S & H Tax Accountants

Author: Parry Hehar

  • What is Accounting

    What is Accounting

    What is Accounting?

    Accounting is the process of recording, classifying, summarizing, and interpreting financial transactions to provide useful information for decision-making. It serves as the language of business, enabling organizations, investors, managers, and regulators to understand financial performance and position. Accounting involves the preparation of financial statements such as the balance sheet, income statement, cash flow statement, and statement of changes in equity. These statements help stakeholders make informed decisions about the allocation of resources, investments, and strategic direction.

    Accounting can be divided into several branches:

    1. Financial Accounting: Focuses on the preparation of financial statements for external users (such as investors, creditors, and regulatory bodies).
    2. Management Accounting: Involves the analysis of financial data for internal management purposes, helping businesses with budgeting, cost control, and performance analysis.
    3. Tax Accounting: Deals with preparing tax returns and ensuring compliance with tax laws.
    4. Forensic Accounting: Involves investigating financial discrepancies, fraud, or disputes.
    5. Auditing: Entails the independent review of financial statements to ensure accuracy and compliance with accounting standards.

    Advantages of Accounting

    Accounting offers several benefits that contribute to the effective management of businesses and organizations:

    1. Informed Decision Making: Accurate accounting records provide a solid foundation for decision-making. Financial reports allow business owners, managers, and investors to analyze past performance, forecast future trends, and make strategic choices based on solid data.
    2. Compliance and Legal Protection: Accounting ensures that a business complies with regulatory requirements. Accurate financial records help businesses avoid penalties for tax fraud or misreporting. Proper accounting also protects companies in case of legal disputes, as financial statements can serve as evidence.
    3. Financial Control and Planning: Accounting helps businesses control costs and plan for future expenses. By tracking income and expenditures, managers can identify inefficiencies, reduce waste, and allocate resources more effectively. It also helps with budgeting and setting financial goals.
    4. Attracting Investors and Funding: Investors and lenders require clear, well-organized financial statements to evaluate the financial health of a company. A solid accounting system builds trust and transparency, making it easier to attract investment and secure loans.
    5. Improved Financial Transparency: Accounting promotes transparency by ensuring that financial information is systematically recorded and reported. This helps maintain accountability to stakeholders, from investors to regulatory bodies.
    6. Business Performance Measurement: Accounting provides various tools, such as profitability ratios and return on investment (ROI), to measure and evaluate a business’s performance. This helps business owners assess whether they are achieving their financial goals and where improvements can be made.

    Disadvantages of Accounting

    While accounting offers many benefits, there are also some limitations or challenges that businesses may face:

    1. Complexity: Accounting can be complex and requires a deep understanding of financial principles, tax laws, and regulatory requirements. Small businesses without dedicated accounting professionals may find it difficult to maintain accurate financial records.
    2. Cost of Implementation: Implementing an effective accounting system can be costly, particularly for small businesses. Costs can include software, accounting staff salaries, training, and compliance with regulatory standards (e.g., GAAP or IFRS).
    3. Risk of Human Error: While accounting systems are designed to reduce errors, mistakes can still occur. A miscalculation, inaccurate data entry, or failure to follow correct accounting procedures can lead to significant financial discrepancies.
    4. Time-Consuming: Accounting tasks such as preparing financial statements, managing payroll, and reconciling accounts can be time-consuming. For small businesses, this may take valuable time away from other essential activities, such as sales, marketing, or customer service.
    5. Depersonalization of Decision-Making: An over-reliance on accounting data may lead to decision-making that focuses too much on numbers and not enough on qualitative factors such as customer satisfaction, employee morale, or market trends. Some argue that financial data can sometimes obscure the broader picture.
    6. Potential for Fraud or Manipulation: Though accounting systems are designed to maintain accuracy and transparency, they can be vulnerable to manipulation. Companies may engage in “creative accounting” practices to inflate profits, hide losses, or evade taxes, which can mislead stakeholders and harm the business in the long run.
    7. Limited Scope: Accounting, while essential, does not provide a comprehensive view of all business aspects. It primarily focuses on financial transactions and may overlook factors like employee engagement, brand equity, or customer loyalty, which are also critical to long-term success.

    Conclusion

    Accounting is a vital function in any business, helping to ensure financial accuracy, legal compliance, and informed decision-making. It provides valuable insights into financial performance, aids in managing costs, and plays a key role in attracting investors and securing funding. However, it is not without its challenges. If you need assistance with any tax or accounting obligations, contact S & H Tax Accountants, call us on 03 8758 5532 or you can email us on info@sahtax.com.au

  • Protect your business: Outsmart fraud before it hits!

    Protect your business: Outsmart fraud before it hits!

    In the wake of the pandemic, many small business owners have become increasingly concerned about fraud. According to SAP Concur, a staggering 85% of businesses surveyed expect the risk of fraud to continue even after the pandemic. Making matters worse, many fraudulent acts originate from within businesses themselves. Below you will find some essential internal controls that you can implement to safeguard your business and mitigate the risk of financial mismanagement and fraud.

    1. Segregation of duties

    A critical first step in preventing fraud is ensuring that no one individual has control over all aspects of any significant transaction. For example, the person who approves expenses should not be the same one who processes payments. By distributing tasks among multiple employees, the chances of fraudulent activity going unchecked are significantly reduced. This internal control is particularly important for small businesses, where roles may overlap, making it crucial to ensure that checks and balances are in place.

    2. Regular financial reconciliation

    Routine reconciliation of financial statements, such as bank statements, helps in identifying discrepancies or unusual transactions early. Create a consistent schedule—monthly or quarterly—to compare transactions in your accounting software against bank records. If you have an accountant, engage them in this process to ensure the highest level of scrutiny. Keeping a close eye on these financial statements not only helps to identify potential fraud but also aids in maintaining accurate financial records.

    3. Comprehensive access controls

    Restricting employee access to financial systems and sensitive data is vital for reducing fraud risk. Employees should only have access to the information and functionalities necessary for their roles. For example, HR staff should not have access to accounts payable functions. Implement multi-factor authentication (MFA) and regular password updates to bolster security further. This internal control limits the potential for opportunistic fraud and shows employees that the organisation takes security seriously.

    4. Employee training and awareness

    Educating employees about fraud risks and the importance of internal controls is essential. Conduct regular training sessions that cover how to identify and report suspicious activities. Encourage a culture of transparency and communication, so employees feel comfortable voicing concerns. Consider using real-world examples pertinent to your industry to make training more relatable. This approach not only empowers employees to act as your first line of defence but also reinforces the importance of safeguarding the organisation’s assets.

    5. Whistleblower policy

    Establishing a robust whistleblower policy encourages employees to report unethical behaviour or fraudulent activities without fear of retaliation. Ensure that this policy is well-publicised and accessible to all staff. Consider offering anonymous reporting channels, such as hotlines or secure email addresses. A strong whistleblower policy not only enables early detection of fraud but also fosters a culture of accountability and ethical behaviour within the organisation.

    6. Comprehensive internal audits

    Conducting regular internal audits, either by internal staff or external auditors, serves as an additional layer of scrutiny. These audits can help identify weaknesses in your internal control systems and recommend improvements. Make sure to act on the recommendations provided in audit reports to continuously enhance your fraud prevention strategies. Regular audits not only help in identifying vulnerabilities but also demonstrate to stakeholders that the organisation is committed to maintaining financial integrity.

    7. Automated financial monitoring systems

    Consider investing in automated financial monitoring systems that can provide real-time insights into transactions and identify anomalies that may indicate fraudulent activity. These systems often use machine learning algorithms to adapt to normal transaction patterns and alert you when something seems off. For example, if an employee typically submits monthly travel expenses of around $500 suddenly claims $5,000, the system can flag this anomaly for further investigation. Automated systems not only enhance fraud detection capabilities but also reduce the manual workload on finance teams.

