Blog Posts - Page 7 of 16 - RA Business Advisors

New year resolutions for small businesses

January 23, 2020 By raadmin

Happy new year! As 2020 begins, right now is a good time to reflect on your business’ progress over the last year and plan the year. Don’t forget to make New Year’s resolutions for your business to grow and reach new heights this year. Here are some resolutions that can be helpful for small businesses in 2020:

1, Give your business a financial health check

Many small businesses were hit by cash flow problems last year. To avoid the same fate, take a serious look at your business’ balance sheet and its profit and loss account. Consider whether you have sufficient headroom and is there anything you can do to improve? For example, do you need to spend more time chasing late payments, or could new financing facilities provide an answer?

2, Boost your marketing efforts

Marketing is always an important part of operating a business. Good marketing attracts customers, keep them loyal and encourage them to recommend your service/product to others. In other words, it raises company profits and reputation. If your company hasn’t focused on marketing, then you should do it now.

Customers are important – always do your research to see what they look for in a product/service. Keeping up with trends is also important to market your product/service better.

3, Make your customers happier

This year, why not talk to your customers and see what you can do to make them happier? Happy customers will keep coming back and refer to friends and family members to you. By listening to them and collecting feedback, you will know what you need to do better.

4, Stay updated with tax laws, regulations, and deadlines

Make sure to talk to your accountants to ensure that you are up-to-date with all tax laws and regulations that may affect your business. Ask them for filing deadlines and set up alerts and reminders for the year.

Action plan: Talk to our expert accountants today for advice! Give us a call or book a consultation on 07 3367 0852.

New Year, New Decade

January 16, 2020 By raadmin

Not only did we celebrate a new year a couple of weeks ago, but we welcomed a new decade. It is at this time we find ourselves not only reflecting on the year that has just been, we are also reflecting on the decade that has just gone.

At the beginning of the last decade, our office operated quite differently. Looking back at 2010, we were just beginning to implement Xero and our processes were drastically changing into electronic form. All our correspondence was via snail mail, email was used sporadically to converse with clients; and working away from our desk was next to impossible due to all our files & software being on a server which we could only use via ‘Remote Access’.

This last decade has drastically improved our processes. So much so, that we would not want to return to where we used to be. Now, we are very proud Gold Xero Partners, well and truly using and loving our beautiful accounting software, all our correspondence is via email allowing instantaneous contact between ourselves and our clients, and all our files and software are ‘in the clouds’ which allows us to work away from our desks easily, and in turn, improving our work/life balance.

Trying to imagine where we will be at the beginning of next decade is mind boggling, but exciting!

For many people a new decade brings with it an increased sense of ‘New Beginning’ and starting with a ‘Clean Slate’. In small business, often the break between Christmas and New Year allows us time to evaluate the past and consider how we can tackle the coming year with improved efficiencies. How can we make our business grow, be more successful and find a better work/life balance. Perhaps, if you haven’t made the jump yet, this is your year to improve your data processing and bookkeeping by jumping onto Xero. It will most definitely not be a change you regret! For those of you who do use Xero, perhaps there is an add-on which you have been considering implementing – this is the time to jump on board. While you are feeling refreshed to tackle the year ahead, get the ball rolling, it’s the best time to implement a change.

From all of us at RA Business Advisors, we wish you a very successful year ahead!!

Directors beware: Penalties for Unpaid Super

January 9, 2020 By raadmin

Company Directors can be held personally liable for a company’s unpaid employee superannuation.

Any unpaid superannuation is payable to the ATO after three months as a Superannuation Guarantee Charge (SGC). The ATO can issue a Director Penalty Notice for unpaid GSC and the Company Director’s personal assets can be sold to pay for the debts in the penalty notice. In other words, Company Directors can be held personally liable for the company’s unpaid superannuation.

If a company fails to pay superannuation, but it lodges its SGC Statements by the SGC Statement due dates, the ATO can issue a Director Penalty Notice to the company’s directors. The Directors can become liable to the ATO for the amount of SGC claimed in the Director Penalty Notice. Directors can avoid personal liability if the SGC is paid by the company.

