Archive for 'business'
It is easy to get caught out with superannuation, particularly when you are the owner of a business. With so many things to occupy your mind, superannuation may slip from the forefront.
But as a business owner, you must pay the superannuation guarantee for your staff, and you must pay it on time. A failure to pay it on time will mean that you are no longer able to receive a tax deduction for the payment for that financial year.
On top of that, you can face hefty penalties (which you won’t get a tax deduction for either!). Now imagine being five days late on a $10,000 super payment, losing the tax deduction on that payment and then copping a $20,000 penalty as well.
The first thing is to make sure that your super is paid well before the time it is due. This should be a priority payment (a payment that you make before anything else).
As the end of the financial year approaches, it is time to be thinking about the June Super Guarantee payment. You may have until July 28 to make the payment but leaving it until then will not net you a tax deduction until the next financial year. From a tax perspective, this may not be what you want to do (unless you know that in the next year, you will need more tax deductions).
Superannuation also has a few strange rules when it comes to claiming a tax deduction. For employee superannuation, it is critical that it is paid on time. More than that, the money has to actually be in the bank account of the super fund for you to claim a tax deduction.
Unlike other expenses where you can show the money coming out of your bank account, this money needs to be present in your super fund for you to make the claim. If your super guarantee payment hits the bank account of the super fund on June 30th then you can claim a tax deduction for that year. If, however, it hits the bank account on July 1st then the tax deduction is claimed in the financial year after.
Problems arise when you are paying your super through a clearing house, which takes a number of days to clear your payment and get it to the super fund. For example, you may pay the clearing house on the 25th of June, but your super fund does not receive it into their bank account until the 1st of July.
The ATO’s Small Business Superannuation Clearing House usually has some concessions in these instances.
If you want to get a tax deduction for your June Super Guarantee payment, you need to work out with your clearing house the latest day that they can guarantee that the super fund will then receive the payment this financial year. Some of these clearinghouses are quoting that you should be paying as early as the 14th of June.
Finally, with regards to Super Guarantee, remember that the rate increases to 10.5% from 1st July. This rate applies to wages paid on or after July 1st so make sure your payroll system either automatically updates the rate or that you have updated it to reflect the increase.
Employers who fail to meet their Super Guarantee obligations may also be liable for a range of penalties or charges on top of the super guarantee charge.
Paying super is an important part of being an employer. To ensure your business remains compliant, remember to:
- pay the right amount (10 per cent) of employee ordinary time earnings until 1 July 2022 (when it will rise to 10.5
- pay on-time
- pay the right way and
- keep records to show you have met your obligations
With inflation surging, costs rising and interest rates increasing (after being stable for a decade), businesses may be feeling the heat about their profit margins. Your business may be struggling to absorb these rising costs amid labour shortages, while also requiring spare capital to expand and further digital transformation initiatives.
In a time where growth should be at the forefront of your mind, you may instead be struggling with the incoming additional financial pressure. Here are five measures that business owners can put into place to mitigate the impact of inflation.
Renegotiate Contracts To Reduce Costs
Many of your fixed-term agreements may have been made previously with pricing based on a certain set of assumptions. A project that commenced several years ago could now be operating at a loss, due to the cost of supplies today. In this instance, renegotiating the contract to reflect these changes is the best course of action. There is no sense in continuing a project if you would be put out of business by the overall cost to you after all.
Consider Alternative Pricing Strategies
To what degree might you be able to pass the inflationary price rises onto your customers without alienating them? Small scale increases to your products occurring over multiple times may be more palatable to your customers, such as with quarterly rises rather than annual rises. If things swing back, your business can maintain the increased pricing and profit from the gain instead.
How Do You Manage Wage Increases For Your Staff?
Consider how wage competitiveness for jobs could impact your staffing. If matching industry expectations for wages in a sector is not feasible, consider alternative options as incentives, such as flexibility, opportunities for career advancement and better work/life balance options (e.g. 4 and a ½ day weeks, WFH Mondays, etc). This might be a method to compete at a lower pay scale by focusing on other benefits.
What Are Your Key Products?
Identify the products that your customers come to you for (your ‘milk and bread’ as it were) and use them to stimulate the sales of more profitable products or services. Reduce your key product pricing and instead upsell or cross-sell additional products to increase your customer’s basket size and gain additional purchases.
