S & H Tax Accountants

Author: Bizink

  • Managing Debt and Creating a Debt Repayment System

    Managing Debt and Creating a Debt Repayment System

    Debt can be a significant burden on one’s financial life. It can cause stress, anxiety, and make it difficult to achieve financial goals. However, with a little planning and dedication, anyone can create a debt repayment system and get on the path to financial freedom.

    Here are some tips for managing debt and creating a debt repayment system:

    Take Stock of Your Debt

    The first step in managing debt is to understand the extent of the problem. Make a list of all the debts you have, including the balance owed, interest rate, and monthly payment. This will help you determine which debts to tackle first and give you a clear picture of your overall debt situation.

    Focus on High-Interest Debt

    High-interest debt, such as credit cards or personal loans, should be your top priority. These debts often have interest rates of 15% or higher, making them the most expensive debts to carry. By paying off high-interest debt first, you can save money on interest charges and free up more money to pay off other debts.

    Create a Budget

    To pay off debt, you need to free up money in your budget. A budget can help you track your expenses, identify areas where you can cut back, and allocate more money towards debt repayment. Be sure to include debt payments as a fixed expense in your budget, so you don’t fall behind on payments.

    Consider Consolidating Debt

    If you have multiple high-interest debts, consolidating them into one loan can make it easier to manage and potentially lower your interest rate. You can consolidate debt by taking out a personal loan or using a balance transfer credit card. Just be sure to compare interest rates and fees to ensure you’re getting a good deal.

    Make Extra Payments

    Making extra payments towards your debt can help you pay it off faster and save money on interest charges. Even small extra payments can make a big difference over time. Consider using any extra money you receive, such as a tax refund or bonus, towards debt repayment.

    Automate Payments

    Setting up automatic payments for your debt can help you stay on track and avoid late fees. Many lenders and credit card companies offer automatic payments, so you don’t have to worry about remembering to make a payment each month.

    Stay Motivated

    Paying off debt can be a long and challenging process, but staying motivated can help you stick to your debt repayment plan. Set small goals along the way, such as paying off a credit card or reaching a certain milestone, to help you stay on track.

    In conclusion, managing debt and creating a debt repayment system requires discipline, dedication, and a plan. By taking stock of your debt, starting with high-interest debt, creating a budget, considering consolidating debt, making extra payments, automating payments, and staying motivated, you can pay off debt and achieve financial freedom. Remember, it’s never too late to start, and every small step towards debt repayment counts.

     

    We understand that managing your debt can be difficult and tiring. To relief your stress, contact S & H Tax Accountants. We are a local accounting firm that is known as one the best firms in Cranbourne. We have excellent staff, that can help make a debt repayment system, as our accountants are well-qualified and experienced. Make a booking today at S & H Tax Accountants, call us on 03 8759 5532 or you can email us on info@sahtax.com.au.

  • Essential steps to managing your family’s finances

    Essential steps to managing your family’s finances

    Managing family finances can be a daunting task, but with the right tools and mindset, it can be a smooth and effective experience. Here are some essential steps for managing your family’s finances, including budgeting, saving, and planning for the future.

    Budgeting

    Budgeting is the cornerstone of managing family finances. It involves creating a spending plan that outlines your family’s income and expenses. A budget helps you to keep track of your finances, avoid overspending, and save for the future. Here are some steps to follow when creating a budget:

    Calculate your monthly income: This includes your salary, any rental or investment income, and any other sources of income.

    List your monthly expenses: This includes your rent or mortgage payment, utility bills, groceries, transportation, entertainment, and any other expenses.

    Determine your discretionary income: This is the amount of money you have left after deducting your expenses from your income.

    Decide which expenses are most important: Allocate your discretionary income to your most important expenses first, such as savings, debt repayment, and emergencies. Any money left over after that can go to non-essential expenses.

    Track your spending: Keep track of your expenses to ensure you stick to your budget. If you’re not sticking to your budget, identify areas where you could make adjustments. It’s possible you need to spend less, or maybe you can take on a side hustle for a while.

    Saving

    Saving is an essential part of managing family finances. It involves setting aside money for emergencies, retirement, education, and other long-term goals. Here are some tips to help you save more:

    Start small: Even if you can only save a small amount each month, it will add up over time. Even $10 a month to start adds up if you keep doing it. Once you’re used to setting aside $10 a month, see if you can put aside $20 a month.

    Make saving a priority: Set up automatic transfers from your checking account to your savings account each month. This way, you don’t have to think about it.

    Cut back on expenses: Look for ways to reduce your expenses, such as eating out less or unsubscribing from services you don’t use.

    Use savings apps: There are several savings apps that can help you save money effortlessly. Research which will work best for you.

    Set savings goals: Setting specific savings goals can help motivate you to save more. As with above, you don’t have to start out with a huge goal. Start with a smaller goal that you can attain and build from there.

    Planning for the future

    Planning for the future is an essential part of managing family finances. It involves setting long-term goals and creating a plan to achieve them. Here are some steps to follow when planning for the future:

    Set financial goals: Determine what you want to achieve financially, such as paying off debt, saving for retirement, or buying a home.

    Create a financial plan: Develop a plan that outlines how you will achieve your financial goals, including how much money you need to save each month and how you will invest your money.

    Invest wisely: Make sure you invest your money in a way that aligns with your financial goals and risk tolerance.

    Review your plan regularly: Review your financial plan regularly to ensure you are on track to achieve your goals.

    Seek professional advice: If you are unsure about how to create a financial plan, consider seeking the advice of a financial planner. They can help you determine which goals are a priority, how to best allocate your money, and strategies for investing for your future.

    In conclusion, managing family finances involves budgeting, saving, and planning for the future. By following these essential steps, you can ensure that your family’s financial future is secure. Remember, it’s never too late to start managing your family’s finances, so start today!

     

    At S & H Tax Accountants, we are aware that managing family finances can be extremely tiring and daunting. At S & H Tax Accountants, we provide you with best possible service, as we have well-qualified and experienced accountants. They can help you create a financial plan and guide you in making a budget. BOOK TODAY at S & H Tax Accountants, call us on 03 8759 5532 or you can email us on info@sahtax.com.au.

  • Bookkeeping Basics for Small Business Owners

    Bookkeeping Basics for Small Business Owners

    On average, small business owners spend 10 hours each week recording, organizing, and processing financial transactions – everything from accounts receivable and payable to employee payments, expense receipts, and supplier invoices.

    While the process may be time-consuming (and tedious!), effective bookkeeping is the foundation of sound financial management – which in turn, is the lifeblood of your business.

    Feeling overwhelmed by mountains of paperwork and complex calculations? Here are three bookkeeping basics to help ensure a healthy financial future for your small business.

    Faithfully track expenses

    Accurate and consistent expense tracking is crucial for claiming tax deductions and lowering your overall tax bill. Plus, analyzing expenses can offer crucial insights into spending patterns and the overall profitability of your small business.

    Business Finance Man Calculating Budget Numbers, Invoices And Fi

    Small business owners should consider using a mobile app for simple, consistent expense tracking. Options like Expensify and Receipt Bank help do away with manual data entry with automated functions, including:

    • Receipt data capture via your smartphone’s camera (no need to hold onto paper receipts, which can get lost or misfiled);
    • Synchronization with your phone’s GPS to track mileage of business travel; and
    • Importing bank and credit card data, plus integration with accounting software.

    Systematic invoicing and filing

    Efficient invoicing is about more than ensuring you get paid in a timely fashion. An invoice is an official record of the terms of each transaction and must be completed accurately to avoid errors in your bookkeeping process.

    Here are a few tips for professional invoicing:

    • Ensure each invoice includes all the important details: contact information, a tracking number, a detailed list of products or services rendered, and a breakdown of the total amount due;
    • Provide an electronic receipt to reduce waste and create a “paper trail” if there’s ever a dispute; and
    • Maintain an invoice-filing system that records when you sent the invoice, to whom, when payment was made, and any reminders sent out.

    An online invoicing tool can streamline this aspect of your bookkeeping process and provide an efficient backup filing system.

