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  • 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.

     

  • Understanding and improving working capital

    Understanding and improving working capital

    When it comes to running a thriving business, understanding and effectively managing your working capital is crucial. Essentially, working capital is the cash readily available for the day-to-day running of operations. The more protracted the business cycle, the higher the working capital requirement tends to be. Your goal? To ensure you have enough working capital on hand to cover operational expenses, with a reasonable buffer in place.

    How to improve your working capital

    Feeling anxious about your working capital? No worries! To improve it, let’s start by figuring out how much working capital your business actually needs. By using cash flow forecasting, you can proactively calculate when you might run out of cash and determine the minimum capital required to avoid that situation.

    Ways to reduce working capital needs

    The key to reducing your working capital needs revolves around cutting down on expenses. Here are some strategies to consider.

    • Limit large personal withdrawals.
    • Avoid buying major assets out of daily operating profits. Remember, there are other financing options available, such as leases or loans.
    • Refrain from overtrading, which can lead to increased overhead costs and delay customer payments.
    • Assess your inventory costs. Think twice before placing bulk orders, even if it comes with a discount.
    • Simplify payment collection. Explore mobile and online options to make it easier for customers to settle their bills.

    Shortening cash cycles

    Another effective strategy is to shorten your cash cycles.

    • Collect money quickly and efficiently.
    • Negotiate better terms with suppliers. Paying your bills faster than your customers are paying you can lead to an unnecessary increase in working capital.

    Forecast your cash flow and profit-and-loss

    Accurate cash flow forecasts can provide valuable insights into your working capital, allowing you to take proactive steps for improvement. Profit-and-loss forecasts, on the other hand, help assess future profitability, enabling you to make informed decisions about your working capital needs.

    Wrapping Up

    The goal is to lessen working capital concerns by understanding what it is, how much you need, and ways to improve it. Once these processes are in place, managing your working capital will become second nature, allowing you to focus on growing your business and boosting profitability.

    Remember, it’s always beneficial to consult with your accountant regarding your working capital needs and possible improvement strategies.

    We’re here to help – get in touch now.

    Making sure that you have effectively managing your working capital, can be a little confusing and stressful at times. That is why S & H Tax Accountants are here to help, we are one the best accounting firms in Cranbourne. S & H Tax Accountants offer business consultations to their clients. Our team of accountants aim to provide our clients with the best level of services to all of our clients. Our accountants are well-qualified and vastly experienced. Make a booking today at S & H Tax Accountants, call us at 03 8759 5532 or email us info@sahtax.com.au.

     

     

     

  • Essential bookkeeping practices for start-ups

    Essential bookkeeping practices for start-ups

    Starting a new business is exciting, but it also comes with its fair share of responsibilities. One of the most critical responsibilities is maintaining accurate records of your business transactions. From saving receipts to processing employee payroll, every money-related detail should be documented. It’s not just about keeping things tidy; it’s about understanding the financial health of your business and meeting all your tax obligations.

    Don’t underestimate the basics

    Some small businesses continue to rely on traditional systems, like pen, paper, and a trusty shoebox. Although it may seem outdated, this method can work well for businesses with very few transactions. These businesses might not have the latest payment technology, and could be invoicing customers or receiving immediate cash or cheque payments. In such cases, they would need to maintain a record of all receipts, past, present and future jobs, as well as a log of their customers and transactions.

    Of course, if you’re serious about your business, you might want to consider using a more accurate system.

    The power of spreadsheets

    In the digital age, spreadsheets offer a simple and effective way for start-ups to keep track of their financial activities. When you’re just starting or operating a part-time business with a limited budget, a spreadsheet can be a cost-effective alternative. As your business grows and becomes more complex, you can transition to specific accounting software.

    With a spreadsheet, you can set up a basic accounting system to track invoicing, perform calculations, and even set up a budget.

    Embrace accounting software

    For those more serious about their business, subscribing to accounting software might be the best option. Modern accounting software often links directly to your bank account, making it an efficient way to document all necessary transactions. It also reduces the risk of errors and offers features like generating professional invoices, tracking debts, and ensuring everything is entered accurately for your accountant at tax season.

