S & H Tax Accountants

Tag: Accountant Cranbourne

  • ATO Deductions: What Individuals, Businesses, and Trusts Can Claim

    ATO Deductions: What Individuals, Businesses, and Trusts Can Claim

    When completing an Australian tax return, one of the most important considerations is identifying which expenses are deductible. The Australian Taxation Office (ATO) provides clear guidance on what individuals, businesses, and trusts can claim. Knowing the right deductions not only ensures compliance but can also reduce your taxable income and maximise your refund.

    1. Deductions for Individuals

    Individuals can claim deductions for work-related and personal investment expenses. To be deductible, the expense must:

    • Be directly related to earning income,

    • Not be private or domestic in nature, and

    • Be substantiated with records (e.g., receipts, logbooks).

    Common deductions include:

    • Work-related expenses: Uniforms, protective clothing, tools, union fees, professional memberships, and training courses.

    • Vehicle and travel expenses: Car expenses when using your own vehicle for work purposes (excluding commuting to and from work), and travel costs for work-related purposes.

    • Home office expenses: If you work from home, deductions may include a portion of electricity, internet, phone, and office equipment depreciation.

    • Self-education expenses: Courses or seminars directly related to your current job.

    • Investment-related expenses: Interest on loans for investment properties, management fees, and certain financial advice costs.

     

    2. Deductions for Businesses

    Businesses, whether sole traders, partnerships, or companies, can claim deductions for expenses that are directly connected to generating assessable income.

    Common business deductions include:

    • Operating expenses: Rent, utilities, insurance, advertising, and accounting fees.

    • Employee costs: Wages, superannuation contributions, training, and fringe benefits.

    • Business assets and depreciation: Instant asset write-off (subject to thresholds and eligibility), or claiming depreciation over time.

    • Motor vehicle expenses: Fuel, servicing, registration, and lease costs for business use.

    • Travel expenses: Airfares, accommodation, and meals incurred during business-related travel.

    • Interest and finance costs: Interest on business loans and overdrafts.

    • Bad debts: Debts that cannot be recovered from customers.

    3. Deductions for Trusts

    Trusts, as separate taxable entities, can also claim deductions for expenses incurred in earning income.

    Typical deductions for trusts include:

    • Management and administration costs: Trustee fees, accounting, and legal costs related to managing the trust.

    • Business expenses: If the trust carries on a business, deductions similar to those available for companies (e.g., rent, wages, and operating costs) can be claimed.

    • Investment expenses: Interest on loans used for investment purposes, portfolio management fees, and related costs.

    • Depreciation of assets: Assets held by the trust can be depreciated according to ATO rules.

    • Distributions: While not a deduction itself, trusts can distribute income to beneficiaries, effectively shifting the tax liability to them.

    Are you confused on what expenses you can claim and what you can’t. Contact S & H Tax Accountants, we are always here to assist you. We have a wonderful team of well-qualified, very professional and vastly experienced individuals. Our priority is always our clients, therefore book an appointment with us today! Call us on 03 8759 5532 or you can email us on info@sahtax.com.au

  • How the 2024–25 Financial Year Has Come to an End

    How the 2024–25 Financial Year Has Come to an End

    Reflecting on the Key Themes and What’s Next for Australian Taxpayers

    As of 30 June 2025, the 2024–25 financial year has officially come to an end. For individuals, businesses, and tax professionals alike, this date marks more than just a page on the calendar — it’s a critical turning point for financial reporting, compliance, and planning.

    Here’s a look at how this financial year has wrapped up and what lies ahead:

    Key Themes of 2024–25

    1. Cost-of-Living Relief and Tax Changes

    A major feature of the year was the government’s continued focus on cost-of-living pressures. With inflation gradually easing but still impacting households, the Australian Government introduced targeted relief measures. The revised Stage 3 tax cuts took effect from 1 July 2024, offering middle-income earners a modest tax reduction. This has played a role in adjusting tax planning strategies across the board.

