Should you work with family and friends?

Posted on 15 January '20, under people.

One place small business employers often fail to search for new job applicants is the families and friends of their best employees. Before rushing headlong into hiring family or friends, consider the people and all areas of business that will be affected. Hiring friends and relatives can be a balancing act. If not handled well, it can sour the working environment. But hiring friends and family can have great benefits too, as long as you proceed carefully with these following points:

Business is not a charity:
Don’t hire an employee’s relative just because they ‘need’ a job. If someone has trouble holding down a job, you don’t want them either. Make it clear that if the relative or friend doesn’t perform as expected, he or she will have to go. Hire on a probationary basis, establishing a two-week or month-long period to see how things work out.

Hire for the right reasons:
People rarely see their own relatives clearly and are therefore likely to make general and positive statements that don’t tell you if they have relevant work experience or training, rather than analysing their capabilities. With this in mind, ask specific, detailed questions about their qualifications before you agree to interview them.

Never play favourites.
Be toughest on your own relatives. Before you hire a relative, make it clear to them that they are going to have to prove themselves, and they will be held to the highest standards. Make sure all the rules apply to all employees. Everyone has to be qualified and they have to do their jobs well. Otherwise, they’re not hired.

Updates to the unclaimed superannuation money protocol

Posted on 15 January '20, under super.

The Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLMA), more commonly known as the unclaimed superannuation money protocol, has been updated recently to provide a clearer structure going forward.

SUMLMA provides guidance on in relation to unclaimed money, lost member accounts, superannuation accounts of former temporary residents and their associated reporting and payment obligations. The update has now added content on inactive low balance accounts.

The act now clearly defines what is an inactive low-balance account, how statements and payments work, the registering of lost members and various rules for special cases.

It is important to note that the information in the protocol does not apply to super providers that are trustees of a state or territory public sector super scheme, in which:

  • The state or territory has laws requiring the reporting and payment of unclaimed super money to the state or territory government. Or;
  • The state or territory public sector super scheme complies with relevant state or territory laws.

The protocol provides administrative guidance only and should not be taken as a replacement for the law or technical reporting specifications.

The importance of keeping business records

Posted on 15 January '20, under business.

Probably the most important reason behind sound record-keeping is that it allows you to learn and grow from your own business experiences. Keeping your records in check will help you understand the current situations of your business and also project future profit or losses. In addition, good record keeping will also show you where your business needs improvement or re-invention. Here a few records to keep that will prove invaluable in the future.

Financial Statements:
Keeping accurate and up to date financial statements will help you at a time of lending applications. These finances include income statements as well as balance sheets that show assets, liabilities and the equities of your business at a specific date.

Purchases and expenses:
The items you buy and sell to your customers and the costs of running your businesses. Supporting documents for both of these include invoices, email records, credit card slips, cancelled cheques, cash registrar tapes and account statements. These can help you to determine whether your business is improving, which items are selling, or what changes you may need need to make.

Assets:
The properties that you own and use in your business. These records verify information regarding your business assets, such as when and how you acquired these assets. They will also help you to determine the annual depreciation when you sell the assets. Examples of these records include the purchase or sales invoices and real estate closing statements.

What are franking credits?

Posted on 15 January '20, under tax.

Franking credits are a kind of tax credit that allows Australian companies to pass on the tax paid at a company level to shareholders. Franking credits can reduce the income tax paid on dividends or potentially be received as a tax refund.

Where a company distributes fully franked dividends (and those dividends are included in the taxable income of the taxpayer) the taxpayer can claim a credit against their taxable income for the tax that has already been paid by the company from which the dividend was paid.

Since the 2016-17 income year, the standard formula for calculating the maximum franking credits is:

Franking credit = (dividend amount / (1-company tax rate)) – dividend amount

Franking credits are paid to investors in a 0-30% tax bracket, proportionally to the investor’s tax rate. If an individual’s top tax rate is less than the company’s tax rate, the ATO will refund the difference. Therefore, an investor with a 0% tax rate will receive the full tax payment paid by the company to the ATO as a tax credit. Franking credit payouts decrease proportionally as an investor’s tax rate increases. Investors with a tax rate above 30% do not receive franking credits with dividends and may even have had to pay additional tax.

There can be eligibility requirements that must be met before franking credits can be paid, such as that you must hold the shares ‘at risk’ for at least 45 days to receive a total franking credits entitlement of $5,000 or more. There are also rules that can apply to buying, holding and selling shares with franking credits attached.

Closing the office for the holidays

Posted on 13 January '20, under business.

As the holiday season approaches, the workplace often gets more relaxed as things wrap up. However, closing the business for the holidays usually isn’t as simple as turning the lights off and heading home for a few weeks. There is often a lot of preparation and work that needs to be done before everyone leaves the office.

Notify staff:
Giving your staff at least two to four weeks notice of business closing dates will allow them to prepare for the shutdown and organise their workload appropriately. Having reminders through announcements, in-office calendars, emails or signs on notice boards will allow employees to ensure their work is done on time and organise personal events.