    If you opt for a cloud-based solution, you’ll enjoy real-time access to your accounts, increased data security, and the flexibility to access your financial data anytime, anywhere.

    Stay on top of your cash flow

    Regardless of the accounting system you choose, a good system will enable better decision-making based on real-time financial insights. Identifying cash flow trends can help drive your business growth by revealing your most profitable products and services, your biggest customers, your highest costs, and more. The ability to monitor these trends places you in a better position to improve your profits and spot potential areas of growth.

    Wrapping up

    As a start-up, your primary task is to evaluate your business needs and choose an accounting system that allows you to track your cash position accurately, keep precise records for tax purposes, and identify cash trends.

    Consulting with your accountant can be an invaluable first step. They can offer advice on the best system to use and ensure it’s compatible with their processes. Remember, your financial records are the lifeblood of your business, and keeping them in perfect order is integral to your success.

    Want to discuss what system will best suit your needs? Contact us now for advice.

    Bookkeeping is an essential part of a business, as it helps a business to stay organised especially when it tax season. S & H Accounting offers the service of bookkeeping. We understand that keeping a track of every purchase and sale can be tiring and stressful. Our team consists of amazing staff whom are vastly experienced and well-qualified. Wo aim to provide the best level of service possible to our clients, as our priority is your growth. Book an appointment today with S & H Tax Accountants, contact us on 03 8759 5532 or you email us info@sahtax.com.au

     

  • Differences between BAS and IAS

    Differences between BAS and IAS

    Running a business comes with a lot of financial responsibilities, and as a business owner, you’ve probably come across terms like BAS (Business Activity Statement) and IAS (Instalment Activity Statement). While they may sound similar, understanding the differences between these two statements is crucial for maintaining compliance and staying on top of your tax obligations. In this article, we’ll break down the nuances of both BAS and IAS and provide actionable advice to help you navigate through them with ease.

    So what is BAS?

    Let’s start by demystifying the BAS, shall we? The Business Activity Statement is a form that all Australian businesses use to report and pay their tax liabilities. It’s a summary of all the business taxes you have paid or will pay to the government in a specific period. It can include the following payments, if they apply to your business:

    • GST
    • Pay as you go (PAYG) income tax instalment
    • Pay as you go (PAYG) tax withheld
    • Fringe Benefits Tax (FBT) instalment
    • Luxury Car Tax (LCT
    • Wine Equalisation Tax (WET)
    • Fuel tax credits

    If your business is registered for GST, you’ll need to lodge a BAS. If your business turnover is less than $20 million, you can choose to lodge monthly or quarterly. If your turnover is more than $20 million, you must report monthly.

    BAS statements are issued by the ATO either monthly or quarterly. A form needs to be lodged with the ATO and payment made to the ATO by the due dates as follows.

    For monthly BAS: within 21 days of the end of the month on the form
    For quarterly BAS: as above for IAS

    Understanding IAS

    Now, let’s look at the Instalment Activity Statement (IAS). While the IAS may seem similar to the BAS, there are some key differences you should be aware of.

    The IAS is the simpler of the two forms and is only issued quarterly. It’s without GST and some other taxes. Businesses that are not registered for GST, and individuals who are required to pay Pay as You Go (PAYG) instalments or PAYG withholding (such as self-funded retirees), use this form to pay PAYG. The ATO will tell you what your GST instalment amount is and if applicable, what your PAYG instalment amount is.

