Bookkeeping and Accounting Blog - Articles for Bookkeepers in Australia

April 8, 2020 Accounts, COVID-19, Uncategorized

How To keep Your Business Running During An Emergency

‘Business continuity’ is the process of planning out how your company can continue trading – when disaster hits. In essence, it’s your Plan B for how to set up a means of trading, when you don’t have access to your usual offices, workspaces or equipment. Right now businesses are having to put ‘Plan B’ into action.

10 key elements to include for your ongoing business continuity plan

Digital communication and cloud technology have given us the ability to access company information, applications and communication channels. For many businesses this will allow you to keep at least some of your usual day-to-day operations ticking over.

However, there are a host of important business areas that you need to consider when developing your company strategy to deal with an emergency situation.

Here are 10 important elements to factor into your business continuity plan:

Location and workspace – Does everyone in the business have a good internet connection for remote working? Make sure you agree on the guidelines for maintaining workflow. Schedule regular online catch ups to check in and agree on the priorities.
Key products or services – which products and/or services will you be able to offer? For the business to continue trading, you need to identify a core set of products/services. Review which product/services will bring in the required revenue and cashflow, and which activities in the business should therefore be classed as essential.
Key staff and resources – who are the core people you need for the company to operate? Based on your decisions regarding essential activities, identify who your key management and staff members are. Think about how much resource is needed to trade, how you’ll get approvals and sign-off and what critical knowledge needs to be shared within the team.
Key contacts and connections – who are your main stakeholders outside the business? And which of these are vital to the running of your business? Make a list of your key suppliers, service providers, property contacts and customers and ensure you can have open communication with all these connections. Also, look at alternative suppliers so you can minimise any disruption to your operations.
IT equipment, data and infrastructure – what equipment, tools and software do you need to continue working? Essential hardware and software will include laptops, tablets or smartphones for your staff, paired with cloud services, video conferencing, communication apps and effective, secure access to your customer and business data.
Plant and manufacturing equipment for essential businesses – if you’re a bricks and mortar business, or a product-based manufacturing business, what equipment do you need to carry on your operations? This will include any machinery, hardware equipment and vehicles needed to manage the essential operations you’ve identified for the business.
Financial management – how will you access your key financial numbers during any outage? It’s sensible to move to a cloud-based accounting system NOW, so you have continuous, uninterrupted access to your financials. A platform like Xero online accounting allows you and your advisers to see those all-important figures.
Cashflow management – how are you going to ensure you maintain a positive cashflow position? We can help put a process in place to run regular cashflow statements. Use forecasting to project your cashflow position forward in time – so you can take proactive action to avoid any cash gaps in the near future.
Insurance – does your current business insurance policy cover you for all emergency situations? Review all your existing insurance policies so you understand what your policy covers. Securing the business in all scenarios should be your focus here.
Leadership – who could take over if you (the owner/MD/CEO), is left unable to run the business? Having a nominated deputy, with a clearly defined chain of command, means you can be confident that the company will be in safe hands, even if you’re indisposed.

March 25, 2020 BAS, Uncategorized

Scott Morrison Unveils Additional Stimulus and Support Measures

Prime Minister Scott Morrison has announced an additional stimulus package, taking the value of the total support to $189 billion.

Acknowledging that the coronavirus pandemic may continue for some time and have long lasting impact on the livelihoods of Australians, the PM announced a raft of new support measures.

Details of the new package:

Support for businesses – eligible businesses and not-for-profits, with a turnover of under $50 millions and who are employers, will receive up to $100,000 (with a minimum of $20,000). This is an extension to the ‘boosting cashflow for employers measure’ which aims to keep employees in work. Employers will receive a tax free payment equal to 100% of wages or salary withheld (increased from 50%). This will be available from April 28th.

Temporary relief for financially distressed businesses – by temporarily providing higher thresholds and more time to respond to demands from creditors and providing temporary relief from directors’ personal insolvent trading liability.

Increasing the instant asset write-off – the Government has already announced that they are raising the threshold to $150,000 (from $30,000) — and making more businesses eligible to use it up to a turnover of $500 million.

Backing business investment – by accelerating depreciation deductions.

Supporting apprentices and trainees – through wage assistance to help small businesses.

