The Christmas countdown is happening, and we are rushing to get everything done to capitalise on all opportunities before the post-Christmas lull. Whether Christmas is a busy period or not, it does cause volatility and dislocation for most businesses. It is not business as usual and that is what causes the problem.
Business owners cope better with predictable and consistent trading conditions, and solutions to issues that arise are easier, it is a very different picture during disrupted periods. Watch out for these five things this Christmas:
1. The headache that is Christmas trading stock – Ho, Ho, No …
If your business sells goods and your activity spikes over Christmas, there will be the temptation to increase stock. It makes sense as long as you don’t go over the top. Having too much post-Christmas stock means you have a lot of cash tied up with stock or will be carrying out of season product. Find suppliers than can work on short notice. Or better still, see if they will place stock on consignment, then you only pay once stock sells. Sometimes it is better to lose a few sales rather than carrying a lot of stock and headaches into the New Year.
Stock management is not just about the cost aspect. Consumers will purchase online if they cannot purchase in store. Retailers can capitalise on this by giving consumers the opportunity to buy online while still in their store if the stock is not currently available or may provide free shipping.
2. The trend to discount
Consumers want a bargain and usually find one. With Black Friday sales stock is usually available. Those consumers waiting for last minute bargains just before Christmas, are left with whatever stock remains.
If you decide to discount stock, it is crucial to know what your profit margins are so you can calculate what you amount you can discount. Carefully consider your strategy and what your business can sustain. Example – a business with 30% gross profit margin that decides to offer a 25% discount needs to increase sales volume by 500% simply to maintain the position they were in beforehand. Quite often businesses end up trading below their break-even point and therefore generate losses.
3. The increased costs of Christmas
Costs increase over the Christmas period. Employing more staff, holiday and other leave costs, downtime from public holidays, and promotional costs all add to the cost of doing business. Keep a close eye on the costs. It is awesome to embrace the Christmas spirit as long as you don’t get a hangover for New Year.
A lot of businesses bring on more casual staff. Make sure you are paying staff the correct pay rates and meeting your Super obligations. Example – Under Retail Award, the rate for casuals (21+ years) starts at $26.76/hr. There is a 3 hour minimum shift for all casual workers. Check the Fair Work website findyouraward to check correct rates.
4. Cash flow headaches into the New Year
Quite often the New Year means quieter trading and also tighter cash flow. The first quarter (Jan-Mar) is usually the toughest quarter for cash flow for the year. Ensure you have a cash buffer heading into the New Year. Don’t over-commit at the end of the year or it will lead to problems in the New Year.
5. Be like Scrooge – chase in those debts
If your customers have accounts, start following up the debtors early. If they are experiencing any cash flow problems, Christmas will increase that pressure. Creditors who chase early and hard get paid first. You don’t want to be the last supplier on payment list – the cash flow bucket may well be empty at that time.
Christmas is a magical time of year. Don’t get caught up in the hype and rush and lose control.
At Accorti Accountants +Advisors we are Business Accountants. We work with clients all over Australia and have offices in Brisbane and the Gold Coast. If you have any questions or need help please contact us now.
#tax #advisory #bookkeeping
Parliament passed legislation last month that will prevent taxpayers being able to claim deductions for expenses that were incurred when holding vacant land. The amendments are not only retrospective but go further than solely vacant land.
Previously, if you had purchased vacant land intending to build an investment property on the land, then expenses incurred for holding the land (council rates, loan interest, etc) may have been able to be claimed as tax deductions.
The new laws will prevent these types of deductions from being claimed. Mum & Dads (individuals, closely held trusts and SMSFs) are the people that the new laws will affect the most. As the new laws will apply retrospectively to outgoings or losses incurred on or later than 1 July 2019 regardless of whether the land was first held prior to this date, and with no grandfathering in place, these amendments not only impact those that are intending to develop the vacant land but also those that have already acquired the land for development. It is the same target as previous tax changes that denied travel claims for visiting residential rental properties and claims for depreciation for plant and equipment in some residential rental properties.
The changes however, go beyond purely vacant land for residential purposes. Deductions could be denied also for land with a building on it, if it is deemed that the building is not ‘substantial’. The problem is that legislation does not clearly state ‘substantial’ definition.
A shearing shed or silo would be substantial, but a residential garage would not meet the test from what the bill suggests.
