Posted on 13 July '18, under Money.
When you run your own business, it can be hard to step back and look at the big picture. Failing to do so, however, not only harms your business; it can also make it even harder to sell.
Whether it is failing to track cash flow or not investing correctly in key staff, there are many bad habits that business owners commonly make. Here are the top three:
Using the business as your personal ATM
A common business tax-minimisation strategy is to spend business earnings on personal expenses that are not directly related to the business. The idea behind this strategy is that reducing the earnings will make the business liable for a smaller tax bill at the end of the year. However, the strategy can create complications that cost more in the long run.
For example, when selling the business, the owner will need to convince buyers that the number of expenses claimed should be added back to profits since they are not ‘real expenses’.
Not making cash flow king
Many small businesses fail as a result of cash flow issues. Problems with cash flow can be caused by a variety of factors, such as poor debt collection, unfavourable terms negotiated with customers, lazy record-keeping or a lack of regular costing analysis. Failing to manage cash flow hinders an employer’s ability to pay employees and meet suppliers’ invoices. The business’s capacity to meet unexpected debt obligations can also be significantly reduced, resulting in missed opportunities and potentially forcing the closure of business at worst.
Far too many business owners neglect to spend enough time developing formal business, financial and operational plans; instead, they spend each day focusing on their short-term to-do list. These plans, however, are vital in determining whether all the owner’s work results in business growth or if they are gaining little return.
Particular objectives need to be mapped out to monitor and measure performance. This allows business owners to identify areas of reduced productivity or activities that generate lower-than-required returns and take appropriate action to rectify this.
Posted on 13 July '18, under Business.
Rebranding your small business can be a tricky matter. When done well, it has the potential to help your business stand out from the competition bubble and even expand your target market.
On the other hand, a failed rebrand can damage the reputation of your business, or even risk losing loyal customers who dislike your new look. Which is why rebranding is a move that should never be taken lightly and must always be strategically planned.
Consider these ideas before embarking on your rebranding journey.
Understand your strategy
Rebranding is a serious investment which will require both your time and money. Therefore, a rebrand must always be necessary to either solving the problem at hand or growing your business. If it isn’t – then it may be helpful to consider easier and less costly actions, you can take. You must have legitimate customer-focused strategies behind why this move is required. Otherwise, rebranding will likely harm your business more than help it.
Merely tweaking the name and logo of your business and hoping for the best will not cut it. Taking a holistic marketing approach will allow you to focus on the development, design and implementation of the rebranding strategy through your business as a whole. To improve the identity of your business, you must look at how this one change will affect your overall business. Reviewing every aspect that will be affected will also help you assess whether the results will be worth the effort and cost involved.
Evolve with your target market
For a small business to remain successful on a long-term basis, it must remain relevant to its target market. A rebranding will largely depend upon the target market your business is pursuing – in particular, adapting to their ever-evolving wants and needs concerning the product or service you have on offer.
Hire an expert
Knowing where to start when rebranding your business can be a challenge, especially if you are planning a complete image overhaul. That is when hiring an expert to draw up a detailed plan for an innovative new look for your business can come in handy. Using their unbiased opinion can be invaluable in forming a rebranding strategy when your business may be too close to your existing brand to remain objective.
Posted on 13 July '18, under Super.
The Australian Tax Office (ATO) is reminding self-managed super fund (SMSF) trustees to beware of allowing members to access their super early.
A self-managed super fund (SMSF) trustee must meet a condition of release before any funds can legally be released.
The ATO can issue severe penalties if you or a SMSF member access your super before you are legally entitled to do so.
Some consequences of getting caught up in an illegal super scheme include the disqualification of trustees, imposition of administrative penalties, the fund being made non-complying and prosecution.
The Tax Office encourages those members who have been involved in an illegal super scheme to contact them immediately. The ATO will review your voluntary disclosure and take your circumstances into account when determining any penalties.
Posted on 13 July '18, under Tax.