If a company fails to pay superannuation and it also fails to lodge SGC statements by the SGC Statement due dates, the Directors are automatically personally liable for unpaid superannuation. In these circumstances:

The ATO can estimate unpaid superannuation if it chooses
The ATO can and will issue a Director Penalty Notice to recover superannuation from the Directors
Placing the company in liquidation or voluntary administration will not avoid liability for the Directors
The ATO can and will issue Director Penalty Notice after a company is already in liquidation or voluntary administration

In May 2019, new legislation was passed to change the date upon which company directors become automatically liable for SGC amounts. The new date is the date which SGC Statements are due, which are:

Quarter	Period	Super Due for Payment	SGC Statement Due Date
1	1 July – 30 September	28 October	28 November
2	1 October – 31 December	28 February	28 February
3	1 January – 31 March	28 April	28 May
4	1 April – 30 June	28 July	28 Aug

If your company cannot pay superannuation, the best thing to do to avoid liability is to lodge SGC Statements within three months of them being due. If this is done, then you will be able to avoid liability under any Director Penalty Notice issued by placing your company in liquidation, if this is the best option available. The ATO will also not be able to issue you with a Director Penalty Notice after your company has been placed in liquidation.

But if your company is unable to pay superannuation within three months of it being due, then it probably has some underlying financial problems and you should see advice regarding the company’s circumstances, strategies which may be put in place and risks to you as a Director personally.

Contact our expert Accountants for assistance if you have any questions about this information or if you need help in working out what to do if you have unpaid superannuation in your company. Don’t leave this too late. If you do, then your personal assets will be at risk!

Christmas Party, Gifts and FBT: What you need to know.

December 19, 2019 By raadmin

‘Tis the season to be jolly!

Fringe Benefits Tax (FBT) can be confusing, especially when there is no separate FBT category for Christmas parties. You may encounter different circumstances when providing these parties for your team and preparing gifts. We understand your struggles and have simplified things for you.

1, Christmas Parties and Gifts for staffs

If you are not a tax-exempt organisation and do not use the 50-50 split method for meal entertainment, the following explanations may help you determine whether there are FBT implications arising from a Christmas party.

Exempt Property Benefits:
The costs associated with Christmas parties (such as food and drink) are exempt from FBT if they are provided on a working day, on your business premises and consumed by current employees. These costs are an “Exempt Property Benefit”. The property benefit exemption is only available for employees.
Exempt Benefits – Minor Benefits:
The provision of a Christmas party to an employee may be a minor benefit and exempt if the cost of the party is less than $300 per employee and certain conditions are met. The benefit provided to an associate of the employee may also be a minor benefit and exempt if the cost of the party for each associate of an employee is less than $300. The threshold of less than $300 applies to each benefit provided, not to the total value of all associated benefits.
Gifts provided to employees at a Christmas party:
The giving of a gift to an employee at Christmas time may be a minor benefit that is an “exempt benefit” where the value of the gift is less than $300.

Where a Christmas gift is provided to an employee at a Christmas party, the benefits are associated benefits, but each benefit needs to be considered separately to determine if they are less than $300 in value. If both the Christmas party and the gift are less than $300 in value each and the other conditions of a minor benefit are met, they will both be exempt benefits.

2, How about Client gifts?

As the gift is an expense to your business, it is generally considered to be a tax deduction. The ATO has considered the act of gift making to clients, and several cases exist where the tax treatment has been tested in the courts. If there is an expectation that the gift will either generate future business from the client or motivate them to refer your services to others, it is considered that the expense of the gift was business promotion and is a tax deduction.

It should be noted that the gift does not constitute the provision of entertainment which is a non-taxable deduction.

If you are unsure about the FBT implications of your Christmas party or gifts, please contact our expert Accountants today, and they can assist you!

Top 3 small business challenges and how to solve them

November 28, 2019 By raadmin

1, Finding and approaching the right customers

This is the problem that many businesses face. Even big firms still spend a lot of time and energy coming up with strategies and plans to find and attract more customers every day. For small businesses, it might be more difficult considering the scale of operation and tight budgets. Having a great product or service is not enough to let customers find and trust your business. Your team must go out and actively look for potential customers using a variety of strategies.

No matter what your strategy is, it is crucial to consider who your ideal customers are. Mass targeting doesn’t work on a tight budget, so you need to be careful about targeting the right consumer. Get started by crafting buyer personas: what they do, where do they spend time online, what are their buying behaviors, etc.