    The instalment amounts will be payable as follows:

    IAS Key Dates

    • July – September Quarter is due 28 October
    • October – December Quarter is due  28 February
    • January – March Quarter is due 28 April
    • April – June Quarter is due 28 July

    How to Navigate BAS and IAS

    Understanding the differences between BAS and IAS is one thing, but knowing how to tackle them effectively is another. Here are some actionable tips to help you navigate through these statements with confidence:

    • Stay Organised: Maintain accurate records of your business’s financial transactions, including sales invoices, purchase receipts, and tax-related documents. This ensures that you have all the necessary information when it comes time to complete your BAS and IAS.
    • Use Online Accounting Software: Consider using accounting software to streamline the process of preparing and lodging your BAS and IAS. These tools can automate calculations, track your GST obligations, and generate accurate reports, saving you time and reducing the risk of errors.
    • Seek Professional Guidance: If you find the complexities of BAS and IAS overwhelming, don’t hesitate to seek help from a qualified BAS or Tax Agent who can lodge these form for you. They can provide personalised guidance, ensure compliance, and help you maximise your tax benefits.
    • Stay Informed: We keep up-to-date with the latest ATO guidelines and regulations related to BAS and IAS. The ATO website offers valuable resources and updates that can keep you informed about any changes that may affect your business.

    Wrapping Up

    Understanding the differences between BAS and IAS can help you run your business with less stress. And staying on top of your BAS and IAS requirements not only keeps you compliant but also sets a solid foundation for your business’s financial success.

    We’re here to help you navigate the world of business, BAS and IAS. If you have a question, please don’t hesitate to get in touch.

     

    These two statements are very important to businesses, as the BAS is the summary of all of the businesses taxes that you have paid in that specific time period, usually quarterly whereas the IAS does not have the GST tax and some other business taxes. If your business needs help in completing these forms, then please feel free to contact S & H Tax accounting. Our team consists of experienced and very well-qualified accountants, who always aim to provide you with the best level of service possible. Book a business consultation with S & H Accountants today, call us at 03 8759 5532 or email us at info@sahtax.com.au.

  • Unravelling the mystery of missing profits: A guide for new business owners

    Unravelling the mystery of missing profits: A guide for new business owners

    Starting a business is a wild ride with its fair share of ups and downs. One hurdle many new entrepreneurs encounter is the difference between the profits they expected and the hard cash available at the financial year-end. This guide aims to alleviate these concerns by shedding light on where your missing revenue might be hiding.

    Possible causes of missing profits

    There may be several reasons why your business has shown good performance throughout the year, yet there’s little cash to show for it in the end. Here are a few possible places your profits could be lurking:

    1. Unsettled debts: Some of your customers might have acquired your products or services without paying yet.
    2. Inventory: Your profits might be tied up in unsold stock or raw materials, especially if you buy in bulk.
    3. Asset acquisition: If you’ve purchased new assets like a work vehicle, these expenses are depreciated over several years and not all claimed in the year of purchase.
    4. Owner withdrawals: Balancing the amount of profit you withdraw from your business for personal use can be tricky.

    Navigating financial statements

    One of the key components to understanding your financial situation is your profit and loss statement. This document represents your business’s income and expenses over a given period, whether these transactions have been completed or not. This means that sales or purchases made on credit are included, which can create a disparity between your profit figures and actual cash on hand.

    Bridging the gap

    To bring your financial statements closer to your actual financial situation, regularly review your debtors. Vigilance in following up payment requests and taking action for late payments is essential. Additionally, using a cloud-based accounting system to track transactions in real time can aid in timely decision making.

    Dealing with creditors and debtors

    Businesses often have customers who pay on credit, as well as suppliers who offer credit for purchases. This can lead to a time lag between the record of transactions and the actual monetary exchange, increasing the figures in your ‘Sales’ and ‘Cost of Goods Sold’ (COGS) categories while your bank account remains stagnant.

    Understanding COGS

    COGS represents the direct costs involved in creating or acquiring the goods you sell to customers. This includes the initial inventory, purchases made during a specific period, and the inventory left at the end of that period. Other costs like freight, storage, and factory overheads could also be included.

    The role of reinvestment and owner withdrawals

    In a bid to expand their operations, businesses often reinvest their profits. This reinvestment could take the form of increased stock, debtors, or capital expenditure. On the other hand, excessive withdrawals by the business owners can restrict growth and deplete cash reserves. It’s essential to set sound budgets for each owner to prevent drawing too much profit.

