Getting on top of cash flow

Posted on 6 August '19, under money.

Managing cash flow is critical to the success of a small business. While it is necessary to be profitable, your profit is a number that shows up on your accounts at the end of the year whereas your cash is the money you have in the bank. By incorporating the following tricks, you can help to maintain the flow of money coming in and keep the business running smoothly.

Prepare a cash flow projection:
There are always unforeseen challenges or changes in the marketplace. While you won’t always be able to predict or forecast these, you can gain a better grasp on industry trends and patterns. Drawing up a cash flow projection can help you plan the ups and downs of your spending. In your projection, be sure to include:

  • Cash receipts, including income from sales and income from financing.
  • Cash disbursements, including all expenses (cost of goods, operating expenses, loan payments, income tax payments, etc).
  • Net cash flow — opening cash balance plus receipts, minus disbursements.
  • Ending cash balance.

Generate new business:
The business is going well; you’re meeting your targets, money is coming in, and you’re happy. This is not a time to relax, it is a time to be seeking out and generating more business. Cash flow may keep your business alive, but sales are what keeps cash flow alive. Keep expanding and preparing your business to cater for growth. This will help prevent you from chasing your tail when times are tough.

Be wary of unregistered tax preparers

Posted on 6 August '19, under tax.

The Australian Taxation Office (ATO) is warning taxpayers to keep an eye out for people posing as tax agents who are not registered with the Tax Practitioners Board (TPB). Only a registered tax agent can charge a fee to prepare and lodge your tax return.

There are concerns from the ATO about the number of people claiming to be tax agents, often promising refunds that sound too good to be true, or providing discounted services much cheaper than registered, legitimate tax agents. Unregistered preparers will often use a taxpayer’s personal login details to access their ATO Online account through myGov to lodge tax returns.

To protect yourself from a large tax bill or from facing penalties, check that your tax agent is registered on the TPB website or ask to see their Certificate of Registration of Tax Agent. Protecting your myGov login details and password will also ensure safety as a legitimate tax practitioner will never ask for your myGov credentials. Registered tax agents can access the information they need themselves through ATO online services dedicated to lodging returns for their clients.

Individuals should also be aware that if you use an unregistered tax or BAS agent and they are negligent, you will not be protected under the safe harbour provisions set out in the Taxation Administration Act 1953.

Boost employee productivity

Posted on 6 August '19, under business.

All businesses need to look at ways to increase the productivity of their staff. When your employees get more work done, it will ultimately lead to the business making a bigger profit. As well as increasing productivity, employers should also aim to improve the happiness and wellbeing of their workers. Here are some ways to boost employee productivity without losing staff engagement.

Use feedback:
Collect as much data as you can from your employees. This can inform how you create the workplace to best suit their needs. Data you might collect could include information on their performance levels by installing productivity tracking software on their devices. You could also regularly survey your staff to gain more qualitative data on their personal insights and happiness levels at work.

Provide good tools:
A business can only foster a productive environment when employees have access to the best tools. Provide your staff with excellent hardware, software and office supplies. This includes laptops, office furniture, and amenities. The more comfortable that your employees feel at work, the more work they will get done. High-quality software will also help your business to achieve work more efficiently.

Allow flexibility:
Having an employee schedule in place may be one way for you to ensure your workers stay on task and produce a consistently high standard of work. However, rigid schedules do not always suit all employees. Allowing your employees to make minor changes, such as swapping shifts, flexible start or finish times and remote working arrangements can actually improve productivity and loyalty to the business. It can also benefit employee communication, dependance and engagement.

Illegal early release of super on ATO watch-list

Posted on 6 August '19, under super.

Illegal early release of super (IER) is one of the risk areas that the ATO has identified as being of most concern and in need of action.

Each year, the ATO analyses its data to identify the areas of high risk that will form part of its compliance program. Aside from illegal early release, another key risk area is non-lodgement. In the last year, the ATO has targeted individuals and promoters who register self-managed super funds with the intention of using the fund to illegally access super benefits.