From 1 July 2018, the Tax Office is advising Australians that if they find an error in their tax return or activity statement they will not incur a penalty but will advise of the error and how to get it right next time.
Penalty relief will only apply to eligible taxpayers or entities (i.e., turnover of less than $10 million) every three years.
These may include:
– Small businesses
– Self-managed super funds (SMSFs)
– Not-for-profit organisations
Eligible individuals will only be given penalty relief on their tax return or activity statement if they make an inadvertent error because they either:
– took a position on income tax that is not reasonably arguable, or
– failed to take reasonable care
The ATO will not provide penalty relief when individuals have (in the past three years):
Received penalty relief
– Avoided tax payment or committed fraud
– Accrued taxation debts with no intention of being able to pay (i.e., phoenix activity)
– Previously penalised for reckless or intentional disregard of the law
– Participated in the management or control of another entity which has evaded tax.
Individuals can not apply for penalty relief. The ATO is reminding individuals that they will provide relief during an audit should it apply.
Penalty relief will not be applied to:
– Wealthy individuals and their businesses
– Associates of wealthy individuals (that may be deemed a small business entity in their own right)
– Public groups, significant global entities and associates
Penalty relief will also not be applied to certain taxes, i.e., fringe benefits tax (FBT) or super guarantee (SG).
Posted on 5 July '18, under Business.
It is no secret that most startups will fail in their first three years of operation, so building a new business that can not only survive but thrive in the face of a challenge is of the utmost importance.
Ensuring your business is strong enough to move past any inevitable hitches that come its way can be achieved by improving the foundations.
Consider these ideas.
It’s all about teamwork
For a business to survive any disaster, it will first need a motivated team that can work well under stress and are eager to take on challenges. Your team must work in sync with each other. Completing projects must be considered a team effort to create a sense of unity in the workplace.
The perfect partnership
Going into business with another individual might work well for you. They can pull you up when you are feeling tired or down and make the role at the top not so lonely.
However, finding the right individual for the job is essential. Choosing a business partner who shares the same values and vision for the business as you ensures you will both remain on the same page when dealing with any setbacks.
Preparing for failure
You certainly can not plan for every mishap that comes your way, so you and your team should plan for any foreseeable disasters should they ever occur.
Perseverance is key
There will always be situations in which you and your team have not prepared for. In these instances, it will take determination, creativity and hard work. Your team must see this as a challenge to overcome rather than a disaster zone.
Posted on 5 July '18, under Super.
The Australian Securities Investment Commission (ASIC) has released a new report highlighting its view on the setup of SMSFs for property investments using ‘one-stop shop’ models.
‘One-stop shop models’ tend to promote the purchase of residential property through SMSF borrowing. They are usually arranged by groups of real estate agents, developers, mortgage brokers, financial advisers and so forth.
This model creates conflicts of interest that may affect the advice given to set up an SMSF. For example, these businesses take advantage of customers with limited or no knowledge of SMSFs or super and have the potential to cause major financial detriment, including:
– Receiving inappropriate or misleading advice to set up an SMSF which may result in members being financially worse off
– The obligations of a SMSF trustee are not clearly explained by the advice provider
– Members may be encouraged into a property purchase at an inflated value, or unaware of undisclosed high commissions.
The Australian Tax Office (ATO) are encouraging individuals to seek independent professional advice from a licensed adviser before establishing an SMSF and undertaking an new investment in an SMSF.
SMSF trustees who make a mistake are also encouraged to make a voluntary disclosure to the ATO. The ATO aim to help SMSF trustees in these circumstances to get their SMSF back on track.
Posted on 5 July '18, under Tax.
Tax Time is now upon us, with the ATO Assistant Commissioner announcing the top five mistakes commonly made when Australians complete their annual tax returns.
Common mistakes some taxpayers are making include:
– Leaving out a portion of their earnings, i.e., forgetting to include a job – income from a temp job, or income earned from the sharing economy.