If the new measures prevent holding costs from being claimed as a deduction, then they will generally be added to the cost base of the asset for capital gains tax (CGT) purposes. This means that they can potentially reduce any capital gain made when you dispose of the property in the future. However, holding costs for CGT assets acquired before 21 August 1991 cannot be added to the cost base and these costs cannot increase or create a capital loss on sale of a property.
On a positive note, if the vacant land is leased to a third party under an arm’s length arrangement it may continue to meet eligibility for deductions for the holding costs after 1 July 2019 if the land is being used in a business activity. Also, primary production land used in business will generally be excluded from the new rules. However, if there are residential premises on the land already or they are being constructed on the land then deductions could still potentially be lost (at least to some degree).
There are also carve outs for land which has become vacant or which cannot be used to produce income for a period of time due to structures being impacted by natural disasters or other events beyond the owner’s control.
The amendments will not apply if you (or certain related parties) are carrying on a business on the land or the land is owned by superannuation funds (other than SMSFs), companies, certain public trusts or managed investment trusts.
At Accorti Accountants +Advisors we can help you understand and navigate the property and tax issues to help you achieve your goals.
We work with clients all over Australia and have offices in Brisbane and the Gold Coast. If you have any questions or need help please contact us now to discuss land and property tax.
#accortiaccountants #tax #property
The Government has resurrected the Superannuation Guarantee amnesty giving those employers that have fallen behind with their Superannuation Guarantee obligations the ability to self-correct themselves. However, this time the amnesty incentive is strengthened by harsher penalties for those that fail to take action.
The amnesty was originally announced back in May 2018 and was due to run 24 May 2018 – 23 May 2019, but the amnesty failed to secure passage through Parliament after a backlash from those thought that the amnesty was too lenient on recalcitrant employers.
The Australian Government reports more than 7,000 employers have come forward since the original announcement to voluntarily disclose historical unpaid super. The Superannuation Guarantee tax gap is estimated at around $2.85 billion in missing or late Superannuation Guarantee payments.
New legislation to enable the amnesty is currently before Parliament, if enacted it will apply from the date of the original amnesty announcement 24 May 2018 – 6 months after the legislation has passed Parliament. Employers have this time period to disclose voluntarily unpaid or underpaid Superannuation Guarantee payments to the Commissioner of Taxation.
The amnesty applies to historical unpaid or underpaid Superannuation Guarantee for all periods up to March 2018 quarter.
Employers must disclose the outstanding Superannuation Guarantee to the Tax Commissioner to qualify for the amnesty. They must pay in full, or if that is not possible for the business then it must enter into a payment plan agreement with the Australian Taxation Office. If they agree to the payment plan and fail to meet the payments, then the amnesty will not apply.
The amnesty will only apply to voluntary disclosures. The Australian Taxation Office will continue with their compliance activities during the Superannuation Guarantee amnesty period so full penalties will apply if they find the underpayment first. The amnesty also does not include amounts already identified as owing or the employer is subject to an audit with Australian Taxation Office.
Normally, if the employer fails to meet their quarterly Superannuation Guarantee payment on time, they will have to pay the Superannuation Guarantee charge and lodge a Superannuation Guarantee Statement. The Superannuation Guarantee charge applies even if you pay the outstanding Superannuation Guarantee soon after the deadline.
| What employers pay for failing to meet Superannuation Guarantee obligations | |
| No Amnesty | Amnesty |
| Superannuation Guarantee charge comprised of: | Superannuation Guarantee charge comprised of: |
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| Penalties of up to 200% of the amount of the underlying Superannuation Guarantee charge (minimum 100% for quarters covered by the amnesty) | No penalties |
| A general interest charge if the Superannuation Guarantee or penalties are not paid by the due date | A general interest charge
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| Superannuation Guarantee charge amount is not deductible – even if you pay the outstanding amount | Superannuation Guarantee charge amount is deductible |
Under the quarterly Superannuation Guarantee, the interest component is calculated on an employer’s quarterly shortfall amount from the first day of the relevant quarter to the date when the Superannuation Guarantee charge would be payable (not from the date the Superannuation Guarantee was overdue).
The ability to deduct Superannuation Guarantee charge and the reduction in penalties under the amnesty could be significant for employers that have fallen behind with their Superannuation Guarantee obligations.