    Looking ahead

    Implementing these internal controls will help protect your business against fraud and financial mismanagement. They serve as a solid foundation to build upon as your business grows and its specific needs evolve. Remember, the key to effective fraud prevention is not just having these controls in place but also regularly reviewing and updating them to adapt to new risks and challenges.

    Ready to take the first step in strengthening your business’s financial integrity? Start by assessing your current internal controls and identifying areas for improvement. If you need advice or assistance, reach out to S & H Tax Accountants today. Our team consists of well qualified, vastly experienced and extremely professional. Book an appointment with us today, contact us on 03 8759 5532 or you can email us on info@sahtax.com.au

     

  • How to scale your business with minimal effort

    How to scale your business with minimal effort

    When you’re ready to take your business to the next level, you might start thinking about “scaling”. No, it’s not just a fancy term for growth, it’s about doing more with less. Scaling is about increasing your revenue without needing to proportionately increase your resources—pretty cool, right?

    It’s like sending an email: whether you send it to 100 people or 100,000, your effort is the same. The trick to scaling effectively? Efficiently using your resources without emptying your pockets.

    So, how can you make this happen? Let’s get into it.

    Keep it simple, keep it clean

    Don’t get lost in complexity. More complexities equal more chances for things to go wrong, more time wasted, and more resources spent.

    If you’re scratching your head trying to understand a process or a tool, chances are, so are your employees and customers. 

    Keep it simple to keep control and keep everyone on the same page.

    Automation is your friend

    The future is here, and it’s all about automation. There are tools out there that can take care of your administrative tasks, saving you time and effort. From invoicing to project tracking, automation can streamline your process, making your business more efficient and leaving you with time and energy to spend in other areas,

    Check the activities you perform regularly and explore whether there’s a tool that could automate them. 

    Data doesn’t lie

    Take out the guesswork and let data guide your decision-making. We’re in the information age, and there’s a metric for nearly everything. Know what’s working and what’s not by looking at how customers engage with your website or which marketing campaigns are most effective. 

    Make smart decisions based on hard facts, not assumptions.

    Offer more, work less

    Imagine increasing customer retention with minimal effort from your end. It’s possible if you scale your offerings. Consider automatic renewals, subscription models, or repeatable pricing packages. Not only will these save you time from manual work, but they’ll also boost customer loyalty.

    In a Nutshell

    Scaling your business is all about smart growth. It’s growing your revenue without growing your expenses at the same rate. 

    The secret to effective scaling lies in maintaining simplicity, embracing automation, making data-driven decisions, and fine tuning your offerings. 

    It’s not just about working hard, but about working smart.

    Need assistance with your small business, then reach out to S & H Accountants. We do not only offer tax services to our businesses, but also offer business services to all of our clients. We always prioritise our clients growth, and thus have such a wonderful team which include, well-qualified, vastly experienced and very professional individuals. If you would like to make an appointment today, then call 03 8759 5532 or you can email us on info@sahtax.com.au.

  • 4 end of the year financial planning tips

    4 end of the year financial planning tips

    The end of the year is typically a reflective time. Something about that lull between holiday festivities and New Year’s Eve sets the stage for introspection and review. While you’re busy reflecting on the year that’s ending and the new one about to begin, make sure you take some time to consider your finances.

    Here are some financial tasks that should be on your must-do list before the calendar rolls over. Read on for some items that really can’t wait.

    1. Take stock of your financial plans

    If you have formal financial plans, take a step back and assess how they’re working for you. If you have a real document in place, that’s great. If your financial plan consists of a loose set of ideas in your head, that’s okay – but consider making that plan a little more concrete for the new year.

    Has anything in your life changed since the beginning of the year? Marriage, the birth of a child, or a change of career are all reasons to revise your financial plans. Or maybe you’re navigating a job loss, an unexpected illness, or the loss of a loved one. Your plan from the beginning of the year may not resonate anymore, for a variety of reasons.

    A lot can change in the course of a year. It’s okay if things change, but it’s important for you to shift as necessary. Your financial plan is a living document and should be updated accordingly. Take some time to reassess and adjust your plan as needed based on what’s happened in the past year.

    2. Check your progress on your goals

    If you’ve been saving for a large purchase or committed to making contributions to a savings account, check how that’s going. It’s easy in January to say that this is the year it’s finally going to happen for you. But it doesn’t mean a lot if you don’t check how you’re doing by year’s end.

    If you made your goals, that’s great! If they fell by the wayside, take a look at what you could have done differently. Or, take some time to set a goal that’s more manageable so that you can get that sense of accomplishment next December.

    3. Review your spending and saving habits

    This is going to be a lot of fun if you made significant contributions to your savings accounts this year. The sense of accomplishment will give you some much-needed momentum to carry those habits into the new year.

    If, however, you were a little more skilled at spending than saving, it might be time to have a talk with yourself. Take a look at where your money went, and if it didn’t go to something that makes you proud, reconsider those habits for next year.

    Yes, it’s hard to deny yourself the things you want. But it’s terrible to be caught without any savings when you need them.

    4. Consider your contributions

    There are many accounts that benefit from a contribution before the year is over. Retirement or education savings plans would be good examples – or a tax-free savings account. This is also a good opportunity to review your charitable giving goals.

    Final Thoughts

    The end of the year is a time of change and new resolutions, but before you do take a look back. Check your progress over the past year – it’s the only way to know if your goals are working out. Before you make new ones, see how you did on the ones you set at this time last year.

    The post 4 end of the year financial planning tips appeared first on Universal Content Master.

    Although the end of the year has finished, it is a good time to sit down with your accountant to make sure that you are ready for the new financial year ahead. S & H Accountants offer tax planning as well all taxation services, we do not only offer this services to individuals but also businesses, trusts and companies. Our staff are very well-qualified, extremely proffesional and vastly experienced. We always aim to provide our clients with the best level of service possible. Book an appointment today, call us at 03 8759 5532 or you can email us on info@sahtax.com.au

  • Small business end-of-year planning tips

    Small business end-of-year planning tips

     

    Connect with your clients
    The holidays are a time of shared goodwill—a natural time to reach out to your customers to check in on how they’re doing, how well your products or services are working for them, and to show your appreciation for their ongoing patronage. Some small businesses send their clients a holiday card or email with a special offer; others make sure each of their customers receives a personal phone call. Whatever you decide, remember it’s not how you do it or how much you spend—it’s the personal touch your clients will remember.

    Update your financials
    Ideally, your business always keeps up to date with bookkeeping—but if you’re still using an outdated spreadsheet system, now is a great time to consider upgrading to cloud based accounting for the new year. There are many cost-effective solutions out there designed for small business owners that will help you save time and money, allowing you to make better decisions based on accurate, real time figures. In the meantime, organize any receipts that need to be entered into your financial database, make sure your invoicing is up to date, and be sure you haven’t fallen behind with your AR or AP.

    Consider a price increase
    Once you know your numbers, you may want to give some thought to raising your rates in the new year. Take an honest look at your expenses, annual profits, as well as your personal and business financial goals. It’s generally recommended that freelancers increase rates on an annual basis as the value you bring to your work increases with experience. But really, every small business should consider doing the same. Costs go up and it’s reasonable for your pricing to reflect your expenses. Increasing rates at the beginning of a new year will make sense to your clients—and they’ll appreciate getting the heads up now so they aren’t surprised when new pricing goes into effect January  1st.

    Meet with your accountant
    Touching base with your accountant before the year closes is a smart move for your small business. That way, you can go over your goals for the new year, do some business planning, looking at how much capital you may need to meet your goals, and whether a change to your business structure would be worthwhile. Your accountant can also offer helpful tax planning advice; for instance, she can provide an estimate of your tax payments for the current year, and point out tax-saving opportunities—such as a purchase that would benefit your business and save on taxes if made before December 31.