Diversify Your Supply Chain
Identify opportunities to diversify your supply chain relationships and mitigate your risk of interruptions. It could be a critical point for your survival – the last few years have demonstrated that reliance on overseas production can be detrimental to a business. You could become a supplier yourself, investigate options closer to home for supply purposes or work out how government incentives could be used to benefit your business.
Rethinking your strategy for inflation now rather than later could be a key maneuver in ensuring how your business performs in the long term. You can speak with a trusted adviser today for logistical guidance for your business.
As of 5 April 2022, new Directors will need to have applied for their Director Identification Number (DIN) prior to their appointment to the position.
Existing directors were required to obtain a DIN prior to the end of the transitional period (30 November 2022), whereas directors of Indigenous Corporation have until 30 November 2023. Failure to do so could result in penalties for non-compliance.
What Is A Director Identification Number?
Previously a company or business was registered through ASIC, where a Tax File Number and an Australian Business Number would be required. These are obtained through the Australian Taxation Office (ATO) and are a critical part of setting up a business or company.
Introduced in November 2021, there will be an additional step introduced in the registering of a company, involving a Director Identification Number (DIN). This director identification number is a unique identifier that a director will apply for once and keep forever.
They were brought in as a part of a broader regulatory strategy to address the issue of phoenixing – this is where controllers of a company deliberately avoid paying liabilities by shutting down indebted companies and transferring assets to another company.
DINs are recorded in a database to be administered and operated by the Australian Tax Office and are made available to the public.
The ATO has the power to provide, record, cancel and re-issue a person’s DIN. A DIN will be automatically cancelled if the individual does not become a Director within 12 months of receiving the DIN.
Who Does A DIN Apply To?
Director ID only applies to companies and corporate bodies registered under the Corporations Act and CATSI Act.
Director ID does not apply to sole traders, partnerships or trusts unless the trust has a corporate trustee.
Deadlines For Applying For A DIN
When the announcement of DINs was made in April 2021, there were set deadlines in place for those involved in profit and not-for-profit entities, as well as for Indigenous Directors. As of 5 April 2022, those deadlines have changed.
For profit entities, the deadline for applying for a DIN under the Corporations Act must be done before your appointment as a director.
For non-profit entities (including those entities registered under the ACNC Act as either private or public companies), you also need to have applied for your DIN before you are appointed as a director.
For new directors of Indigenous Corporations, the same requirements for applying are advised (prior to appointment).
How To Apply For A DIN
All directors must apply for their own DIN. This cannot be done by a third part, unless it can be proven to the Registrar that the director is unable to make the application on their own behalf (such as suffering some sort of incapacity, etc).
There are three ways to apply for a DIN:
- Online application via the myGovID app. This is different to myGov and is the quickest way to obtain a DIN.
- Phone application.
- Paper application (which is the slowest process).
These methods require proof of identity documentation, however, you may be able to use certified copies (witnessed by a Justice of the Peace) if you are using the paper application.
The hard part in obtaining favourable judgements for your business or service is making sure clients and others perceive all you have done for them – in other words, getting credit for what you have done.
There are five principal dimensions to service quality:
Reliability is the ability to provide the promised service dependably and accurately. It includes timeliness and the person’s perception of your competence. People judge you on how dependable you are. Reliability means performing the service correctly the first time.
Assurance is the client’s feeling that her or his situation is in good hands. It involves the knowledge and courtesy of your personnel, and their ability to convey trust and confidence.
Assurance also involves credibility, which includes trustworthiness, believability, and honesty. It means having the client’s best interests at heart and demonstrating care and concern. Assurance is the reason for the old saying, ‘People don’t care how much you know until they know how much you care.’
Tangibles include the physical evidence of your service, your facilities and equipment, and the appearance of your personnel. Tangibles include correspondence, newsletters, brochures, and other tangible products that the client receives from you. They also include the neatness of reports and financial statements, and invoicing.
Responsiveness is your willingness to help people and provide prompt service. Responsiveness, like reliability, also involves the timeliness of service. Accessibility is also part of responsiveness, as are approachability and how easy you are to reach.