If Superannuation Guarantee is paid late, special provisions exist within the legislation to automatically protect employees from inadvertently breaching concessional contribution cap limits if the unpaid Superannuation Guarantee is paid to the Commissioner and then transferred to the employee’s superannuation fund. Where the employer makes the payment directly into the employee’s fund, the individual would need to apply to the Commissioner requesting the exercise of discretion to either disregard the concessional contributions or allocate them to another financial year.
If an employer fails to take advantage of the amnesty and is found to have underpaid employee Superannuation Guarantee, they are required to pay the Superannuation Guarantee charge which includes penalties of up to 200%. Outside of the amnesty period, the Australian Taxation Office has the power to reduce the penalty in whole or part. However, the legislation enabling the amnesty imposes tougher penalties on employers that do not voluntarily correct unpaid or underpaid Superannuation Guarantee by removing the Australian Taxation Office’s capacity to reduce these penalties below 100%. In effect, the Commissioner loses the power for leniency even in cases where an employer has made a genuine mistake.
Even if you don’t think that your business has any Superannuation Guarantee underpayment issues, it is well worth completing a payroll audit that will ensure your payroll calculations are correct, and that your employees are being paid at a consistent rate as per their entitlements under workplace awards and laws.
If your business has fallen behind on its Superannuation Guarantee obligations and is eligible for the amnesty, you need to start working through the issues now or contact us to work through the issues for you. There are several calculations that need completing and these may take some time to complete.
If your business has engaged any contractors during the period covered by the amnesty, then the arrangements will need to be reviewed as it is common for workers to be classified as employees under the Superannuation Guarantee provisions even if the parties have agreed that the worker should be treated as a contractor. You cannot contract out of Superannuation Guarantee obligations.
If a problem is revealed, you can correct it without excessive penalties applying under the amnesty.
At Accorti Accountants we can help you ensure you have met your obligations and, in the event you have not, help to resolve.
Contact Us at Accorti Accountants +Advisors located on the Gold Coast & Brisbane, Australia to discuss your super obligations
#accortiaccountants #superamnesty #tax #superannuation #smallbusiness
Question: Am I better off to do business myself or partner with someone?
At Accorti, we get asked this question a lot. And I have asked myself this question many times. This is a question with no easy answers. You will generally not know the answer until after the fact.
I find that for most clients, the question has one main driver: Fear. Fear of the unknown, of failure, of not having all the answers or fear of XYZ….
I recently had a client which had 3 partners in a private company that started several years before coming to us. They had similar goals so “joined forces”. I doubt very much at the time they sat around and said “I’m really scared that I can’t do this on my own, lets join together” but that is what happened (they just didn’t talk about it).
Needless to say, people change and the subtle differences started to magnify. The financial reality of having partners sunk in. As there were 3 owners they all needed to earn a living and therefore too much capital came out to support their respective families, cash flow suffered. Then resentment set in as others were perceived as not pulling their share of the weight.
Ultimately, we then had the disastrous task of unwinding it (a business divorce).
Don’t get me wrong, partners can add tremendous value to your business. Generally, a partner will bring something to the table you lack, normally skills, capital or both. But it is critical you understand your motivation. To help determine whether you are driven by fear, ask yourself the below questions.
If you have reasonable clear answers to the above and realistic means to address them then you need to consider what is the point of having a partner. Why are they coming along? What value are they bringing at you can’t source another way? Be honest with yourself.
If you are still on the fence, as yourself this:
Will the business generate enough profit to support more than one owner? If it can’t … well you know.
In my experience, 9 out 10 times you are better off to go it alone. Sure this might make things a bit harder, take a bit longer, or cause more sleepless nights but you have control of your future. You will make mistakes but we all do (even that partner you want will). But unless the partner can bring something to the table that is truly invaluable, you get along very well, and you want to work together for the next 10-15 years then I’d say go it alone. Or at least try it first.
At Accorti we love to help people find the right answers (whatever they may be).
Contact Us at Accorti Accountants +Advisors to discuss working through these issues, before or after you have “joined forces”
In recent times there has been significant changes to the obligations on Licensees under the Queensland Building and Construction Commission (QBCC) due to the introduction of the Building Industry Fairness (BIF) Act.
The two biggest impacts are:
Here we will focus on the changes to the Financial Reporting requirements.
In many respects we have gone back to the system of old …. Gone are the days of reporting your financial information once, to have your approved Maximum Revenue (MR) granted and then only re-reporting to QBCC if you no longer meet the Net Tangible Asset (NTA) requirements of your approved Maximum Revenue or require an increase. This system of self-monitoring was doomed to be abused (and it was by some).
