Will you have a happy Christmas break?

Posted by 09/12/2019 News and advice No Comments

Will you have a happy Christmas break?

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Many businesses find the Christmas period and the weeks just after Christmas a low-income period.

One of the options for many businesses is to take is to close for an extended period during the Christmas and New Year break.

Often it’s the only time that some small business owners can take time off.

Although retail usually takes a dive after the Christmas spendathon, retail shops also prefer to stay open despite the drop in trade. This is mostly about maintaining continuity and presence as competition can be fierce and losing trade is just not a viable option.

But many other businesses such as manufacturing, building and some service industries find it an ideal time to down tools and close.

The Fair Work Ombudsman says that an employer can direct an employee to take annual leave, but only when an award or registered agreement allows it and the requirement is reasonable.

If you employ staff, you should also give them at least one months’ notice that you will be closing and that they must take leave over the closure period.

The other consideration for businesses who close, is cash flow. Planning for an extended closure is critical. In many cases your cash flow will be dramatically reduced, especially if your business relies on employees to generate direct income.

Making sure you keep cash in reserve leading up to the end of the year will provide the buffer you need to get through this period and ready to go in the New Year.

You also need to have plan in place to quickly ramp up income once you and your staff get back to work.

Let us know if you believe you may experience cash flow issues post the Christmas New Year break, and we can help you develop a plan to ride it out.

Employee or contractor?

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If you use contractors to provide services for your business, how do you know if they should really be an employee?

The Independent Contractors Act 2006 in conjunction with the Fair Work Act 2009 protect the rights and entitlements of independent contractors. A number of businesses have been fined for taking advantage of employees using illegitimate contract arrangements.

There are a number of factors which may contribute to determining the difference between an employee and independent contractor.

However, it is important to note that no single indicator can determine if a person is a contractor or an employee.

Each determination is based on the individual merits of the work arrangement in place. Courts always look at the totality of the relationship between the parties when determining the status of a person's employment.

There are some common indicators that may contribute to determining whether a person is an employee or independent contractor:

As an employer, it's a decision you can only make accurately when you review the whole working arrangement.

These six questions will help you decide before you hire a worker:

  1. Ability to subcontract/delegate: can they pay someone else to do the work?
  2. Basis of payment: are they paid based on an agreed quote they provided?
  3. Equipment, tools and other assets: do they provide their own tools and equipment needed to get the job done?
  4. Commercial risks: are they legally responsible for their work and liable for fixing mistakes or defects?
  5. Control over the work: do they decide how the work gets done subject to specific terms in the contract or agreement?
  6. Independence: do they operate their own business independently of your business?

If the answer is no to some or all of these questions, you need to seek further information and advice before treating your worker as a contractor.

When less equals more

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How much would your business change if you lost over half your clients?

The simple answer would be that your business would suffer greatly, maybe even fold.

But if the half that you lost were your smallest, worst paying, most difficult price shoppers, then you might find that your business would prosper even more.

Business owners often spend proportionately more time and money satisfying small, difficult customers than looking after professional easy-going clients. If you could take your energy away from the price shoppers, then you would be able to invest a lot more time in working with and growing your larger, more profitable clients.

The more attention you can put into your best clients the more they tend to spend with you. The reason for this is that top quality clients have a better understanding of the value you can offer them and are often less focused on price.

There is no doubt that some clients cost more than they make for you. When was the last time you had a good look at your client list to see who really are your best clients?

When you break it down, you will probably find only about 20% – 30% of your clients provide about 70% – 80% of your income.

So why not work with only the top 20% or 30% of your clients, and call them all ‘A’s.

Analyse what criteria they need to fit to be an ‘A’ client, and use the information to focus your energy working with and attracting only ‘A’ class clients. When every client is ‘A’ class, they all get the very best from you in service, quality and care. They will repay your attention with increased business.

The criteria could include how much they spend, how easy they are to work with, how well they pay and how much they value you and your relationship with them.

Once you have a criteria to work with you will find it much easier to target only prospects that fit your ‘A’ class portfolio.

If you would like some help in setting up the criteria for your best clients, please give us a call.

Growing a small business is getting more challenging

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Right now, there are hundreds of small business owners in the Beenleigh area mulling over their tax returns.

Like many business owners, you are probably looking for ways to save money. And maybe one of those cost saving measures is doing your own tax, because you think can’t afford an accountant.

But tax and accounting is just the tip of the iceberg when it comes to running a business, and a good accountant can help guide your business in the right financial direction.

Here’s some questions to ask yourself about using a local Beenleigh accountant like us.

  • Does your accountant sit down with you in order to understand your business and personal goals and then tailor the advice to suit your situation?
  • Does your accountant offer advice on ways to grow your profit each year?
  • Does your accountant offer a complete all year service with easy monthly payments?
  • Does your accountant assist you with your accounting software to make sure you’re getting the most out of it?
These are very important questions.
That’s why it might be time to let us review your business and personal tax structure to make sure it’s as tax-effective as possible.

Because engaging a tax accountant who doesn’t take a strategic view of your business means you’re only getting a token interest. And that’s just not good enough.

Give us a call today!


