RA Business Advisors

Small Business

Tick Tock, Time’s Almost Up

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EOFY is just around the corner, so business owners beware. If you haven’t gotten it done, there is still some time left! If you’re a start-up founder, then pay extra close attention as I guide you step by step into your first business EOFY.

Step 1. Get your ducks in a row

Getting your documents in order is absolutely crucial when that panic sticking EOFY rolls around. If you don’t know what your number looks like it’s hard to make a plan on what to do.  As we keep telling you, we are XERO experts and we believe in most circumstances that is the best place to get your business numbers sorted.  For a start-up, there may be more cost-effective options to get you going and we can guide you through that decision.

Step 2. Seek expert advice

Many problems arise when tax time comes around; the biggest one is lack of understanding. That’s why our taxperts (link) are well versed in all the laws regarding tax.  We provide both taxation and business advice to arm you with all the knowledge you need. Penalties apply if your business isn’t compliant with legislation, so avoid unnecessary fees by talking to one of our advisors today!

Step 3. Claiming is the game

Small businesses that purchase new assets under $20,000 are eligible for a tax write-off to the full value of those purchases. Traditionally, you’d have to wait potentially say five years to realise this return but thankfully this upfront deduction has been extended. One catch: the assets must be purchased prior to EOFY and businesses cannot write-off expenditure that they are trying to also claim through an R&D tax incentive.  Other deductions such as superannuation contributions (new rules this year) can also make a big difference to your tax bill.

Step 4. Be aware

Tax rule changes are as frequent as Christmas these days, no matter what they change every year. It’s critical that you stay up to date with these changes. Last year the tax rate for small companies dropped from 30% where it had been stuck for quite some time. This year the rate is 27.5% for businesses earning under $10 million and 30% for businesses earning more.

Step 5. Arm yourself

Before the technological age really took off, owning a small business was a living nightmare. Thankfully the ATO has kept up with the times by offering an endless supply of small business administration information. Or if you’re really a tech head, there’s an app for that. Check out the ATO website for information ranging from start-ups to large businesses.  There is also a huge array of clever apps on the market that can help streamline your business and free up your time for the more important things in life.

Artificial Intelligence – The Future of Finance

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Artificial Intelligence – The Future of Finance

If someone said the letters AI to you 20 years ago, you would think they were insane. The prospect of artificial intelligence never seemed real but since the technology era really took off, AI is a reality, not just a dream. Each and every day we are subject to artificial intelligence, from auto-correct on phones and computers to Siri and Google assistant on your smartphones.

The corporate giants are investing heavily in AI because they know it’s not the future anymore, it’s the present. AI provides so many possibilities that us mere mortals never thought possible, that’s why our absolute favorite corporation – Xero are investing heavily in this transformative technology. Unfortunately, as with all technology advancements, there are misunderstandings and massive concerns. Does Skynet ring a bell, anyone?

The Difference Between AI and Machine Learning

AI concept creator John McCarthy explains AI as: “every aspect of learning or any other feature of intelligence can in principle be so precisely described that a machine can be made to simulate it.” This definition moves away from the concept of ‘thinking machines’, as we’ve seen in the Blockbuster  ‘Terminator’. The definition of AI varies based on the goals corporations are trying to achieve.

Machine learning is a data analysis technique that teaches computers to learn from experience. Machine learning uses both supervised and unsupervised learning to predict future outputs and find patterns or structures within input data. Machines use learning algorithms to ‘learn’ information directly from data without relying on predetermined equations as models.

Google Assistant

Tech Mogul Google has always been the forerunner with technology, especially with the release of the small but powerful Google home. Google home utilises the intelligent and responsive google assistant that you can find on any 2016+ Android or Google smartphone. This tiny inexpensive gadget sits anywhere in your house or office and provides you with a whole myriad of features, including but not limited to: playing music, sending directions, providing weather and traffic updates.

Appointment Setter

Even though Google is absolutely obliterating the AI market with Google assistant and Google home, they are furthering this development even more. Enter stage right, the Google Duplex. What is Google duplex? Another step in the direction of advanced AI. Google Duplex is an appointment setter, not an online one mind you, but Google Duplex actually calls the restaurant or hairdresser that you want to book at.

