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Blockchain Technology – The Future of Transactions?

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Blockchain – Painting The Picture

Have you ever thought about the ‘middlemen’ that are involved in your daily transactions? Think about when you buy a coffee from your local café – a bank confirms the amount you need to pay to purchase that coffee and then sends that amount to the café owner. Now let’s relate this to a larger scale business example – an auditor will examine a company’s financial records to ensure accuracy, and make sure that they comply with laws and regulations. Blockchain is an upcoming technology that might remove the need for these intermediary services.

The Blockchain offers the chance to bypass the middleman and provide secure verification for all sorts of transactions – saving time and money by eliminating the need for third party processes. John O’Connell of Macquarie Group has touted the Blockchain as “a layer of trust on top of the internet”. With this technology, there is the potential for vast improvements to transaction security and speed, market visibility, and elimination of fraudulent activity and disputes.

How Does It Work?

Blockchain technology is different to the classic accounting ledger – which typically records transactions in one place. The difference with the Blockchain is that it stores transaction information in several “blocks” creating an audit trail that builds as more information is added. Every party involved in the transaction is able to access the Blockchain, and are all responsible for maintaining it.

blockchain

Implications

There have been concerns that the Blockchain could disrupt several industries; this technology could mean that there would not be any need for auditors to verify transactions conducted in the Blockchain. The presence of the Blockchain also eliminates the need for accountants to reconcile and process transactions, leaving companies, their clients, banks and tax authorities to record and share information independently.

However, several experts have assured that this technology will not displace the need of financial advisory – they instead see the Blockchain working synonymously with accountants. Claire Mackay, principle advisor at Quantum Financial has insisted that Blockchain technology will enable advisors to provide a faster and more efficient service, but the interpersonal relationship between the advisor and the client will still remain the key to business moving forward.

One thing is for sure, the Blockchain has the possibility of transforming accounting, audit and banking – creating one true record of transaction. Due to these changes, these services might have to re-evaluate the way they operate in the near future; ensuring that they still offer a value proposition that won’t be eclipsed by fast moving technological development.

 

Information gathered from intheblack.com

 

Post Contributor:
Andrés Pascoe

The New Payments Platform…Finally!

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The Current Problem

You go out to dinner with friends, you’re having a great night & what could possibly go wrong? Then the end of the night comes, and the waiter utters that dreaded sentence…

“Unfortunately we don’t do split bills…”

This is a hassle that we have all experienced as with the high dispersion of banking providers among consumers, there is bound to be at least one of your friends that uses a different provider to you. As we all know, it can take up to 3 business days for payments to be transferred between different banks – which is extremely frustrating.

Although this delay can be a pain for consumers, perhaps the biggest sufferer of delayed inter-bank payments in Australia is small business. Late payments have been described as the “silent killer” of Australian small businesses. Another major problem for small businesses in Australia is poor cash flow – research has found that small business owners spend an average of 12 days in a year chasing unpaid invoices. This forces small businesses to focus on surviving rather than thriving, due to the stress that arises from chasing these payments.

Australia is a front runner in embracing electronic payments, however Australia’s existing infrastructure does not have the capability to support the evolving needs of a 24/7 digital economy. The RBA has now come up with the answer: The New Payments Platform. The New Payments Platform or NPP is a platform that: “Can empower businesses to become more efficient, reduce costs and improve their customer service.” A big win for Aussie small business!

Happy

The Way it Works

Basic Infrastructure

Users will be able to transfer money between bank accounts in real time, through an identifier such as an email address, phone number or ABN number. This provides unprecedented efficiency and convenience with transferring money (no more sharing of lengthy BSB and account number details). Users will also be able to include richer data with each payment – 280 characters will be allowed to be added to each payment rather than the 18 characters currently allowed by banks, which will facilitate e-invoicing and instant processing.

Fast Settlement Service

The Reserve Bank of Australia will provide the Fast Settlement Service (FSS), which enables all payments made on the NPP to be settled in real-time central bank funds, across each financial institution’s Exchange Settlement Account (ESA).