    Save time with accounting software

    By law, every business is required to keep organized and timely financial records. However, manually posting income and expenses to ledgers and journals is time-consuming – not to mention stressful for the math-averse.

    Shave some time (and stress) off your weekly bookkeeping with an all-in-one accounting software solution like Xero, QuickBooks, ClearBooks, or KashFlow.

    Online bookkeeping offers numerous advantages, such as:

    • Instant reports and real-time insights on profits and loss, customer accounts, payroll – and your overall financial “big picture”;
    • Simplified data entry so you can collate and print invoices, purchase orders, and payroll much faster than with manual methods; and
    • Improved accuracy through automation (once data is entered, the software handles all subsequent calculations and processes – including invoicing).

    When it comes to accounting, vigilance is the key to mitigating risk and ensuring the long-term profitability of your small business. Be sure to set aside time each day, week, and month to update and review your books to catch any red flags and ensure your finances are on track. 

    At S & H Tax Accountants, we understand that keeping a record of your transactions, organizing your documents and keeping your receipts can be very tiring. That is why we are here to provide you with the highest level of service possible. We have well-qualified staff members who are able to help you. Book an appointment today, call us at 03 8759 5532 or email us at info@sahtax.com.au.

     

    The post Bookkeeping Basics for Small Business Owners appeared first on S & H Tax Accountants.

  • Unlocking the secrets of small business cash flow

    Unlocking the secrets of small business cash flow

    When it comes to running a small business, maintaining a healthy cash flow is essential for sustainability and growth. Your business can be incredibly profitable but still ultimately fail because of improper cash flow management.

    To prevent that from happening, here are some best practices that can help you better manage your cash flow and maintain the financial health of your small business. Remember, the key to success is to be proactive and vigilant about your finances.

    Let’s dive in!

    1. Understand Your Cash Flow Cycle

    Before you can manage your cash flow, you have to understand your cash flow cycle. This involves tracking when money comes into your business and when it goes out. By examining the timing and sources of your cash inflows and outflows, you can identify patterns and potential issues. For example, you’ll notice periods where you have higher expenses and lower profits, or the reverse.

    This information helps you make informed decisions on how to maintain a positive cash flow. For example, you might choose to offer more sales during your slow periods, or find ways to cut costs.

    2. Develop Accurate Financial Forecasts

    Financial forecasting is a crucial aspect of cash flow management as it allows you to anticipate your cash flow cycles. Regularly create and update cash flow projections, taking into account expected sales, expenses, and other relevant factors. Accurate financial forecasts will help you identify potential cash shortages or surpluses and make informed decisions on how to allocate resources effectively.

    For example, you might hold off buying new equipment this month because the next two months are expected to be slower financially, then make the purchases when you have more cash coming in.

    3. Monitor Your Cash Flow Regularly

    Just like a doctor checks a patient’s vital signs, you should monitor your cash flow regularly to maintain your business’s financial health. This means reviewing your cash flow statements, balance sheets, and income statements on a regular basis. By doing this, you can spot issues early on, such as late payments or unexpected expenses, and take corrective action before they become major problems.

    4. Maintain an Emergency Fund

    Unexpected expenses are a fact of life for any business. To mitigate their impact on your cash flow, establish an emergency fund. This reserve can be used to cover unexpected costs or to tide you over during periods of slow cash inflow.

    Ideally, your emergency fund should be able to cover at least three months’ worth of operating expenses. Not only will this help your finances, it will give you peace of mind because you know you’ll have breathing room in case of an emergency.

    5. Invoice Promptly and Efficiently

    Although invoicing is vital to your cash flow, many small business owners put off invoicing and following up on unpaid invoices.

    It’s essential to invoice your clients promptly and efficiently, to maintain your cash flow. This means using accurate invoicing software, setting clear payment terms, and providing convenient payment options for your customers. If you have clients with accounts payable processes, make sure you understand the process and their payment cycles so you don’t wind up waiting months for payment.

    Additionally, follow up on overdue invoices in a timely manner. The sooner you invoice and follow up, the sooner you’ll get paid.

    6. Encourage Early Payments

    Offer incentives for customers to pay early, such as discounts or other perks. This can help increase cash coming in and provide a buffer for cash flow management. Additionally, consider implementing payment milestones for large projects, where customers pay a portion of the invoice at specific intervals throughout the project.

    7. Keep Your Expenses in Check

    To maintain a positive cash flow, it’s essential to keep your expenses under control. Regularly review your expenses, identify areas where you can cut costs, and negotiate better terms with suppliers. Remember also to check your ongoing subscriptions and automatic payments. You may be paying a lot of money for products you don’t use.

    8. Use Technology

    Embrace technology to streamline your cash flow management. There are many tools available that can help you track expenses, create financial forecasts, and automate invoicing. By leveraging technology, you can save time and effort, allowing you to focus on growing your business. Chat to us to get our recommendations for your business.

    9. Seek Professional Guidance
    Financial professionals provide valuable guidance and insights on managing your cash flow. They will identify potential issues and develop strategies to maintain a healthy cash flow.

    Working with a specialist can help you avoid costly mistakes and make well-informed financial decisions, well worth it in the long run.

    The bottom line

    Effectively managing your cash flow is crucial for the success and growth of your small business. By understanding your cash flow cycle, developing accurate financial forecasts, monitoring your cash flow regularly, and implementing the best practices discussed in this blog post, you can maintain a healthy financial position and pave the way for sustainable growth.

    Of course, you can always reach out to us for guidance on managing your small business cash flow. Don’t leave your business’s financial success to chance, contact us today for a consultation, and let’s work together to ensure your business thrives!

     

    If you need assistance with your cash flow and need some professional guidance, then please contact S & H Tax Accountants. Our Accountants can help you with managing your cash flow, and provide you with some guidance on how you can have a positive cash flow. Make a booking today at S & H Tax Accountants, call us on 03 8759 5532 or email us at info@sahtax.com.au

  • Using financial reconciliation to keep your business on track

    Using financial reconciliation to keep your business on track

    As a small business owner, you’re likely already aware of the importance of keeping your finances in order. Financial management goes deeper than paying your bills on time and collecting on invoices (although those are also important). It involves regularly checking up on your financial situation to make sure your accounts are in order, your records are up-to-date, and you’re spending within your budget.

    Among those activities, financial reconciliation plays a vital role in keeping your finances–and your business–on track.

    Here’s what you should know about financial reconciliation and how it can help your business.

    What is financial reconciliation?

    Financial reconciliation is a process of ensuring your financial records are consistent and accurate. Basically, when you conduct a financial reconciliation, you review financial statements and compare them with your bank statements, credit card statements, vendor statements, and other relevant financial records, such as invoices.

    As you do this, you’ll look for any errors or discrepancies–for example if a payment appears on your bank statement but not your accounting records, or if the payments show as being for different amounts on different records. When you conduct a financial reconciliation, you want to make sure that the money in your bank account matches the money your financial documents show you should have.

    Discrepancies need to be addressed or you’ll wind up with financial information that isn’t accurate, which affects your cash flow and your ability to make financial decisions. If the discrepancy involves an ongoing payment–to you or to a vendor–catching it early could save you a lot of money.

    The goal of financial reconciliation is to ensure all financial transactions are recorded accurately and thoroughly in your accounting system. That way, you know exactly how much money you have and how much is moving into and out of your business, and you can make informed financial decisions.

    Types of financial reconciliation

    Every business has different reconciliation needs, depending on how big it is and how many and what types of transactions it has.

    Bank reconciliation involves your business’s bank statement to your accounting records to ensure that all transactions have been recorded correctly. You’re looking here to make sure that the bottom line of your bank statement matches your bank account balance. If not, you’ll want to determine why. Is there an automatic withdrawal that hasn’t yet been posted to your account? If so, you need to be aware of it to prevent yourself from over-drawing on your account.

    Credit card reconciliation involves reconciling your business’s credit card statements with your accounting records to ensure that all charges have been recorded accurately. This is similar to a bank reconciliation in that you need to know exactly how much you’ve spent on your credit card–including pending transactions–so you know how much you have available to you.