The Backlash

Unfortunately, this new technological advancement has prompted concerns about the ‘fate of the human race.’ In a nutshell, people are worried that we are playing with fire and are about to get burnt. Some claim Duplex is not only strange but completely unethical whilst others are applauding Google for this massive feat. I don’t want to imagine how many man-hours went into accurate speech recognition. Those against the innovative technology said it was immoral for the robot not to identify itself prior to booking the appointment. Google has since given in to these demands and will avoid the assistant ‘deceiving’ humans when setting appointments by identifying itself as a robot to the recipient.

Will AI Affect the Way I Work?

Because of the second payments directive PSD2, significant changes are coming to the accounting industry (significantly good that is). Finally, the big banks won’t be allowed to hold onto user data, this vital information can now be shared (with user permission) to third parties. What does this mean exactly? Management accountants and business advisors will be able to utilise businesses’ banking and account records to accurately predict data and turn towards intelligent cashflow.

 

Millennial Millionaire

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Millionaire Millenial

The Millennial Millionaire

This week we are highlighting a man dubbed ‘The Millennial Millionaire’, Grant Sabatier. Grant is the founder of the
overseas company ‘Millennial Money’. Within a five year period, he went from having $50 to spare each week,
to full financial independence. If like me, you want to know the marvelous journey this man took to get to where he is;
then read on dear reader… read on!

The Beginning

In 2013, Grant was living in an apartment he could barely afford, with student loans (10x worse than HEC debt) and a car loan. Living paycheck to paycheck, with only $50 spare at the end of the month. Whilst he wasn’t drowning in bills, he definitely was not flourishing.

Math time: if Grant had a remaining $50 at the end of the month, how much did he have at the end of the year?

Answer: $600 (that’s not even enough for a small holiday).

The Change

In late 2014, early 2015 Grant underwent a major change of his perspective on his financial situation. He managed to: reduce his $50,000 student loan and car loan to less than $8,500 with final payment to occur in 2018, built an investment portfolio with over $35,000, and accumulated enough savings for an adequate emergency fund.

The Process

  1. Shift to a net-worth mindset – start tracking your net-worth

Income, savings, investment returns, debt to income ratio, all these numbers play an important role when optimising your money but the single most important figure is your overall net-worth. Net-worth subtracts liabilities from your assets. No matter how much you make or save, if your net-worth isn’t increasing you’re on the wrong track. Not sure where to start? Our experts can help. Give us a call on (07) 3367 0852 and talk to an advisor.

  1. Become a bloodhound

I’m not saying become an actual sniffer dog, what I mean is tracking your money every step of the way. Calculate loans, bills, food, entertainment, etc. Similar to getting a loan, ask yourself how much you spend each week on both necessary and unnecessary things. Knowing where your money is ending up is much more important than budgeting (of course, budgeting is ideal anyway!). Doing so can really help put into perspective what you should decrease.

  1. Never stop learning

You don’t have to sign up for a 3-year degree at university, and you certainly don’t have to pump thousands of dollars into a trade accreditation for this step. Luckily in the technology era, free courses and certifications are popping up everywhere. If like me you are into digital marketing, Google offers free certifications in both Adwords and Analytics, whilst HubSpot offers an Inbound Marketing Certification. No matter what industry you’re in, you should always look at increasing both your knowledge and skills.

  1. Adopt a side business

These days it’s so easy to create a side business, whilst it won’t offer you thousands in revenue, it can offer you another income stream. Some people get paid to blog, create logos, produce crafty things or even create a small side business. Similar to selling lemonade for 50c a cup as a child, you can create a small business quite easily. Unless you’re sure this is the career path you want to take, do not invest all of your time and resources into it!

  1. You are #1

From the widely known concept in ‘Rich Dad, Poor Dad’, pay yourself first. Save as much as you can before bills are due but leave enough to ensure no late payments. I’m not saying take half your paycheck and hide it from creditors, I’m saying start squirreling funds away before making purchase decisions. The most effective way is to start with 10% of your pay and place it in an interest-earning savings account, or even invest it. Anytime you earn money from your side business, put it straight in your savings or investment account – don’t spend it! This reduces the risk of impulse buying as you’ll have less and less left over to do so.

  1. Invest, don’t consume

If you were to look at some statistics, you would notice that most people are consumers rather than investors in this world. Investing is crucial if you want to build any kind of wealth or portfolio. Whenever someone earns a raise or accrues some overtime, they spend it on things that don’t work towards financial freedom. In fact, the biggest thing most people do is buy expensive things or live a certain lifestyle they can’t afford, essentially ‘champagne taste with beer pockets’. So the next time you’re at a shopping center or browsing the internet and see something you want, ask yourself “will I actually need this item and if not, will it add value to my financial freedom?” The answer is most likely always no.

