Business Issues That Keep You Awake At Night

By Joe Smith

In the current economic climate and with the ever evolving technological changes, business owners are facing significant challenges in several areas of their business now more than ever.  Although this is obviously an article in printed media I would like to make it a little interactive!  Please read on and then use the contact details at the end of the article if you think we could help.

So what are the things that keep you awake at night if you are a business owner?  Some of the main issues that we hear as business advisors and accountants relate to cash flow.  No matter which industry that you operate, or which stage of the economic cycle we are at, cash flow needs to be monitored closely.

In times where cash flow is tight, it is obviously important to monitor money coming in and going out very closely.  One thing that we can help with is comparing your income and expenses with industry benchmarks for similar businesses to determine if there are any areas where you are spending more or less than average compared to your income.

The other side of this may be when things are going well the temptation is to add to existing assets or upgrade using finance.  While this may be a sound strategy, it is imperative that a budget and cash flow for the business is prepared and closely monitored to ensure financial obligations can be met going forward.

Technological changes may also be one of the things that keep you awake at night.  At Sothertons we strive to keep on top of technological advances in our industry and we are experienced and accredited for using online software such as Xero that can not only reduce the time spent on bookkeeping, for business owners who are time poor, but we can also recommend add on software that could help improve your business in other areas such as employee scheduling and payroll, stock management or electronic point of sale systems as well as many other areas.

And with the theme of making this article interactive, please call or email us at Sothertons Gladstone on 4972 1300 or email sothertons@sothertonsgld.com.au to organise a no obligation chat over a coffee to see if we can help with the issues in your business that keep you awake at night!

Single Touch Payroll – Are you ready?

By Tina Zawila

Single Touch Payroll (STP) commences on 1 July 2018 and is mandatory for employers with 20 or more employees, yet most are not even aware of what STP is all about.  And before you think that 1 July is ages away, you should be aware that you need to count the employees who are on your payroll on 1^st April, to determine if STP applies to you from 1 July.  

When doing your count, you include each individual employee, not just your FTE’s (full-time equivalents).   If a casual employee worked for you anytime during the month of March 2018, they should be included.  Of course you should also include any employees who are on leave, are seasonal, or even if they work for you overseas.   So take care, you may not think you ‘usually’ employ 20 people, but it is possible that you could hit that number based on the requirements of the head count.

There are a few limited exemptions to the head count including independent contractors, staff provided by third-party labour hire organisations and company office holders and directors.  However, if you meet the headcount and are required to report through STP, you will then include these employees in your STP reporting as normal (they just don’t count towards the initial head count).

You should also be aware that once you become what is called a “substantial employer” (with 20 or more employees) then you will need to continue reporting using STP even if your employee numbers drop to 19 or less (unless you apply for, and are granted an exemption).

So what’s STP all about?

Quite simply it means that you will report payments such as salaries and wages, pay as you go (PAYG) withholding and superannuation information from your payroll solution to the ATO each time you pay your employees.  

Therefore you will need to ensure your payroll software is STP ready and compliant before 1 July 2018.  Many of Australia’s leading software providers are working on this functionality to have it ready by the start date.

If you do not qualify as a substantial employer this year – be aware that from 1 July 2019 STP will apply to all employers (subject to legislation passing in parliament). 

If you have any questions regarding STP, contact the professional team as Sothertons Gladstone on 4972 1300.

Is your Business App-to date?

By Steve Marsten

Many people say that when you have a small to medium business – there is just no time to do anything and yet there are those business owners who take things in their stride and look like they are in control and have time on their hands. This is not always easy you need to be a problem solver, communicator or a financial whiz kid. You need to wear a lot of hats.

We are always looking to find ways to improve productivity and systemize different sections of the business all the time. It’s just making life as an entrepreneur just that little bit easier. We are often asked what Apps we use to help us in our business. Now there are thousands of Apps and navigating your way through them is not easy. However you often land on some good ones that you tend to rely on.