As such, the new (old) system requires Licensee to report their financial information to QBCC at least annually to ensure they still meet the NTA requirements for their approved Maximum Revenue.
The reporting requirements depend on your Financial Category which are listed below
Those with annual Maximum Revenue of less than $800,000 can self-assess and report directly to QBCC by the QBCC portal.
Are required to provide a:
These financial reports are, technically, not required to be prepared by an accountant. However, the accompanying MFR Report will be required to be signed-off by an accountant.
Are required to provide signed Financial Statements inclusive of:
These financial reports along with the accompanying MFR Report will be required to be complied and signed-off by an accountant.
In addition to your annual reporting requirements, Licensees are required to report continued compliance with the MFR Regulation 2018 or financial information at certain times which include:
A qualified accountant must prepare the MFR report for the licensee. A person is a qualified accountant if they are an accountant who is approved by the Commission, and is independent of the licensee. A person is NOT deemed independent of licensee if that person is:
Ultimately, as Licensee, you are responsible for the information provided to support your license. As such, ensure you take advice from an accountant that specialises in the construction industry and understands the QBCC MFR reporting process and requirements.
At Accorti Accountants we specialise in accounting for the construction and property industries. Please contact us with any questions regarding your QBCC Financial Reporting requirements.
In our next construction blog we will discuss the second major change under the BIF Act – payment claims!
Thanks,
Michael Binnie
If you are located on the Gold Coast or Brisbane or surrounding areas Contact Us at Accorti Accountants +Advisors to discuss your reporting requirements
Tax planning helps to minimise your business tax liability.
Paying tax is not a bad thing, it means your business is profitable, but paying more than tax than you should is a bad thing!
Most people want their business to be working at its full potential and want to save on tax. Tax planning needs to be completed by 30 June every year, which makes it a great opportunity each year to step back, reflect and plan ahead.
Helping our clients each year with the tax planning, we:
During the process, we will ask questions like:
This is a great time to also plan for the coming financial year. We like to consider your business strategic plan, budgets and cash flow requirements.
What are some key areas to consider for tax planning?
Superannuation
If you own a business, make sure you maximise contributions to your own superannuation each year (for both you and your souse). This is the best tax planning available. You are literally getting a tax deduction for investing in your own future.
For employers, superannuation is deductible for the year that the contributions are received by the superannuation fund. If it is possible, pay your employee’s superannuation before 30 June to make sure the business can claim the tax deduction this financial year.
Assets – Instant asset write-off
There are a number of thresholds and dates to consider when a business purchases any new assets so to access the instant asset write-off:
Remember: a business should only buy assets that it can afford and that will be used. Don’t buy things just to save tax!
Write off bad debts
Every business should review the debtor list before 30 Jun 2019. Any debts that can not be recovered should then be written-off.
Stocktake to calculate stock on hand
Every businesses that has stock should complete a stocktake before 30 Jun. The stock can be valued at market value, cost or replacement value (whichever is lowest). These different values can make quite a significant difference.
Bring forward expenditure
If possible, bring forward expenditure. Dependent on business cashflow, you may bring these costs forward into the current year and this will reduce the tax payable. Expenditure may include equipment repairs, marketing orders, stationery, or any other outlays that are necessary.
As with all planning, it’s best to start early, so all options can be considered and budgeted.
Would you like to find out more about business tax planning and what you should do prior to 30 June?
If you are located on the Gold Coast or Brisbane or surrounding areas Contact Us at Accorti Accountants +Advisors to discuss your year-end tax planning and how we can help you save.
This time of year it seems like everyone is talking about year-end tax planning, strategies to minimise tax, or top 10 tax tips, etc. These are all helpful but really miss the point.
Tax is tax, and yes there are a few things you can do prior to year end, but as long as you have a good accountant this should just be business as usual.
The goal of any business should be to maximize your free cash flow. Period.
At its simplest, Free Cash Flow = Cash In – Cash Out*.
While you can impact both, your accountant will be better able to help with Cash Out (including Tax). We are pretty good at costs, efficiencies, minimising tax and alike. Accountants, on the other hand, are generally not that great with Cash In. We can help for sure, but it is not a natural strength.
So, the questions you as a business owner should focus on, and ideally not just at year end, are things like:
and so on.
As a business owner, a focus on these areas can be profound. It also makes it easier to succeed. Rather than juggling everything you can just focus on one thing: Increasing Cash In. Then leave the rest to people that are better at it.