Here is a persona template for you to get started:

2, Raising brand awareness

Brand awareness is extremely important for every business to grow. It represents how familiar your customers are with your brand and how well they recognize it. Raising brand awareness helps your customers remember your brand better, build trust over time and increase your company’s value. In other words, once your customer is aware of a brand, they start to recognize it, make a purchase, prefer it to other brands, and trust the brand more overtime. This means that they will be likely to make more purchases in the future and recommend the service/product to their friends and families as well.

Here are a few ideas to boost your brand awareness:

Offer freemium: Offering a free basic product/service line and only charging for products at the premium level is a very popular (and effective) strategy for software companies like Hubspot, Typeform or Hootsuite. This gives consumers a free chance to experience the product/service before purchasing, and the company will get free advertising when consumers use it.
Co-marketing: Partnering up with another company can help you get a better reputation and awareness outside of your circle. Unlike co-branding, co-marketing doesn’t involve releasing new products/services and are easier to plan, launch and manage. It provides a win-win situation for both companies to reach a wider market, learn more about customers and earn better attention.

3, Hiring talent

Hiring talented people remains one of the biggest challenges for businesses, according to the Conference Board Annual Survey. Hiring new people is a complex process that requires a lot of time and money. It is easy to just send out a job description, screen applicants, and make a decision. But how do you make sure that the candidate is the right one for the job?

To answer this question, companies can create a candidate persona, which is like the buyer persona described above, but for candidates. This persona should showcase the ideal traits and skills suitable for the job and align with the company culture. Finally, don’t forget to measure the results to better tailor your hiring strategies in the long term.

5 Powerful ways to improve your small business marketing

November 7, 2019 By raadmin

As a small business, we understand how other small businesses struggle with managing a budget for marketing strategies. A small budget doesn’t mean that you can’t get creative and succeed with your marketing campaigns. Our blog is here to guide you through some powerful tactics to utilize your marketing game and not spending too much money.

1, Profile your target market based on certain characteristics

Conducting research about your market is not enough, you need to identify your target audience and classify them into groups based on characteristics. Some common (and effective) ways to segment a market are:

Demographics (Age, gender, income, education, social status, occupation,…)
Geographics (City, country, living area,…)
Psychographics (Lifestyle, personality, attitude, values,…)
Behavioral (Benefits sought, purchase usage, intent, occasion,…)

It is also important to keep in mind that your target market should have a need for your product/ service and be willing to pay for your offer.

2, Create and share content that adds value

By publishing content that brings value to your audience, your brand will attract people and gain more audience overtime. You don’t even need to attempt to sell your products, sharing knowledge and value-added content is enough to give people a reason to follow and listen to the brand. Consider sharing content that is relevant to your business and your followers as well.

3, Level up your Google My Business profile game

You see Google ratings and business profiles everywhere, but did you optimize this yet? Filling out your Google My Business profile now to take a big step in local marketing. Make sure to include important keywords to optimize your SEO. Additionally, putting up some nice photos would improve your credibility.

4, Get listed in online directories

Getting on directories will drive traffic to your site and increase awareness. Depending on your industry and product/service, you will find different online directories that are suitable for your company. Many of them are free or have paid options but the basic one is usually free.

5, Leverage micro-influencer marketing

Micro influencers (those with small reaches) are often cheaper than highly regarded celebrities. Research has shown that these influencers usually communicate and engage with their audience more. In other words, they are perceived as trustworthy and influential among their followers. Working with them can form a strong community around your brand and build better awareness. For instance, you can easily use tools like TRIBE or Scrunch to connect with micro-influencers based on your product and desired audience.

How Much Documentation Do You Really Need For a Tax Return?

August 2, 2019 By raadmin

Tax time is one of the few times of the year where keeping an absurd amount of paper in your possession is socially acceptable. But while most of us can confide in our receipts to keep us safe navigating our tax return, receipts aren’t always enough – especially if you get audited by the ATO.

As one such Australian told the ABC some weeks ago, claims for $120,000 of self-education over three years lead to a full-scale audit. When asked to supply bank statements as well as receipts for their education, they were taken aback, but this is not an alien concept for audits from the ATO. Unfortunately for this person, they made mistakes in previous returns leading to a $24,000 debt – but this doesn’t have to be the case for you.

Jumping through various hoops to only get stung with a big debt is a pretty jarring experience and you are destined to learn some lessons going through that type of hardship. The number one lesson they learned?

