Author: webadmin

How to use forecasts and scenario planning

Written by webadmin on 2 August 2024. Posted in Uncategorised.

For centuries, accounting was all about reviewing historic information – but that only told you about the past, not what was going to happen in the future.

If you’re only looking back at past periods and historic numbers, this limits the insights you can achieve for your business. With a backward-looking ideology, it becomes difficult to plan, run through different scenarios or understand the path of the business going forward.

Forecasting changes this. With the right data analysis and forecasting tools, you can project sales, cash, revenue and profits into the future – and get in control of your business.

A forward-looking view of your business journey

Forecasting switches the focus of your financial management. By moving to a forward-looking view of your business journey, you can see further down the road – and that helps to spot any opportunities and avoid common business pitfalls.

Forecasting adds value by:

Highlighting the data patterns – a forecasting tool takes your historic data and projects it forward in time. This helps you and your advisers spot patterns, trends, gaps and opportunities, revealing the true ‘story’ behind your business accounts. For example, forecasting may reveal a predicted seasonal slump in the next quarter, allowing you to plan ahead and proactively take action to minimise negative impacts.
Giving you a future view of your business – instinctively, business owners will look back at prior periods to assess performance. There’s value to reviewing your historic actuals, of course, but using forecasting helps you to look forward, rather than just backwards. Forecasting is the satnav, showing you the road ahead, rather than the rear-view mirror showing you the road you’ve already travelled.
Helping you scenario-plan – with a financial model of your key drivers, combined with accurate forecasting, you can quick answer your burning ‘What if…?’ questions. Forecasting lets you run different scenarios, with different drivers, to see how business decisions may pan out over time. If option B performs better than option A, that’s invaluable information when defining your next strategic move.
Making informed, evidence-based decisions – having ‘the full picture’ of combined historic numbers, forecasts and longer-term projections aides your business decision-making. Forecasting gives you solid evidence on which to base your strategy, and helps to red flag any threats that are looming on the horizon – giving you the best possible information to keep your executive team informed and on the ball.
A deeper relationship with your accountant – forecasting also helps us to get a far more granular view of your business. This helps to spot potential areas of performance improvement, and to give you the best possible strategic advice, all backed up by solid, empirical data and management information.

Talk to us about the benefits of forecasting

If you want to get in control of the destiny and results of your company, come and talk to us. Forecasting helps you highlight your future threats and opportunities – and create a proactive strategy to improve the performance of your business.

Instant asset write-off extended for small businesses

Written by webadmin on 26 July 2024. Posted in Tax.

New legislation moving through the Australian Senate will increase the instant asset write-off threshold to $20,000. This change aligns with the 2023–24 income year, providing consistency for small businesses in understanding which new assets can be immediately deducted.

Eligibility Criteria

To be eligible for the instant asset write-off, the following conditions must be met:

The asset must be installed or ready to use between 1 July 2024 and 30 June 2025.
The asset must cost less than $20,000.
The annual aggregated turnover of the business must be less than $10 million.

The $20,000 threshold applies on a per-asset basis, allowing multiple assets to be written off instantly if each asset costs under $20,000.

Assets Over the Threshold

Assets valued at $20,000 or more cannot be immediately deducted. Instead, they can be placed into the small business simplified depreciation pool and depreciated at 15% in the first income year and 30% each income year thereafter.

Next Steps

Small businesses can continue to immediately deduct eligible assets using the instant asset write-off. This amendment is intended to improve cash flow compared to deducting assets in the small business depreciation pool and reduce record-keeping over time.

The provisions preventing small businesses from re-entering the simplified depreciation regime (lockout rules) for five years if they opt out will remain suspended until 30 June 2025.

Please contact our office if you have any queries regarding these announcements.

Why Productivity Matters and What You Can Do About It

Written by webadmin on 19 July 2024. Posted in People and Culture, Uncategorised.

Productivity is a term linked to strong economies, successful businesses, and the efficiency of clever staff. If businesses were more efficient, we’d see fewer failures, more jobs, and better incomes for everyone.

According to the Xero Small Business Insights special report in Australia, the most productive industry in 2023 was wholesale trade ($214.20/hour), while hospitality lagged at $40.20/hour. Though productivity dipped across all industries, ten sectors, including manufacturing, agriculture, and construction, outperformed the national average ($100.30). Western Australia was the most productive state ($102.50/hour), with productivity 15% higher than Tasmania ($89.00/hour), the least productive state.