    2. Superannuation and Retirement Planning Updates

    There were also important changes to superannuation. The Superannuation Guarantee (SG) rate increased to 11.5%, and more attention was placed on boosting retirement savings through concessional and non-concessional contribution caps. Many Australians took advantage of downsizer contributions, especially as property market activity remained strong in some regions.

    3. New Compliance Measures

    The ATO ramped up its focus on data-matching and tax avoidance, particularly in areas such as cryptocurrency, rental income reporting, and contractor payments. Many businesses faced extra scrutiny under the Taxable Payments Annual Reporting (TPAR) regime, and Director IDs became mandatory for new company directors.

    4. Small Business Support and Instant Asset Write-Off

    This year saw the temporary extension of the $20,000 instant asset write-off for small businesses with aggregated turnover below $10 million. Many SMEs used this incentive to invest in tools, equipment, and technology to support productivity and growth.

    End-of-Year Considerations

    With the end of the financial year, individuals and businesses should now turn their focus to:

    • Finalising income and expenses: Ensuring all deductions, receipts, and income streams are accounted for, particularly for rental properties, investments, and sole traders.

    • Superannuation top-ups: Checking if contribution caps were fully utilised before 30 June.

    • Lodgement obligations: Individual tax returns are due from 1 July 2025, with deadlines varying depending on whether you lodge yourself or via a registered tax agent.

    • Trust distributions: Trustees should ensure resolutions were prepared before year-end to distribute trust income effectively.

    Looking Ahead: 2025–26 and Beyond

    As we move into the new financial year, it’s an ideal time to reassess your financial goals, review budgets, and prepare for any upcoming changes in tax law or policy. With the next federal election on the horizon, economic and tax reform debates are expected to gain momentum.

    Whether you’re an individual taxpayer, a small business owner, or an investor, seeking proactive advice can make a significant difference in the year ahead.

    Need Support?
    If you need help preparing your tax return, finalising business reports, or planning for the year ahead, now is the perfect time to speak with a qualified accountant. S & H Accountants can assist you in taxation obligations, as we prioritise your growth and progress. Our team consists of well-qualified, vastly experienced and very professional individuals. Book an appointment today, call us on 03 8759 5532 or you can email us on info@sahtax.com.au.

  • Understanding The Australian Taxation Office

    Understanding The Australian Taxation Office

    Understanding the Australian Taxation Office (ATO)

    The Australian Taxation Office (ATO) is the principal government agency responsible for overseeing and administering Australia’s taxation system. As a key component of the Australian Government, the ATO plays a crucial role in ensuring compliance with tax laws, managing the country’s tax revenue, and enforcing fiscal policies. In this article, we’ll explore the ATO’s responsibilities, functions, structure, and its importance to the Australian economy.

    1. The Role and Functions of the ATO

    The ATO is responsible for a broad range of duties, with the primary focus being the collection of taxes, enforcement of tax laws, and ensuring fairness in the taxation system. Some of its key functions include:

    • Tax Collection: The ATO ensures that individuals and businesses pay their taxes in accordance with Australian law. This includes income tax, goods and services tax (GST), company tax, and other forms of federal taxation.
    • Taxpayer Support and Education: The ATO helps taxpayers understand their obligations by providing guidance, tools, and resources. This includes maintaining tax guides, offering online services, and delivering educational programs for businesses, individuals, and tax professionals.
    • Compliance and Enforcement: The ATO monitors tax compliance, investigates suspected tax fraud, and takes enforcement actions against individuals or entities found to be evading taxes or breaching tax laws.
    • Superannuation Regulation: The ATO manages and enforces superannuation (retirement savings) regulations, ensuring that employers meet their obligations to contribute to employees’ super funds.
    • Customs and Excise: The ATO oversees customs and excise duties, ensuring that imports and exports comply with Australian laws and regulations.
    • Reporting and Data Collection: The ATO collects and analyzes financial data from individuals and businesses to inform government policy, monitor economic trends, and improve tax collection efficiency.