Coronavirus SME guarantee scheme – a loan guarantee arrangement between the Government and participating banks to assist with the immediate cash flow needs of small businesses.

Increasing the benefit – the Government is temporarily expanding eligibility to income support payments with a new, time-limited coronavirus supplement of $550 per fortnight. The payment will go to existing and new recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit for the next six months.

Early access to superannuation – eligible individuals and sole traders will be able to access up to $10,000 in 2019-20, and a further $10,000 in 2020-21. Withdrawals will be tax-free. Applications are through the myGov site online by July 1. There will also be a temporary reduction of minimum super drawdown rates.

Support for airlines and airports – up to $715 million relief from a range of taxes and Government charges.

For more on the new package, the Treasury has fact sheets on each measure at https://treasury.gov.au/coronavirus.

Talk to us, we are here to help you and your business.

February 26, 2020 Accounts, BAS, Bookkeeping

Common BAS Errors Will Impact Your Business

Most activity statement errors are unintentional – even so, such errors can have a big impact on your Business Activity Statement. Unintentional errors may result in you paying too much GST or not enough. Whether you lodge the BAS yourself or whether you use our services to lodge, it’s useful to understand some of the inadvertent inaccuracies that can happen.

Here are some tips to help avoid the most common mistakes we see on the BAS.

Before preparing the BAS

Allocate all transactions in your accounting software to the correct expense or income account.
Make sure you reconcile your accounting software to your actual bank balance to ensure you haven’t missed or duplicated transactions.
If you use point-of-sale software and clearing accounts, check that you are not declaring the same income twice.
Set aside time to prepare the BAS so you have plenty of time to manage cash flow obligations ahead of the BAS payment due date.

Reviewing the BAS

The most common errors involve incorrect tax codes. Bank fees, donations, certain registrations, interest and ASIC fees are GST free.
Check overseas purchases; many well known online vendors are now registered for GST in Australia, however many of the smaller overseas vendors may not be, so they should still be GST free.
Similarly, some payment gateway services have GST on their fees and some don’t; check if you can claim GST.
Check that you have included stamp duty on insurance policies; as this is a government duty, no GST is payable.
If you have bought a vehicle, check that you have not claimed more than the ATO car limit of GST for this financial year.
Make sure you haven’t double claimed GST on both the vehicle purchase and repayments.
Don’t include salary, PAYGW or superannuation as a purchase on your BAS. Salary and PAYGW are reported separately on the BAS. Superannuation is not reported on the BAS at all.
Do include cash purchases and income. Cash transactions should be recorded in your accounting software.
Check the GST registration of any contractors you pay and check that you have not claimed GST if they are not registered.
If you transfer money between related entities or bank accounts, check that these transactions do not have GST as they are excluded from BAS reporting.
Although your business may purchase goods and services for private use, you may not claim GST on these.
Remember, you need a valid tax invoice for every business purchase over $82.50 including GST.

Accurate Activity Statements

There are many more potential issues with BAS reporting, but these are the most common and easily fixed. If your business is growing in complexity, or if the compliance obligations are becoming challenging, we’ll help you make BAS effortless and accurate every time.

Contact our team of professional bookkeepers now.

February 19, 2020 Uncategorized

Gift Cards and Vouchers Now Have Three Year Expiry

Gift vouchers can be a great way to attract customers, maximise marketing campaigns and increase sales – so long as you don’t get caught out by the new rules.

Does your business offer gift cards or vouchers? If so, new laws came into effect on 1 November 2019, which you’ll need to adopt. Gift cards and vouchers issued on or after 1 November 2019 must meet the new requirements of the Australian Consumer Law (ACL).

New Gift Card Laws

Mandatory minimum expiry period of three years from the date of issue.
The actual expiry date must be listed on the card; alternatively, the supply date and expiry period, for example, “Valid for 3 years from 11/02/2020”.
Post-purchase fees are no longer allowed. Payment processing fees may be allowed, however activation, top-up, account keeping or balance enquiry fees are not.

There are some situations in which the new requirements don’t apply, for example if the card can be topped up, if it is part of a temporary marketing promotion or if it is donated free of charge for promotions. Visit ACL New Gift Card Laws webpage for full details.