Keep records and use a tax agent

The ability for tax agents to easily change previous years returns and to accommodate sudden changes in your financials makes keeping yourself safe during an audit much easier. Furthermore, keeping records needs to stop being an exclusively analog process. Scanning your receipts into software such as XERO or Dropbox not only frees up space in your pocket but makes it far easier to organise and recall receipts.

At the end of the day, if you have correctly worked out your claims so you aren’t claiming more than you should be and have your documentation in order, you have nothing to worry about. If you aren’t confident that you can correctly work out your deductions, take the stress away and contact a tax agent. We can help you get the most out of your tax return, give us a call today on 3367 0852 or email us through mail@raaccountants.com.au

Minimum Wage Increases, What They Mean For You

June 14, 2019 By raadmin

The Minimum Wage Panel on 30 May 2019 handed down its minimum wage decision for 2019.

From the first pay period commencing on or after 1 July 2019, the National Minimum Wage will increase to $740.80 per week, or $19.49 per hour.

What this means for you:

Employers who pay their employees at the National Minimum Wage or Modern Award rates of pay will need to apply the increase in the first full pay period commencing on or after 1 July 2019;

Employers who currently pay above National Minimum Wage or Modern Award rates of pay are not obliged by this decision to increase their rates of pay, but need to ensure their rates remain at least as beneficial, once the increase is applied; and

Employers who pay under enterprise agreements must ensure that the base rates in those agreements remain at least equal to the new minimum Modern Award rates. If you pay any of your employees under annualised salary arrangements you will need to conduct an audit of those annualised salaries against the new Award rates and working patterns to ensure the annual salary compensates for award entitlements.

If you are an employee unsure of the award rates for your line of work, you can check out the award calculator HERE

Need Help?

If you need help with updating your pay systems for these new rates, don’t hesitate to contact our expert accountants!

Non-Compliant Payments: How Are They Changing in 2019?

May 24, 2019 By raadmin

When you are paying your employees, there are certain parties you need to withhold amounts from and instead send this to the ATO. This is to ensure these parties don’t have to pay larger amounts of unnecessary tax at the end of the year. We’ve put together a handy guide to make sure you don’t get caught out heading into the end of the financial year.

From July 1, 2019 you can only claim deductions for payments made to your workers where you have met the PAYG withholding obligations for that payment.

If the PAYG withholding rules require you to withhold an amount from a payment you make to a worker, you must:

Withhold the amount from the payment before you pay it
Report the amount the ATO

Any payments you make where you haven’t withheld or reported the PAYG tax are non-compliant payments. You won’t be able to claim a deduction if you don’t withhold any PAYG tax or report the PAYG tax.

You can only claim a deduction for the following payments if you comply with the PAYG withholding rules:

Salary, wages, commissions, bonuses or allowances to an employee
Directors’ fees
To a religious practitioner
Under a labour hire arrangement
For a supply of services where the contractor has not provided you with their ABN

These are all well and good, but what if you are providing something which is not cash, goods and services for example. If this is the case, you will still have to report the PAYG tax in order for this to be classified as a compliant payment and allow you to claim a deduction.

It’s important that you ensure you are complying with PAYG withholding and reporting obligations for a payment. If you don’t, you face losing your deduction for that payment or existing penalties that apply, which can be a hefty fine.

If you do make a mistake, you don’t need to start hyperventilating, instead you should lodge a voluntary disclosure form and correct your mistake as soon as possible. However, if you should have withheld PAYG tax and didn’t, you do stand to lose your deduction for that payment.

As always, you can get in contact with us if you have any worries about your PAYG activity.

How Will Tax in Australia Change After the Election?

May 17, 2019 By raadmin

There is only a short time before the Federal Election on 18 May 2019, and there’s a lot of wild speculation.

We’re not trying to recommend who you should vote for, but instead we believe that it is vital that our clients understand how they will be affected by the result of the Election.

Here are some of the key ways you may be impacted:

The amount of personal income tax and Medicare levy you will pay
The amount of capital gain that will be subject to personal tax
Opportunity to continue to convert excess franking credits into cash tax refunds
Altering the tax treatment of trust distributions
Ability to offset prospectively investment losses against other income (i.e. negative gearing)
Ability to claim a full deduction for the cost of managing your tax affairs; and
Remove deductibility on personal superannuation contributions and lower the annual concessional contribution cap

A note of caution here, as there is little detail associated with some of the proposed changes. While we have listed below the main policy announcements, the detailed legislation might differ substantially, so we encourage you to be mindful of this!