    2. Structure of the ATO

    The ATO is a department of the Australian Government, and its operations are overseen by the Treasury. The ATO’s administrative structure consists of several key divisions, each focusing on specific aspects of taxation:

    • Individual and Small Business Taxation: This division manages personal income tax returns, GST for small businesses, and other taxation issues affecting individuals and small enterprises.
    • Large Business and International Taxation: This unit deals with multinational corporations, large enterprises, and cross-border tax issues, ensuring compliance with international tax treaties and laws.
    • Superannuation: The superannuation division ensures that super contributions are made by employers and that employees’ retirement savings are correctly managed and reported.
    • Compliance and Enforcement: The compliance and enforcement team investigates and audits tax fraud, non-compliance, and evasion activities, imposing penalties where necessary.
    • Public Affairs and Education: This division manages communications with the public, educates taxpayers, and provides resources to ensure compliance with tax laws.

    At the head of the ATO is the Commissioner of Taxation, who is responsible for the overall direction and strategic leadership of the agency. The Commissioner is supported by a team of deputy commissioners and other senior executives who manage the day-to-day operations.

    3. ATO’s Role in the Australian Economy

    The ATO is integral to Australia’s economy for several reasons:

    • Revenue Collection: The taxes collected by the ATO fund essential government services, including healthcare, education, defense, infrastructure, and welfare programs. In 2023, the ATO collected over $500 billion in revenue, making it a key source of funding for the Australian Government.
    • Economic Stability: By ensuring that taxpayers comply with tax laws, the ATO helps maintain the stability and integrity of the Australian economy. Tax revenue is used to finance public services and social security programs that benefit all Australians.
    • Policy Implementation: The ATO assists in the implementation of fiscal policies. For example, it helps enforce tax cuts, rebates, and stimulus packages introduced by the government to stimulate economic growth or address financial crises.
    • Fostering Trust and Fairness: The ATO’s role is also to maintain public confidence in the tax system by promoting transparency, fairness, and equity. It works to ensure that businesses and individuals pay their fair share, helping to prevent tax evasion and creating a level playing field.

    4. Technological Innovations in Tax Administration

    Over the years, the ATO has embraced technology to improve the efficiency and accuracy of tax administration. Some of the innovations include:

    • Online Services: The ATO offers a wide range of online tools for individuals and businesses. This includes the myTax system for lodging individual tax returns, and the Business Portal for managing business taxes and superannuation contributions.
    • Single Touch Payroll (STP): STP is an initiative that requires employers to report their employees’ wages, tax, and superannuation information to the ATO in real time. This innovation reduces administrative burdens on businesses and helps ensure accurate reporting.
    • Data Matching: The ATO uses advanced data analytics and artificial intelligence to cross-check financial information from multiple sources (such as banks, employers, and other government departments) to detect discrepancies and improve compliance.
    • Digital IDs: The ATO is increasingly relying on digital identity verification systems, allowing taxpayers to securely interact with the ATO’s services online.

    5. Dealing with Non-Compliance and Tax Evasion

    Tax evasion and non-compliance are significant challenges for the ATO. The agency employs a range of tools to detect and deter fraudulent behavior, including:

    • Audits and Investigations: The ATO regularly conducts audits on individuals, businesses, and multinational corporations to ensure that they are complying with tax laws. The agency has a dedicated audit team that investigates discrepancies and undertakes forensic accounting.
    • Penalties and Sanctions: Those found to be evading taxes may face severe financial penalties, interest on unpaid taxes, and in some cases, criminal prosecution.
    • Publicising High-Profile Cases: To discourage tax evasion, the ATO often publicizes cases where individuals or businesses have been caught cheating the system. These stories serve as a warning to others about the potential consequences of tax fraud.

    6. Conclusion

    The Australian Taxation Office (ATO) is a fundamental institution in Australia, ensuring the smooth operation of the country’s taxation system and contributing to the nation’s economic wellbeing. With responsibilities ranging from tax collection to enforcement, taxpayer education, and superannuation regulation, the ATO plays a vital role in supporting the government’s economic policies and public service funding.