If you have not met the new requirements on vouchers issued since 1 November, the new laws will still apply even if the actual voucher does not. Customers will be able to redeem the voucher within the three-year expiry regardless of what is stated on the voucher. Gift cards and vouchers issued before 1 November 2019 have the same expiry period and conditions of purchase as at the time of purchase.

What Next?

Review your gift voucher terms and conditions.
Update your printed and online vouchers and related marketing material.
Check the information published on your website and social media.
Make sure your internal processes and point-of-sale systems are brought up to date and remember to tell your staff of the changes.

Need help?

Talk to us about how the changes affect your business operations and cashflow, or how to implement gift cards in your business.

February 5, 2020 Accounts, Bookkeeping

How Healthy Is Your Working Capital?

We all know that cash is king when it comes to business success, but what exactly is ‘working capital’ and how does this financial metric help measure the health of your business?

Working capital is made up of the cash and assets that are available in the business to fund your operations and keep you trading. It’s worked out by taking your current assets (the things you own) away from your current liabilities (the things you owe to other people).

So, why is working capital such a critical metric?

Having the liquid capital needed to trade

It’s possible for your business to be busy, successful and profitable, but for your cash position to still be in poor health – and that can have a serious impact.

If you can’t readily convert your assets into liquid cash, it’s a struggle to meet your cashflow goals, pay your bills and fund your day-to-day operations. But with the optimum level of working capital, you strengthen your balance sheet and put the company in a solid financial position.

To achieve this healthy level of working capital you’ll need to:

Proactively manage your cashflow – cashflow feeds your working capital by pumping liquid cash into the company and keeping the balance between assets and liabilities in a strong position. But to achieve this, it’s vital to achieve a positive cashflow position, where your cash inflows are greater than your cash outflows. This means getting paid on time, lowering your outgoings and keeping a close eye on your ongoing cash position.
Monitor and forecast your financial position – running regular financial reports helps you stay in control of your finances. With careful monitoring and forecasting of your cash position, you can ensure you don’t end up in a negative cashflow position, without the requisite working capital to trade and fund the next stage in your business plan. Cloud accounting software and business intelligence apps have made it easier than ever to create up-to-date, real-time reports and run dashboards that show your key metrics.
Use additional finance when required – if working capital is looking thin on the ground, then additional funding may be needed to bolster your balance sheet. Short-term finance options (such as overdraft extensions or invoice finance) and longer-term business loans can be needed to keep working capital on an equilibrium.

Talk to us about optimising your working capital

Working closely with your bookkeeper is vital if you want to promote the ideal level of working capital in the business. We can help manage your cashflow, monitor your financial metrics and provide access to additional finance and funding when your capital needs a boost.

Get in touch to start maximising your working capital.

January 22, 2020 Uncategorized

Start Your Year Off In The Performance Zone

Getting back into work after a break can be hard.

You might be struggling to get back into your routine and engage your brain in work. Or, perhaps you spent time setting your goals and planning your year and you’re full speed raring to go. There is however, an optimum approach somewhere between these two scenarios – we call this hitting the ‘Performance Zone’.

The ‘Performance Zone’ sits between the ‘Comfort Zone’ and the ‘Danger Zone’.

It’s easy to hang out in your Comfort Zone. We just keep doing what we’ve always done because so far it’s worked… and there’s no motivation to change. However, sitting comfortable in times of such rapid change can leave you exposed. Your competitors, those working in the Performance Zone, setting goals and making incremental changes and improvements, could squeeze you out.

Working in The Performance Zone enables you to break bad habits and form good ones, achieve your goals and improve the value of your business. When working in your Performance Zone, you’ll be engaged in your work and adopt new learnings, processes and technology to streamline your business and make it more efficient.

Be wary of putting the full throttle down though. If you stretch too far out of your Comfort Zone, past the Performance Zone, you may find yourself in the Danger Zone. Committing to a massive amount of change all at once can lead to volatility, burnout, mistakes resulting re-work, the loss of a key team member and cause you to work even longer hours for no gain (apart from stress gain).

The aim is to set goals and implement changes to move beyond your Comfort Zone into your Performance Zone. If you do find yourself hitting the Danger Zone, it’s ok. Retreat back into your Performance Zone… not back to your Comfort Zone. You’re here to improve your business performance, that won’t happen from your Comfort Zone.

This concept applies to your entire team.