What is Productivity?

Productivity measures how efficiently a business turns inputs into outputs. The more productive you are, the better you turn resources like labour, capital, or materials into products or services you can sell.

Types of Productivity

People Productivity: How much work it takes to deliver products or services to customers, usually measured as hours worked per dollar earned.
Financial Productivity: How well a business monetises its investments in assets like machinery, often measured as the return on capital invested.
Materials Productivity: How much a business spends on materials to generate sales, including inventory and energy.

Why Productivity Matters

More productive businesses get more from less. This boosts their potential to profit, handle inflation or slowdowns, and withstand price competition. Productivity gains are harder to come by nowadays, but digital tools have levelled the playing field, allowing small businesses to compete with larger ones.

How to Increase Productivity

There are four main ways to boost productivity:

Better Tools: Tools amplify efforts. Invest in software or equipment that reduces manual work. For instance, a booking system that integrates with your calendar and payment systems.
Smarter Methods: Continuously review and improve your processes.
Skilled Workers: Invest in training and development.
Entrepreneurship Mindset: Embrace optimisation and innovation.

Increasing Productivity Checklist

Better Tools:
- List potential investments and their costs.
- Estimate the return on each investment.
- Choose the best mix of affordability and impact.
Smarter Methods:
- Map out and document your work processes.
- Identify and address friction points.
- Implement software for repetitive tasks.
- Align processes with customer preferences.
Skilled Workers:
- Ensure clear job descriptions and training.
- Regularly provide and receive feedback.
Entrepreneurship Mindset:
- Look for scaling opportunities.
- Stay open to acquisitions.
- Focus on niche opportunities.
- Continuously improve supply chains.
- Hire and empower entrepreneurial staff.

Boosting Productivity is an Attitude

Small businesses can significantly improve productivity by constantly refining processes, investing in tools, and eliminating inefficiencies. With smart investments in teams and technology, the benefits will add up. Efficient businesses experience fewer delays, miscommunications, and wasted efforts, leading to increased satisfaction and profit.

Budgeting for success: the importance of good financial management

Written by webadmin on 24 May 2024. Posted in budgeting, cashflow.

When you’re operating and managing a small business, you have a finite pot of cash to work with. Because of this, it’s incredibly important to manage your cash well and to have clear budgets and spending limits for every area of your business operations.

Let’s take a look at why budgeting is such a vital part of your financial management, and what you can do to keep your company on budget and in a positive cashflow position.

4 ways to stay in control of your business budgeting

It’s impossible to run a successful business without having a tight rein over your expenditure.

Sales may be bringing in healthy revenues, but the income and profits you’re generating can quickly be eaten up if you’re overspending on operational costs, marketing campaigns, staff payroll or investments in new hardware and software.

We’ve highlighted four ways to put good, solid budgeting at the heart of your financial process:

Embrace the power of budgeting

A well-crafted business budget gives you the foundations to become a financially healthy and successful business that’s in control of its spending.

You don’t have to use a complicated budgeting app; a simple breakdown of income and expenses in an Excel spreadsheet can be a great starting point.

To get started:

Track your projected sales, so you understand your future revenue numbers and have a solid projection for your income over the year or budget period.
Calculate your costs, including fixed costs like rent and utilities and variable costs like inventory and marketing. This will give you an understanding of your total expenditures. Remember to factor in business taxes and contingency funds to cover emergencies.
Set clear budgets for the coming period’s spending, based on the total income you’ve predicted and the total fixed and variable costs you’ve estimated. Always leave some wriggle room to account for inflation and changing costs.
Regularly review your budget, so the document is constantly evolving. Reviewing and updating your budget helps you stay on track, identify areas for cost-cutting, and make informed decisions about resource allocation. Remember, a budget is a living document, so adapt it as your business evolves.

Track your budgets, income and spending

Setting the budget isn’t the end of the process. It’s important to track all income and expenses and update your budget based on the current health of your business finances.

Using the latest cloud accounting software can work wonders. These cloud tools help you record your incoming and outgoing transactions in real-time, so you can work with the most up-to-date numbers and financial data when reviewing and reworking your budget.