    You can also conduct vendor statement reconciliation, where you examine your vendor statements against your accounting records to ensure all invoices have been paid and recorded accurately. This can prevent any errors in paying your vendors.

    If you have two units of business or more–such as divisions, subsidiaries, or franchises, you’ll need to conduct intercompany reconciliation. This is where you compare financial records between two or more companies to ensure transactions are recorded accurately and consistently.

    Why you need financial reconciliation

    Financial reconciliation is a vital tool that helps you manage your business more effectively. It ensures your financial records are accurate, complete, and up-to-date. This prevents errors or discrepancies that could lead to financial losses, or legal or compliance issues.

    It can also help identify any fraudulent activity or transactions you did not approve, protecting you against fraud and lessening the risk of financial losses. If you have numerous transactions that are difficult to keep track of, regular financial reconciliation prevents accidental overspending or missed payments that could ultimately affect your relationships with vendors.

    As mentioned above, many businesses are required to comply with financial regulations and reporting requirements. Financial reconciliation helps ensure that your business is in compliance with these requirements. If you’re not compliant, you can take measures to address the issue quickly, before it gets out of control.

    How to conduct financial reconciliation

    If you’re looking to establish a solid, repeatable process, these are a few steps you can take:

    Step 1: Identify what types of financial reconciliation you need to perform.

    Step 2: Establish roles and responsibilities for each team member involved in the process. Make sure everyone knows and understands what they are responsible for and when.

    Step 3: Create a schedule for conducting financial reconciliation on a regular basis. This may vary depending on the size of your business, and you may conduct different types of reconciliation on different schedules, depending on your unique business needs.

    Step 4: Ensure all financial data is easily accessible to those who need it. Each time you conduct a financial reconciliation, make sure you have all relevant documentation and data needed. Cloud accounting software can help you manage your reconciliation.

    Step 5: Conduct the reconciliation: Compare your financial statements to your accounting records to identify discrepancies or errors.

    Step 6: Investigate and resolve discrepancies: If you find errors or inconsistencies, look into them and do what you can to resolve them. You may have to hunt down additional paperwork, contact vendors to discuss payments, or reach out to your bank or credit card issuer.

    Final thoughts

    As a business owner, you’ll need to make vital decisions to move your business forward. Accurate financial records enable you to make those decisions based on your cash flow and current financial standing.

    If you have questions about financial reconciliation or other important financial aspects of your business, please reach out to us. We’re always happy to answer questions and show you how we can make your business management easier.

     

    Making sure that your financial records are accurate and consistent, can be a tough job, however our team at S & H Tax Accountants are able to do that for you. Our team consists of well qualified and experienced staff members that can guide you on how to conduct your financial reconciliation. S & H Tax Accountants would love to assist you in any questions that you might have. Book an appointment today at S & H Tax Accountants, call us at 03 8759 5532 or email us at info@sahtax.com.au.

  • Avoiding bankruptcy: Top reasons it happens and ways to prevent it

    Avoiding bankruptcy: Top reasons it happens and ways to prevent it

    Starting a business is not for the faint of heart. A certain level of stress comes with carrying the responsibility of ensuring your company’s success. If things go wrong, it all falls back on you. That said, the freedom and sense of accomplishment of running your own business make the challenges well worth it.

    With good planning and strong business practices, you can avoid the pitfalls and drive your business to financial success. Learn the top reasons why small businesses end up in bankruptcy and what you can do to prevent that from happening to you.

    Poor cash flow

    Not bringing enough money in is the main reason why businesses fail. You simply must have more money coming in than is going out, or you’re on the express train to bankruptcy. This might mean increasing your prices or decreasing your costs, or a combination of the two. There might also be different service models you can offer (such as subscription services) or ways to branch out your income.

    Work with an accountant or bookkeeper to help you identify issues with your cash flow as soon as you know there’s a problem–or to prevent one before it happens. The earlier you catch a cash flow problem, the better.

    Insufficient initial funding

    Don’t rely solely on credit to fund your business. If you start in a deficit, climbing out of debt and becoming cash positive will be much harder. It can also be challenging to break the habit of throwing capital investments on credit in an attempt to start making money.

    Explore all of your options for initial funding. Make sure you have more than enough funding to start your business off on the right foot.

    Difficult market conditions

    Economic recessions or depressions can negatively affect businesses, especially those relying heavily on consumer spending. Unfortunately, there’s not much anyone can do about a poor economic climate but try to budget for the ebbs and flows of the market so you have breathing room if times get tough.

    An emergency account with money set aside for unexpected situations will at least give you some cash to survive on if things take a downturn.

    Poor financial management

    Finances can get complicated, which is why you need to make sure you’re on top of things. Failing to keep accurate financial records, not managing expenses effectively, and not correctly forecasting future revenues and costs are all issues that could hurt you financially.

    Work with an accountant, bookkeeper or advisor if you’re having difficulty managing your finances. They can help you set a plan and show you how to ensure your money is best used.

    Lack of market research

    If you can’t compete with your rivals, your business may struggle to generate enough revenue to stay afloat. This problem typically comes back to a lack of market research.

    An entrepreneur jumps into a market they’re passionate about, only to discover that somebody else is already offering the same thing – and they’ve already got the market cornered. Or maybe there’s no need for that particular product or service at all.

    Do your market research before going into business, and before offering a new product or service. The results will tell you whether there’s a need for what you’re offering.

    Legal issues

    Lawsuits, fines, and penalties can be costly for businesses, draining their financial resources. The best way to avoid this is to ensure you’re familiar with the rules and regulations you must follow or get help from a professional advisor when necessary. An ounce of prevention is worth a pound of cure.

    How to avoid bankruptcy

    While the reasons businesses end up going bankrupt may seem numerous, there are some specific things you can do to make sure it doesn’t happen to you, such as:

    • Maintain accurate financial records and regularly review your business’s performance.
    • Develop a solid business plan that includes realistic revenue and expense projections.
    • Diversify your business’s revenue streams to reduce reliance on a single source of income.
    • Stay current on industry trends and market changes.
    • Reduce unnecessary expenses and manage costs effectively.
    • Seek professional advice from accountants, lawyers, and business consultants when necessary.
    • Build up an emergency fund to help your business weather tough times.
    • Avoid taking on too much debt and manage what you already have effectively.

    By taking these steps, you can reduce the risk of bankruptcy and increase the chances of long-term success.

    Final thoughts

    A business might end up in bankruptcy for many reasons, but a bit of planning goes a long way. Do your research, be honest when you need help, and work with a financial professional to help you stay profitable. [Contact us] to further discuss how you can protect your business and learn how we can help.

     

    If you are thinking of starting a new business but may have some concerns in mind such as financial success please contact S & H Tax Accountants. We are a local Accounting Firm, that has achieved great success with out clients. We have wonderful and experienced staff members who are able to assist you in issues regarding Cash Flow, Initial funding or even Financial Management. Please contact us on 03 8759 5532 or email us on info@sahtax.com.au.

  • Business Update – 22 March 2023

    Business Update – 22 March 2023

    Welcome back to our Weekly Digest. Read on for the latest updates and some ideas to help us all move forward.

    Why Australian banks will come out the other side of the global crisis

    According to Reserve Bank of Australia assistant governor Chris Kent, Australia’s banks are “unquestionably strong” and are equipped to handle a prolonged period of market strain. The banks are already well advanced on their bond issuance plans for the year and could defer their issuance for a while.

    Relief as Credit Suisse and UBS strike a deal

    Though not out of the woods yet, fundies feel that the UBS-Credit Suisse deal should do a great deal to curb an impending worldwide financial crisis. In an all-share deal, UBS will pay 3 billion Swiss francs ($4.5 billion) for its former rival.

    High fares and reduced capacity hurting airline recovery

    Sydney Airport’s chief executive, Geoff Culbert, blamed high airfares and reduced airline capacity for stagnant domestic passenger recovery, as the airport reported 2.7 million travellers for February.