This is what we know so far (at time of writing):

Labor’s Tax Policies

A tax on those receiving distributions through Family or Discretionary Trusts at 30%. These are small business structures, and this will affect many business owners.

Doing away with the cash refunds for excess franking credits through a SMSF.

Increasing the personal tax rate in the top tax bracket by an additional 2%.

4. Maintaining a company tax rate at the full 30 per cent (%) for companies with turnover exceeding $50 million.

Higher personal tax rates at the top end and lower personal tax rates at the lower end (i.e. less than $125,000).

Limit negative gearing on investment properties to newly built residential dwellings from a yet to be determined date after the election. Property investments made before this date will not be affected as they will be grandfathered. The ability to negatively gear other asset classes will also be restricted.

If the total of the interest and deductions related to investments exceed the investment income, the excess will not be able to be used for offset against other non-investment income such as salary and wages. This excess will need to be carried forward for offset against future investment income or capital gains.

It will apply on a prospective global basis to every taxpayer. In other words, it will apply to property and shares alike (and any other relevant asset classes) and it will apply by looking at a taxpayer and assessing their overall investment income as measured against their overall investment interest expenses;

Providing landlords who build new residential dwellings an annual subsidy for 15 years of $8,500 a year if the home is let out at 20 per cent below market rates;

Much higher capital gains tax when you sell an investment property or other taxable asset due to the halving of the Capital Gains Tax (CGT) discount to 25 per cent for individuals. All investments made prior to 1 January 2020 will be fully grandfathered, so the new rules won’t apply to them.

A new deduction (the Australian Investment Guarantee) that will enable a 20 per cent deduction in respect of the purchase of any eligible asset worth more than $20,000.

Capping of deductions for managing tax affairs to a maximum of $3,000. This cap will impact individuals, trusts and partnerships. A carve-out is to apply for individual small businesses with positive business income and annual turnover up to $2 million.

Whistle-blower rewards for tax evasion; and higher penalties for tax exploitation promoters.

12. Superannuation:

Oppose catch up contributions on concessional contributions and tax deductibility on personal superannuation contributions;
Lower annual non-concessional contribution cap to $75,000 and reduce high-income super contribution threshold to $200,000 so that more Div293 Tax will be paid by higher income earners;
Increasing the superannuation guarantee to 12 per cent when fiscal circumstances allow;
Phase out the $450 minimum monthly threshold to receive super guarantee contributions, as part of a broader women’s super-security package; and
Higher penalties for employers not paying SG.

The Coalition’s Tax Policies

Companies with a grouped turnover of less than $50 million have a reduced company tax rate of less than 30 per cent. Tax cuts already enacted as follows:

5 per cent 2019-20 income year
26 per cent for the 2020-21 income year
25 per cent for the 2021-22 income year and for subsequent income years

The government will no longer proceed with implementing its plan to have a 25 per cent tax rate apply to all companies;

The government has legislated changes to personal income tax thresholds, as announced in the 2018-19 federal budget. Personal tax changes legislated are to be rolled out in three tranches over the next seven years as detailed in the table above;

No change to current arrangements regarding negative gearing of investment property;

No change to the CGT discount, which currently sits at 50 per cent for individuals;

No change to the current arrangements regarding trust distributions from discretionary trusts. Currently distributions are subject to tax in the hands of beneficiaries at marginal income tax rates, which could result in a lower effective tax rate for those distributions;

No change to the current arrangements regarding imputation, in particular the full refund of excess imputation credits. This means that excess imputation credits can be converted into cash refunds;

Superannuation – While not directly a tax policy, the government is proposing a three-year audit cycle for SMSFs that have a history of good record-keeping and compliance;

The $30,000 immediate asset write-off is available to 30 June 2019. There is no certainty beyond this date; and

Establish a Small Business Concierge Service within the Australian Small Business and Family Enterprise Ombudsman’s office to provide support and advice about the Administrative Appeals Tribunal process. It will also create a dedicated Small Business Taxation Division within the AAT which will include a supporting case manager, a standard application fee of $500 and fast-tracked decisions to be made within 28 days of a hearing.

It’s hard to imagine not being impacted in any way.

There are many other election issues that will influence a voter’s preferences and, at the end of the day, it is about making informed choices.

Please contact us anytime if you would like our advice (before and after the Election) about these proposed tax policies and how they may affect you. We’re here to help you!