To improve your tracking:

Use codes to categorise your expenses – the Chart of Accounts in your accounting software makes it easy to categorise each expense as it’s incurred. It’s then easy as ABC to review your financial reports and to analyse your spending patterns.
Review your spending – check your spending against each code and see where budgets are on track, or where there’s overspending that’s threatening your budget. Are there subscriptions you can cancel? Or could you renegotiate rates with your vendors?
Plan for seasonal trends and patterns – tracking your income and expenditure helps you to spot, predict and plan for the financial ups and down you’ll experience over the year. The more you understand your cashflow, the better equipped you are to stay on budget, make solid strategic financial decisions and avoid unexpected shortfalls.

Separate your personal and business finances

It’s tempting to think of the money in the business as ‘your money’. But it’s crucial to have a clear divide between the company’s money and your own money, as an owner and director.

Here’s why that separation is important:

Open a dedicated business bank account – all the cash you generate, supplier bills you pay and transactions you carry out will be logged through this account. This keeps your own cash and your business cash entirely separate.
Track your business expenses – by having separate business and personal bank accounts, you can easily track your business expenses and manage your budgets. There’s no confusion around personal expenses that could potentially muddy the water.
Consider getting a business debit card – a business card helps you to pay for business-related costs directly from your business bank account. This helps you to track your expenses and keep a closer eye on your budget.

Forecast for the future: don’t just track the past

Basing your budget and financial strategy on historic data is a great foundation stone. But you can also use this data to project the data forwards in time and create useful forecasts.

For example, you can:

Get clear cashflow forecasts – based on your historical sales trends and projected expenses, you can quickly estimate your future cashflow. Having this view of your future cash position is extremely helpful when setting out your budget for the period.
Plan out your budgets and cash management – with forecasts at your fingertips, you can plan for seasonal fluctuations, identify potential funding needs and make informed decisions about the short, medium and long-term strategy of the business.
Be ahead of the curve – with solid budgets, forecasts and a great overview of your finances, you can be more in control as a business owner. Whatever the market throws at you, you’re better prepared, agile and ready to respond.

Talk to us about getting on top of your budgeting

Financial management can be overwhelming, especially if you’re new to running a business. But don’t be afraid to seek help from a qualified accounting professional.

As your adviser, we can:

Streamline your record-keeping, bookkeeping and financial reporting.
Give guidance on budgeting, forecasting and financial management.
Ensure your cashflow and budgets are always looking positive and healthy.

Let’s sit down and talk about getting your budgets and financial management in order.

Get in touch now to talk about budgeting

2024–25 Federal Budget Highlights

Written by webadmin on 17 May 2024. Posted in News, Tax.

The Federal Treasurer, Dr Jim Chalmers, handed down the 2024–25 Federal Budget at 7:30 pm (AEST) on 14 May 2024.

Described as a “responsible Budget that helps people under pressure today”, the Treasurer has forecast a second consecutive surplus of $9.3 billion. As reflected in the Budget, the government’s main priorities are helping with the cost of living, building more housing, investing in skills and education, strengthening Medicare and responsible economic management to help fight inflation.

The key tax measures announced in the Budget include extending the $20,000 instant asset write-off for eligible businesses by 12 months until 30 June 2025, introducing tax incentives for hydrogen production and critical minerals production, strengthening foreign resident CGT rules and penalising multinationals that seek to avoid paying Australian royalty withholding tax.

The Budget also includes various amendments to previously announced measures, as well as several income tax measures that have already been enacted before the Budget announcement, including:

The revised stage 3 personal income tax cuts (enacted by the Treasury Laws Amendment (Cost of Living Tax Cuts) Act 2024 (Act No 3 of 2024)).
Medicare levy and surcharge threshold changes (enacted by the Treasury Laws Amendment (Cost of Living—Medicare Levy) Act 2024 (Act No 4 of 2024)).
A specific exemption for Australian plantation forestry entities from the new earnings-based rules introduced as part of thin capitalisation reforms (enacted by the Treasury Laws Amendment (Making Multinationals Pay Their Fair Share—Integrity and Transparency) Act 2024 (Act No 23 of 2024)).

These enacted measures have not been discussed in detail in this report.

The government anticipates that the tax measures proposed will collectively improve the Budget position by $3.1 billion over a five-year period to 2027–28.