If you do, and your income goes up, you will likely have higher costs and perhaps tax too. Who cares? Your Accountant will focus on this and make sure there is as much left for you as possible. If they don’t, get a new one!
Focus on Cash In. Let us focus on Cash Out. Trust me, we are better at it!
Cheers,
Michael Binnie
* Free cash flow is more fully defined as: FCF = Net Income + Non-Cash Expenses – Increase in Working Capital – Capital Expenditures
If you are located on the Gold Coast or Brisbane or surrounding areas Contact Us at Accorti Accountants +Advisors for advice on your cashflow.
Want to run your business and not waste time with accounting? We think Xero is the answer. We’ll help you switch to Xero and get online invoicing, live bank feeds, and any integrations you need all in a single platform. #Xero #accounting #smallbiz #startups
Xero allows your business a powerful, yet simple way to manage your business finances from the cloud.
Using Xero as the core business finance system, you will have real control to run your business – basic bookkeeping to efficient online invoices, detailed financial reporting and live bank feeds. And that’s not all…
A beautiful business platform
Being a fully functioning business platform, Xero has an open architecture which allows you to plug-in time-tracking apps, online payment solutions or job-management tools. Whatever business sector you are in there is a range of apps available to customise the Xero system to meet your needs.
Using cloud platform Xero you get:
Talk to Solve Accountants about switching your accounting software to Xero
If you would like a highly flexible business platform for your accounting system, we can help you switch over to Xero.
If you are located on the Gold Coast or Brisbane or surrounding areas Contact Us at Accorti Accountants +Advisors
Need to get a grip on your cash flow? We’ll help you tailor your accounting set-up and cash flow forecasting tools to reveal your future cash position. #cashflow #forecasting #SmallBusiness #SmallBiz #SMB #finance #accounting
Your business lifeblood is cash flow. With managing cash flow, prevention of cash flow issues is a lot easier than attempting to fix cash flow issues after the event.
Balancing the income (inflow of cash) against the expenditure (outflow of cash) results in a positive cash flow. If you are on top of this, the business will have the required liquid cash to cover the liabilities.
By using the cash data from periods prior and then projecting it forward, forecasting will give you a crystal ball to reveal the cash flow health of the future.
By producing cash flow detailed forecasts, it is possible to:
Get a firm grip on your business cash flow, we will help you tailor the accounting set-up and can provide the forecasting cash flow tools needed to show the future cash position of your business.
If you are located on the Gold Coast or Brisbane or surrounding areas Contact Us at Accorti Accountants +Advisors and let’s start forecasting.
Running a business is hard, but there’s no reason to go it alone. Setting up an advisory board or finding the right mentor to advise you, can help you grow your business. Talk to us about your advisory structure. #smallbiz #leadership #solveadvisory
When you are planning for business success, it is important to keep track of the bigger picture. To develop your business in ways that will assist growth may mean you appoint advisors that can help your business to grow.
Setting up a board to advise or appointing a business mentor are good options if you are considering an advisory function.
Advisory boards give the small business the benefit of other parties’ knowledge without incurring the expense and formality of a board of directors. Advisory boards are usually linked to not-for-profit companies, but many other companies also benefit from utilising this resource. An advisory board will assist in providing advice and insight to the business, but the advisory board can not make decisions or have roles and duties as directors.
The board you select should bring a range of perspectives to the table. The space should be comfortable for members to disagree. Select your members and carefully set the tone for meetings!
You may not quite be at the level to form a board, but a business mentor could be the perfect idea. Business mentor’s help you to see the bigger picture and assist you to look outside of your business. Working together to identify different ways to seize opportunities and meet upcoming challenges. To find a business mentor start by firstly identifying the knowledge and expertise that you are wanting. Then start building your business network. Look specifically towards local organisations that mentor and make connections with networking organisations specific to your industry. Looking for a person who has the relevant experience is important but also remember you should also consider a mentor that you will feel comfortable sharing your business with. When you are ready, repay the favour and become a business mentor!
If you are located on the Gold Coast or Brisbane or surrounding areas Contact Us at Accorti Accountants +Advisors and talk to us about your business goals and how to set up your advisory structure.
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Brisbane & Gold Coast Business Accountants.
Accorti Accountants + Advisors is a firm of chartered accountants that provide business accounting, tax, and advisory solutions for evolving businesses in Brisbane and the Gold Coast region.