    With these end-of-year planning tips in mind, you can take action and enjoy a great start to the year ahead. Best of all, checking all those important “must-do’s” off your list, you’ll be ready to enjoy a relaxed and happy holiday. If you need assistance with your planning, contact S & H Accounting. Book an appointment for Tax planning now, call us on 03 8759 5532 or email us on info@sahtax.com.au

  • Finding the right fit: How to choose the right financial planner for you

    Finding the right fit: How to choose the right financial planner for you

    No matter what your financial goals are, consulting with a financial planner can help just about everybody. Not only will they help you refine your goals, they’ll guide you in creating strategies for your money, and keep you accountable to your plan. They’ll also help you navigate different saving and investment strategies, so you know your money is working for you.

    They’ll also make sure you have the information you need to make the best financial decisions for your circumstances, so you can grow your wealth and increase your financial security.

    If you’re looking for a financial planner, these tips can help you find the best person to meet your unique needs.

    Be clear about your goals

    Most people’s big financial goals fall into the following areas:

    • Retirement
    • Buying a home
    • Paying for higher education (for themselves or their children)

    But along the way a lot of other events come up that pull our financial focus, such as buying a car, paying for a trip, or covering expensive home repairs. Whether your goal is to build up your emergency savings account, pay for the trip of a lifetime, or fund your retirement, a financial planner can help you allocate your money wisely.

    Before you start searching for a financial planner, list your financial goals, long-term and short-term. That will give you the framework for finding someone whose expertise matches your objectives.

    Check their qualifications

    There’s no shortage of financial planners out there to choose from – but not every planner is licensed, or has the right credentials, training, or experience to meet your needs.

    With your goals in mind, start researching financial planners in your area who hold relevant professional designations and appropriate qualifications. Check online to see if there’s a complaint record against them, or information that doesn’t match the claims they make. Where you find the complaint record may depend on the government body that oversees their work.

    Ask your friends and family for referrals – ideally people you trust who are in the same stage of life as you are. Visit each financial planner’s website and look for testimonials from people whose circumstances are similar to yours. Double check with the appropriate certifying body that they have the required qualifications.

    Ask questions

    Make a list of candidates and interview at least three financial planners. When you do, ask what qualifications they have, what their approach is, what services they include, and how they can help you achieve your goals.

    Additionally, inquire about

    • what products they offer (and make sure they have the proper certifications to sell them),
    • how they’ll keep you informed,
    • how they decide on appropriate investments or strategies for their clients,
    • whether they’ve ever been disciplined by a regulator (again, you can often verify their answer to this last question online), and
    • how they’ve helped clients in situations similar to yours.

    Find out their payment structure

    Financial planners may charge you for services in a variety of ways, including:

    • An hourly fee
    • A fee based on the value of your assets under their management
    • A commission or trading fee based on buying stock or investments for you
    • A salary from their employer (such as those who work through banks)
    • Statement of Advice fee — A one-off fee for preparing your Statement of Advice. This fee is either paid up-front and deducted from your investments, or added to ongoing fees for service.

    You need to know how they’re paid and what they charge so you can determine if their advice is in any way influenced by outside factors.

    Final thoughts

    Whether you’re looking for help with investment planning, estate planning, retirement planning or other financial guidance, choosing the right financial planner is key to you taking control of your finances. You want someone who understands your financial goals, is experienced in the areas you want guidance, and who you feel comfortable talking openly with. S & H Accountants are the one for you, we offer financial and tax planning, as one of our services. Contact us today to book a consultation with one of our experienced staff members. Call us on 03 8759 5532 or you can email us on info@sahtax.com.au.

  • How rising interest rates impact small businesses and ways to mitigate those effects

    How rising interest rates impact small businesses and ways to mitigate those effects

    In the world of business, one constant factor you are likely to encounter is change, particularly in the financial landscape. One such change that can bear significant implications for small businesses is rising interest rates. Understanding how this impacts your business and identifying solutions to counteract these effects can be key to sustaining and growing your business.

    The implications of rising interest rates for small businesses

    Interest rates have a ripple effect on various aspects of business, let’s look at a few.

    Decreased consumer spending

    A crucial repercussion of rising interest rates is that consumers invariably end up allocating more of their income to repay the increased mortgage rates and business loans. As a result, there’s less disposable income for them to spend — this isn’t great news if you are in an industry that is deemed non-essential by the consumer.

    Difficulty in accessing credit

    Lenders may enforce stricter requirements, such as more equity or personal guarantees, as a response to high business loan rates. This makes both long-term and short-term debt more expensive and harder to obtain.

    Increased operational costs

    The ripple effect of interest rates can also increase your operational costs. Your employees might demand a pay rise to cope with their increased living costs, and important business partners might pass on their increased costs to you, raising the cost of your whole supply chain.

    Uncertainty in predicting future costs

    Rising interest rates can make it difficult to predict the cost of future borrowing or the cost of existing business loan rates, making it harder to plan your finances and future investments.

    Strategies to counteract rising interest rates

    Despite these challenges, there are several strategies you can employ to mitigate the impact of rising interest rates:

    1. Delay major purchases that could drain your cash reserves.
    2. Consider paying interest only on any loans as a temporary option to reduce monthly payments.
    3. Refinance high-interest products like credit cards.
    4. Secure new loans with a longer fixed term to protect against further unexpected increases.
    5. Explore alternative financing options such as crowdfunding, angel funding, or government assistance.
    6. Use forward contracts to mitigate the risk of exchange-rate differences if your business conducts foreign currency transactions.
    7. Discuss with your suppliers about how to work together to offset interest rate increases.

    Get in touch with us for tailored advice.

    Your next steps

    Evaluate how susceptible your business is to the effects of rising interest rates and take action accordingly. Immediate steps can include paying off debts that may incur higher interest costs, and investigating any government support you may be entitled to.

    No matter what financial challenges your business faces, know that there are always strategies and resources available to help you overcome them.

    Talk to us. We’re experts at helping businesses navigate the unsteady financial times.

     

     

  • Unpacking the 2024 Federal Budget: What you need to know

    When Treasurer Jim Chalmers handed down the 2024-25 Federal Budget on 14 May 2024, it was clear that the government had a diverse range of objectives. From offering tax cuts to supporting vulnerable groups, the budget is packed with measures aimed at stimulating economic growth and providing relief. Let’s unpack the key points from this year’s budget, focusing on how they impact small businesses.

    Tax Incentives and Extensions

    Instant Asset Write-Off

    One of the standout features for small businesses is the extension of the instant asset write-off. This allows businesses to immediately deduct the cost of eligible assets, rather than depreciating them over several years. This extension provides an excellent opportunity for small businesses to invest in new equipment and technology, boosting productivity and efficiency.

    Tax Incentives for Critical Minerals and Hydrogen Production

    The government is also offering tax incentives aimed at critical minerals and hydrogen production. While these sectors may seem distant from typical small business activities, any small business involved in supply chains linked to these industries can benefit indirectly. For instance, if you’re a supplier or contractor in related fields, these incentives could trickle down to you.

    Cost-of-Living Relief and Energy Bill Assistance

    Energy Bill Relief

    Energy costs can be a significant burden for small businesses. The budget includes a $3.5 billion extension and expansion of the Energy Bill Relief Fund over the next three years. Eligible small businesses will receive a rebate of $325 on their electricity bill over the next financial year, in quarterly instalments. This measure aims to alleviate some of the financial pressures associated with rising energy costs.

    Rent Assistance

    The government is increasing the maximum rates of Commonwealth Rent Assistance by 10 per cent, with a $1.9 billion investment over five years. While this initiative primarily targets households, any small business will find the increased disposable income among customers can lead to more spending power, potentially boosting sales.