    The Bottom Line

    If you’re facing a fiscal year-end with profits but no cash in hand to pay your taxes, don’t panic. Dig deep into your financials to uncover if your cash is tied up in extra stock, debtor accounts, or new assets. Managing a business is a journey, and understanding these financial intricacies will empower you to navigate it better.

    Contact us for a deep dive into your financials.

    Managing the financial aspect of a business can be one the most difficult parts of handling a business. However, S & H Tax Accountants offer services such as business advice. Our team understands that this requires a lot of effort, thus can cause a lot of stress for our clients, that is why we are here to help. We are known for our well-qualified, experienced and extremely dedicated staff, who aim to fulfil your needs to best possible level. Make a booking today with one our clients, call us at 03 8759 5532 or you can email us at info@sahtax.com.au

  • Decoding the language of financial ratios

    Decoding the language of financial ratios

    As a small business owner, you’re likely already wearing many hats. But the hat of a financial analyst might seem a little oversized, particularly if your background isn’t in finance or accounting. However, understanding financial ratios can be a game-changer for your business, helping you assess your business’s financial health and make informed decisions.

    Financial ratios: what are they?

    Think of financial ratios as a thermometer for your business’s financial health. These are calculations that compare one item in your financial statements to another. For instance, how much current assets you have compared to liabilities, or the percentage of each dollar of sales that remains after all expenses have been deducted.

    They reflect the financial relationships vital to your business operations.

    The power of financial ratios

    To harness the power of financial ratios, it’s important to understand the financial relationships they represent and the implications for your business. Unless you are well-versed in accounting principles, consider engaging an accountant or bookkeeper to help you interpret these ratios.

    The ratios that matter

    Let’s delve into some of the key financial ratios every small business owner should know:

    1. Current ratio: This ratio measures your business’s liquidity. A higher current ratio indicates efficient cash management and the ability to meet short-term obligations. If your current ratio is less than 1:1, it might be a signal that additional financing is needed to meet upcoming commitments.
    2. Return on equity ratio: This ratio offers insight into the returns your business is generating for its owners. It’s an efficiency indicator, showing how effectively your business uses its owners’ money.
    3. Gross profit margin: This ratio helps understand the relationship between your sales and cost of goods sold. A low gross profit margin could indicate weak product demand or need for better cost control.
    4. Net profit margin: It’s the percentage of each dollar of sales remaining after all expenses. It’s a critical indicator of your business’s expense management capabilities.
    5. Debt to equity ratio: This ratio compares the financing you’ve received from creditors to the amount invested by the owners. It highlights the balance between debt and equity in your business.

    The journey of understanding financial ratios might seem like traversing uncharted territories, but it’s a journey worth embarking on. Decoding the language of financial ratios can provide invaluable insights into your business’s financial health.

    If you’re feeling overwhelmed by the intricacies of financial ratios, don’t worry. We’re here to help!
    Feel free to contact us and leverage our expertise.

    These Financial Ratios help a business to understand their financial position and thus leads to better decisions to be made. S & H Tax Accountants are always here to help their clients with any of their business inquiries. Our Team consists of hardworking, extremely qualified and vastly experienced. We aim to make sure that all of our clients are provided with the best level of service. Make a booking at S & H Tax Accountants, call us at 03 8759 5532 or you can email us at info@sahtax.com.au

  • Avoid These 5 Costly Accounting Mistakes

    Avoid These 5 Costly Accounting Mistakes

    A Canadian bank recently surveyed over 500 small business owners about what they love and hate most about owning their own business.

    Unsurprisingly, flexibility and feeling in control ranked first in the “love” category. Meanwhile, almost 60% said bookkeeping was hands-down their most hated task.

    Most business owners understand that effective financial management is key to their success. But lack of knowledge, frustration, and even avoidance can add up to accounting mistakes that derail future growth.

    Protect your business and reduce your stress by avoiding these five costly accounting errors.

    Mixing personal and professional finances

    From day one, business owners should have a separate bank account in which to deposit their income and pay their business expenses.