    4.7 million Australians getting a cash boost to their social security payments

    The federal government is doing what it can to support Australians “feeling the pinch”. Singles and couples on the Age Pension, Disability Support Pension and Carer Payment will receive a $37.50 per fortnight increase, while people over 22 without children will receive a $27.40 per fortnight increase.

    Recession-proof suburbs do exist

    As economists predict Australia could fall into a recession this year, four NSW suburbs have been marked as safe from any potential downturn. Learn where they are here.

    Adelaide gets the first mobile phone detection camera

    South Australia started a pilot program where cameras are installed on some of the state’s most high-risk roads to reduce driver distraction. Drivers caught using their phones while driving won’t face penalties until next year due to a grace period.

    Virgin Australia IPO dampened amid Credit Suisse collapse

    Global banking turmoil and share market volatility could cause a delay in the planned initial public offering and relisting of Virgin Australia. It was initially scheduled for June.

    Further losses are expected this week for shareholders

    Though there are plenty of reasons for optimism as world exchanges try to recover from last week’s turmoil, experts say that shareholders should expect further losses this week.

    Government supports another wage rise but won’t say how much

    Labor says it supports another wage rise for workers. However, they have been avoiding the question of what they feel that amount should be. The government is currently finalising its submission to the Fair Work Commission’s annual wage review.

    Get in touch

    Contact us if you have any questions or want to discuss the next steps for your business.

    If you are are wanting to start a new business but have some concerns about recession or even about how to manage your finances in these tough circumstances, then please contact S & H Tax Accountants. We have very experienced staff who are always willing to assist you or advise you on any concerns that you might have. Please book an appointment today at S & H Tax Accountants, call us at 03 8759 5532 or email us at info@sahtax.com.au.

  • Financially Savvy Women: 5 Strategies to Improve Your Financial Literacy

    Financially Savvy Women: 5 Strategies to Improve Your Financial Literacy

    It is well established that financial literacy is a key component of financial independence. The more you know and understand about finance, the better equipped you are to make important decisions. Historically, women have had lower financial literacy scores than men for many reasons, including social norms, a lack of access to resources, and needing to focus on other issues.

    That said, women are living longer than men and studies suggest they face systemic barriers that make it difficult for them to achieve the same level of economic security and financial literacy that men can obtain. This, in turn, makes it increasingly difficult to accumulate wealth, plan for retirement, and invest money, despite women’s increased involvement in higher education and in the workforce.

    In recognition of International Women’s Day, here are some steps women can take to increase their financial literacy so they can make informed financial decisions.

    What is financial literacy?

    Financial literacy is an understanding of the value of money, how money works, and how to make money work for you.

    Seek out information

    Unfortunately, due to a lack of access to educational resources, a lack of financial resources and ongoing stereotypes about women’s ability to manage finances, women have often been shut out of financial conversations.

    A great step in building your financial literacy is to start pursuing information and knowledge. There are many resources available online, including introductory personal finance courses, newsletters, podcasts, and websites that explain key concepts. Many of them are written for a general audience, so they’re designed for beginners to understand.

    Find them, subscribe to them, and learn from them. Ask us for specific recommendations for your situation.

    Find an advisor you trust

    Women tend to view financial risks and investments differently than men do, and they tend to feel less confident in financial conversations. Find an advisor who respects you and your goals, and understands your unique financial needs. Make sure it’s someone you feel comfortable talking with and asking questions of. Ask them to explain everything to you, so you understand all the important terms, phrases, and strategies.

    Don’t be tempted to think you’ll never understand finance. You can, and you will. You just need someone to explain it to you in a way that is meaningful to you. And you need someone who builds a strategy based on your financial responsibilities and pressures.

    Build an emergency fund

    Build an emergency fund of your own. Having an emergency savings account gives you some financial independence, in case of a crisis. Find a way to save up three to six months of expenses, so that if you lose your income or financial resources, you have some breathing space. The work you put into saving that money and managing the savings account will teach you about how money works.

    Check your credit score

    If you have any credit in your name, you have a credit score. Knowing it and understanding the role it plays in your finances is a massive step towards financial literacy. Your credit score affects your eligibility for loans, leases, credit cards, and mortgages. Utility companies might check your credit score when you open an account, and rental agencies take it into account when renting to you.

    If your credit score is low, look into ways to build it up. There are many resources available to teach you about improving your credit score.

    Continue educating yourself

    You don’t have to become an expert in finance to be financially literate, but having a basic understanding will help you make better financial decisions, and it will help you get on the path to financial independence.

    Commit yourself to continually learning about finances, or at least to always being involved in your financial decisions, so you have control over your future.

    Final thoughts

    Financial independence involves you having the money you need to live the lifestyle you want, but it also means being confident in making your own financial decisions. Financial literacy can give you some of the confidence you need to make important decisions.

    If you need assistance understanding your finances, making sure that your information is correct or even building an emergency fund, S & H Tax Accountants can always help. We have friendly and experienced staff who are always willing to help and guide you to have the ability to be financially independent. Book in today at S & H Tax Accountants, call us at on 03 8759 5532 or you can email us on info@sahtax.com.au.

  • Differences between active and passive investing and why they matter

    Differences between active and passive investing and why they matter

    When you invest your money, it’s a given that you’re willing to take on some amount of risk. There are strategies you can employ to ensure the risk you’re taking is minimal, but it still exists.

    If you’re comfortable with a lot of risk to enjoy a greater reward, it’s important to understand that you could lose everything you put in. Of course, most of us aren’t putting our money on the line like that. There is a spectrum of opportunities between taking the maximum possible risk and not investing at all.

    One of the ways you can do this is by choosing between active and passive investing. But what do these terms mean, and why does it matter? Read on to find out.

    Active Investing

    Active investing means remaining involved in the trading process by actively buying and selling your investments. The person managing your portfolio makes decisions concerning what you buy and sell, reacting to conditions in the market. They aim to get ahead of the market by making smart choices that will lead to bigger gains.

    That may mean you are doing this work yourself or employing a portfolio manager’s services. Either way, someone is watching, and you’re putting your faith in their ability to spot opportunities to make significant gains quickly and move your money accordingly.

    Passive Investing

    On the other hand, passive investing is a strategy that aims to make gradual gains with few buying and selling moves. It’s cheaper because nobody is managing your portfolio to make short-term gains. Instead, you pursue a buy-and-hold strategy to hold your investment in a broad market index with a long-term gain on the horizon.

    The goal isn’t to acquire gains through taking advantage of market fluctuations or hitting on lucky timing. Instead, you’re trying to match the market by creating a well-diversified portfolio that will perform well over time.

    Which one earns the most money?

    That depends on how long a time you’re looking at. Sometimes a portfolio manager may indeed spot a diamond in the rough and invest at the right time, and the investor will make remarkable gains quickly. Over time, however, passive investing tends to have larger gains.

    In this case, the extra fees you would pay your portfolio manager are well worth it. However, it’s not a commonplace occurrence to strike it rich in the stock market.

    Who is each type of investing for?

    There is no rule about who should invest in what. However, a mix of active and passive investments would be worthwhile if that’s financially feasible for you.

    Investors with a higher threshold for risk, such as those with extra funds, are typically more attracted to active investment because the potential gains are appealing and the additional fees associated with having a portfolio manager aren’t as significant for them.

    For most of us, however, passive investments are the way to go. Their track record is proven, they are low-maintenance and straightforward, and they come with less stress.

    Final Thoughts

    Active and passive investment strategies both have a place in a healthy portfolio and can be undertaken by anyone looking to enter the market. A passive investment strategy will be beneficial if you wish to do something low-risk with a good chance of a healthy return.

    Contact us to discuss which investment strategy is right for you.

    If you need assistance with choosing which investment method, please contact S & H Tax Accountants. Book a consultation with us today, as we have experienced staff members who are able to help you in choosing between Active Investing or Passive Investing. Call today on 03 8759 5532 or email us on info@sahtax.com.au

  • Business Update – 8 March 2023

    Business Update – 8 March 2023

    Welcome back to our Weekly Digest. Read on for the latest updates and some ideas to help us all move forward.