In the 2019 financial year, the ATO cancelled the registration of 609 newly registered SMSFs who intended to use the funds for IER. They also withheld the details of 352 funds from the Super Fund Lookup, meaning they couldn’t receive payments and rollovers.

The ATO has warned of severe consequences for you and your fund if super is accessed before you are legally entitled to it. These include disqualification of trustees, administrative penalties, the fund deemed as non-complying, or even prosecution.

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.

Creating a positive work environment

Posted on 29 July '19, under people.

The workplace can be where you spend the majority of your time. Maintaining a positive and healthy environment while at work is therefore critical to your happiness and mental wellbeing. One of the key ways to ensure your workplace is healthy is by having strong relationships with your colleagues. Here are some simple ways you can develop a team-oriented atmosphere and make your time at work more productive and enjoyable.

Social events:
While you may spend a lot of time with your team at work, it would further improve the morale of your workplace to incorporate social events outside of work. Great working teams are those that spend a lot of time together and enjoy each other’s company. When people are engaging together in an activity that isn’t work-related, it can create a more personal and friendly work environment.

Team rituals:
Similar to team social events, incorporating team rituals into the working day can help to create a sense of collaboration and comradery. Having daily or weekly rituals can help people to feel more deeply involved in their working experience. Rituals to celebrate success may include rewarding milestone achievements like the end of a project or a quota reached, or implementing an ‘Employee of the Month’ program. Rituals to build relationships may also benefit your workplace, such as welcoming new employees in a special way, or recognising birthdays and other celebrations.

Supporting mental health in the workplace

Posted on 29 July '19, under business.

Business owners have a responsibility to look after their staff and ensure they have a healthy working environment. This extends to mental health as well as physical. With one in five people experiencing a mental health issue at some stage in their life, there is a greater need to have mental health support specifically within the workplace environment of small businesses.

While most workers can successfully manage their illness without it impacting on their work, some may require support for a short period of time and others may require ongoing workplace strategies. Employers should be aware of mental health issues they can encounter and how best to approach them. Research is key in helping to understand what your employee is going through, how to recognise the illness and ways to successfully manage it.

Employers need to recognise the role in which work can play in an individual’s mental health. An ‘unhealthy’ work environment or a workplace incident can cause considerable stress and possibly contribute to or worsen mental illness. Under the Disability Discrimination Act 1992, employers must make changes to the workplace to enable someone with anxiety and/or depression to remain at or return to work, provided they can continue to meet the core requirements of their role. These changes can be temporary or permanent.

Further ways to promote mental health initiatives within your business include encouraging members of your workplace to seek help, reducing the stigma surrounding mental illness, and fostering connectivity and communication. Managing mental health within your business by avoiding conditions that lead to excessive stress and encouraging awareness and support can have many positive outcomes and cultivate a mentally safe and healthy workplace. Employers should also familiarise themselves with the work health and safety regulatory body in their state or territory.

Tax requirements for capped defined benefit income streams 

Posted on 29 July '19, under super.

Members who receive income from one or more capped defined benefit income streams may have additional tax liabilities. They would then need to calculate their entitlement to the 10% tax offset if the income from all their capped defined benefit income streams exceeds their defined benefit income cap.

SMSF’s who pay a capped defined benefit income stream to members with a cap will need to provide the ATO with a PAYG withholding payment summary annual report, due by 14 August 2019. Members will have a cap if they have income from a capped defined benefit income stream and are 60 and above or under 60 and receiving a death benefit income stream from a person who died aged 60 or over.

When preparing their individual tax return, members need to:

  • Consider all income they receive from capped defined benefit income streams.
  • At label 7M, include half of the income from the tax-free component and taxed elements of all their capped defined benefit income streams which exceeds their defined benefit cap.
  • At label 7N, include any untaxed element.
  • At label T2, calculate and include their entitlement to the 10% tax offset (the amount may be nil).