Empathy: means that you provide caring, individualised attention to clients. It goes beyond mere courtesy, although courtesy is as important a part of empathy as it is of assurance. It requires a commitment to the client and involves understanding the client and knowing his or her personal needs and specific requirements.
Courtesy involves politeness, respect, consideration for the client’s property, and consideration of the client’s time, as well as the friendliness of contact personnel (including receptionists and telephone operators).
To get a high rating on your scorecard, you need to think about how you can demonstrate your capabilities in these areas in ways that people can perceive clearly.
If you have employees who are expecting to expand on their family (whether they are adopting or looking to become pregnant), the Federal Budget 2022-23 announced a change to paid parental leave that could impact you and your employees.
Single parents and fathers are now eligible for longer paid parental leave after the government proposed an ‘enhanced’ 20-week scheme from announcements made during the Federal Budget 2022.
Under existing arrangements, up to 18 weeks of paid parental leave can be taken by whoever is designated a baby’s primary carer – usually the mother – at the minimum wage, while a secondary carer is eligible to take two weeks. If the secondary carer does not use the two weeks, it is lost.
As a result of the recent announcements made in the Federal Budget 2022-23, the secondary carer’s leave will be merged with the 18 weeks of Paid Parental Leave to increase the government-funded scheme to 20 weeks of leave.
Single parents will see two additional weeks of paid parental leave added to what they normally would be entitled to, whereas two-parent households will be able to split the Paid Parental Leave as they would like. However, this leave must be taken within two years of the child’s birth or adoption.
The ‘use it or lose it’ incentive will not be implemented into the new scheme, but an emphasis may still be placed on the primary caregiver to take the bulk of the leave.
The enhanced scheme will also broaden the eligibility for paid parental leave to include a household income threshold of $350,000 per year.
This fully flexible leave aims to help working parents make caring decisions that suit their specific circumstances and encourage fathers to take up parental leave.
Presently, women who earn up to $151,350 can access paid leave, but women earning more than the threshold are not entitled to this scheme, even if their partner has lesser or no income.
The rate of paid parental leave has not increased either – it is simply that eligible parents will be able to access more of it. This may be a disincentive however to the higher income earner, as taking the paid time off may be less than what they would otherwise earn working.
Notably, though, the proposed scheme still does not include superannuation payments in parental paid leave. Paying super on paid parental leave would allow parents to continue building their retirement savings while taking time out of the paid workforce to care for children.
If all goes to plan, these changes to the paid parental leave scheme will take place no later than 1 March 2023.
Paid parental leave is a topic that can be tricky for employers. Having a discussion with a professional can be a way to alleviate concerns about what your employees are entitled to or the risks of failing to match standard employee obligations around the matter.
Just as you need to have an individual or family plan for how to manage in an emergency, so too should your business. The better prepared you are to navigate through any situation that might arise, the easier it will be to get back into the usual operation.
Unexpected disruptions to business operations can be prevented with a well-thought-out emergency management plan and recovery plan to help protect your business before, during and after an emergency.
Natural disasters, such as floods, fires and earthquakes can strike without warning, and throw a spanner into the general running of your business.
Your primary aim with an emergency plan is to ensure that your business is able to act and continue to be operational. To do so, you need to have in place specific plans for your business to manage operations in the event of an emergency prior to, during and after its occurrence.
You will want to ensure that you have the following plans developed for your business:
- The continuity plan, which helps you to prepare your business for an emergency by identifying risks to critical areas, and how best to protect them.
- The emergency action plan allows you and your staff to know what to do during an emergency situation
- The recovery plan which guides your business’s recovery after an emergency.
Once you have those in place, you will need to ensure that you have a list and copies of the supporting documentation that you will need, such as detailed emergency procedures, evacuation maps and insurance information. By having these documents in place, you can ensure that your emergency management plans are equipped with comprehensive information to smooth the process.
To keep that information up to date, and to be certain that your emergency management plan stays relevant to changing situations and circumstances, you will need to regularly review the contents. Keeping both the management and recovery plans updated will ensure that you are prepared for any eventuality.
In the event that staff changes occur or locations for business alter, those changes need to be reflected in the plan.
All of your staff should be apprised of the plans and procedures that are in place. Doing so through practice, drills and repeated enforcement of the steps to be taken can help you determine if anything needs to change. This is a key opportunity to understand the efficiency of your emergency procedures and plans for your business, and if anything can be done to improve.