    Inflation is still a concern as the economy slowly recovers

    Australia’s economy has recovered better than most from the COVID pandemic and is now 7% larger than before. But experts say that ongoing inflation is a continuing concern for everyday affordability.

    Mental health is a major concern as the cost of living remains high

    New quarterly figures from Suicide Prevention Australia show that 46% of Australians have reported an elevated distress level from cost of living pressures – a 5% rise on the December quarter.

    Centrelink payments set to rise to help with the cost of living crisis

    Beginning March 20, more than 4.7 million Australians will receive a cash boost to their social security payments to help them cope with the soaring cost of living.

    Demand for EVs is stronger than ever

    New data from FCAI shows that Australian EV demand soared in February 2023 as fully battery electric vehicles made up 6.8% of the overall new car market. The total number of EVs on Australian roads is approaching 80,000 and climbing higher.

    Australian companies still shedding jobs as recession looms

    Two Australian companies have laid off hundreds of staff members due to tough market conditions. Healius, a healthcare company, has cut 500 full-time roles since the Covid-19 pandemic began, and Thoughtworks, a software firm, has laid off 100 employees.

    Queensland is considering legislation to keep solar panels out of landfills

    Queensland is the biggest contributor of solar waste, and the potential products set to end up in the landfill is enormous – but the opportunity for recycling or repairing those panels is also massive. New legislation is hoping to prevent those panels from going to waste.

    Affordable rent is becoming rarer and rarer

    The number of properties listed for rent for less than $400 per week has almost halved over the last year, with Hobart and Darwin the exceptions.

    New super tax rules only affect the wealthiest Australians

    National Party leader David Littleproud says that raising the tax rate on superannuation balances above $3 million will affect “many mum and dad businesses, ” hoping to sell up for retirement. However, Federal Treasurer Jim Chalmers reiterated, “99.5% of Australians with super accounts will continue to receive the same rate.”

    Toblerone is no longer Swiss enough to have the Matterhorn on its packaging

    Mondelez, the US parent company of Toblerone, is moving some of its production to Slovakia. Because Switzerland has laws regulating the use of national symbols, the change could see the Matterhorn disappear from the packaging because it will no longer meet the country’s standard of ‘Swissness.’

    Get in touch

    Contact us if you have any questions or want to discuss the next steps for your business.

    If you are concerned regarding your financial position due the various elements such as the rise of inflation or your rent is increasing day by day, please feel free to contact S & H Tax Accountants. We are a Local Accounting Service in Cranbourne, that have experienced and friendly staff  who will always help you in the best possible manner. So please book an appointment at S & H Tax Accountants today, call at 03 8759 5532 or email us at info@sahtax.com.au.

     

     

  • Return on investment vs cost: how to weigh them when making business purchases

    Return on investment vs cost: how to weigh them when making business purchases

    Deciding to purchase something to help your business is a big decision. It can be difficult to part with hard-earned money, especially in the early days. To understand the right time to invest by purchasing something for your business, you must calculate whether the Return on Investment (ROI) would be profitable.

    The cost is the amount of money you spend making the purchase, plus any indirect costs (such as training costs) related to the purchase. The ROI is calculation of financial gains or benefits that you obtain as a result of that cost.

    To determine ROI profitability, there is a simple formula you can use. If the purchase yields a positive return, it can be considered profitable.

    However, if the purchase does not earn back the amount of money it costs, it would be considered a negative return on investment. Read on to learn more about how to weigh a potential return on your investment versus the cost.

    Return on Investment Formula

    Using a formula to calculate the ROI only offers a rough initial estimate. Other factors might come into play, such as future work you will get because of the new asset or unforeseen expenses. The formula to determine ROI is:

    ROI = (Net Profit / Cost of Investment) x 100

    Let’s see an example

    Suppose you run an environmental surveying company. You have three employees who spend their time in the field gathering data and taking stock of how a proposed development project would affect the landscape. Vegetation, waterways, animals – everything is taken into consideration.

    You have one client who would like you to perform a survey of very rugged terrain. They would pay $2500 if you could complete this work, but covering the landscape would be difficult and take time.

    The only way to do it effectively would be to purchase a drone for $1000. The new equipment would make taking on this work possible and save many hours spent physically in the field. It would cost $200 to train each employee how to use the drone.

    Additionally, having a drone would mean you could offer your new aerial surveying services to other clients who are undertaking more large-scale or complex projects.

    Calculating the ROI of obtaining new equipment for this project

    You would first tally your total expenses and expected revenue to decide whether this purchase would be profitable.

    Expected Revenue = $2500

    Total Expenses = $1000 + ($200 x 3) = $1600

    You would then subtract the expenses from your expected revenue to determine the net profit.

    Net Profit = $2500 – $1600 = $900

    To calculate the expected return on investment, you would divide the net profit by the cost of the investment and multiply that number by 100.

    ROI = ($900 / $1600) x 100 = 56.25%

    Your return on investment would be 56.25%, which is a positive return. Not only that, but your new equipment may allow you to gain more work in the future, making your ROI even better.

    What happens when you don’t put your investment to work

    What if you purchase the drone but find the learning curve overwhelming, and it winds up collecting dust in a corner?

    In this case, your client may not hire you, or the hours required to do the work on foot may make taking on the project cost prohibitive. This would result in a negative return on investment, especially if you have already performed the employee training. Your ROI would be zero, plus you would be down $1600 from the initial expense and training.

    Final thoughts

    While the idea of making a large purchase to benefit your business can be daunting, there are often significant rewards that come with taking the plunge. Do your research, calculate if the investment is worth it, and then move ahead confidently. If you calculate correctly, you will find that your purchase takes your business to new heights.

    If you need any assistance calculating the return on your investment, you can always contact S & H Tax Accountants. We have experienced staff, who can help direct your business in the right direction. Book an appointment today at S & H Tax Accountants, you can call us on 03 8759 5532 or email us on info@sahtax.com.au

  • 6 tips to paying down your personal debt in 2023

    6 tips to paying down your personal debt in 2023

    2023 is expensive. The cost of living is higher than ever, interest rates keep rising, and it keeps getting harder to stay afloat, let alone get ahead. As a result, carrying debt has become commonplace. But, with the challenges of the past few years, many of us have more debt than we’re comfortable with.

    How do you get ahead while you’re still trying to catch up?

    Here are some tips on how to pay down your personal debt this year.

    1. Take stock of your debt

    There’s no way to fully understand your situation if you don’t take the time to identify everything you owe. Because looking at your monetary situation can be stressful, many people choose to ignore their financial statements and just keep a rough estimate of how much they think they owe.

    This is a mistake. Turning a blind eye to the numbers won’t change them, and neglecting to look at your debts regularly will make it easier to continue spending.

    2. Identify which debt is costing you the most

    Between a mortgage, outstanding loans, credit card debt, car payments, lines of credit, and many more forms of debt, some will cost you more than others to maintain. Once you have a clear picture of everything you owe, determine the interest rate on each debt.

    This way, you can plan to pay down the most expensive debt you have first. Doing so will save you as much interest as possible, meaning that you can pay down your debt faster as time goes on. So make your money work as hard as it can by paying down that higher interest debt.

    3. Consider consolidating your debt

    While working with a debt consolidator can temporarily hurt your credit score, it might be worth it in the long run. It can be extremely stressful to look at multiple sources of debt, and it’s easy to be overwhelmed by it all. This often leads to missed payments, which also hurts your credit score.

    By consolidating your debt, you end up with one regular payment, which is much easier to manage. The temporary credit score hit can be well worth it if you have a complex debt situation or simply feel overwhelmed.

    4. Set a budget and save

    Once you have figured out your repayment strategy, make a plan so you’re not working against yourself. Look at the actual cash you bring each month and allocate those funds. Set aside money for living expenses, entertainment, and your existing debt payments.

    If you have any leftover money, start putting that in a savings account. You should work towards setting aside 3-6 months of living expenses so that if something unexpected happens, you have the money to deal with it and don’t have to rely on credit to help yourself.