Notify other stakeholders:
Important stakeholders such as customers, suppliers or vendors should also be informed in advance of when the business is closed for the holidays to ensure that any services or needs are completed prior to shutdown. Customers can be notified through your business’s website, emails, signs around the business or letters and phone calls for close clients.

Update your security:
If your business has a security team or service, make sure that they are kept updated about your closing dates, as well as an emergency contact list with the owner and key employee details so they know who to contact in the event of a security issue, even when the business is closed. It is also a good idea to ensure that all cybersecurity software is up to date before you leave to prevent hackers and viruses from damaging your assets while you’re away.

Backup data:
Backing up your servers will reduce the risk of losing crucial business assets to hackers, viruses or software malfunction while you’re away. By making backups of your data through tools such as cloud storage or hard drives, you don’t have to worry about coming back to a corrupted system.

Change automated greetings:
If you have an automated answering service for business dealings, consider recording a message letting people know that your business has closed for the holidays. It is also a good idea to detail what dates you will return.

Turn off equipment:
Don’t forget to shut down any equipment that won’t be used throughout the holidays, such as lighting, copiers, computers and kitchen supplies. However, be aware of equipment that shouldn’t be turned off, such as fax machines, security systems, servers and backup systems, and refrigeration units.

When is unpaid work legal?

Posted on 13 January '20, under legal.

There are circumstances where unpaid work is okay, however, legal unpaid work situations are limited, and in most circumstances, workers should be paid. Employers who are not meeting the Fair Work Act guidelines can be penalised for breaking the law by paying workers’ compensation and fines up to $63,000 for corporations and $12,600 for individuals.

If no employment relationship exists between the worker and employer, then the worker does not legally have to be paid. An employment relationship can involve:

  • Intention to perform work for the employer under the arrangement.
  • Helping with the ordinary operation of the business.
  • Working for a long period of time.
  • An expectation of payment.
  • The employer receiving the main benefit of the arrangement.

Unpaid work is legal if the work is to provide someone with experience in that particular job/industry, to provide training and skills as part of formal programs (e.g. university placement), to test someone’s job skills, or if it is volunteer work for a non-for-profit organisation. These include:

Vocational placements:
A vocational placement is formal work experience that is part of an educational or training course. The aim of vocational placements is to give students important skills to help them transition smoothly into the workforce through industry experience. The placement must be approved through the legal authorisation of the institution delivering the course; programs offered at universities, TAFE and schools will meet this requirement. If the work meets the definition of a vocational placement under the Fair Work Act, then the position can be lawfully unpaid.

Internships and work experience:
An internship or work experience arrangement is a type of on-the-job training, where someone works to gain experience in a particular occupation or industry. This type of work can be legally unpaid if it is a vocational placement, or if there is no employment relationship.

Trials and skill demonstrations:
This is when someone is asked to perform work or undertake a trial in order to be evaluated for a job position. This work trial is used to determine someone’s suitability for the job on offer. It can be unpaid if:

  • It is necessary to evaluate someone’s suitability for the job.
  • The trial is only for as long as necessary to demonstrate the skills required for the job.
  • The worker is supervised by the potential employer or other appropriate staff for the entire duration of the trial.

Volunteering:
Work is counted as volunteering when its main purpose is to benefit others, such as a church, sporting club, government school, charity or community organisation. A genuine volunteering arrangement occurs when:

  • The parties did not intend to create an employment relationship.
  • The volunteer is not obligated to attend the workplace or perform work.
  • The volunteer doesn’t expect to be paid for their work.

SMSF schemes for illegal access of super

Posted on 13 January '20, under super.

The ATO has issued a warning for Australians to be aware of scheme promoters that promise to allow you to withdraw your superannuation early, and illegally.

Individuals can legally withdraw super when they turn 65, even when they haven’t retired, are at their preservation age and retire, or under the transition to retirement rules while continuing to work. Super can only be accessed early under circumstances that mainly relate to specific medical conditions or severe financial hardship.

The ATO is taking action to shut down promoters who tell people they can gain access to their super before they are eligible to by setting up a self-managed super fund (SMSF), which is illegal. There has been a number of schemes that encourage individuals to channel money inappropriately and deliberately to avoid paying tax.

Penalties for involvement in illegal super schemes include fines up to $420,000 for individuals and up to $1.1 million for corporate trustees. An individual may also lose their right to be a trustee of their superannuation fund or, in some cases, jail time up to five years.

Fund trustees or members who have knowingly been involved in a scheme or been approached by anyone claiming that they can withdraw their super early should contact the ATO immediately to advise of the situation and avoid further penalties.

Managing employees with personal crises

Posted on 13 January '20, under people.

Managing an employee who is going through a stressful period personally can be a big challenge for bosses. Handling these situations well as a manager often means you need to be compassionate and empathetic whilst also being professional and constructive.