    It’s also crucial to designate a business-only credit card. Come tax time, separate statements will make submitting claimable expenses quick and easy, while reducing the risk of a painful audit.

    Letting accounts receivable slide

    It’s frightening easy to lose track of which customers have paid you and which clients are late. Implement a strict policy and schedule for tracking accounts receivable and pursuing unpaid invoices.

    • ask customers to pay at the point of purchase or no more than 30 days later;
    • contact clients to confirm they have received your invoice and to agree on a payment date;
    • follow up immediately when payment dates are missed; and
    • keep accurate, up-to-date records of each client’s payment history.

    Investing in a cloud-based accounting solution can make AR a breeze by automating your monthly invoicing – and contacting late payers with a reminder email.

    Not using tech to track your expenses

    Tired of chasing down missing receipts and struggling to justify claims come tax time? There’s an app for that! Choose from numerous options, such as Receipt Bank, Shoeboxed or Expensify.

    Many of these apps generate expense reports that are easy to share, or sync automatically with accounting software.
    Neglecting to strategize for long-term growth

    Effective accounting means managing day-to-day finances while making provisions for future growth. Software and cloud-based solutions offer easy ways to track your financials, but they also generate reports and provide analytic tools SMB owners can use for future forecasting.

    Familiarize yourself with the reports your software can generate to track long-term trends, identify and mitigate risk, and discover new ways to increase profitability. Talk to your accountant about which reports and metrics are most important for your particular business and how to utilize them.

    Final tip: Don’t go it alone

    Small business owners are rarely trained accountants. Don’t try to manage your company’s finances all by yourself.

    Collaborate with a trusted professional, invest in quality IT solutions, and spend some time familiarizing yourself with relevant tools and trends.

    You’ll feel empowered, which is step one to forging a more love-filled relationship with small business accounting!

    Keeping a track of your finances, whether it be for a business or an individual. S & H Tax Accountants are always here to guide you along the way, we have an exceptional team that always aim to provide you with the best level of services possible. Our accountants are well-qualified, punctual and vastly experienced. To make a booking today, call us at 03 8759 5532 or you can email us ta info@sahtax.com.au

  • 5 essential steps to crafting a solid business plan

    5 essential steps to crafting a solid business plan

    Creating a robust business plan is crucial to the success of any startup. It not just provides a roadmap for your business, but also helps to attract potential investors.

    Here’s a practical guide to help you put together your business plan.

    • Gather Relevant Information

    Start by collecting all the necessary information about your business. This includes understanding who will run the business, who will advise you, and a thorough analysis of your industry, competition, and target market. Remember, more data is always better. Even if you don’t use all the data you collect, it’s helpful to have it at your disposal.

    • Crunch the Numbers

    Nothing validates your business idea better than concrete financial figures. Your financial plan should include your projected revenue, expenses, and profit or loss. These can be presented in the form of an income statement, a cash flow forecast, and a balance sheet.

    • Write the Body of the Plan

    Once you have your numbers, it’s time to delve into the strategy behind them. This is where you explain your business concept, market analysis, marketing strategies, operations, and management team. Each section should be addressed in detail, providing in-depth insights into your business.

    • Seek Feedback

    Sharing your draft business plan with industry experts and potential investors can provide invaluable feedback. You want these individuals to challenge your strategies, question your numbers, and put you on the spot. This will only make your business plan stronger.

    • Edit and Tighten

    Less is more when it comes to a business plan. After receiving feedback, take the time to revise and refine your document. Look for areas where you can tighten your thinking, clarify your intentions, or remove unnecessary sections.

    Creating a solid business plan requires thorough preparation, detailed financial analysis, and a meticulous review process. Remember to keep your business plan concise, focused, and visually appealing. Your business plan is a reflection of your business idea, and a well-crafted one can open doors to numerous opportunities.