This could be as simple as fire and evacuation drills, through to meetings and safety courses on what to do in the event of an emergency.
Of course, there are some emergencies that cannot be circumnavigated with a simple plan. The recent flooding in Northern NSW and Queensland shows that even the best-made plans can be less than effective in the face of an unprecedented disaster.
In this case, thinking about and implementing the ways that you can prepare your business to deal with the potential ramifications of a worst-case scenario maybe the better outcome. You may need to consider:
- Taking out insurance for the business, or checking your current
- Taking into account the location and risks associated with the area
- Backing up and secure your data in offsite locations to prevent loss
- Keeping a list of emergency contacts and recovery contacts (such as police, fire, insurance, employees etc)
- Reviewing your evacuation procedures and updating
Succession planning for the family businesses has a number of factors that could impact the decision to pass the business onto the next generation. Namely, you’ll be looking for someone in the family who is willing to assume the responsibility.
But if you intend to pass your business down the family tree there are also a number of taxation, financial and managerial considerations that need to be taken into account for a successful succession.
When transferring your family business and placing it in the name of another family member you may trigger a myriad of taxable consequences, including Capital Gains Tax (CGT), wine equalisation tax, fuel tax credits and excise duty. You need to consider, when preparing the business for succession include:
- Consulting the ATO to check if you are eligible for tax concessions
- Document all business restructuring operations and the tax impact in the succession plan
Consider A Family Trust
It is often suggested before a younger family member gains ownership of the business they should first assume managing responsibilities to prove themselves. If you want to relinquish control gradually rather than permanently, re-structuring the business as a family trust is an option.
Although this may be complicated and incur costs, as a trustee you will be able to have control of the assets from a distance and be able to step in should the need arise in the early phases of new leadership. Family trusts also carry increased tax benefits and concessions that can be taken advantage of.
This is a great solution for those looking to go into semi-retirement or looking to step back from the business but still want some involvement with the process.
Create A Family Constitution
To make the hand-off occur as smoothly as possible a family constitution should be drawn up collaboratively by all, directly and indirectly, involved in the business. The following should be included:
- A detailed business plan, stipulating goals, outcomes
- Hierarchy of the business, both present and future
- Will of the business
- Code of conduct for interactions between family members in business
Develop A Succession Plan To Successfully Succeed
A succession plan is designed to assist you in transferring your business to a successor. To do so, it should include the following to further guide the process.
- Choose A Successor
Identify who you would like to take over your business. If you wish to keep it in the family, you need to be certain that the person who will be taking over is skilled and prepared for the responsibilities to come. Make sure that you consider what is the best path for the business.
- Value Your Business
Understand how much your business is currently worth by getting your business valued. By doing so consistently, you can mark out how much your business is worth during events, the general day-to-day and more. This valuation may change substantially before you plan to leave, but having a valuation may assist you with planning for your succession.
- Keep The Plan Current
Review your plan regularly, as your circumstances and the business’s circumstances may change over time. Having an up-to-date succession plan will ensure you’re always ready in the event that you need to pass the business on earlier than expected.
- Make The Final Handover
If the final preparations have been properly made, and you’re ready to go, you should simply be able to hand over the business and step aside. A clear and current succession plan should facilitate a smoother transition with far less chance of disruption to the business’s everyday operations.
The trust that your customers place with your business often revolves around the personal information that they have shared with you. Contact details, payment information, even their demographical data are stored within your databases.
That’s why it’s critical that your business maintains confidentiality and the trust that has been established with how you use their information. Businesses, therefore, need to take the relevant precautions to ensure that the privacy and personal information of their customers are not compromised.
This may involve:
- Encrypting the information you receive from customers: There are programs available that encrypt the information that your customers may send to you over the internet (such as payment details). These scramble the data so that it is indecipherable to anyone trying to read the information.
- Create employee log-ins: Create log-ins for each employee for company computers. Screening each employee before they are given access to a log-in for any of the databases is a necessary preventative measure. Creating passwords for protected files that only the relevant employees have access to will add another layer of security.
- Keep your sensitive files in a different location: Avoid keeping particularly sensitive files on the same network as all other files. These files should instead be kept on a separate computer and limited employees should have access to it, if not any.