The defined benefit income cap will be $100,000 for most individuals. It may be less in some circumstances, such as if they turned 60 during the year or were over 60 and then started receiving income from a capped defined benefit income stream for the first time partway through the year.

SMSF’s must ensure all obligations are met, include registering for PAYG, providing members and the ATO with payment summary information, and making sure to comply with withholding obligations of their activity statement.

Legal issues raised by social media

Posted on 29 July '19, under legal.

The rise of social media creates a number of legal issues that business owners must be aware of when utilising platforms such as Facebook, Instagram and LinkedIn. Businesses should consider a proactive approach in implementing both preventative and reactive ways of mitigating potential risks.

Confidentiality:
Legal issues arise when confidential information is disclosed on social media. In accordance with privacy regulation, individuals must be notified when personal information is being collected and the disclosure of such information is prohibited unless it is for certain purposes. To mitigate the risk of an unwanted privacy breach, you should constantly revisit the strength of your online security by updating software, creating strong passwords, and backing up data.

Misleading conduct:
Under the Australian Consumer Law (ACL), an individual acting in trade or commerce must not make any false or misleading statements about the goods or services that they are providing. Claims made on social media, as well as any comparisons with competitors, must be substantiated. The Australian Competition and Consumer Commission (ACCC) provides guidance to businesses to ensure their social media pages are not breaching the misleading conduct provisions of the ACL.

Defamation:
Defamation occurs where content is published or broadcast that injures a third party’s reputation. Defamation on social media platforms can have far-reaching implications, as a slanderous comment can be distributed online instantaneously to numerous jurisdictions, causing severe damage to a person’s reputation. Social media creates a further risk for defamation, as it could even occur by ‘liking’ or ‘sharing’ a defamatory comment made by someone else.

New tax toolkit for rental property owners

Posted on 29 July '19, under tax.

The ATO has developed a new rental property owners toolkit for property investors to ensure that mistakes are avoided in their tax returns.

Each year, the tax office identifies fairly common mistakes being made with tax claims made in regard to investment properties. In a recent review of individual tax returns, nine out of 10 taxpayers with a rental property were found to have made a mistake in their tax return.

The newly developed toolkit focuses on areas were mistakes are most commonly being made. These include:

  • Renting out a room, a unit, or a whole house on an occasional basis through the sharing economy (such as Airbnb).
  • Repairs, maintenance and capital expenditure.
  • Any borrowing expenses incurred when taking out a rental property loan.
  • Interest on a loan that is taken out to purchase a rental property.

Fact sheets within the toolkit are also available to be downloaded individually. The toolkit is designed to assist rental property owners to get the information they need in order to lodge correctly and to avoid any lodgement mistakes in the future.

Protecting your business from online scams

Posted on 21 July '19, under web.

Protecting your business from any kind of threat is a priority. When it comes to online security, however, many owners are not practising secure measures to properly protect their business. Small businesses are unfortunately too often the target of online scamming and should practice a number of strategies to ensure their online security.

Keep personal details secure:
Be mindful of how much personal information is accessible on your website and social media profiles. Back up your content and avoid using public computers or hotspots where possible. Ensure you are using password protection and that you choose your passwords carefully. An organisation-wide password policy can also go a long way in protecting businesses from online fraud.

Practice caution:
It is common for small businesses to receive fake invoices which can easily be paid if not enough attention is being paid. Keep records of everything and check the credibility of people who are contacting you online expecting some kind of financial transaction. Take the time to educate your employees about the importance of not clicking on links in emails or messages, or opening attachments from people or organisations they don’t know.

Install appropriate anti-virus software:
Ensuring all technologies used for your business are protected from vicious spyware or malware is a necessary step when preventing online scamming from occurring. Do your research to find the best software for your business and your business needs. Be sure to read reviews before deciding on the software you will install.