Overlay Services

Overlay services are payment related products or services that can adopt the benefits of the basic infrastructure. This provides a platform for competition and innovation, with each product and service having the possibility of offering differing or similar experiences. The first Overlay Service to go live on the NPP will be Osko by BPAY.

This new platform represents a great opportunity for small business in Australia, as a more efficient, accountable payment system is a welcome change to increase productivity within small businesses. Small business is continually proving to be a crucial contributor for Australia’s economy, and is a sector that can benefit greatly from the New Payments Platform. We can’t wait for this system to kick in, as we are looking forward to seeing our clients experience the benefits of this new system!

Post Contributor:
Andrés Pascoe

Our Wellness Centre Experience

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We have recently been collaborating with a growing local business called City Cave, doing some strategic planning and cash flow forecasting work. We like to get a good understanding of how our clients operate, this lead to our owner and director Patrick having a fairly unique experience last week.

City Cave are a small but expanding local business. They run wellness centres, with their main point of difference being their float tanks. These tanks, or small pools have 45kg of Epsom salts dissolved in them, so a little bit like the red sea, you really do float. The reported benefits of floating in these special tanks include aiding in circulatory, respiratory, digestive, muscular skeletal, and hormonal balance. There is also the ability to turn off the lights and float in complete silence with this sensory deprivation believed to help with stress levels and have other neurological benefits.

City cave

Here is what Patrick had to say about his float tank experience!

So I booked in for a float last week, which came as a big surprise to those who know me well. With a big family and busy business, doing absolutely nothing for a whole hour is something I am not at all used to, and visiting a wellness centre is a little different to my usual places to frequent. So I made my booking online and quickly received a confirmation email. I then turned up at the designated time and a young lady took me through to the float room and explained how it all worked. I really wanted to be open to the whole experience so after settling in and checking how everything worked I lay back and tried to empty my mind and enjoy the experience. After laying there and being very relaxed for what I thought must be close to an hour I just had to get up and check my watch – it had been 20 minutes. My second attempt at trying to chill out was more successful and I made it to the 1-hour mark. As I left I really did feel very refreshed and had a bit more spring in my step, I am glad I gave it a go and I would do it again.

Check out City Cave’s website www.citycave.com.au and if you are looking for a unique relaxation experience why not give it a try!

Post Contributor:
Andrés Pascoe

False Claims Spark Calls for Blanket Deduction System

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Deduction DebateAustralia’s current tax deduction system has been a hotly debated issue in recent months. There have been strong opposing views, with one side claiming that the current system is severely flawed, due to the sheer amount of fraudulent and petty claims occurring. However, many are claiming that the current system should be kept in place, and stating the problem as being with the public not being educated enough when claiming work-related expenses.

Joanne Dunne, director at Accounting firm PwC is strongly in the corner of a reform of the current system, stating that the current tax deduction system is “out of control”. Dunne has claimed that the current system is inefficient, due to “silly expense claims” that are burdening the ATO’s resources. Dunne also stated that the time spent on these trivial claims should be allocated to “more important” work, and also claims that the cost of investigating these false claims outweighs the costs recovered. The proposition of a simple yearly $1000 blanket deduction for each taxpayer has been discussed, with the view of simplifying the system and nullifying any incorrect claims made.

This has proven to be an unpopular recommendation for some; with Ram Pandey from the ATO expressing disapproval of this idea. Pandey has defended the current system, explaining that the actual problem lies with the public’s misunderstanding of what should be claimed. He argued that a complete overhaul of the system would not be practical, and that it should undergo some gradual tweaking and enhancement instead.

We found this debate quite interesting; we believe that any changes in the tax system are definitely worth keeping an eye on for any small business owner. Our taxation accountants are also very knowledgeable in this area, if you’re looking for some specific advice or simply want to speak with an accountant about your tax planning options, call us today to schedule an appointment on (07) 3367-0852.