Using simplified depreciation

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At Accountants 360, we know that working out depreciation deductions can be hard to understand. As a small business owner, you might prefer to use  simplified depreciation rules for your business.

The simplified depreciation rules apply if your small business has an aggregated turnover of less than $2 million.

One of the top simplified depreciation rules is the instant asset write-off.

With the instant asset write-off, you can immediately deduct assets bought for your small business, which cost less than $20,000 in the year that you buy and use them, or install them ready for use.

The increased instant asset write-off threshold of $20,000 applies from 7.30pm 12 May 2015 to 30 June 2017.

Another important rule applies if the balance of your pool for depreciating assets is less than $20,000, before applying any other depreciation deduction. In this case you will need to immediately deduct the full amount in your tax return.

For more information on claiming depreciation deductions and working out the balance of your small business asset pool, give us a call. We can assure you that the best way forward will mean the best possible tax deductions for your business.

And remember to lodge lodge on time

If you are preparing your own return you must lodge by 31 October. But if you are using a registered tax agent like us, then we  will have different lodgment dates. If you are using us for the first time,  please get in touch with us before 31 October.


The top 3 Tax issues for small business

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The ATO has identified the top three tax issues facing small business.

Poor understanding of rules and obligations and a lack of tax planning is behind much of the concerns facing Australian small businesses.

Here are the top 3 issues to address when small businesses lodge their tax returns:

  • Failing to report all of their income
  • Not having the necessary records to prove small business expenses claims.
  • Claiming private expenses as business expenses

There are three golden rules to remember when claiming deductions.

One, the expense must have been for your business not yourself.
Two, if you use something for business and private purposes, you can only claim the portion that is related to your business.
Three, you need a record to prove it.

The top tip for small business operators is to ensure that records are kept up-to-date. Good record keeping will help you complete and lodge your tax returns, manage cash flow, meet your tax obligations and understand how your business is doing.

That’s where we can help. We can help you plan your tax obligations and cash flow throughout the year.

Give us a call to find out how we can work with your to ensure your records are up to date and that your deductions are correctly maximised.

ATO cracking down on “Black Economy”

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We know most business owners are honest and that running a business can be difficult.

Unfortunately, there are businesses that gain an unfair advantage by not meeting all their tax and superannuation obligations. The ATO is focusing on protecting honest businesses from this unfair competition by addressing black economy activities.

The black economy refers to both dishonest and criminal activities that take place outside of, or involve misuse or abuse of, the tax and regulatory systems.

Examples of black economy activities include:

    • not declaring all income
    • over-reporting deductions
    • demanding (or paying for) work cash in hand to avoid obligations
    • other illegal activities, such as illicit tobacco, sham contracting and ABN fraud.

The ATO uses up-to-date third-party data and sophisticated risk analysis profiles to identify those who may need a bit more help and those who may not be doing the right thing.

The ATO is checking up on businesses around Australia as part of this work. Depending on what they find during the visit, they may contact businesses at a later stage to follow up.

If you have any concerns or feel your book-work is not up to date please call us for an assessment.

Are you ready for Single Touch Payroll

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Single touch payroll is a new regulation that changes when and how small businesses report payroll activity to the Australian Tax Office (ATO). Now, you need to send a report after each pay day.

If you had 20 or more employees on 1 April 2018 you needed to report to the ATO through STP-enabled software from 1 July 2018, unless you had been granted a deferral.

Single Touch payroll now compulsory

Its now compulsory
But Single Touch Payroll has been extended to all employers from 1 July 2019 and is compulsory.

Each time you pay your employees you will also be sending your employee salary and wage information, pay as you go (PAYG) withholding and super information to the ATO. These will be year-to-date amounts.

You will need to make sure your current payroll software is updated by your digital service provider (DSP) to offer STP reporting, or choose payroll software that is STP-enabled.

What the changes mean for you
Each time you run your payroll and pay your employees, you will also send the ATO your STP data from your payroll software. This will be done through a pay event.

If you need to, you will be able to make corrections to your employees’ year-to-date (YTD) amounts in your next pay event, or through an update event.

Payment summaries
You will not be required to provide payment summaries (including part-year payment summaries) to your employees for the payments you report and finalise through STP.

The ATO will make this information directly available to your employees online through myGov. This information will be called an employment income statement. It is the equivalent of a payment summary.

Once you make a finalisation declaration, the ATO will notify your employees that their employment income statement is ‘tax ready’ in myGov and they can use it to complete their tax returns.

STP information will be pre-filled into myTax for individuals who prepare and lodge their own tax returns. It will also be made available to tax agents.

Reporting superannuation information
You will continue to report and pay your employees’ superannuation entitlements through your existing SuperStream solution (including the Small Business Superannuation Clearing House). This does not change as a result of STP.

What will change is the requirement to report your employees’ super liability or ordinary time earnings (OTE) each pay day. This is based on the amounts you currently provide on an employees’ payslip.

Super funds will report to the ATO when you make the payment to your employees’ super fund.

This will provide the ATO with visibility of your super obligations and payments.

If you are concerned about how this will affect your business, please contact us as soon as possible for advice. Remember this is now a compulsory requirement of all employers.