    5. Adjust your credit card habits

    Credit cards come with many perks, but they’re only worthwhile if you can pay the amount you’re spending on them. Doing so responsibly builds your credit score and allows you to take advantage of the benefits of being a cardholder.

    If you don’t have the actual money to pay your credit card off each month, tuck it away somewhere so you’re not tempted to use it. It’s
    easier than ever to tap your card, but without the funds to back it up, you’ll find yourself back in debt before you know it.

    6. Increase your income

    Nobody wants to hear that they have to work more, but if after looking at your financial situation, you find that there simply isn’t enough money coming in to pay for what you’ve already spent, you will likely need to find a side hustle. The only other option is to decrease your living expenses, which is tough to do in 2023.

    Final thoughts

    Paying down your personal debt isn’t anyone’s idea of a good time, but it’s essential. The debt isn’t going to go away on its own. Once you start seeing improvements, you will feel encouraged to continue until it’s eliminated. Call your personal accountant to devise a strategy to pay down your debt this year.

     

    If you need assistance managing your accounts or need to formulate a strategy to minimise your debt, please contact S&H  Tax Accountants. We are a local Accounting Service that provide all tax services as well as bookkeeping. We have experienced and friendly tax agents that will do their best to provide you with the best outcome. Book an appointment today at S & H Tax Accountants, you can call us on 03 8759 5532 or email us at info@sahtax.com.au

  • Business Update – 22 February 2023

    Business Update – 22 February 2023

    Welcome back to our Weekly Digest. Read on for the latest updates and some ideas to help us all move forward.

    What to do if you can no longer afford your mortgage

    As rates continue to rise, many Australians find themselves unable to make payments on their home. Learn what to do if your mortgage payment obligations are becoming impossible to meet.

    Woolworths expands controversial surveillance tool

    Woolworths is expanding the rollout of a controversial AI technology that helps reduce misscans at self-serve checkouts at more stores in NSW, Victoria and Queensland.

    Changes coming to superannuation rules

    Treasurer Jim Chalmers is proposing an “end to the super wars” with a new law that would see an end to early access to funds.

    Chinese airlines flying through Russia have an unfair advantage

    Since the Russian invasion of Ukraine nearly a year ago, European, Canadian, and U.S. airlines have avoided Russian airspace, making long-haul routes take longer and cost more. As China reopens and flies directly through Russia, other international airlines say they have a leg up.

    No more SMS two-factor authentication on Twitter unless you pay

    Twitter warned non-Twitter Blue users using SMS 2FA authentication that they have 30 days to switch to another 2FA method. Find out how to keep your account secure here.

    Everyone’s scrambling to get on board with AI

    With the release of ChatGPT in November, it seems that everyone’s talking about the potential of AI. Everyone from students to CEOs is trying to keep up as we figure out how this new technology fits into our lives.

    Meta follows in the footsteps of Twitter

    Mark Zuckerburg announced that Meta is launching a pay-for-verification subscription service called Meta Verified for Facebook and Instagram, much like Twitter Blue. The launch begins in Australia and New Zealand this week, with more countries to follow.

    Bitcoin is booming, but why?

    Everyone’s watching as Bitcoin continues to make steady gains in 2023. But will it climb back to $20K? Forbes has some ideas about why the price of crypto is suddenly climbing again.

    Get in touch

    Contact us if you have any questions or want to discuss the next steps for your business.

    If you need any assistance, managing your business’s accounts, please contact S & H Accountants. We are a local Accounting Service, that specializes in Bookkeeping and all Tax services. We have experienced and friendly staff, that will provide you with the best service possible.

  • 7 ways your trades business can market its services

    7 ways your trades business can market its services

    When you go into business as a tradie, your focus is often on performing your trade to the best of your ability – as it should be. With time, the quality of your work will speak for itself, which is the most valuable testimonial of all.

    However, any tradie accountant or bookkeeper will tell you there’s more to it these days. While your good reputation preceding you is undoubtedly essential, there are a few other ways that you’ll want to market your services to ensure that you have a steady stream of work. Read on to learn 7 ways you can market your trades business.

    1. Appear in directories

    Since setting up a new business is usually a digital experience these days, it’s easy to overlook the step of making sure you appear on a physical list where people can find you. Ensure your business is on whatever relevant trade directories run in your area.

    Additionally, make sure you appear in the online equivalent. Yelp, Google, and Facebook each have business directories. And let’s not forget the old standby: the phone book. Yes, they still exist! They are valuable resources for some people looking to hire a tradie.

    2. Have a website

    Some website-building platforms are very user-friendly, but if you feel that’s beyond you, hire someone to do it. Almost everyone does an online search before they hire a business, and not having a website is like waving a giant flag that says you’re out of touch, old-fashioned, or possibly not legitimate. Meanwhile, having a website reassures people that you are who you say you are, and can provide the services they need.

    3. Leverage social media

    Nothing is stronger than a good referral, and people naturally turn to social media to find out what your customers are saying if they don’t know someone who’s used your services personally.

    Keep your social media presence strong and engaged. If you’re uncomfortable doing this, hire someone to do it for you. It’s critical when doing business today.

    4. Offer referral promotions

    When you wind up with a happy customer, provide them with an easy way to speak positively about you and suggest you to their friends. A card or a thank-you email with a discount code will do the trick.

    5. Run ads

    Tradie marketing can be tricky because, typically, your services aren’t always needed. But when you are needed, it’s usually urgent.

    If your trades business doesn’t appear on the first page of Google, it might be worth your while to take out an online ad. That way, when someone searches for a tradie in your area, your business will appear next to their search. The only way someone can click on your information is if they see it – so make sure they have that chance, whether through an organic search or a paid ad.

    6. Make yourself visible in the real world

    Make sure your business’s name and logo appear on any equipment you use and make clothes for your team to wear when they’re out and about in the world.

    It may be smaller than a billboard, but driving and walking around letting people know who you are, what you do, and how to contact you will go a long way to market your trades business. If people become familiar with your business name, they’ll be more likely to turn to you when they need you.

    7. Good old-fashioned snail mail

    Believe it or not, print campaigns are alive and well! If you operate a trades business whose services are sorely needed in a specific area, consider making a print ad to pop into mailboxes. A word of warning, though – make sure your print ad is relevant, valuable, and eye-catching. You don’t want to spend money producing something that will immediately go to the recycling bin.

    Final Thoughts

    Marketing for trades businesses is a lot like any other type of business in that you have to understand your audience and their needs and show up when they’re looking for you. With some research and proactive planning, you can be sure your business will appear in the right place and at the right time.

    Need help growing your business? Get in touch with our specialists today.

    If you need accounting services, feel free to contact S & H Tax Accountants, we would be more then happy to help. We are a local accounting service in Cranbourne, that provide excellent services for any type of trade services. We have excellent staff members and tax agents who are always looking to give you the best service.

  • Business Update – 15 February 2023

    Business Update – 15 February 2023

    Welcome back to our Weekly Digest. Read on for the latest updates and some ideas to help us all move forward.

    RBA governor’s statement met with confusion

    Philip Lowe will appear before the senate this week to answer for the RBA’s rate hike strategy. Last week, he said that further interest rate hikes would be necessary to tame inflation, leaving observers confused as it seems to have already peaked.

    Faster internet is on the way

    Millions of Australians will benefit from the government’s $2.4 billion funding boost to the NBN.

    ATO seeks to boost the use of eInvoicing

    eInvoicing is a digital system that allows businesses to send and receive invoices through their accounting software, eliminating the need for physical documents, scanned papers, or PDFs. However, less than 1% of businesses have adopted it.

    Households spending power decreased due to inflation

    Middle-income households are major drivers of the nation’s economy, spending over $1 trillion annually. However, the cost of living has increased significantly, increasing spending on necessities by 23 percent. That means less money to spend on anything else.

    Homeownership becomes less likely the younger you are

    Most Australians spend much of their working lives pursuing home ownership. Yet, many millennials still pay sky-high rent for small rooms. Owning anything has become further out of reach for each generation.