Post Contributor:
Andrés Pascoe

Introducing Xero Projects

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September was an exciting month for Xero partners and small business owners in Australia, as Xero held their annual Xerocon conference in Melbourne. Xero utilised the event to announce an abundance of new apps and features, along with some changes arising in the cloud accounting system. One exciting new feature announced was Xero Projects, which is a tool that will give small business advisors like us the ability to collaborate even more closely with our clients. Projects will give business owners the ability to track their jobs more precisely, ensuring easier planning and budgeting and more efficient resource allocation. The essential goal for Projects is to help drive business efficiency and profitability.

Xero Projects Features

Xero Projects is a new simple time and cost tracking tool that:

• Focuses on the financial side of project management.
• Integrates with key Xero features, including contacts, invoicing, and very soon bills and bank reconciliation.
• Provides flexible, easy project invoicing.
• Supports fixed price and time billing.
• Monitors project budgets and financials.

It has been designed especially for small businesses with simple costing needs, allowing for collaboration with Xero accountants who will be able to provide live informed decisions and allow small business owners to manage their business more efficiently.

xero projects

Pricing

For businesses working with Xero accountants such as ourselves, Xero Projects is going to be free to use for the rest of 2017. Following 2017, this feature will initially be priced at $7 per month in the introductory period, then $10 per month thereafter.

We love this new addition from Xero, tools such as Projects are making Xero’s software an even more attractive proposition for small businesses owners – further expanding the platform to achieve efficiency and profitability.

If you are interested in learning more about Xero Projects or any other Xero add ons, our Xero experts are always available for a chat. Get in touch with us on (07) 3367-0852. or schedule a free Xero Consultation session below:

Post Contributor:
Andrés Pascoe

Tradesmen Bunnings ABN Scam Uncovered

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An interesting tax avoidance scam has been uncovered recently, involving thousands of tradesmen around Australia and hardware chain Bunnings Warehouse. Because of the amount of cash transactions that occur in the trade industry, a large number of these service providers have been able to circumvent the tax system.

Large amounts of contract workers in Australia have been able to beat the system by replacing their own ABN number with Bunnings ABN number on invoices, making the transactions untraceable to their actual recipients. This has created a black economy of sorts for tradesmen as a result of the large amount of unaccounted for payments. Paul Drum, a member of the government’s national tax liaison group has responded to this issue, proposing that the Government implements a system “to make sure we can verify ABNs on a real-time basis”. This new system would ensure that all contractor transactions are accounted for in real time, eliminating the possibility of contractors escaping tax payments and ensuring the Government does not lose out on hundreds of millions of dollars.

Understanding Your Tax Obligations

If there is a chance that you are not fully aware of all of your tax obligations, there are a range of online guides that can help you. The ATO website has a comprehensive guide to what payments need to be reported each year, including details about businesses in building and construction. We recommend giving the website a look by clicking here, as it is a valuable resource designed to help you make sure that you are fulfilling your tax obligations. As always, you are welcome to contact one of our taxation experts on (07) 3367-0852 if there are any further questions you had regarding your tax planning options. We would love to hear from you!

Post Contributor:
Andrés Pascoe

EFTPOS Minimum? Australian Consumers Are Cashing You Later

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How frequently do you go to your local café and pay for your morning coffee with a crispy fiver? The reality is that as soon as ‘medium cappuccino’ is rolling off your tongue, the café staff member is most likely entering the amount due into their portable EFTPOS machine, assuming that a cashless transaction is about to occur. Cashless payments are becoming a more prevalent trend in business transactions around the world, with Australia as one of the front-runners of this revolution.

Research conducted by market analysts East & Partners has shown that cash payments currently make up less than 10% of all payments received by Australian merchants, additionally; between 2010-2016 the amount of cash payments within Australia has fallen around 46%. This has been quite a quick transition for Australian businesses, as only 10 years ago cash payments represented 70% of all Australian transactions according to RBA. East & Partners have also claimed that only 2% of all transactions will be paid via cash within the next 5 years.