Motivate them to work in their Performance Zone instead of their Comfort Zone but have processes in place to prevent their burn out. If you notice someone coming in early, staying late and visibly stressed, find out why. Speak to them about the Performance Zone and offer support to help them manage their workload, prioritise work and reduce their stress levels.

Want help reaching your Performance Zone? Get in touch to find out how we can help!

December 12, 2019 Uncategorized

Give yourself a present this Christmas

Get outside for a walk!

Owning and working in a small business can eat up all your spare time. Exercise or time for yourself is often the first thing that is abandoned to fit in the many other things you have to do in a day. And while many of us finish the year with lofty goals for exercise in the new year, these can be hard to achieve.

Is this you?

Here’s an idea… Instead of setting goals that are vague and big, set smaller more specific goals that are much easier to achieve. Make a point of getting outside every single day and getting ‘a little’ exercise – it doesn’t have to be a gym membership, a bootcamp or going running. Even just a walk around the block will be a step in the right direction!

A study in the journal Preventive Medicine found that just by minimising sedentary activities and replacing some of them with light-intensity activities can achieve benefits for your health. So start small and stick to it. Soon you’ll be benefiting from the short time away from work, more time to think and the fresh air.

Start walking – Walking has multiple health benefits both physical and mental. Find out about walking groups in your area or join a friend a couple of days a week.
Take the stairs rather than the lift – When the option is there to take the stairs, use them.
Replace your daily drive with a bike ride – If your exercise is part of your daily commute it becomes integrated in your day rather than another thing to achieve.
Walk ‘further’ to the office – if biking is not an option perhaps you could park a bit further away from the office or get off public transport one stop earlier.
Go out for coffee – You may not achieve it every day, but if you find a great coffee shop a couple of blocks away, you’ll have a reward to look forward to.

For a healthy lifestyle, the adult recommendation is at least 30 minutes of moderate physical activity on five or more days per week. This will not only increase your quality of life but also your sense of wellbeing. So give yourself a present this Christmas and go for a walk.

Happy Christmas!

December 5, 2019 Bookkeeping, Superannuation

New Rules for Salary Sacrificing Super

Salary sacrificing to super allows an employee to forego part of their salary or wages and have the employer contribute this amount to their superannuation fund instead of paying it as cash. It reduces the taxable value of salary or wages, and is therefore beneficial to the employee in both reducing tax payable and increasing superannuation.

Up until now, employers were allowed to calculate superannuation guarantee contributions (SGC) on the reduced amount of salary or wages.

What’s Changed?

From 1 January 2020, SGC must be calculated on the gross amount of salary or wages, before any salary sacrifice amount is deducted.
This means employers will have a higher superannuation contribution to make for any employees who previously had their super guarantee amounts reduced because of sacrificing part of their salary to super.

Example: an employee is paid $100,000 per annum exclusive of SGC and sacrifices $20,000 to super. The employer currently pays SGC on the reduced salary of $80,000, being $7,600. From 1 January 2020, the employer must pay SGC on the gross salary of $100,000, which will be $9,500, an increase of $1,900 per year.
The other big change with this rule is that salary sacrifice contributions will no longer contribute to the compulsory employer superannuation guarantee contributions. In some cases, employers were able to avoid paying any SGC, because the employee salary sacrificed an amount at least equal to the compulsory amount of employer contribution.
Because sacrificed amounts will no longer be counted towards employer contributions, if an employer has not fulfilled their super guarantee obligation and is required to lodge a super guarantee charge statement, the amount of super owing, (and any charges and penalties), will be calculated exclusive of any salary sacrifice amounts paid.

Example: an employee is paid $120,000 per annum exclusive of SGC and sacrifices $15,000 to super. The compulsory employer amount of 9.5% on $120,000 is $11,400. As the employee sacrifices more than this to super, the employer currently would have made no further contributions. Under the new rules, the employer must pay SGC on the gross salary, in addition to any salary sacrifice the employee makes. This means an increase of $11,400 per year.

Revise Employee Agreements and Remuneration Packages Now

We recommend that employers review all employee arrangements that include salary sacrifice to superannuation.

Employment agreements and remuneration packages may need to be revised to comply with the new rules so that it is clear that superannuation guarantee is calculated on the gross salary or wage before any amounts sacrificed.

We can assist with reviewing remuneration packages for your employees so you are not caught out by the new rules.