    Real estate auctions pick up again

    After a severe lull following the pandemic, auction volumes are gaining steam once more. The increase is attributed to the end of a holiday lull and stabilising real estate prices.

    Money laundering is alive and well in Australia

    Due to a lack of scrutiny and regulation in some professions, Australia is a facilitator for money laundering. Real estate is a popular vehicle for the shadowy practice, with few government regulations in place to prevent it.

    The government seeks SME thoughts on payment times

    Small Business Minister Julie Collins is urging small and medium businesses to share their thoughts for a government review regarding accelerating payment times between major companies and their suppliers.

    Disney cutting 7000 jobs

    Reinstalled Chief Executive Bob Iger is seeking to cut $5.5 billion USD from its annual costs to drive profits. He is also under pressure to make Disney+ profitable and find new ways to monetise the Disney catalogue.

    UNSW psychiatry professor seeks to redefine burnout

    Gordon Parker, the founder of the Black Dog Institute, argues that burnout is not just a syndrome resulting from chronic workplace stress that has not been successfully managed. Instead, it’s a more wide-ranging condition that must be redefined to learn how to prevent it.

    Get in touch

    Contact us if you have any questions or want to discuss the next steps for your business.

  • What is inflation and how does it affect my savings?

    You can’t get through the news these days without hearing about inflation and how rapidly it’s increasing. Rates were generally low for quite some time and we all got used to it. Suddenly, however, everyone is getting squeezed by inflationary pressure.

    But what exactly is inflation, and how does it affect the money you have in the bank? Read on to learn more about what it is and what it means for your savings.

    What is inflation?

    Inflation is an increase in prices. Everything from a can of soup to a home costs more to buy. Of course, not all goods get more expensive at the same rate, and there are many reasons why prices go up.

    Year after year, things are more expensive than they were before. You’ll see this in action if you look at an old advertisement from 100 years ago. Things that used to cost a bit of change now cost much more.

    This is purposeful to some degree. Economists generally agree that a target rate of 2% annually is desirable to keep balance in the economy and promote growth. This rate allows central banks to lower interest rates to stimulate the economy if necessary without putting too much of a burden on the consumer.

    What causes inflation?

    The factors that cause inflation are varied and somewhat complex. There are a few different types of inflation as well. Supply and demand, production costs, worker shortages, printing money, and rising wages – all of these factors and more contribute to inflation.

    When the entire picture is considered, you can see why understanding any given inflation situation becomes a matter of healthy debate. While it’s clear that we as individuals have little control over inflation, we all want to know what it means for our bank accounts.

    Buying Power

    Any time your savings grow slower than the inflation rate, you will effectively lose money. Put simply, the money in your savings account must earn a higher interest rate than the inflation rate to continue to hold the same value.

    Currently, the global inflation rate is a few percentage points higher than the average savings account pays in interest. So while you have the same dollar amount in your account, that money now buys less than it could when prices were lower.

    The “Rule of 72”

    One interesting way of estimating how the inflation rate will affect your money is known as the Rule of 72. While it’s only to be used as a general estimate, it can help you imagine what will happen to your money if rates continue at their current level.

    To determine how long your savings will take to double, take 72 and divide it by your annual interest rate. For example, if you hold $100 in a savings account with a 2.5% interest rate, it would take 28.8 years for that account to reach a balance of $200.

    You can also use the rule to calculate how quickly these new higher prices would halve the value of your savings. Take 72 and divide it by the annual rate of inflation. If it’s currently 6.5%, for example, it would take just over 11 years for your $100 to be worth $50.

    You can see why an inflation rate higher than the interest you’re earning is problematic. While your actual dollar amount will continue to rise, inflation will undercut those earnings by making each dollar worth less.

    Remember that this is only a general estimation and doesn’t consider many factors. For example, it’s unlikely that the inflation rate would remain the same for 11 years or anywhere close to that. The Rule of 72 is only meant to illustrate the pace at which your money changes – to help understand the gap between the two rates.

    Final thoughts

    It’s easy to get caught up in the talk about inflation and how it devalues your money, but try to remain calm. Remember that while prices may never go down to what they once were, periods of high inflation have happened before, and they will happen again. However, they don’t last forever, and by continuing to make educated choices about where to invest your money, you will successfully weather the storm.[gravity form id=”3″ title=”true” description=”false”]

    If you have concerns about the rising inflation and how this would effect you, you can always talk to an accountant at S & H Tax Accountants, we have experienced and friendly staff who would love to help you. Book an appointment today at S & H Tax Accountants, email us on info@sahtax.com.au or call us on 03 8759 5532

  • 7 tips to help your small business adjust for inflation

    7 tips to help your small business adjust for inflation

    Forex Trade Graph Chart Concept
    Forex Trade Graph Chart Concept

    Inflation has ballooned worldwide in recent months, and there’s no question that small businesses are feeling the pinch. Supplies cost more, employees are hard to find, and your profits are shrinking.

    It’s undoubtedly challenging, but you can weather the storm with the following tips.

    1. Study your data

    Your numbers are always helpful, but in times of rapid inflation, you’ll be especially thankful that you keep a nice, clean set of books. Analyze your data to learn what products and services make you the most money, which ones cost the most to offer, and to identify where you can save.

    2. Cut expenses

    Now that you’ve identified where you can save money, go ahead and cut what you can. It’s nice to be able to offer many products and services, but
    this is a time to tighten your belt.

    Focus on the items that keep your business as healthy as possible, and ditch the rest – at least for the time being. It’s okay to simplify, especially when times are tough.

    3. Adjust your prices

    Nobody likes to raise their prices, but the reality is you likely have no choice. Keeping prices the same would indeed be wonderful for your customers or clients. However, if you’re offering your products or services at the same prices as before inflation started to climb rapidly, you’re absorbing the cost.

    When you dig into your data, you may find that some things you offer actually cost you a lot of money. That’s not a sustainable business model – raise your prices to keep yourself afloat, or find items that cost less for you to sell.

    4. Simplify and automate

    If aspects of your business take a long time to complete, see if there’s anything you can do to reduce those hours. Switching to cloud accounting or inventory management software would be excellent examples, as doing so would allow you to use your valuable time elsewhere.

    Identify where you can simplify and automate, and then do it. Then, even when inflation comes back under control, you will undoubtedly find that the saved time helps.

    5. Focus on your customer

    Remember that your customers are keeping you in business and experiencing inflation in their lives too – both at home and in their own businesses.

    Keep the lines of communication clear and open, especially if you’re going to alter your offerings or raise your prices. It’s a lot easier to retain loyal customers than it is to gain new ones, so make sure they know how much you value them and communicate openly to maintain their trust and loyalty.

    6. Consider your employees

    Good help is hard to find. Those who work for you are feeling the pinch as well. While it’s essential to automate what you can, you must consider the consequences it will have on your staff. Identify how you can better use their talents if parts of their roles become automated.

    7. Remember, this will pass

    Inflation has happened before and will undoubtedly happen again after this. Historically, periods of inflation last anywhere from a few months to several years. One thing, however, must be remembered: all periods of inflation end.

    Final thoughts

    While inflation is difficult for small businesses, there are steps you can take to reduce its impact. Focus on what you can control and face what you can’t with confidence and creativity. With some planning, clear communication, and smart adjustments, you will come out of this inflationary period intact.

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  • 8 tips for staying in budget this holiday season

    8 tips for staying in budget this holiday season

    The holidays are officially upon us, and chances are you’re starting to feel a bit spendy. It’s only natural. We want to spread that feeling of good cheer around by buying presents for those we love.

    There’s nothing wrong with that, but keep your pocketbook in mind. Nothing kills the joy of the season like a giant credit card bill come January. Keep your spending in check by following these tips.

    1. Make a budget early

    This might seem obvious, but there’s no way to stick to a budget if you don’t make one.

    The very first thing you must do to keep spending in check is plan ahead. Make a list of who needs a gift. Then brainstorm what they might like and what’s realistic for you to get. Do it early so that you have a spending plan in place.

