? How will they have transformed? Keep giving people value. (You can never give too much!) What will the “ownership experience” of owning your product be? Or perhaps the tasting experience? Always note that there is a special offering coming to them.

Engage people in conversation. They will engage others hence social media can be useful for this as well as your blog perhaps. Use Partners to turbo charge your marketing. Speak to your suppliers. Utilise their lists or clientèle or if you are starting Yoga Classes maybe you target someone in the Massage industry?

Planning the Launch – you need to target two sets of people - those who are your potential clients and customers and those who love to talk about new things in town. Don’t forget to invite the town dignitaries as well as the local paper. All of these will talk about your business over the next week. When you have your speech keep it relatively short and focus on WHY you are doing what you are doing then delivered to the highest standard possible. At Sothertons we work with business owners who are focussed on success.