    Superannuation Changes

    Paid Parental Leave

    Starting 1 July 2025, superannuation will be paid on Government-funded Paid Parental Leave. This change ensures that employees’ superannuation balances continue to grow even when they take parental leave, which is especially beneficial for female employees who are more likely to take extended leave. For small businesses, this can improve employee satisfaction and retention.

    Compliance and Support

    The government is allocating $60 million over four years to support practical activities for employer and worker representatives related to Payday Super. Additionally, $20.5 million over four years will be provided to help small business employers comply with recent changes to workplace laws. These measures aim to simplify compliance and ensure that small businesses can meet their obligations without undue stress.

    Support for Small Business Employers

    Workplace Relations

    $111.8 million over four years (and $12.4 million per year ongoing) will be provided to progress the government’s workplace relations agenda. This funding will help streamline processes and reduce the administrative burden on small business owners.

    Anti-Money Laundering and Counter-Terrorism Financing Act

    $168 million over four years will be invested to strengthen Australia’s Anti-Money Laundering and Counter-Terrorism Financing Act 2006. If your small business deals with significant financial transactions or operates in a high-risk sector, staying compliant with these regulations will be crucial.

    Investments in Infrastructure and Technology

    Regional Community Infrastructure

    The budget allocates $101 million to upgrade regional airports and connecting infrastructure. For small businesses in regional areas, improved infrastructure can mean better access to markets, resources, and customers. It’s a step towards levelling the playing field between metropolitan and regional businesses.

    Clean Energy and Quantum Computing

    The government is unlocking more than $65 billion of investment in renewable capacity and clean energy technologies. Small businesses in the renewable energy sector or those looking to transition to greener practices can benefit from these investments. Furthermore, the budget includes building the world’s first commercial-scale quantum computer, which can open new avenues for innovation and growth in tech-driven small businesses.

    Health and Social Support

    Medicare and Aged Care

    $2.8 billion will be invested in strengthening Medicare, including addressing health system pressures and improving access to medicines and mental health support. Additionally, $2.2 billion is allocated for aged care reforms. These measures ensure that your employees have access to better healthcare, contributing to their overall well-being and productivity.

    Support for Women and Vulnerable Groups

    The budget outlines financial assistance for victim-survivors leaving violent partners, and $2.4 billion will be invested over five years in priority areas including jobs, health, education, justice, housing, and essential services. These initiatives aim to create a more inclusive and supportive environment, which can positively impact your workforce and community.

    Practical Steps for Small Business Owners

    Understanding the federal budget is one thing, but how can you practically apply this knowledge to your business? Here are some actionable steps:

    1. Review Your Asset Purchases: With the extension of the instant asset write-off, consider what new equipment or technology your business needs. Investing now can lead to immediate tax benefits.
    2. Monitor Energy Costs: Ensure you’re eligible for the energy bill rebate and adjust your budgets accordingly. Every bit of savings helps.
    3. Stay Compliant: Keep up to date with changes in superannuation and workplace laws. Use the allocated support to ensure you’re meeting all legal requirements without unnecessary stress.
    4. Explore Grants and Incentives: Look into government grants and incentives for clean energy projects. Small investments in sustainability can lead to long-term savings and customer goodwill.
    5. Engage with Community Initiatives: Participate in regional infrastructure projects and community support programs. Building a strong local network can provide new opportunities and support.

    Conclusion

    The 2024-25 Federal Budget presents a wealth of opportunities and support mechanisms for small business owners. From tax incentives to cost-of-living relief and investments in infrastructure and technology, the measures outlined aim to foster a more resilient and dynamic business environment.

    Remember, the key to leveraging these opportunities lies in understanding the specifics and taking timely action.

    For more detailed advice tailored to your business, talk to us now.

  • Proactive superannuation planning: what you need to be aware of before June 30

    As a small business owner, juggling multiple responsibilities is the norm. With June 30 fast approaching, understanding superannuation can save you a lot of headaches and potentially a lot of money. Let’s dive into the key aspects of superannuation you need to be aware of before the end of the financial year.

    Annual contribution limits for superannuation

    Concessional Contributions

    Concessional contributions are pre-tax contributions such as employer contributions and salary-sacrificed amounts. For the 2024 financial year, the concessional contribution cap stands at $27,500 per individual. This cap will increase to $30,000 from July 1, 2024.

    Key Points:

    • Employer Contribution Rate: Currently at 11% for the 2024 financial year, increasing to 11.5% from July 1, 2024.
    • Catch-Up Contributions: If your total superannuation balance is below $500,000, you can use up to five years’ worth of unused concessional contribution caps. This is particularly significant if you have caps from the 2019 financial year that expire soon.
    • Maximisation Methods: Consider salary sacrificing or making personal concessional contributions. Both methods can help you maximise your superannuation contributions before the end of the financial year.

    Non-Concessional Contributions

    Non-concessional contributions are after-tax contributions. The annual cap for these contributions is $110,000 for the 2024 financial year, increasing to $120,000 from July 1, 2024.

    Important Considerations:

    • Individuals aged 75 and over generally cannot make non-concessional contributions unless they are mandated contributions.
    • If your total superannuation balance is $1.9 million or higher, you are not permitted to make non-concessional contributions.

    Contribution strategies prior to June 30, 2024

    For Employers

    Ensure that all superannuation guarantee contributions for your employees are made before June 30 to qualify for a tax deduction in this financial year.

    For Individuals

    If you’re planning to claim a tax deduction for personal superannuation contributions, you must lodge an “Intent to Claim a Superannuation Deduction” form with your super fund and receive an acknowledgment back from them.

    Superannuation Guarantee changes

    Starting from July 1, 2024, the superannuation guarantee contribution rate will increase from 11% to 11.5%. This means that from the next financial year onward, employers will need to contribute more to their employees’ superannuation funds.

    Minimum Pension requirements

    If you’re drawing a pension from your superannuation, make sure the minimum pension payment has been withdrawn for the financial year before June 30. Failing to do so could mean that your pension is deemed to have stopped, which could have significant implications.

    Non-arm’s length income and expenses

    Be mindful of any non-arm’s length income and expenses, as they can attract a higher tax rate. Ensure all transactions involving your superannuation fund are conducted at market value to avoid penalties.

    Safe harbour interest rate rises for related-party LRBA loans

    If your superannuation fund has a limited recourse borrowing arrangement (LRBA) with a related party, note that safe harbour interest rates have risen. It’s crucial to update the terms of your loan to ensure compliance with ATO guidelines.

    Reduced GST input credits for advice fees in Superannuation

    Effective from the new financial year, GST input credits for certain advice fees in superannuation will be reduced. Plan accordingly to manage your expenses and tax liabilities.

    Final Tips and Actionable Advice

    Review and adjust contributions

    Take a close look at your current contributions and make any necessary adjustments to maximise your tax benefits. Be proactive in planning your contributions for the next financial year as well.

    Keep an eye on changes

    Stay updated on legislative changes affecting superannuation. The rules can change frequently, and being aware of these changes can help you make informed decisions.

    Consult with professionals

    Seek advice from financial advisors or accountants specialised in superannuation to ensure you’re making the most of your contributions and complying with all regulations.

    Don’t delay

    Procrastination can cost you. Make any necessary contributions and adjustments well before the June 30 deadline to avoid any last-minute stress or errors.

    Superannuation is a vital component of financial planning for both individuals and businesses. Understanding the various contribution limits, strategies, and regulatory changes can help you optimise your superannuation before June 30. By staying informed and proactive, you can ensure your superannuation strategy aligns with your financial goals.

    The end of the financial year is a critical time for superannuation planning, so don’t wait – start now!

     

  • The Power of Financial Models

    Financial models are invaluable tools designed to help you understand and project the financial health of your business. By simulating different scenarios and examining potential outcomes based on various inputs like sales growth, margins, and cash flow, these models provide a comprehensive picture that aids in informed decision-making.