    As the Australian economy continues to evolve, the ATO is leveraging new technologies to enhance its services, improve compliance, and provide greater transparency. In a country where the tax system is crucial for the functioning of public services, the ATO’s role is more important than ever in ensuring that Australia remains a fair and prosperous society.

    Don’t understand your tax obligations, contact S & H Tax Accountants. We have a very well qualified, vastly experienced and extremely professional team who always prioritise your growth. Book an appointment today, call us on 03 8759 5532 or email us on info@sahtax.com.au

  • NDIS PLAN MANAGEMENT

    NDIS PLAN MANAGEMENT

    Understanding NDIS Plan Management: A Guide to Maximising Your Supports

    The National Disability Insurance Scheme (NDIS) is Australia’s leading disability support program, designed to help individuals with disabilities live more independent and fulfilling lives. One of the key features of the NDIS is the flexibility it offers in how participants manage their funding and access the supports they need. For many, understanding the different ways to manage an NDIS plan is crucial to ensuring that the full potential of the scheme is realised. This article explores NDIS Plan Management—what it is, how it works, and how it can benefit NDIS participants.

     

    What is NDIS Plan Management?

    Plan management refers to the way in which NDIS funding is administered and the supports are accessed by participants. Under the NDIS, there are three primary ways to manage your plan:

    1. Self-management: You take full responsibility for managing your NDIS funds and engage with service providers directly.
    2. Agency management: The NDIS agency (NDIA) manages your plan, and service providers are paid directly by the NDIA.
    3. Plan management: A third-party provider (a Plan Manager) helps you manage your NDIS funds. This is a middle ground between self-management and agency management, offering greater flexibility without the full responsibility of self-management.

     

    How Does NDIS Plan Management Work?

    When you choose plan management, a registered Plan Manager is appointed to help you manage your funding. The role of the Plan Manager is to support you with:

    • Financial Administration: The Plan Manager handles all the invoicing, payments, and budget tracking. They ensure that your service providers are paid promptly, helping you stay on top of your NDIS budget and reducing administrative burden.
    • Budgeting and Reporting: Your Plan Manager provides you with regular updates on how much of your NDIS budget you have spent and what remains. This ensures that you can track your expenses and adjust your spending to avoid running out of funds before the end of the plan.
    • Accessing Providers: While you still choose your service providers, your Plan Manager can help you identify appropriate providers, negotiate prices, and ensure that they meet the requirements of the NDIS. They also handle the processing of claims to ensure that providers are paid correctly.
    • Support and Guidance: Plan managers often offer advice on how best to use your NDIS funding, navigate the NDIS system, and explore all available options for support. 

    Conclusion

    NDIS Plan Management offers an ideal balance of flexibility and support for many participants. It simplifies the administrative and financial side of accessing disability services while allowing you to maintain control over your supports and budget. By choosing a registered Plan Manager, you can ensure that your NDIS plan runs smoothly, making it easier to focus on achieving your goals and living an independent life. If you need assistance with NDIS Plan management then please contact S & H Tax accountants, you can book in appointment with us, call us on 03 8759 5532 or you can send us an email 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.

     

     

  • 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.

     

  • 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

     

  • 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

  • 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

     

     

  • 6 Essential Accounting Terms for Small Businesses

    6 Essential Accounting Terms for Small Businesses

    Hiring an accountant is widely considered best practice for small business owners.  But delegating financial analysis and reporting doesn’t mean completely checking out of the process each month or quarter. On the contrary, it’s recommended that business owners work closely with their accountants throughout the year to better understand their financial position, and make smart plans for future growth.

    Want to increase your accounting knowledge so you can have more informed, insightful discussions with your account this quarter?

    Start right now, with this list of 6 essential accounting terms for small business owners.