The full Budget papers and the Treasury ministers’ media releases are available online.

The tax, superannuation and social security highlights are set out below.

Income Tax

The instant asset write-off threshold of $20,000 for small businesses applying the simplified depreciation rules will be extended for 12 months until 30 June 2025.
The foreign resident CGT regime will be strengthened for CGT events commencing on or after 1 July 2025.
A critical minerals production tax incentive will be available from 2027–28 to 2040–41 to support downstream refining and processing of critical minerals.
A hydrogen production tax incentive will be available to producers of renewable hydrogen from 2027–28 to 2040–41.
The minimum content length requirements and the above-the-line cap of 20% for total qualifying production expenditure for the producer tax offset will be removed.
A new penalty will be introduced from 1 July 2026 for taxpayers with more than $1 billion in annual global turnover found to have mischaracterised or undervalued royalty payments.
The Labor government’s 2022–23 Budget measure to deny deductions for payments relating to intangibles held in low- or no-tax jurisdictions is being discontinued.
The start date of a 2023–24 Budget measure to expand the scope of the Pt IVA general anti-avoidance rule will be deferred to income years commencing on or after assent of enabling legislation.
Income tax exemptions for World Rugby and related entities for income derived in relation to the Rugby World Cup 2027 (men’s) and Rugby World Cup 2029 (women’s).
The deductible gift recipients list is to be updated.

Social Security

Social security deeming rates will be frozen at their current levels for a further 12 months until 30 June 2025.
Carer payment recipients will have greater flexibility with their participation requirements.
Eligibility for the higher rate of Jobseeker payment will be extended to single recipients who can partially work zero to 14 hours per week.
The maximum rates of the Commonwealth Rent Assistance will increase by 10% from 20 September 2024.
Funding will be provided to implement a social security means test treatment for military invalidity payments affected by the Full Federal Court’s decision of FC of T v Douglas 2020 ATC ¶20-773; [2020] FCAFC 220.
Funding will be provided to enable Australia to enter into a bilateral social security agreement with Uruguay.
Foreign investors will be allowed to purchase established build-to-rent properties with a lower foreign investment fee.

Superannuation

Superannuation will be paid on government-funded paid parental leave (PPL) for parents of babies born or adopted on or after 1 July 2025.
The Fair Entitlements Guarantee Recovery Program will be recalibrated to pursue unpaid superannuation entitlements owed by employers in liquidation or bankruptcy from 1 July 2024.

Tax Administration

The ATO will be given statutory discretion not to use a taxpayer’s refund to offset old tax debts on hold.
Effective 1 June 2023, the indexation of the Higher Education Loan Program (and other student loans) debt will be limited to the lower of either the Consumer Price Index or the Wage Price Index.
The Department of Home Affairs and the ATO will conduct a pilot program for matching the income and employment data of migrant workers.
A new ATO compliance taskforce will be established to recover tax revenue lost to fraud while existing compliance programs will be extended.
The ATO will have additional time to notify a taxpayer if it intends to retain a business activity statement refund for further investigation.
The 2019–20 Budget measure “Black Economy — Strengthening the Australian Business Number system” will not proceed.

GST

Refunds of indirect tax (including GST, fuel and alcohol taxes) will be extended under the Indirect Tax Concession Scheme.

Excise and Customs Duty

Tariffs identified as a nuisance across a range of imported goods will be removed from 1 July 2024.
The start dates for certain components of a measure to streamline excise administration for fuel and alcohol announced in the Coalition government’s 2022–23 Budget will be deferred.

Get in touch to discuss how the Budget announcements impact you.

Are you hiring the best talent for your business culture?

Written by webadmin on 19 April 2024. Posted in People and Culture.

Are you hiring the best talent for your business culture?

Your people are a vital asset, so when you hire a new starter , it’s critical that this new employee fits perfectly into your operations, culture, and values as a company.

But how do you know if a potential hire is a ‘good fit’? Will they drive your business to bigger and better success, or could this new employee create problems down the line?

Be transparent about your company values

Your company values are central to your mission as a business. So making sure those values are clearly outlined and shared is essential for hiring the right talent. By clearly defining and sharing these fundamental values, you’ll attract candidates who share your ethics, values and core motivations – making them a great potential fit for your company culture.