    Need help with your business plan? Get in touch with us today

    Having a well thought out and concise plan can really help a business to succeed. As it was mentioned above that a business plan is combination of numbers and strategies, however we understand that it can be a little difficult to understand. S & H Tax Accountants is the firm that you need. Our team is known for their punctuality, experience and the level of service that we provide our customers. Book an appointment today call us on 03 8759 5532 or email us at info@sahtax.com.au.

  • Navigating financial pressure: a guide to asset liquidation for your business

    Navigating financial pressure: a guide to asset liquidation for your business

    Every business encounters financial challenges at one point or another. But when the going gets tough, just remember that you’re not without options. One practical strategy that can help you weather the storm is asset liquidation.

    Asset liquidation is a process of converting your business’s tangible or intangible assets into cash, providing you with the vital liquidity to bridge financial gaps until your business recuperates. However, this strategy demands careful planning and swift action. An accurate asset register aids in making informed decisions about what assets to sell off.

    Asset Liquidation: The four principal categories

    Broadly speaking, business assets that could be converted to cash fall under four categories:

    • Current Assets

    These include items that can be sold quickly for cash. If these assets aren’t essential to your operations, they can be used to cover immediate expenses, buying more time for recovery. Examples include accounts receivable, existing inventory, raw materials, manufacturing and packaging supplies, short-term investments, and offshore funds.

    • Fixed or Long-Term Assets

    Fixed assets are typically more costly and last for over a year. These can be streamlined and sold if they’re no longer required. If you own property, equipment or vehicles that are still needed, consider selling the asset for immediate cash flow and then leasing back.

    • Intangible Assets

    These are typically more challenging to value and sell due to their nature. They include intellectual property, goodwill, brand, and business ‘know-how’. While they are crucial to your business, selling them may be an option if the situation is critical.

    • Other Business Interests

    If parts of your business aren’t crucial to its core operations, they could be sold off without causing disruption. This includes underperforming divisions or non-core products or markets.

    A caution

    Remember that the liquidation value of an asset is typically below market value. Consider all options carefully before selling off valuable parts of your business. Always seek legal, financial, and business advice before making decisions that impact your long-term future.

    Your business has the resilience to weather financial storms. You just need the right strategies to navigate these challenging times.

    Consult with us if you’re unsure about the best course of action.

    When starting a business, it very important that the business owner has analyzed their financial position, such as their assets. S & H Tax Accountants offer business consultations. Our accountants are professional, well-qualified and vastly experienced, our team aims in providing our clients with the best level of service that we could possibly provide. S & H Tax Accountants believe that your business growth is our priority. To book an appointment with us today, call us at 03 8759 5532 or email us at info@sahtax.com.au

     

     

  • Tax Season Tips for Small Business Owners

    Tax Season Tips for Small Business Owners

    Preparing for tax season is really a year-round endeavor. Tip number one for SMB owners is to update financials on a monthly basis, using a streamlined software or cloud-based system.

    This way, come tax time, everything you need is all in one place. And well organized SMBs are better positioned to minimize their tax bill while avoiding penalties associated with missing or inaccurate information.

    Here are four more ways to take the stress out of tax time, and get the most out of your return.

    Know your credits & deductions

    Small businesses typically benefit from a wide range of tax credits. From special allowances for research and development, to programs that supplement wages for student employees and apprentices, knowing which credits apply to your business can save you a bundle on taxes.

    It’s also important for SMBs to be savvy about deductions. After all, you want to keep as much of your hard-earned revenue as possible. Often-overlooked items you may be able to deduct include:

    • Seminars, classes or conventions you attended to improve your professional skills;
    • Unused inventory that you’ve donated to charity (a good reason to consider donating your overstock, rather than paying for storage); and
    • Capital assets, such as office furniture, computers, and equipment.

    Speak to your accountant about the full range of available deductions you can plan for each tax year.

    Be careful about what you claim

    If you run your business out of your home, you may be able to claim a portion of expenditures like utilities, insurance, property tax, and rent. But you’ll need to keep good records, and all your receipts, to justify why you’ve allocated business costs to your home office.