Apps can be broken into 4 key sections for your business. 

Finance and accounting; Communication; Time management and other favorites.

Finance and accounting:

Xero App for your mobile allows you to run your business from anywhere. It works for all systems. It’s easy to send invoices, approve expenses, input receipts and reconciling your accounts. So your office can be on any beach, mountain or desert that has the internet.

Communication:

Many have tried to knock down skype however Skype is widely used for business communications. This text, voice, and video chat application is available on desktop and on mobile, it’s a good way for teams to stay in touch as well. Because most people are already familiar with Skype, there’s no learning curve involved.

WhatsApp, Telegram and Messenger are also used by many especially if groups can be established to keep things “in house”. Watch out for the “Slack” app in this space. It’s growing at a rate of knots as well.

Time Management:

Outlook mail lets you bring all your email accounts and calendars in one convenient spot. Whether it’s staying on top of your inbox or scheduling the next big thing, it makes it easy to be your most productive, organised, and connected self.

Other favorites:

As I mentioned – they are a plethora of apps however my favorites includes a  calculator; Uber; Converter for imperial to metric  and SamCard for collecting business cards. This App transfers contacts straight into my outlook.

For more information on Business Apps call our team at Sothertons on 4972 1300.

Work Related Deductions – Are They Legit?

By Joe Smith

While the hectic tax season for individual tax returns may be over and accountants give a sigh of relief, the tax returns lodged during this and prior tax years are now in the sights of the ATO.

The top man at the ATO, Chris Jordan, has recently advised a senate committee that random audits have started over the past 18 months which are focusing on workplace related tax deductions. 

So you may be thinking that your tax return claims are only a tiny amount in the scale of things however the total of work related tax deductions in Australia amounted to $22 billion in 2014-15!  And of this total the ATO estimate that $2.5 billion or more could have been paid out in questionable refunds.

One other thing to keep in mind is that while some audits may be random, the ATO have benchmarks for almost every occupation you can think of and these can be used to calculate whether your claims are over these benchmarks which in turn may lead to an audit.  If you do receive the dreaded audit letter from the ATO, if they find the claims to be false or unsubstantiated, you may have to pay back part or all of their refund plus up to a 100% penalty with interest.

With the ATO making it easier to lodge tax returns without using a tax agent, it is arguably also easier for them to recover amounts claimed by taxpayers lodging via MyGov.  If you haven’t received advice from a legitimate tax agent on what can and can’t be claimed, then it may be possible that you have claimed something you are not entitled to claim.  So I would always advise that if you have work related tax deductions totalling more than a couple of hundred dollars you should seek professional advice and lodge through a tax agent.

If you would like to know what can and cannot be claimed for your own specific circumstances then call 4972 1300 to book an appointment with a tax experts at Sothertons Gladstone.  

Ignorance is NOT Bliss!

By Tina Zawila

From time to time we meet clients who have found themselves in some form of financial difficulty, generally with the ATO, their bank, their suppliers, or they are simply struggling to make their business work as it should.

If the client seeks help early, we can usually nip things in the bud, suggest some changes to business strategy, enter into new financial arrangements and generally avoid a serious financial issue.

However, there are times when clients do not seek advice early (for whatever reason) and by the time we become involved, things are quite difficult.  We have seen the ATO issuing garnishee notices on bank accounts, and clients using finance from what is known as “lenders of last resort” with effective interest rates of 67 to 69% pa – yes you read that rate correctly!  We can still help in these scenarios, however, a lot more effort and time will be needed to turn things around.

Don’t let this happen to you!  They say ignorance is bliss, but ignoring a problem does not mean it’s not happening. And the sooner you address the issue the better.  Time does not heal financial wounds, it usually exacerbates them.

If you are new to business, seek advice early.  Make sure you understand your business structure – there is a difference between operating as a sole-trader and being a director of your own operating company.  You should also understand your taxation obligations including income tax, GST, PAYG, and superannuation for employees and/or yourself.  