    Practical steps for leveraging financial models:

    1. Planning and forecasting

    Start by creating a base financial model incorporating your current financial data. Input variables such as projected sales, estimated expenses, and planned investments. This will allow you to forecast your financial performance across different scenarios. By simulating best-case, worst-case, and most likely scenarios, you’ll be better prepared to navigate potential challenges and seize opportunities.

    Action Tip: Use spreadsheet software or financial modelling tools to develop your initial model. Regularly update it as new data becomes available.

    2. Informed decision making

    Financial models serve as robust decision-support tools. They help you evaluate the financial implications of various choices, whether it’s setting pricing strategies, launching new projects, or considering investment opportunities.

    Action Tip: Before making substantial business decisions, use your financial model to conduct a cost-benefit analysis. This will aid in weighing the pros and cons and aligning decisions with your financial goals.

    3. Setting and achieving goals

    Establish clear, achievable financial goals based on your model’s insights. By tracking your progress against these goals, you can maintain a strategic focus on growth and profitability while identifying areas requiring improvement.

    Action Tip: Break down long-term goals into smaller, manageable milestones. Regularly review and adjust these goals in response to your actual performance and market conditions.

    4. Securing financing

    Presenting a detailed financial model can significantly enhance your credibility with lenders and investors. It demonstrates your understanding of your business’s financial position and showcases your preparation for future growth.

    Action Tip: When seeking financing, ensure your model includes comprehensive projections showing how the funds will be used and the expected return on investment.

    5. Monitoring performance

    Regularly comparing your actual financial performance with your model’s projections is essential. This practice helps in identifying deviations, assessing their causes, and making the necessary adjustments to keep your business on track.

    Action Tip: Set up regular financial reviews—monthly or quarterly—to compare projected versus actual performance. Use these reviews to refine your model and strategies continually.

    Summing up

    Incorporating financial modelling into your small business strategy is not just a best practice—it’s a necessity for sustainable growth and informed decision-making. By investing time in developing and maintaining accurate financial models, you set the stage for achieving greater efficiency, profitability, and long-term success.

    For detailed advice tailored to your business, talk to us now.

     

  • Budget Details 2024 – 15 May 2024

    Budget Details 2024 – 15 May 2024

    Welcome to our Weekly Digest – stay in the know with some recent news updates relevant to business and the economy.

    ATO flags 3 key focus areas for this tax time

    As ‘tax time’ approaches, the Australian Taxation Office (ATO) has announced it will be taking a close look at 3 common errors being made by taxpayers: Incorrectly claiming work-related expenses; inflating claims for rental properties; failing to include all income when lodging.

    Australians prioritise savings over splurging with impending stage 3 tax cut

    As Australia braces for an impending Stage 3 tax cut set to roll out on July 1, a significant portion of its citizens are opting for prudence over indulgence, according to a recent survey.

    Addressing Australia’s skills gap a national priority

    Addressing Australia’s growing skills gap must be a priority if the Federal Government is committed to boosting productivity, growing the economy and reclaiming our competitive edge, according to the Business Council.

    Australia Economic Outlook

    The global economy is recovering but inflation proves to be sticky. Domestically, the outlook remains positive but weaker growth is expected for 2024.

    Roy Morgan business confidence improves marginally in April

    There were mixed results in April with businesses growing more confident about the performance of the Australian economy over the next year, but less confident about the performance of the economy over the longer-term over the next five years.

    ATO expands data-matching program for crypto assets

    The ATO has advised in a recent notice that it will collect data from cryptocurrency designated service providers as part of a data-matching program to ensure taxpayers are meeting their tax and super obligations.

    Landlords warned over ‘double dipping’ on deductibles and other tax errors that could cost government $1.2 billion

    As Australia’s tax season rolls around again, the national tax office has a familiar group in its sights: landlords.  The Australian Tax Office (ATO) this week revealed Australians with rental properties were one of three groups under scrutiny, after findings that nine out of 10 landlords were making mistakes on their returns.

    Get in touch

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

    The Federal Budget has been released, this article addresses the key points of the budget. If you need assistance in understanding the budget please contact S & H Accountants, on 03 8759 5532 or you can email us on info@sahtax.com.au

     

  • Navigating financial metrics: Why the Current Ratio is key for your business

    Navigating financial metrics: Why the Current Ratio is key for your business

    Ever felt like the term “current ratio” sounds like something straight out of a high school mathematics class that you’d rather forget? You’re not alone. But here’s the thing – understanding the current ratio can be a game-changer for managing your business’s financial health. Here’s a simple breakdown.

    What is the Current Ratio?

    In the simplest terms, the current ratio measures your business’s ability to pay off its short-term obligations with its short-term assets. Think of it as a snapshot of your financial flexibility. A healthy current ratio means you’re sitting pretty and can easily handle upcoming bills and expenses. A lower ratio? It’s a heads-up that you might need to take a closer look at your finances.

    Inputs: the building blocks

    To calculate the current ratio, you’ll need to know two things: your current assets and your current liabilities.

    Current Assets might include:

    • Cash in the bank (Yes, that rainy day fund counts!)
    • Accounts receivable (Money owed to you by customers)
    • Inventory (All those products waiting to find their forever homes)
    • Other liquid assets (Anything else easily convertible to cash)

    Current Liabilities cover:

    • Accounts payable (Bills and expenses you need to pay)
    • Short-term debt (Loans that need to be paid back soon)
    • Other short-term obligations (Think taxes due, payroll, etc.)

    The formula (I promise it’s easy!)

    Ready for the magic formula? Here it is:

    Current Ratio = Current Assets / Current Liabilities

    An example to clear things up

    Imagine your business has $150,000 in current assets and $75,000 in current liabilities. Plug those numbers into our formula, and you get a current ratio of 2. This means you have twice as many assets as liabilities, which is fantastic! It shows potential investors and lenders that you’re in a solid position.

    Current Ratio vs. Quick Ratio

    Now, you might be wondering, “Isn’t this similar to the quick ratio?” Well spotted! While they’re siblings in the world of financial metrics, they’re not twins. The quick ratio is like the current ratio’s more conservative cousin, excluding inventory from assets since it’s not always quick to convert to cash. It gives you a stricter sense of your immediate financial health.

    Why does this matter to you? Knowing the difference helps you understand your liquidity from different angles, ensuring you’re not caught off guard.

    Wrapping it up

    There you have it! The current ratio isn’t so scary after all. Keeping an eye on this metric can help you to manage your business. A healthy current ratio varies by industry, but generally, a ratio between 1.5 and 3 is where you want to be.

    Armed with this knowledge, you’re better equipped to make informed decisions that keep your business thriving.

    Not sure if your current ratio is where it should be or how to improve it? We can offer insights and strategies tailored to your business’s unique needs – contact us now.

    Need help with your business, S & H Accountants can help you with that as we also offer business services. Our business services are offered to small businesses who may need help with services such as bookkeeping, or even business planning. Our team consists of well-qualified, vastly experienced and very professional individuals. Book an appointment today, call us on 03 8759 5532 or email us on info@sahtax.com.au

  • Record keeping for construction businesses

    Record keeping for construction businesses

    If you’re a contractor, it can be challenging to manage a hectic schedule and complex projects, all while ensuring your paperwork, documents, and contracts are in order. It’s important to keep a paper trail of your work and practice due diligence. Keeping all your working documents in order shows that you treat your business, customers, and subcontractors responsibly. This is not only a mark of professionalism but can also help you if you have an insurance or legal claim to deal with.

    Contractor paperwork documentation and procedures

    If you haven’t already, you should develop documentation and record keeping procedures that are appropriate for your contracting operation or service. Once procedures are in place, it’s equally important to ensure that everyone understands and follows the procedures. It’s good practice to hold a workshop on documentation procedures with your employees and have them sign off that they understand and have copies of the procedures.