In a society that craves convenience more and more every day, these statistics definitely make a lot of sense. The prominent rise of cashless payment systems can also be attributed to leading edge organisations such as ride sharing service Uber utilising cashless payment systems, whose success with an online payment system is currently putting their competitors at a major disadvantage. This has created a knock on effect to all small businesses operating in Australia, in that Uber’s success with cashless payment systems has in a sense set a standard for convenience. The benchmark has been set, and it has become crucial for Australian businesses to aim for this level of convenience.

The modern consumer is time-poor, and a minor inconvenience such as a $5 EFTPOS minimum can now be a crucial factor for a consumer’s purchase decision. Technology is continually proving to be a crucial aspect of the successful operation of a business, and this is something that we as business advisors are extremely passionate about.

Post Contributor:
Andrés Pascoe

How Agile is Your Business?

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how agile is your business

It is widely known that successfully operating a small business comes with plenty of challenges. The long hard days of trying to manage every activity within your business everyday can be extremely time consuming and tiring. Thankfully, we live in a day and age where there are readily available tools specifically curated to help a small business owner overcome these challenges, and importantly present them with a platform to grow. These tools have all been made possible by the continual marriage of technology and business within the last couple of decades. We can think of technology and business as a relationship that started off rocky, but now the connection is stronger than ever, to the point where the two have become interdependent. And there are no signs of them breaking up anytime soon.

The importance of technology

Stepping back from the view of a small business and glaring into the landscape of the general business environment, we can make one obvious assessment: technology is the number one factor that is influencing today’s business climate. It is important to note that tech affects all businesses, regardless of whether your business is directly concerned with technology or not. Although this evaluation is an obvious one, few business owners realise how quickly this implementation of technology has to occur. The rate of digitisation of business is accelerating, as organisations try to keep up with the rapid technological changes occurring within each industry.

Innovate your business model

In order to keep your business relevant in today’s age, you not only have to improve on a competitor’s business model, but continually think of how you can improve your own business model! This sense of continual innovation within your business can enable you to be adaptable to change. We believe that small business owners can utilise cloud accounting software such as Xero to alleviate the stress of time consuming activities such as book keeping, giving you the time to complete more dynamic tasks. We also believe that using a tool such as Xero allows us as advisors to collaborate effectively with small business owners to make your business more agile. By agile we mean that we can analyse your business’ real time data, from which our advisors can directly propose where decisions can be made, creating more value, efficiency and ultimately more revenue for your business.

Contact us on 07 3367 0852 for a free consultation, and we can present to you how collaborating with us through the use of Xero can make your business more efficient, and free up more time for you to utilise on other necessary revenue building ventures within your business.

Post Contributor:
Andrés Pascoe

Start Your Business The Right Way

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Starting your business the right wayThe decision to start a business is usually pretty exciting. It’s often someone’s dream finally coming to life. In these early stages it is quite easy to gloss over some aspects that aren’t particularly fun or money making in order to get things up and running.  However, whilst they aren’t money making they could very well be costly and as accountants, we hate to tell our clients that there could have been a better outcome if a few things were different.

The first big financial decision is the structure of the business. Quite often in the very beginning a Sole Trader is the preferred way to operate as setup costs are limited – quite often a popular set up for trades people or the like. However there are some advantages to structuring your business differently.

A big advantage of having a trust or company is the limited liability. This simply means that owners are not necessarily financially responsible for faults or accidents, as the business is a separate legal entity. In extreme cases of financial debt, there will be no access to the personal property or assets of the business owners if the business is carried out through a trust or company. Unlike a sole trader, who is personally liable for financial debts and damage claims made by customers.

Another advantage of operating under a trust or company is the ability to distribute profits amongst other beneficiaries or shareholders under certain circumstances. This is unlike operating as a sole trader, profit can only be income for the individual business owner.

So whilst there are important decisions to make, branding, business location, menus, pricing, staff etc, all the things that will attract your customers or clients, don’t forget about the things they won’t see. Those financial set up decisions will have a bearing on your bottom line and after all, why do the hard yards if you’re not getting the best financial outcome available. We may be tax accountants, but we love to see your business thriving and being proactively involved to help you grow.