  1. Patience is a virtue

Patience is the biggest key to anything in life: getting that promotion, growing your business, meeting the right person, finding the perfect home, etc. There is rarely anything in this world that you can gain without being patient. Don’t be discouraged if you’re saving less than a hundred dollars a month, it all adds up in the end. In a few years, your savings will have increased and you’ll look back proudly at your accomplishment.

 

 

Why You NEED an Online Presence to Succeed

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Social Media

Prior to the technology boom, everyone found businesses in the yellow pages. Unfortunately, these days’ local listings, newspaper advertisements, and any other print medium just won’t cut it. No matter how amazing your business or product is if you aren’t online, you are invisible. Having an online presence can make or break a small business.

The Why

If people are able to find you through a quick google search, google maps or a social media campaign, then you are on the radar. Just being seen isn’t enough, just like the cliché ad you hear at Southbank Cineplex “don’t just be seen, be heard.” Having an up-to-date website is as important as having one in the first place. It’s not only beneficial for yourself (avoid negative reviews) but also your customers.

When I mention an up-to-date website I don’t mean a complete overhaul once a month to the excess of thousands of dollars but instead, I mean a little sprucing up. Content should always be updated, especially if you change address, prices, or even the business name. Time dedicated to creating an online presence is time well spent, especially for small business owners.

 

Online - Why?

Here are the top reasons to increase your online presence:
  1. Become More Accessible – enhance your online presence to stay ahead of the competition. You don’t want a potential customer to pick your competitor over you, so why make it easier for them too?
  2. Cast a Wider Net – these days there are hundreds of social media applications, groups, and even advertising platforms (all thanks to the internet), so why not use them to your advantage? Let the customer come to you, instead of going to them.
  3. Build Consumer Relationships and Trust – reviews will be your next best friend. You have the ability to reach out to unhappy customers and avoid your name being dragged through the mud. Positive reviews can enhance your business in the public eyes. If you can maintain at least 4 stars on Google, Facebook, or the like – you’ll maintain an online presence.
  4. Effortless Marketing – consumers can browse your products, hours of operation, and much more important information with the click of a mouse.
  5. Find What Works and What Doesn’t – easily see the effects of a marketing campaign, track website traffic, and social media statistics. Every inch of your online presence can be measured, thanks mostly to Google Analytics.

 

The How

  1. Create a visually appealing website – with up-to-date information and working links
  2. Create a Facebook and Twitter account – these will give you access to not only a new audience but also allow you to share any news, events, or discounts with the click of a button
  3. Search Engine Optimisation (SEO) – focus on important keywords that relate to the information on the webpage (needs to be done for each webpage). This allows Google to pick up said keyword without the use of advertisements. Essentially allowing potential customers to find your site without relying solely on paid advertising
  4. Hire Someone – you don’t need to hire a university graduate, in fact, you’re better off hiring someone studying marketing or advertising to work either one or two full days a week. This will increase your marketing budget but will be better utilisation of your time. They can complete all your marketing tasks, keep your social media and website up to date, and work on both SEO and AdWords. This means you don’t have to pay hundreds of dollars a month to multiple companies to stay relevant

Conclusion

Building an online presence doesn’t have to be rocket science, there is an entire wealth of technology just one search term away. Create blog posts, maintain your website, utilise social media, and your marketing will be far more effective.

Security – The Endless Dilemma

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Internet security

 

In this day and age, nothing takes precedence more than security. When I say security, I’m not talking about locking your front door or installing a home security system. I mean keeping your account and business information secure and encrypted.

Attention-grabbing headlines relating to online scams, hacks, or viruses are endless, we are constantly trapped worrying that our secure data is being uploaded to someone halfway around the world. Despite these endless stories, the internet is still safe for businesses – provided you take necessary precautions.


Information Matters

No matter what hard drive you use, IT guy you’ve got on speed dial, or how locked tight you keep passwords; your valuable information is NOT safe. From accidentally spilling your morning coffee, to a virus infecting your system and stealing all your valuable information.

Viruses have been plaguing computers well before illegal downloads occurred. In fact, computer viruses (or worms) first began in 1971 with ‘The Creeper Virus’. The first worm was simply an experimental program that became self-replicating, and an anti-virus program was created to remove it. Whilst virus and anti-virus are considered quite yin and yang, security packages just won’t cut it when a hacker wants your information.