    For construction jobs, some of the documents that may be obtained and maintained as part of your documentation procedure include:

    • Project tenders/estimates
    • Contracts or work orders
    • Duty to perform documents
    • Site inspection forms
    • Tests on work completed
    • Documentation for materials delivered to the site
    • Documentation of your risk services assessment
    • Certificates of insurance from your subcontractors

    Using Digital Tools and Software

    Implementing project management and documentation software can significantly reduce the time spent on paperwork. These tools can help in tracking project progress, managing invoices, and storing important documents securely in the cloud for easy access from any location. 

    There are many options on the market and it’s unlikely that a single piece of software will meet all of your project management needs. Companies usually combine a few applications to create a custom solution.

    This is why we recommend choosing project management tools that integrate nicely with the parts of your setup that don’t need changing.

    What to look for

    Real-time reporting capability

    Effective construction project management requires up-to-date information. Without this, you won’t be able to make important decisions unless you rely on guesswork, which isn’t a good way to do things.

    The best project management tools for the construction industry offer instant reporting.

    Accessibility

    Your data must be as accessible as possible. The best construction project management tools are cloud/web-based, which makes them accessible from virtually anywhere in the world.

    Good Support

    You’ll inevitably encounter hiccups when incorporating even the best construction project management tools. That’s why you should look for programs from companies with reliable customer support.

    Security

    Your data is very valuable and sensitive. Construction project management tools and techniques should reflect this. Before you incorporate any software into your workflow, research the company behind it, their terms of use, and what security measures they implement to keep your company’s data private.

    Construction project management tool checklist

    Here are questions to ask yourself once you’ve narrowed your options using the above criteria.

    • Does the software come with enough licences for my company?
    • Can I use the tool on multiple devices?
    • Does the software have several positive reviews?
    • Will the company demo its software for my company?
    • Can my current data be easily transferred to this new software?
    • Do partner companies use the same software or a program that integrates well with this one?

    The right construction project management tools can make a big difference to your company and its productivity.

    We hope this helps identify the best picks and what you must consider when evaluating them.

    Get in touch with us if you have any questions. 

    Need assistance with your small construction business, please contact S & H Accountants today! For an industry such as the construction, its important for those businesses to understand the strategies listed above are essential to their business. S & H Accountants offer tax services to not only individuals, but also businesses like construction businesses. We also offer bookkeeping services to our clients as well. Our team consists of well-qualified, vastly experienced and extremely professional. Our firm aims to provide our clients with the best level of service possible. Book an appointment today with S & H Accountants, call us on 03 8759 5532 or you can email us on info@sahtax.com.au

     

     

  • Navigating cash flow challenges

    Navigating cash flow challenges

    In the world of small businesses, positive cash flow is king. It’s the driving force that keeps your business engine running smoothly, covering all your liabilities. But what happens when outflow exceeds inflow? Cash flow problems ensue, threatening the survival and growth of your business.

    These cash flow problems can originate from a variety of sources including macroeconomic issues like recessions, natural disasters, and wars, as well as microeconomic issues like business decisions and performance. However, with careful planning and smart accounting practices, you can cushion or even avoid these financial blows.

    Let’s delve into some common cash flow issues and explore how you can manage them effectively.

    Problem: Lack of cash reserves

    If your business faces a drop in revenue, having enough cash reserves to cover up to six months of expenses can be a lifeline.

    Solution:

    Project your cash flow by estimating your sales, determining payment timelines, and estimating all expenses. Your accountant can help you create cash flow projections in your accounting software, so you know where you stand financially.

    Problem: Expensive borrowing

    High-interest credit cards and business loans can eat into your business’s revenue significantly.

    Solution:

    Consider supplier financing or refinancing loans to secure lower payments. Term loans with competitive rates can also help improve cash flow.

    Problem: Decreasing sales or profit margins

    Offering too many discounts or pricing your products and services too low can result in low profit margins.

    Solution:

    Create a short-term business survival plan and adjust your pricing strategy accordingly.

    Problem: Outstanding Receivables

    Late payments on invoices can tie up your money and affect your business’s cash position.

    Solution:

    Review payment terms, send invoices early, accept multiple payment methods, offer incentives for early payment, and as a last resort consider selling your debt through invoice factoring.

    Problem: Uncontrolled business growth

    During high-growth phases, cash flow shortfalls can occur when expenses exceed working capital.

    Solution:

    Slow down and get your finances in order. Implement new accounting measures for a clearer picture of your financial situation.

    Problem: Too much inventory or seasonal changes in demand

    Overstocking or underestimating seasonal demand fluctuations can lead to financial constraints.

    Solution:

    Use an inventory management system along with accurate sales forecasting to balance inventory and plan for seasonal changes.

    Problem: Inaccurate forecasting or bookkeeping practices

    As a business grows, cash management may become more complex, leading to forecasting errors.

    Solution:

    Hiring a professional accountant or bookkeeping service will help you to avoid accounting mistakes.

    Final thoughts

    By addressing these common cash flow problems, you can protect the health of your business. Other tactics to improve cash flow include reducing and negotiating your expenses, creating a short-term survival plan, considering borrowing options, and choosing a suitable payment setup for your business.

    Cash flow problems may seem overwhelming, but they are manageable with the right tools and insights. S & H Accountants do not only offer just taxation services, but we also aid businesses in their day-to-day operations; such as bookkeeping or ASIC correspondence. We can advise you on comprehensive solutions to suit your specific situation, empowering you to make informed decisions and manage your finances effectively. Our team consists of well-qualified, vastly experienced and extremely professional. Contact us today on 03 8759 5532 or you can email us on info@sahtax.com.au.

  • Changes to NFP Self-Review Return

    Changes to NFP Self-Review Return

    Changes made to NFP Self-Review Return

    The ATO has made recent changes to the NFP Return. Non-charitable and Non-For-Profit entities who have an active ABN must now lodge an annual self-review return, in order to self-assess their eligibility for tax exemption. These changes will imply to the financial year of 2023/2024. These changes were announced in 2021, however came into effect on the 1 July 2023. A registered agent is also able to lodge the self-review return for their clients.

    https://www.ato.gov.au/businesses-and-organisations/not-for-profit-organisations/statements-and-returns/in-detail/reporting-requirements-to-self-assess-income-tax-exemption/how-the-self-review-return-will-work

    The Self-Review Return

    The self review return will

    1. include questions which are provided now in the current self-review worksheets
    2. guide NFPs to consider their purpose and activities against specific eligibility requirements of an income tax exempt entity
    3. it will not have a lot of questions relating to the financial nature, however will as the NPF of their estimated income for the financial year.

    After the Entity has completed that, they will receive a notification summarising their self-review. After the first lodgment, the NFP will be able to confirm or even update their self-review return. If this is not done correctly, then there are penalties that will apply to the NFP.

    ATO publishes guide for NFP self-review returns

    If you need any assistance in lodging a Self-Review Return or have any questions about it please feel free to contact S & H Tax Accountants. We are a small firm based in Cranbourne as well as Cheltenham. We have an exceptional team, which consists of well-qualified, vastly experienced and extremely professional. Book a consultation today at S & H Accountants, call us at 03 8759 5532 or you can email us on info@sahtax.com.au.

     

  • The importance of budgeting, forecasting, and setting goals for your business

    The importance of budgeting, forecasting, and setting goals for your business

    If you’re like many business owners, you may find yourself struggling to understand what your finances mean or how you can use your financial information to make decisions for your business. Often we get into business because we love a product or service we want to provide. It’s not as common that we love managing the financial aspects of our business. 

    As a business owner, you have your best chances of success when you regularly set budgets, develop financial forecasts, and establish goals. Here’s what you need to know about all three activities. 