    1. Cash Flow

    Do you have more cash flowing into your business each month than you pay out to cover costs and expenses? If so, your accountant will conclude that you’re “cash flow positive.” If the opposite is true, your cash flow statement will reveal that you’re “cash flow negative.”

    Having excess cash on hand means you’re better equipped to keep up with debt, cover unforeseen expenses, and invest in growth opportunities. Your accountant will generate a cash flow statement each quarter to keep tabs on this key performance indicator.

    1. Profit and Loss Statement

    The profit and loss statement (also known as the income statement) is one of the most important documents used by accountants to determine the profitability of your business.

    The P&L statement lists revenues and gains as well as expenses and losses over a specific period of time (typically every three months for small businesses). It calculates your all important “bottom line” so you know if you’re operating at a loss or turning a profit.

    1. Gross vs Net Profit

    Gross profit is what remains when you subtract the cost of goods sold (COGS) from your total revenue. Net profit, on the other hand, drills deeper. It reveals your exact dollar per profit of sales after subtracting all operating expenses, including COGS, taxes, interest paid on debt, etc.

    Gross and net profit are both profitability ratios. They are key for measuring business performance against an industry benchmark and your competitors.

    1. Balance Sheet

    The balance sheet offers a snapshot of your overall financial position at a particular moment in time. It lists the assets (such as cash, inventory, accounts receivable, and equipment); liabilities (like accounts payable, income tax, and employee salaries); and shareholder capital.  In a nutshell, the balance sheet shows what you own, as well as what you owe.

    1. Accounts Receivable & Accounts Payable

    Simply put, accounts receivable is money your business is owed by customers for goods or services sold. It is considered an asset on your balance sheet. Conversely, accounts payable is money you owe suppliers and any bills you have yet to pay, so it’s listed as a liability on your balance sheet.

    1. Bad Debt Expenses

    Bad debt happens when you can’t collect payment from your customers. Long term outstanding accounts receivable could be listed on your balance sheet as “bad debts”, and if they’re never collected, may have to be written off as a loss.

    And there you have it – six key terms to help you build your accounting vocabulary, join the conversation, and empower smarter decision-making.

    Terms such as Bad debt expenses or even the balance sheet can be daunting to small businesses. That is why it is advised that small businesses hire an accountant. S & H Tax Accountants are well known for their services as we have experienced and well-qualified tax accountants. We aim to ensure that our clients are able to reach the best outcome and thus will go well and beyond to assist your clients. If you would like to make a booking with S & H Tax accountants, you can call us 03 8759 or 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!

     

    Handling a business can be difficult, as there so many aspects to it. It is clear that many businesses generally do not enjoy the task of bookkeeping, as it can be tedious at times. S & H Tax Accountants are here to help, our team is well-qualified and rather experienced. We aim to provide our clients with the best level of service possible, as we offer bookkeeping services and all other tax services as well. To book an appointment now, you can call us at 03 8759 5532 or email us at info@sahtax.com.au

  • Adapting your small business to a slower economy – tips and advice

    Adapting your small business to a slower economy – tips and advice

    It’s hard to go a day without reading something in the news about the state of the economy. Whether it’s interest rates rising or the cost of living, there’s no getting around the fact that in 2023 there are many doing it tougher than a few years ago. But while there are some economic challenges for individuals and businesses, it’s important to not go too far down the rabbit hole. Remember – economic conditions are forever changing, and one thing history tells us is that things can change at any point.

    If you’re concerned about the economy’s impact on your business or have already experienced its effects, read on. In this article, we’ll explore ways to adapt and improve your business during slowdowns, so that when the market bounces back, your business can emerge stronger.

    Take the time to really understand your market conditions

    The news can often overwhelm us with negativity. While it’s crucial to stay informed, consuming every opinion piece and social media commentary can lead to a negative mindset. Instead, focus on your own business and industry to identify the real challenges you’re facing. Research might even uncover some opportunities too.

    Consider the following:

    • Have there been changes in your industry or customer behaviour?
    • Can you identify any new, untapped opportunities?
    • Are there any emerging trends that you can take advantage of?