November 27, 2019 Uncategorized

Dividends and Paying Yourself as a Director

As the director in a limited company, dividend payments are the usual way for you to take money out of the company – and see a financial return on your investment into the company.

Dividends are payments made to the company’s shareholders when the business has made a profit. What’s not re-invested into the company can be paid out as dividend payments to your shareholders, of which you’re one. But what’s the most effective way to do this?

Dividends as a part of good wealth management

As a company director, the company’s finances aren’t your only concern – you also have to make sure you’re managing your own personal finances in the best way possible.

Good wealth management is essential as a director, and that means taking an informed, long-term look at the ways in which you’re paid, the financial vehicles you’re using and the tax planning you’re carrying out across the year.

To make your personal finances work effectively:

Split your finances into business and personal wealth – it’s vital to create a clear divide between business cash (money in your limited company’s bank account) and your own personal cash (money in your personal current account and investments). Any profit you create is not ‘your money’ until it’s paid to you by the business.
Ensure you’re being tax efficient – Once a dividend is paid to you – and that money is now yours – you’ll be liable to pay income tax on that income. The rates of income tax in most territories will be higher than the rate of corporation tax. So it’s usually a good idea to keep your profits in the business for as long as possible, minimising the amount of income you’ll have to pay when you file your annual personal tax return.
Pay your dividends at the right time – the timing of WHEN you pay a dividend is important. If you pay a large dividend at the end of the tax year, it may take you over your tax allowance for the year. And if your total dividend income is too big, you could end up paying more higher-rate tax than you need to.
Look at other ways to be paid – dividends are not your only option when it comes to getting paid as a director. You could put yourself on the payroll and take a small ‘living wage’. Or you could have your profits paid out as pension contributions into a personal pension scheme. So it’s sensible to consider all the tax-efficient alternatives.

Planning your directors’ pay

If you want to get the most from directors’ pay, come and talk to us. As your trusted wealth adviser, we’ll work with you to maximise your earnings. This includes helping you forecast your earnings and profits, planning out your dividend payments from the company and setting up your finances so you’re being as tax efficient as possible.

November 13, 2019 Uncategorized

Have you got a strategy for a financially stress free holiday period?

Holiday breaks are a time to spend with family, friends and have a chance to recharge for the year ahead. But, for a business owner this time can be stressful without careful cash flow planning. Even if you do continue to operate through the holiday shutdown season, your customers’ financial behaviour may not remain the same.

It can be pretty disappointing to work hard all year only to find that once you have paid staff, overheads and creditors, you have little or nothing left in the bank to cover your own time off. The budget and forecasting process ensures you know your numbers and are prepared.

Why is cash-flow planning particularly important at this time of year?

Staff leave needs to be covered in addition to your normal fixed overheads like rent, creditors and tax compliance. If you are closed over the period, you will not be selling and your sales may take time to get started again in the new year.

Here are some simple strategies that can help:

Decide your Christmas and holiday break dates – confirm with staff, customers and suppliers so that you can motivate customers to get organised early.
Budget and plan for annual leave – pay rates may be higher than standard ordinary hourly rates, also factor in statutory public holidays.
Decide on a leave payment strategy – will you pay out leave at the beginning of the Christmas break in full or continue to pay as usual throughout the break?
Review your work in progress (WIP) – plan to complete jobs or services that can be invoiced and paid before Christmas (remember if you don’t invoice and collect payment before Christmas, your clients are likely to go on break as well and you may not see the money until mid to late January).
Put together a capacity plan – depending on the type of goods and services you deliver, there is generally a rush to get everything done before Christmas, whether it’s the kitchen bench-top installed or the beauty treatment before the break.
Stocktake – do you need to order in goods now to be able to complete work in progress? Check that there is stock on hand available now to see you through.
Making an arrangement with the Tax Office – if you find you cannot make payments, it is possible to apply for a payment arrangement. There are costs associated with this, however it may provide a solution that gets you through the holiday period. Talk to us, we can help.

Need financial support?

If you can’t make ends meet, now is the time to organise short term financial relief like an arranged overdraft or loan, rather than hoping it will come right.

“Alleviate Your Stress” and contact us for help with cash-flow forecasting or assistance in applying for short-term finance to get you through the break.

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