    They are invaluable tools for businesses

    Budgeting, forecasting, and goal setting are tools that help you manage your finances effectively. A budget is a plan for how you will spend money in the coming year. It’s also a way of setting goals, such as opening another store, expanding your product line, or hiring more employees. Forecasting helps you look at your finances in the short term to make sure they align with the long-term strategy of your business. Goals help you establish your financial priorities and set a plan for moving your business forward. 

    Why you need a budget

    A budget is a plan for how you will spend the money your business has. You can think of it as a roadmap that helps you reach all the goals and objectives in your business, including financial ones.

    By having a budget, you’ll be able to control cash flow. A budget will help ensure that your business stays on track with spending so you don’t pay out more than you’re bringing in. It also lets you know when you have enough money in your accounts to meet expenses such as payroll, taxes, and bills. If you don’t have enough money to cover your expenses, you can look at your budget and revise it, to free up additional money.

    Lastly, budgets allow you to understand how money flows into and out of your business, which makes it easier to meet your immediate financial needs while planning a sustainable future.

    Financial forecasting helps you determine where your business is headed 

    Forecasting is a great way to determine where your business is headed in terms of profit and loss. It helps you predict future cash flow, sales, expenses, and more.

    Financial forecasting can help you take control of your finances by enabling you to anticipate what might happen in the future and plan for it accordingly. This can help prevent overspending or under-budgeting during slow periods or high-demand seasons. Also, it allows you to provide accurate budget projections when seeking funding from banks or investors.

    Goals help you budget and forecast more effectively

    Your goals enable you to set a vision for your business and implement steps to achieve it. For example, if you know that you want to bring in 100 new customers in the next two months, you’ll need to explore whether your marketing budget can accommodate that, and adjust accordingly.
    If your goal is to hire additional staff you can look at your forecast to determine the best time to hire–and how long it will take you to build up the revenue to bring in new people. 

    Additionally, goals enable everyone on your team to know what you’re working towards, so they can feel engaged in the process and take ownership over progress. 

    Final thoughts

    Budgeting allows you to understand how money flows into and out of your business, which makes it easier to meet your immediate financial needs while planning a sustainable future. Forecasting encourages you to examine your records and anticipate the future, so you are prepared for fluctuations in your cash flow. Goal setting creates your vision for the future, so you can identify financial priorities.
    All three are important to building a sustainable and thriving business. If you’d like to learn more about how we can help you with your budgeting, forecasting, and goal setting, contact us today. 

    Starting a small business can be difficult, especially when it comes to the finance aspect, this is where S & H Accounting can help. We do not only offer taxation services but also help our clients to set up their business, such as apply for an ABN, register for GST as well as making the annual reports. Our team also consists of well-qualified, vastly experienced and extremely professional. We aim to provide the best level of service possible to all of our clients. Book an appointment today with S & H Accountants, call us on 03 8759 5532 or you can email us on info@sahtax.com.au.

  • Financial best practices for small business

    Financial best practices for small business

    When you run your small business, you have a lot on your plate. That makes it tempting to let some tasks slide, especially tasks that are related to finances, which can be challenging and is often outside your preferred skill set or experience.
    There are some tips you can follow that keep your finances healthy and enable you to thrive. Here are some financial best practices for managing your business, so you can have the best chances of success.

    Pay yourself

    As a small business owner you may be tempted to keep putting every cent you earn back into your small business, but it’s important to compensate yourself as well. You need to pay your own bills and be financially sound personally. You’ll also need to have money set aside for your retirement.
    Make sure you draw a regular income from your business that you use to take care of your personal expenses.

     Have a separate business bank account

    Keeping your business and personal finances together makes it more difficult to track how your business is doing, and how you’re doing. When you have separate bank accounts for your business and personal finances you can more easily monitor where and how you’re spending money. Finally, it makes things easier to track for tax purposes.
    Have separate accounts for your business and for your personal finances and deposit your salary (see the above tip) into your personal account. 

    Have a good billing strategy

    When you own a business you’ll deal with clients who are slow to pay their bills. Money your clients owe you isn’t accessible to you until it’s in your bank account. Monitor your invoicing system to see which clients pay you on time and who takes their time paying your invoices. If you have too much money tied up in unpaid invoices, you may need to adjust your payment policies.
    Consider charging interest on late payments or giving more strict terms. Or you could offer a slight discount if they pay within 10 days of invoicing. See if you can charge a deposit for your goods or services so you still have some cash flow while waiting for clients to pay the remainder.
    Remember to invoice immediately and follow up before the payment deadline, so you aren’t stuck waiting for payment. If your clients are large companies with their own payment terms, find out what those are and be mindful of them when billing. 

    Keep your receipts

    Now that there are digital platforms for managing the financial aspects of your business, you don’t have to have physical receipts taking up space in your office. Instead, you can go paperless, and keep all your receipts digitally.
    Make sure you know the laws in your area for how long you have to hold onto receipts, pay stubs and other financial documents and keep them for at least that long. If you do still use paper receipts, make sure you have a way of storing them so they’re easy to manage and find when you need them. 

    Have a budget

    Your budget is your plan for success. It shows how much money you expect to bring in and how much you might spend in a given period. You can anticipate times when your profits may be higher and times when you may have a surge in your expenses. Additionally, bankers, investors, and other stakeholders may ask for a budget when they consider financing your business.

    Final thoughts

    There are other strategies that can help you run your business and set yourself up for financial success. Those include automating your bill payments, having a cash flow statement, and choosing the right business structure for you. But as a place to start, creating a budget, keeping your receipts, adjusting your billing strategy and drawing a salary that you keep in a separate bank account are important first steps.
    Want to learn more about how we can help you stay on top of your finances? Contact us to learn more. 

    Starting of a new business can be difficult, however the tips listed above are extremely beneficial. If you do need assistance in starting off your business, then please contact S & H Accountants. We offer business services, such as registering the business, registering the name and all of the important services needed for a business to be set up. We also offer bookkeeping services, that assist a business in maintaining and organizing their finances. Our team includes well-qualified, vastly experienced and extremely professional, we always aim to provide our clients with the best level of services possible. Book an appointment today with S & H Accountants, call us on 03 8759 5532 or you can email us on info@sahtax.com.au.

  • Business Update – 31 January 2024

    Getting caught up on a week that got away? Here’s your weekly digest of some stories relevant to business and the economy.

    Data Privacy Day 2024: Aussies want transparency, businesses need action

    On Data Privacy Day, observed each year on January 28th, Australians and businesses are reminded of the vital importance of privacy. “Ironically, Data Privacy Day is a reminder that data privacy isn’t something a business can achieve in a single day at all”, says Pete Murray, Managing Director ANZ at Veritas Technologies.

    Consumer stress grows, but cost of living concerns begin to fall, survey finds

    Consumer stress has risen for the fifth straight quarter, but concerns over cost of living are beginning to decrease as inflation eases, a new report has revealed.

    Roy Morgan Business Confidence increased 5.3pts to 91.1 in December – after the RBA left interest rates unchanged at 4.35%

    In December 2023 Roy Morgan Business Confidence was 91.1 (up 5.3pts since November). The rebound in Business Confidence came after the RBA left interest rates unchanged at 4.35% in its final meeting for the year in early December. Business Confidence has now spent a record eleven consecutive months below the neutral level of 100, the longest stretch in negative territory in the history of the index dating back over a decade to 2010..

    Stage-three tax cuts: how the Albanese government’s changes will affect you

    Federal cabinet has approved an overhaul of the Morrison government’s scheme. See how much you will receive under the new packages.

    Inflation expectations and economic literacy

    The Reserve Bank of Australia (RBA) bulletin reveals a correlation between economic literacy and inflation expectations. The level of community awareness and understanding of basic economic issues can influence a central bank’s ability to achieve its goals, such as by anchoring the public’s inflation expectations in line with its inflation target.