    Understanding your business’ position in the market and identifying opportunities to differentiate from competitors is crucial. It guides your marketing budget allocation and shapes your products/services.

    A chance to improve for efficiency

    If your business is experiencing a slowdown and you have some extra time, it’s a great opportunity to work on improving your business. Many business owners find it challenging to make improvement initiatives a priority over customer or administrative tasks, but now you can focus on executing those long-standing plans. These activities can make your operations more efficient, and this will be even more beneficial once things pick up again.

    Documenting processes

    Capturing your business processes is a valuable way to improve efficiency. Documenting procedures and creating visual aids can help onboard new team members faster and safeguard against knowledge loss. It’s essential to protect your business from the risk of key personnel leaving.

    Automation

    AI and automation are changing everything. Explore how these technologies are used in your industry to streamline tasks like data entry, reporting, and inventory management.

    Update old systems

    Migrating from one system to another can be complex and time-consuming. Businesses often stick with legacy systems for longer than necessary. But new tools can speed up daily tasks, benefitting long-term business growth. These new tools are good for business long term.

    Exploring different revenue streams

    Consider exploring additional offerings if there is a decline in demand for your core services or products.

    Service related businesses

    Consider your team’s existing knowledge. Can you broaden your work to capture more customers? For example, if you’re a builder who completes new builds, think about how you can communicate your skills for property maintenance, custom carpentry, outdoor living spaces, or project consulting. Your skills and industry knowledge can be used in various ways – just take some time to think about it.

    Product related businesses

    Consider expanding your product offerings to include items that align with your brand and are cost-effective to source. This can help diversify your revenue streams, keep your brand current, and provide marketing opportunities through email campaigns.

    Nurture customer relationships

    Focus on your existing loyal customers as a top priority, as their satisfaction is key to maintaining a successful business. While acquiring new customers is important, remember that the cost of acquiring them is often higher than retaining the ones you already have. In today’s digital age, providing great customer experiences is crucial, as online testimonials and recommendations greatly influence potential customers. Take advantage of any quiet periods to add spontaneous value to your loyal customers, whether it’s offering advice, checking in on their satisfaction, or surprising them with something free. Going the extra mile for your customers and thinking beyond transactions will earn you their trust and respect, resulting in positive word-of-mouth and referrals that can significantly impact your long-term success.

    Expanding B2B opportunities

    Consider if your business, focused on serving end users, could also extend its offering to cater to other businesses. This can provide a consistent revenue stream with less time and management compared to direct consumer engagements. Assess whether pricing for businesses could be lower than for consumers. Estimate potential revenue against reduced margin. If the numbers align, explore this opportunity while maintaining your core business.

    Keep track of your finances and budget

    Regularly reviewing your finances is crucial to improving your business’s health. During quieter periods, you have the opportunity to implement cost-saving practices that can have a lasting impact. For example, consider reviewing your suppliers for cheaper options to save time and money. Conducting a comprehensive expense review can unlock savings without significant disruption.

    Understand natural business cycles

    Keep calm and avoid making hasty decisions based on short-term events. While it can be difficult to ignore the constant commentary on the economy, it’s in your business’s best interest to rely on concrete facts and data when making decisions. Having a long-term business plan serves as a reference point for guiding your choices.

     

    If you need help balancing short-term actions with long-term goals, reach out to our team for advice.

    S & H Accountants understand that it can be difficult for small businesses to have the ability to easily adapt to various changes in the economy. However, S & H Accountants offer services to businesses which assists them in their day to day activities, this may include the document recording or even the use of accounting software. Our team consists of well-qualified, vastly experienced and extremely professional accountants. We always aim to provide the best possible level of services to our clients. Make a booking today with S & H Accounting, call us on 03 8759 5532 or you can email us on info@sahtax.com.au

     

  • 6 Essential Accounting Terms for Small Businesses

    6 Essential Accounting Terms for Small Businesses

    Hiring an accountant is widely considered best practice for small business owners.  But delegating financial analysis and reporting doesn’t mean completely checking out of the process each month or quarter. On the contrary, it’s recommended that business owners work closely with their accountants throughout the year to better understand their financial position, and make smart plans for future growth.