To do this:

Identify your core values and what’s important to you as a business and an owner.
Communicate your core values to your employees and all new starters
Live your values. Reflect them in the way you do business and how you treat people

Communicate your values, mission and culture in your job advert

When you’re hiring, this process isn’t just about you choosing an employee – it’s also about a worker choosing your company and understanding what you stand for. Make sure your job advert gives the best possible indication of what the job entails, but also what you’re like as a workplace. This is a great way to appeal to like-minded people with the best skills.

When advertising and interviewing:

Describe your mission and ask candidates if they are on board with these goals
Talk about your culture and ask candidates why this might appeal to them
Paint the most honest and appealing picture of your workplace

Ask interview questions that reveal the real candidate

You obviously want to know that a prospective hire has the right mix of experience, knowledge and professional skills. That’s a given. But it’s also sensible to ask questions that reveal more about their underlying values, morality, work ethic and interpersonal skills. This will help you to assess whether the candidate is a good fit for your company culture.

Here are some examples of interview questions that dig a little deeper:

What do you look for in an ideal employer? And how important are their core values?
Tell us about a time your faced conflict in the workplace, and how you resolved it
Our culture is front and centre. How do you see yourself fitting into our culture?
How do you see your career evolving as a valued team member in our business?

Ask your team for feedback on candidates

You may think a candidate is the bee’s knees, but what do the rest of your team think? Gauging the opinions of your management team and other team members is vitally important. These people will be working directly with this new hire, so they have to get a good vibe from them.

To encourage objective feedback, give your team members a chance to meet the candidate and take their feedback into account when making a hiring decision.

Monitor your new hire and have regular, ongoing performance reviews

Once you’ve made a hiring decision and have a new employee on the team, it’s vital to have regular and ongoing informal catch-ups and more formalised performance reviews. This helps you to measure how your new employee is settling in. It’s also an opportunity to gauge whether there are areas where they may need support from you and the wider team.

Don’t hold back. Be as open and transparent as possible:

Ask them how they’re feeling about their role, workload and their performance so far
Check their progress against set targets and objectives for their first three months.
Find out if they need help, support, further information or more onboarding support.
Check if they feel they are fitting into the team, and if they are feeling happy
Look out for potential issues that may be causing conflict in the team.

Having the very best talent in your team is central to achieving your goals for the business. So, making sure you hire the right people is actually a business-critical decision to make.

Book a tax planning conversation with us today

Written by webadmin on 10 April 2024. Posted in Tax.

The days of deciding on a tax strategy at the start of the year and then forgetting about it are gone. As taxpayers and tax advisers, we must be nimble, flexible, and aware of changes. That’s why regular tax-planning sessions are so important.

Is your business meeting the right tax compliance goals?
Are there tax changes to be aware of?
And is your tax planning delivering the best results for you and your company?

The need for regular tax-planning conversations

As your accountant and tax adviser, we want to help you get the best outcomes from your tax planning. In the current environment, that’s difficult to achieve if we only speak to you about tax on an annual basis.

The frequency of these tax planning chats will depend on the size of your business and the complexity of your structure and shareholder set-up. But we should talk to you at least once every quarter about the tweaks and changes that are needed in your plan.

In these tax planning sessions, we can:

Update you on the latest tax measures – We’ll tell you which personal and business taxes you need to be aware of.
Tell you how these measures affect you – We’ll run you through the implications of any changes or available business reliefs. We can show you the impact on your tax returns for the coming periods and what this means for your tax costs and your cash flow at large.
Listen to your evolving plans for the business – We’ll also ask you about your future business plans and what you want to achieve in the coming quarter. When we know your aims, we’ll do our best to help you develop a business strategy that’s closely aligned with your tax-planning strategy.
Suggest planning measures to benefit you and your business – When we know your business goals, we can help you plan your tax more effectively. For example, plans to invest in research and development (R&D).
Update your tax plan for the year – With the outputs from a productive tax-planning session, we’ll come up with a refreshed and updated tax plan for the coming period (and beyond). It’s the best way to stay on top while delivering the best in tax compliance and tax efficiency.

Talk to us about booking a tax planning session.

We’ll always do our best to help you plan your tax liabilities and keep the business in a positive cash flow position.

Book a tax-planning conversation with us, and let’s start improving your strategy.