    2. Wait for sales

    Since you’ve done all that terrific planning ahead, you now have the luxury of waiting for a sale. Keep a lookout when shopping in person too, since you already know what the items should cost.

    3. Create a gift

    You’re probably imagining the handmade gems you created for loved ones as a child, but fear not. You don’t have to be crafty to DIY a gift. Search online for inspiration.

    A homemade gift could be something to eat, or a service. Offer to look after children so parents can get a night out, for example.

    The same advice you heard as a child rings true now: a handmade gift almost always means more. There are lots of great ideas out there that don’t cost you a thing, but would mean the world to the recipient.

    4. Thrift

    Consignment and thrift shops are full of wonders. It’s not unusual to find items that are still in their original packaging. Even better, you might stumble upon something that’s truly unique.

    Just be sure to check any items to make sure they’re in good condition and that they have all the pieces.

    5. Share giving

    If you know that the perfect gift for someone is a bigger ticket item, consider joining forces. Team up with a sibling or a friend to tackle the larger expense together. It will mean a lot to the recipient to get what they really wanted, and to know that you worked together to make it happen.

    6. You actually can regift

    This one is a touchy subject for some, but it truly is okay to regift. If you have something that you haven’t used and it’s still in its original packaging, feel free to pass it along. You free up space in your home, and they receive something they need or want. It also produces zero waste.

    Just make sure it’s in mint condition – and no matter what you do, don’t give it to the person who gave it to you!

    7. Bring cash

    When you do head out to the shops to pick up your gifts, bring the amount of cash left in your budget.

    Leaving the credit card at home will make it impossible to overspend. It’s also easier to stay in check when you’re parting with physical money instead of tapping away with your card.

    8. Remember the spirit of the holiday

    It’s an old saying, but it’s true. The reason we’re celebrating doesn’t have anything to do with material gifts. Ask anyone what they remember about a holiday and it rarely includes what they received. People remember who they spent the day with and the memorable events that happened.

    Final thoughts

    With a bit of planning ahead you can stick to a budget this holiday season and still delight your family and friends. Take it a step further – see if you can come in under budget. With the cost of living higher than ever, that would be a truly wonderful gift to yourself. If you have any questions then feel free to call S & H Tax Accountants Cranbourne. S & H tax Accountants offer services to small business as an accountants. We are experienced advisors in Cranbourne and Accountants in Malvern East area.

  • Business Update – 16 November 2022

    Welcome back to our Weekly Digest. Read on for the latest updates and some ideas to help us all move forward.

    ASX slides as other world markets try to find their footing

    The ASX was looking good at the start of the week, but with the US wobbling around a recession and crypto crashing, all gains were erased. Stocks dropped to a low not seen since the start of the pandemic panic.

    Chaos looms at Aussie ports as workers locked out

    The country’s largest tugboat operator, Svitzer, is in an ongoing dispute with the union. The result is that crews have been locked out of ports indefinitely.

    Commonwealth, ANZ, and Westpac ordered to pay up

    Up to one million customers could be eligible for compensation from the big banks after a major class action win. The lawsuit was over consumer credit insurance which customers were sold while taking out personal loans and credit cards.

    VOLY quietly deletes social media and closes app

    Australian start-up grocery delivery service VOLY seems to have stopped operations. When users log in to the app there is a message stating they are closed. Most of their social media accounts have been taken offline.

    Mass layoffs at Amazon starting as soon as this week

    It seems that none of the large corporations are immune to current economic conditions, with Amazon announcing they will be laying off about 10,000 workers across departments.

    Jeff Bezos announces he will give away most of his fortune worth over US$124 billion

    He started by awarding Dolly Parton, who is well-known for funding worthy causes, $100 million to donate as she sees fit. A fund to fight climate change is also in the works.

    No more free lunches at Twitter

    Elon Musk said that the average meal cost US$400 per person – a claim that the former head of the meal program refuted on Twitter. The cut comes days after Musk scrapped Twitter’s work from home policy and mandated employees to return to the office for at least 40 hours a week.

    Funds vanish from crypto exchange

    FTX, one of the world’s largest cryptocurrency exchanges, filed for bankruptcy on Friday. Hours later, US$477 million was missing from the exchange. A probe is underway.

    Retirees defy ageism by returning to work

    With many businesses experiencing a severe labour shortage, some creative business owners are reaching out specifically to older workers to help fill the gaps. The result has proven to be a win for both parties.

    Get in touch

    Contact us if you have any questions or want to discuss the next steps for your business.

    The post Business Update – 16 November 2022 appeared first on ausmasternew.staging.bizinkonline.com.

  • Employee vs contractor – what you need to know

    Employee vs contractor – what you need to know

    Depending on the nature of your business, you may have workers who are employees or contractors, or you may have both. Each has their merits, but it’s important to review which are which in order to meet your tax obligations.

    When you have an employee, you must withhold income tax as well as report on additional benefits. Contractors generally look after their own tax obligations.

    It’s against the law to treat an employee as a contractor. Significant penalties apply if you do, so it’s important to get it right.

    The simplest way to remember is:

    An employee works in your business and is part of your business.
    A contractor is running their own business.

    But how can you be sure that you’ve got an employee or a contractor on your hands, especially with remote work blurring the lines between employees and contractors?

    Does there come a point that you should actually be hiring a worker as an employee, when you thought they were a contractor?

    There are six factors to consider:

    1. Ability to subcontract or delegate

    An employee is not able to subcontract or delegate the work. They must perform the outlined tasks themselves. If they can’t do the work themselves for any reason, say a prolonged illness, and someone else does it, this is substitution. Your business would then pay the other person to carry out those activities.

    A contractor can delegate the work as long as they’re not obligated to do it themselves as per the contract. If your contractor can’t work, they would arrange for another qualified person to do it. You would pay your contractor as usual, who would then pay their subcontractor.

    2. Basis of payment

    An employee is paid a set amount per period of time. The most obvious example would be an annual salary or hourly wage.

    Some employees are paid piece-work rates. They receive an amount per successful sale, or per the number of pieces produced. A commission basis would be a price per item structure.

    A contractor, however, is paid an agreed-upon price in exchange for a predetermined result. Some contracts may specify the amount to be paid in increments as stages of the project are completed. But the key takeaway is that a contractor is paid when the agreed-upon result is achieved.

    3. Equipment, tools, and other assets

    If your business is responsible for providing the equipment, tools, and other assets required to perform the job, that’s characteristic of an employee.

    If the worker is providing these items, they are likely a contractor.

    4. Commercial risks

    Employees do not bear commercial risk and they are not liable for correcting any defects in the work at their own expense. Instead, your business takes this responsibility. The worker will be paid for the time required to perform the task to completion.

    A contractor assumes the commercial risk. They are responsible for fixing any mistakes on their own time. This extra work would fall under the umbrella of the terms set at the beginning of the project. Your business does not have to pay for any extra time taken or materials used, unless otherwise specified in the contract.

    5. Control over the work

    Employees have to complete the work the way the employer specifies. What work is done, where it’s done, how it’s done, and when it’s done are all up to the employer. The employee then completes the work as required.

    Contractors are not subject to the same rules. They decide when and how the work is done, so long as it meets the obligations laid out in the contract. For example, a contractor could choose to work three 10-hour days to complete a job, rather than working four 8-hour days.

    6. Independence

    An employee works within a business. They complete tasks as required until they leave the job.

    A contractor operates independently and may have any other number of contracts on the go with other companies. They can freely accept and refuse other work. Their obligation is complete when they deliver the specified outcome.

    Final thoughts

    It can be confusing to make the determination between an employee and contractor, but it’s important that you do so in order to meet your tax obligations and play by the rules. Contact us to learn more about your tax obligations for employees and contractors. If you have any questions then feel free to call S & H Tax Accountants Cranbourne. S & H tax Accountants offer services to small business as an accountants. We are experienced advisors in Cranbourne and Accountants in Malvern East area. Book an appointment with S & H Accountants today! Call us on 03 8759 5532 or you can email us on info@sahtax.com.au