If you are an existing business and notice that you are struggling to pay your suppliers on time, pay wages, meet loan repayments or taxation liabilities, seek advice immediately.  

Don’t let the situation escalate and don’t feel like you need to solve this on your own.

Early intervention gives you the best chance of working through the issues and finding workable and practical solutions. 

If you are struggling with a financial issue, call the professional team at Sothertons today, on 49721300 and let us help you with strategies to improve your business performance and financial position.

The Growth Strategies in Tough Times

By Steve Marsten

It never ceases to amaze us how some businesses continue to operate without any formal business plan. Is it possible for a business to operate without one? Of course it is. And that’s the conversation we continue to have with small business owners. Do they really know how much better their business could be or how much more their business can deliver in terms of services, value to customers and their employees as well as to themselves without a business plan?

Most businesses still operate with a limited thinking about what their business is capable of and they are not addressing critical issues within their business planning process.

We use business strategies to develop our business plan. It’s a basic 3-4 page document that highlights what needs to happen to drive the business more then just CPI or 5% or 10%.

Your strategy should make you think about 5 key elements at least:

1. Efficiency 

2. Systems 

3. Innovation 

4. Strategy for Growth and Marketing 

5. Risk Management

Efficiency is about doing more with less and SME owners tend to find more ways to operate more efficiently with lower costs. Communicate and discuss with your staff. They are the largest untapped source of knowledge in improving your business.

Depending upon the size of your business, there are different accounting systems that you can use that save you time and hence money! Find out about improvements for small business accounting systems with help from an experienced accountant.

Innovation has to be one of the most important issues of your business planning. It means NOT thinking about what you do now but thinking about how others who maybe moving into your industry, would be establishing themselves differently to you. “Radical” and “New to the world” are the buzzwords however innovation is often about taking something old and tweaking it some more.

Growth Strategies are a key to keeping the top lining improving every year even in a contracting economy. It’s about examining your market; your products and your adaptability to changing markets.

And finally SME’s take on more risk then anyone in the business world. Risk mitigation is the key by having Plan B’s for any major risk issues identified in your business.

I have touched on some key points with business planning. They are all critical to a successful business. Call us at Sothertons to assist you in building a practical Business Plan for the tough times on 4972 1300.

Crypto Currency – The Taxman is Watching

By Joe Smith

The debate over crypto currencies, specifically bitcoin,  has been everywhere over the past few months however one thing that is very important that hasn’t been in the headlines so much is how they are treated for tax purposes in Australia.  The ATO are keeping a close eye on crypto currencies and are consulting with experts on how it should be taxed in the future. 

The current view of the ATO is that bitcoin is nether money or a foreign currency but is similar to a barter arrangement.  From 1 July 2017 the sale and purchase of bitcoin is not subject to GST.  If you are simply using bitcoin to purchase personal goods or services and you are not in business then there are no income tax consequences.  Further to this use, any capital or gain or loss will be treated as a personal asset if the cost of the bitcoin is $10,000 or less.

Where someone is mining bitcoin, this is treated as carrying on a business and as such any income from the transfer of bitcoin to a third party is assessable income.  Any expenses incurred in mining bitcoin are allowed as a tax deduction however non commercial loss provisions may apply.  And if bitcoin stock is held in this scenario it is treated as trading stock.

Finally, the most probable scenario is bitcoin acquired as an investment.  If you are not carrying on a business, any gains or losses will be subject to capital gains tax law with tax payable on any gains made and losses being available to offset against future capital gains.  However, regularly buying and selling bitcoin will most likely be treated as a business by the ATO subject to specific tests and criteria.

And remember the ATO are very resourceful and can look at your lifestyle and living expenses if you get audited and have not declared any capital gains or income.  If you queries on tax and crypto currencies, talk to the tax experts at Sothertons Gladstone on 4972 1300.