To defend against these notorious criminals you don’t need to hire a professional anti-hacker for combating worms, you simply need to move your accounting to the cloud. The cloud replicates your data in different locations to make sure it’s both secure and available when you need it. Not even a natural disaster can affect your accounting data.

Your decision

If you’re thinking about moving your accounting the cloud, look no further than Xero. Security is the top priority and Xero takes every measure to ensure your information stays safe. You won’t need to research what cloud company to join, as Xero has done their due diligence and already utilize a secure and reliable company.

Beginners Guide to Surviving Tax Season

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1. Bookkeeping

Whether business or personal, everyone should be doing this in some capacity. Tracking your income and expenses makes tax preparation and filing so much easier for you and your accountant. To file your taxes, your accountant needs an up-to-date balance sheet (businesses), an income statement, and a record of capital-asset activities for the year (buying, or selling of assets).

2. Receipts and records

Record keeping is the number one priority anyone should have regarding expenses. It doesn’t matter if you keep your receipts organised in a shoebox or online, your accountant will thank you.

Protip: Reduce the clutter by choosing software that allows you to upload and store your receipts.

3. More than just receipts

Sometimes a receipt just isn’t enough. I know, it hurts to hear but it’s the truth! Providing fuel receipts for the use of your personal car won’t cut it. You need more information to back your deduction. The most effective way is to create a log. Track your km’s based on business vs. personal. The ATO won’t accept deductions for personal use, so make sure you make it clear how far you drove for business reasons.

Protip: Driving to and from work is NOT deductible

4. Deductions

Business expenses must be ordinary (accepted within your trade) and necessary. It’s also important to separate personal and business expenses, capital expenses, and any expenses related to the selling of goods (cost of goods sold).

5. Tax strategy

Tax-deductible business expenses are a great way for small businesses to reduce their tax liability. This is especially helpful for companies that are aggressively spending in order to expand. These reasons (and many more) are why tax strategies are so paramount for your business. This is why you need to choose a trustworthy and effective business advisor.

Whether you’re clambering to make your 2017 tax deadline or you’re just not sure what expenses you can deduct, you’ll need an accountant that understands your business and its year-long activities.

To speak to someone who will happily get to know you and your business, call RA Business Advisors on 07 3367 0852 and speak about your tax woes today!

 

Small Business Owners: Why they can’t sleep

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Can't sleep

Why Small Business Owners can’t get any sleep

Time management and cash flow concerns are keeping Small Business Owners (SBOs) awake at night. They are constantly fretting over slow paying debtors and an endless lack of time. I’m not going to bore you with statistics but if you’re interested, check out the graph below:

Reasons why Small Business Owners can’t sleep

Slow paying debtors

Small businesses always seem to find themselves at the mercy of slow paying debtors. Picture your business as a scale, on one end you’ve got creditors and on the other end, you’ve got debtors. Unfortunately, big businesses don’t give you much time to pay (that phone bill is due ASAP), whilst debtors use small businesses as a source of working capital. According to the Australian Competition and Consumer Commission, three out of every four businesses are paid late (link). Thinking back to that scale, if your debtor pays on time the scale tips in your favour (providing cash flow), if that debtor pays late, the scale tips towards creditors – meaning debt.

Where does the time go?

Many SBOs complain they don’t have enough hours in the day to do everything that is required for their business. The majority work a minimum 50 hours per week (that’s roughly 10 hours a day for a five day week), yet state they still can’t get everything done. As much as they would like to explore alternative ways of improving their cash flow, they never have the time!

Unfortunately, technology hasn’t been as advantageous as we previously thought.

See: Make Technology work for you

Reduce the risk

  1. Set a maximum figure for outstanding total invoices – if a customer has not settled their outstanding account, bar them from receiving more products or services until the account is settled
  2. Upfront pre-payment – Opt for upfront pre-payments with as many customers/clients as possible (i.e. service plans, fixed monthly plans, etc)
  3. Obtain part payments (milestone) for larger projects
  4. Pay your bills manually – opt for manual payments, rather than direct debit. This can help greatly with cash flow timing issues

Often cash flow problems are caused by out of date bookkeeping and slack financial management.

We can help

At RA Business Advisors, we can assist our clients with a whole range of services, including cash flow analysis. We can identify what’s blocking your incoming cash flow, and help you with strategies to overcome it. Sit down with one of our friendly advisors for a coffee and a chat.

To chat with one of our advisors call 07 3367 0852 or email mail@raaccountants.com.au