    The same goes for home office computers and mobile phone expenses. Tax authorities will want to see how you’ve separated the personal and professional use of these assets when you claim them as work expenses.

    Want to claim drive-time as a work expense? Ensure you submit a log of your business-related mileage, so you can clearly demonstrate how your personal vehicle was used for professional purposes.

    Don’t miss the deadline!

    This should go without saying, but every year SMBs are hit with serious penalties for filing taxes late. Missing the deadline can have a range of negative repercussions, including:

    • Added interest to amounts owing, plus a late payment penalty;
    • Losing your claim to a refund;
    • Loss of credits toward retirement or disability benefits; and
    • Delay of loan approvals (lenders require a copy of your filed tax return in order to process your application).

    Seek expert advice well in advance

    A recent survey of small business owners found that a full quarter don’t understand their tax obligations. What’s more, 27% only speak to their accountant at the last minute, just before the filing deadline.

    Software has made it easier than ever for small business owners to file for themselves, but when it comes to thoroughness and accuracy, nothing can replace the expert advice of an accountant.

    Consult a professional well in advance, to ensure you’re getting the most out of your tax return, and that your documentation is complete. On the bright side, accounting fees are often tax deductible!

     

    When it comes to accounting it is very important to stay organised, especially when it is Tax time. S & H Tax Accountants offer our services to small businesses as well. We have well-qualified and very experienced accountants which aim to always provide you with the best level of services so that you are able fulfil your desired outcomes for your business. Book a consultation today with S & H Tax Accountants, call us on 03 8759 5532 or you can email us on info@sahtax.com.au.

     

  • The pros and cons of selling your business to an employee

    As a business owner, the thought of selling your company can be quite daunting. You’ve poured your heart and soul into building it, and it’s crucial the company continues to grow even after your departure. An attractive option is selling your business to your employees, those who know your business inside and out and have a vested interest in its success.

    The upside of employee acquisition

    Selling your business to your employees provides a seamless transition with minimal disruption. Employees already understand how the company operates and have established relationships with clients, suppliers, and investors. The transition is usually smooth, as there’s no need for extensive training or introduction to a new owner.

    Moreover, selling to an employee often means less hassle, saving you the time and effort required to bring an external buyer up to speed. You might also not need to stick around for as long as you would if you sold to someone outside the business, as the new owner won’t need as much training.

    The downside of employee acquisition

    Though selling to an employee can seem ideal, it does come with potential drawbacks. The sale price might be lower than what you might get on the open market, and there’s a possibility that the employee doesn’t have enough capital to seal the deal, meaning you might have to help fund the purchase.

    The selling process

    Selling to an employee generally follows a common path, involving various steps including agreeing on a sale price, having the business evaluated, establishing whether the employees can buy your business outright or if you need to finance part of the deal, and drafting a shareholder agreement to transfer ownership. It’s crucial to have each stage overseen by professionals to ensure everything is done correctly and legally.

    The Employee Stock Ownership Plan (ESOP) option

    Consider an Employee Stock Ownership Plan (ESOP) whereby you sell the business to all qualified employees instead of a single buyer. ESOPs can either be funded by the employees, or more commonly, by the seller. In either case, ownership of the company transfers to the employees, and you receive the sale price plus interest.

    Preparing your employee for leadership

    Once all the paperwork is complete, it’s time to start the transition process. The duration will depend on the level of experience and knowledge your employee possesses. If you’ve been mentoring them for an extended period, the transition will be smoother.

    Conclusion

    Selling your business to an employee is a viable way to ensure it continues to operate successfully. While you may not get the same price as selling on the open market, the advantages of a smooth transition and the knowledge that your business is in trusted hands often outweigh the potential financial differential.

    Contact us for some independent advice on this option.

    Selling your business to your employees can be an attractive decision to make for many employees, as there are many advantages such as there is not an necessary training that needs to be done before the transition as the employee would probably have the experience and knowledge. S & H Tax Accountants also offer the services of business advice, thus book an appointment with us today, call us on 03 8759 5532 or you can email us on info@sahtax.com.au.