- Separate groups of customers: Separating databases will prevent the loss of all customer data if there is a breach of security.
- Confidentiality agreements for employees: If the information you store is particularly sensitive or high profile, ask employees to sign confidentiality agreements. This increases their accountability as they run the risk of a lawsuit if they give out confidential information.
If your customers feel that their confidential information or trust has been breached, they may be less likely to purchase from you. Maintaining their trust is one of the most critical aspects of business, and a failure to do so may significantly impact your business’s reputation among prospective clientele.
It may be advisable to employ a professional consultant if there are security concerns for the personal and private information of customers who may be able to assist you in securing it.
When you are first setting up a business, understanding exactly what you are setting out to achieve can be a daunting task. But a business plan takes some of that stress away by helping to cement your business idea into achievable goals. It can be as simple as dot pointing your strategy on the back of an envelope, or a 30-page report of what your business is hoping to achieve.
However, a formal business plan should consist of specific information that you can present to investors (or a bank, or just your spouse) as an indication of how your business will succeed.
What is the point of the business? In this section, try to outline your plan succinctly. You should discuss the industry that your business will be operating within, what structure your business will take, the particular product or service
Actioning The Strategy
What goals do you have for your business? When and how will you reach your goals? Do you have a clear set of steps that you need to take to implement your strategy into being?
Why Your Product?
What’s the competitive advantage of your product over the others in your field? Are you a solicitor who specialises in family law? Do you sell vintage merchandise for Aussie Rules football teams?
What niche does your business fulfil that your customers need? Provide solid information about your product to your readers, and explain the reasoning behind why your customers will want to purchase your product, and not those of your competitors.
Who are your target customers? What demographics do your customers primarily lie in? How will you attract and retain enough customers to make a profit? What methods will you use to capture your audience? What sets your business apart from the competition?
Answering these questions will assist you in planning out your marketing strategy, and demonstrate to your investors that you understand how you will be targeting your customers.
These will be based on your projected financial statements. These statements provide a model of how your ideas about the company, its markets and its strategies will play out.
Obviously, a report that outlines your business plan is probably preferable to a scrap of an envelope, but the main point to this is working through the business idea in a written form that you can take to your business strategists to formulate a more comprehensive and viable business plan that aligns with your goals.
As you write your business plan, stick to facts instead of feelings, projections instead of hopes, and realistic expectations of profit instead of unrealistic dreams of wealth. Facts—checkable, demonstrable facts—will invest your plan with the most important component of all: credibility.
It’s time to start writing that business plan if:
- You have a new idea for a business and want to explore its feasibility
- Your industry is undergoing significant changes and dramatic developments, and you want to map them out for your current business
- You’re looking to sell your business and want to establish a value for it that can be supported by facts and figures.
- You require financing for your business idea and want to plan out how you’ll expend the resources you’re committing.
If you’re looking for assistance with planning for your business’s future, you can come speak with us.
All businesses, at one stage or another, will have to go through significant change. During the last few years, it’s safe to say that many businesses have felt the impact of these changes, whether they were big or small.
Change is necessary for growth but accepting the need for change can be difficult for some.
They can arise in various ways, such as struggling to find quality employees, needing a change in direction, targeting a new target market and so on. Whether it is an internal or external force driving the change; it is important to lead change confidently.
Here are three ways to lead change with ease:
Articulate A Clear & Strong Vision
A strong strategic vision acts as a blueprint for leading change and can provide employees with more clarity about the positive impacts change will have for them and the overall business. A vision statement helps to align your team around the business’ goals and prompts them to work towards making the change happen. A clear vision also helps to overcome cultural resistance to change as employees can link the change to positive transformation.
Engage With Staff
Staff will either accelerate or hinder the change process, so it is crucial to get them on board
and constantly keep them informed. Frequent communication is ideal during times of change. Set aside time for questions and have an open-door policy for staff to ask questions. Make a plan, communicate it to staff and constantly check in to assess whether tactics are successful or require adjustment.
Celebrate The Wins
Wins are proof that change is generating results. Celebrating wins reinforces the notion that change is essential for business growth. Celebrating both small and large wins hones in on the collective contribution of the team’s efforts and motivate employees to work towards goals that will promote change throughout the business.