Listen:
If an employee comes to you with a problem, it can be helpful if you listen to them without interrupting to assure them that you are aware of the situation so you can understand and act accordingly. This could prompt a productive discussion to consider work solutions that are appropriate for the employee and the business.

Keep it professional:
It is often useful to remember that you are still the employee’s manager and not their friend. If the line between manager and friend is blurred, it can make it difficult for you to take a stance and do what is best for the rest of the team and business down the line. If you become too entangled in the employee’s problem, it can make it harder for you to have a serious and upfront discussion about work, which could then damage productivity.

Offer appropriate assistance:
Make a judgement on what the employee needs depending on the situation and act accordingly. This could include reducing their workload, adjusting their work schedule or allowing them to take leave.

Don’t pry:
You often don’t know how much the employee is comfortable with sharing, so to avoid making things uncomfortable, make sure you don’t ask invasive questions. This will also prevent you from becoming too involved in the situation beyond the professional level.

Check in:
You can occasionally check in with your employee by sending a brief email or asking them in person. This doesn’t have to delve into the details of their personal troubles; you can ask questions like ‘do you feel you’re handling everything okay?’ or ‘have the solutions we talked about been helpful?’. This can help your employee feel supported and comfortable at work.

Building customer relationships on social media

Posted on 9 January '20, under web.

With the overflow of businesses posting high-quality content on social media every day, it can be a challenge to make yourself stand out and keep people’s loyalty. One way to increase consumer appreciation and attract returning customers is to work on developing relationships on social media.

Create good captions:
Having a caption that only consists of hashtags, is hard to understand, is irrelevant, or doesn’t resonate with your target audience can potentially reduce the amount people care and the legitimacy of your business. When writing a caption, make sure that is relevant to the social media platform you are using, your audience and your brand. When using multiple hashtags, putting them below your caption can prevent it from being distracting and messy.

Respond to comments:
Taking the time to read and respond to comments can be a great way to build relationships with your customers. People are more likely to remember your business if you respond to them, as they often don’t expect a response. Replying to comments can show customers that you care and are listening to them. This practice can also help you understand what your customers like and don’t like and improve your business and social media accordingly.

Personalise conversations:
Many businesses use bots to automate conversations, whether it’s on social media, phone answering machines or online messaging services. You can stand out from these businesses by communicating with your audience in a way that seems more personal and human. Some ways you can achieve this is by:

  • Addressing customers by their first name if it is supplied on their profile.
  • Always responding to comments in a polite and friendly manner, even if they are complaining or being rude.
  • Using appropriate language – depending on your business branding, you don’t always have to be formal and robotic. You can show the audience that you relate to them and understand them by using language that they are comfortable with. Think about how your target audience typically communicates.

Use content from your audience:
Hashtags and profile tags are a great way to see how your customers are engaging with your business. If a customer posts something about them enjoying your products/services, consider reposting it. This demonstrates that you value their opinions and appreciate their support. As well as this, potential customers are more likely to try your products/services if they see that another customer is benefitting from it, as this can be seen as more trustworthy than advertisements straight from the business.

Creating a successful work team

Posted on 9 January '20, under people.

If you’ve never had a bad teamwork experience, then you’re often considered to be very lucky. Creating a successful team at work can be challenging as it forces people with a range of opinions, values, work styles, work goals and past experience to work together in proximity. To help build a successful team, certain measures can be considered:

Choose the right people:
Taking the time to deliberate and choose a group of people with the right skill set for the project can increase the team’s chances of success. Having the right amount of people doing a particular job in the team can help prevent there from being too many workers in one area with other areas failing to be completed. Choosing a diverse team can also provide a broader perspective on the project and allow for growth.

Encourage team-building exercises:
Allowing the team to spend time together before undertaking a collective project can be a good way for them to get to know each other without the pressures of work. This can strengthen relations and make it easier for team members to ask each other questions, ask for help and offer their opinion when the work begins. Having team-building exercises can also help identify who is suited for what role and who works well together.

Have a clear purpose:
Make sure that your team is all on the same page about their purpose and the short-term and long-term goals they should be working towards. It is helpful when these goals are specific and measurable to avoid arguments of what the team is working towards.

Outline performance expectations:
If the team is unsure of what is expected of them, they may get off track or not meet work standards. Outlining deadlines, work quality and work hours can help the team perform effectively. This can also prevent arguments and criticism about each others work performance.

Reward good teamwork:
If the team excels in an area of work, it can be motivating to show your recognition of their achievements. This can be as simple as verbally congratulating the team on their work, or can be more formal, such as a workplace announcement or a spot in the company’s internal newsletter.

Ongoing checkups:
While teams may feel uncomfortable with being micromanaged and feeling like they are under constant surveillance, having simple evaluations throughout the project can be helpful. The results from evaluations can show you if your team is on track as well as if there are any problems that may be arising. This can help the team be motivated to succeed and help you identify and resolve problems early.