– Claiming personal costs for rental properties, i.e., claiming deductions for periods when they were using the property or claiming interest on loans used to buy personal assets (a car or a boat).
– Making claims for expenses unrelated to their employment, i.e., personal phone calls, work to home commute or buying normal clothes.
– Claims for things they have not paid for.
– Not holding onto receipts or keeping insufficient records of their expenses to validate their claims.
To avoid making common errors, the Tax Office is reminding individuals to:
– Remain up-to-date with what you can and can not claim.
– Keep detailed records.
– Ensure you declare all your employment earnings.
Posted on 28 June '18, under Super.
The Australian Tax Office (ATO) has recently been made aware of circumstances where a member of a SMSF commences a new market-linked pension and unintentionally exceeds their transfer balance cap.
An individual may have exceeded their transfer balance cap if they were receiving a life expectancy or market-linked pension just before 1 July 2017 (which was a capped defined benefit income stream) and then commuted the pension on or after 1 July 2017 and the transfer balance debit is nil under the special value rule in Income Tax Assessment Act 1997 subsection 294-1245(1); and then commenced a new market-linked pension.
The ATO has acknowledged these are unintended consequences associated with the current law and will not take compliance action at this stage provided an individual’s circumstances align with the above situation and:
- if a fund does not report the transfer balance account events of the commutation or the commencement of the new market-linked pension;
- where the fund has reported the transfer balance debit for the commutation as other than nil.
Posted on 28 June '18, under Tax.
The Personal Income Tax Plan announced as part of this year’s Federal Budget has been passed by Parliament.
The plan introduces:
– a new low and middle-income tax offset to reduce the tax payable by low and middle-income earners in the 2018-19, 2019-20, 2020-2021 and 2021-2022 income years
– a new low-income tax offset from the 2022-23 income year
– changes to income tax rate thresholds in the 2018-19, 2022-2023 and 2024-2025 income years
Income tax rate thresholds for the relevant income years are as follows:
2018-19, 2019-20, 2020-21 and 2021-22 income years: Increase the top threshold of the 32.5 per cent tax bracket from $87,000 to $90,000.
2022-23 and 2023-24 income years: Increase the top threshold of the 19 per cent tax bracket from $37,000 to $41,000. Increase the top threshold of the 32.5 per cent bracket from $90,000 to $120,000.
2024-25 income year onwards: Increase the top threshold of the 32.5 per cent tax bracket from $120,000 to $200,000.
Posted on 22 June '18, under Business.
Working with unreasonable people is inevitable for most individuals at some point in their careers. Whether it is an unhappy customer, difficult colleague or uncompromising community member – chances are you will encounter at least one of these situations.
Unfortunately, there is no crash course in dealing with difficult people, but by applying some basic principles of communication, you can manoeuvre through these situations with ease.
Here are three ways to improve your communication with difficult people:
Harness the power of listening
When dealing with a difficult person, it can be easy to fall into the trap of not listening to them and instead concentrating on what is bothering us. Switch your focus to understanding the other person’s viewpoint. Try to understand the underlying motivation behind the person’s behaviour, i.e., they may feel unheard or underappreciated.
Make your intentions known
Communication is a two-way street – you need to be able to listen effectively and express your interests in a clear manner. Think about your communication style. Analyse your strengths and focus on improving your weaknesses. Do you use appropriate body language to boost your verbal message? Are you quick to interrupt when someone else is talking? Are you straight to the point or use vague language? When the other person does not understand your message, you need to improve communication through feedback, i.e., verbal and non-verbal cues.
Don’t make it personal
When you are emotionally activated, it can be difficult to stay neutral. Be aware of your self-talk, especially if it is fuelling negative thoughts of the other person. Look at your situation from an outsider’s view and remain objective. If you are providing feedback, make sure it is constructive and not a personal attack. If you are struggling to take a neutral position, get some perspective from external parties that have dealt with similar situations. They may assist in helping you to see your situation in a different light.