    Top-performing superannuation funds revealed

    Superannuation fund members received a solid boost to their retirement savings in 2023, despite a challenging economic backdrop.

    Double-digit decrease in int’l airfares; which routes saw the biggest drops across each cabin?

    In positive news for international travel, outbound airfares from Australia have taken a nosedive across all cabins, new data from Flight Centre’s corporate division has revealed.

    Get in touch

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

  • How do I adapt my small business strategy in the midst of a cost of living crisis?

    How do I adapt my small business strategy in the midst of a cost of living crisis?

    So, we’re officially in the thick of a cost of living crisis. This presents a challenge for entrepreneurs and is a nerve-wracking time for many small business owners.

    If you’ve had sleepless nights worrying about how you’re going to pay your suppliers or support your staff, you’re not alone. It’s likely you’ve already looked at where you can cut costs, but it seems like an impossible task when suppliers are raising their own prices. 

    But, don’t despair just yet! There are strategies to stretch your dollar further, and they’re not always about trimming expenses.

    Regularly review your costs

    Knowing exactly where and when money is coming out of your business, is the first step to seeing where you can save costs. You could be paying for services you don’t even use, or simply aren’t worthwhile.

    Check your statements with a fine-tooth comb

    By going over your accounts in detail, you might find payments coming out that you had forgotten about, e.g. for subscription services you no longer use. Even if it only saves a tiny amount each month, these costs add up over time and the cash could be better spent elsewhere.

    Take it one step further and ask yourself if the products or services you pay for add value for your business.

    Be on the lookout for deals

    Once you’ve got a clear idea of your costs, work out whether your money is going as far as it can for the services you need. When was the last time you reviewed your providers? Can you negotiate a better rate? Could you get a better deal by going elsewhere? 

    If you’re a single-person business, you also might be able to get better rates. Many software companies have much cheaper individual plans, so it’s worth double-checking you’re taking advantage of your one-man-band status.

    Look at ways to bring more money into your business

    We’ve explored the topic of outgoing expenses, but there’s another approach to enhancing your cash flow – bolstering your sales and generating more revenue, a strategy with a longer-term impact.

    Amp up your marketing efforts

    It might seem counterintuitive to spend more when you’re looking to save, but investing in marketing can yield profitable results in terms of increased sales. There will be short-term costs, but in the long run, effective marketing can substantially contribute to a positive cash flow.

    Manage your receivables effectively

    Nobody enjoys chasing after debts, yet doing so can significantly boost your business, especially in challenging times. Here are some ways to streamline the process:

    • Adopt direct debit systems like GoGardless for invoice collection.
    • Enable invoice reminders via your accounting software.
    • Consider asking clients for an upfront deposit or partial payment.

    Make any cut backs strategically

    Resist the urge to indiscriminately slash expenses. Cutting back in the wrong areas might hinder your business’ growth. Make it a priority to retain your staff, exploring other areas to trim costs or increase revenue instead.

    Reevaluate your pricing

    If sales volume is a challenge, consider adjusting your pricing strategy. As inflation rises and suppliers hike prices, it’s crucial to respond accordingly or risk bearing the brunt of the impact.

    Keep an eye on external influences

    You can’t control everything about your business. Stay aware of external factors that might impact the way buyers behave..

    Understand your customers

    During uncertain times, empathy goes a long way. Understanding your customers’ fears and concerns can inform strategies to drive sales. Depending on their situation, you might be able to offer more services or adjust prices without adverse reactions.

    Monitor your competitors

    Do you know how competing businesses are coping with the cost of living crisis? Can you see what kind of strategy they’ve adopted?  Understanding their strategies can provide insights about your place in the market and potential customer perceptions.

    Use the situation to your advantage

    There’s a silver lining in every cloud. Reduced sales? Use this time to review and streamline your business processes. Examine the reasons for changing sales patterns and adapt accordingly.

    Rely on the data

    Making decisions based on solid data is more important than ever. Use actual business data to create your strategies, not assumptions.  Don’t create a strategy based on what you think is happening, but on what is actually happening.

    As the saying goes, “the numbers don’t lie”. Before making decisions, know your numbers!

    In an unstable economic and consumer landscape, your data remains a reliable constant. Accurate, in-depth financial data is crucial to making informed business decisions.

    Working closely with your accountant is a game changer

    A good accountant can provide the right solutions at the right time. Their expertise on your business can be instrumental in improving its financial health. They can help interpret the numbers, understand the situation, and guide your future steps. S & H Accountants are always here to assist, we have well-qualified, vastly experienced and are extremely professional. We always aim to provide our clients with the best level of services possible. Book an appointment today with S & H Accountants, call us at 03 8759 5532 or you can email us at info@sahtax.com.au

    For further support through the cost of living crisis and beyond, feel free to contact us. We’re here to assist!

     

     

  • Budgeting and cash flow forecasting: key to your business success

    Budgeting and cash flow forecasting: key to your business success

    In the unpredictable world of business, finding a little certainty can make all the difference. While the future remains a mystery, tools such as budgeting and cash flow forecasting can significantly reduce the level of uncertainty, allowing you to anticipate challenges, learn from past events, and enhance your ability to navigate your business.

    Budget vs. Cash Flow: the crucial distinction

    A common misconception is that a budget and cash flow are interchangeable. In reality, a budget is a projection of future possibilities, enabling you to consider various sales and expense scenarios. On the other hand, a cash flow provides a record of actual expenses and sales revenue that flow into and out of your business each month. Although they often deal with the same data, their applications differ. You might budget $1,000/month for online costs, whereas in the cash flow, you’d record the actual amount spent. Despite their distinct uses, cash flow and budgeting are often maintained on the same spreadsheet or similar accounting software for ease of use and comparison.

    The advantages of budgeting and cash flow forecasting

    The benefits of incorporating budgeting and cash flow forecasting in your business are numerous. They help predict and manage potential cash surpluses or shortages, plan for tax obligations, time new equipment purchases, determine when to buy in bulk, and even identify when you might need a small business loan or a line of credit.

    One particularly useful feature is the ability to track expenses and highlight any unusual cost increases or decreases. This allows you to take prompt action to address the issue. Additionally, these tools can help monitor sales levels and flag any underperforming areas of your business.

    Practical tips for effective budgeting

    Preparing an annual budget requires sufficient time – allocate at least two or three months for this process. Update your budget each month based on the actual cash flow. Keep in mind that the sales forecast is often the hardest part to get right. If you’re new to business, examine separate forecasts for different products or geographical areas and note any seasonal patterns in your business and industry.

    Sensitivity analysis: a proactive approach

    A sensitivity analysis, often referred to as ‘what if’ scenarios, can help you understand how different outcomes affect business performance. This analysis allows you to review the effects of changes in your revenue or costs. For example, if one customer contributes thirty percent of your turnover, what would happen if they stopped buying from you?

    The power of regular updates

    Regularly comparing your actual expenditure against your budget enhances your ability to predict future costs accurately. It’s good practice to review and update your budget and cash flow forecasts at least once a month, or more frequently if your business environment is changing quickly.

    Budgeting and cash flow forecasting are powerful management tools that can guide your business decisions. However, their value lies in their regular review and updating, ensuring their figures remain current and reflective of your business’s financial health.

    Contact us now for help with budgeting and cash flow for your business.

    Budgeting and Cash Forecasting are two very important aspects of a businesses financial position, thus it is important for every business to understand the effectiveness of these two concepts. S & H Tax Accountants offer the service of a business consultation, as we also do all taxation services whether it be for a company, sole trader or even a trust. Our team of accountants are committed and driven to help you to achieve your business outcomes. Book an appointment today with S & H Tax Accountants, call us on 03 8759 5532 or email us on info@sahtax.com.au.