    Want to increase your accounting knowledge so you can have more informed, insightful discussions with your account this quarter?

    Start right now, with this list of 6 essential accounting terms for small business owners.

    1. Cash Flow

    Do you have more cash flowing into your business each month than you pay out to cover costs and expenses? If so, your accountant will conclude that you’re “cash flow positive.” If the opposite is true, your cash flow statement will reveal that you’re “cash flow negative.”

    Having excess cash on hand means you’re better equipped to keep up with debt, cover unforeseen expenses, and invest in growth opportunities. Your accountant will generate a cash flow statement each quarter to keep tabs on this key performance indicator.

    1. Profit and Loss Statement

    The profit and loss statement (also known as the income statement) is one of the most important documents used by accountants to determine the profitability of your business.

    The P&L statement lists revenues and gains as well as expenses and losses over a specific period of time (typically every three months for small businesses). It calculates your all important “bottom line” so you know if you’re operating at a loss or turning a profit.

    1. Gross vs Net Profit

    Gross profit is what remains when you subtract the cost of goods sold (COGS) from your total revenue. Net profit, on the other hand, drills deeper. It reveals your exact dollar per profit of sales after subtracting all operating expenses, including COGS, taxes, interest paid on debt, etc.

    Gross and net profit are both profitability ratios. They are key for measuring business performance against an industry benchmark and your competitors.

    1. Balance Sheet

    The balance sheet offers a snapshot of your overall financial position at a particular moment in time. It lists the assets (such as cash, inventory, accounts receivable, and equipment); liabilities (like accounts payable, income tax, and employee salaries); and shareholder capital.  In a nutshell, the balance sheet shows what you own, as well as what you owe.

    1. Accounts Receivable & Accounts Payable

    Simply put, accounts receivable is money your business is owed by customers for goods or services sold. It is considered an asset on your balance sheet. Conversely, accounts payable is money you owe suppliers and any bills you have yet to pay, so it’s listed as a liability on your balance sheet.

    1. Bad Debt Expenses

    Bad debt happens when you can’t collect payment from your customers. Long term outstanding accounts receivable could be listed on your balance sheet as “bad debts”, and if they’re never collected, may have to be written off as a loss.

    And there you have it – six key terms to help you build your accounting vocabulary, join the conversation, and empower smarter decision-making.

     

    With the help of these 6 terms, a small business is able to identify their financial position. In order to help small businesses, S & H Tax Accounting are always ready. Our team of Accountants are one the most well-qualified and experienced accountants that you will ever meet. We aim to provide our clients with the best level of service possible, as we believe that your growth is our priority. To make a booking now contact us on info@sahtax.com.au or you can call us at 03 8759 5532.

  • Your End of Financial Year Checklist

    Your End of Financial Year Checklist

    The end of the tax year is right around the corner and though you may be dreading 30 June, there are things you can do to feel better prepared and make the most of your tax deductions. Because this year has been different for many people in terms of their employment situation, there are changes to tax reporting that may affect you.

    Here are some things to know about your income, deductions and home office expenses.

    1. Your income

    Generally speaking, your income is money you earn from your employer in salary or wages, or the income you earn as a self-employed person from your business. However, there are other items included in income that people often forget. When you file your taxes, be sure your reported income includes:

    • Employment income
    • Personal services income
    • Crowdfunding income
    • Sharing economy and tax income
    • Investment income
    • Government payments
    • Termination payments
    • Bank interest
    • Prizes and awards
    • Dividends
    • Income from rental property
    • Foreign income
    • Capital gains
    • Managed funds income
    • Discounted shares under employee share schemes

    2. Your deductions

    Deductions are typically the least understood area of taxes. People often get confused about what they can and cannot deduct, which can result in missing out on important tax breaks.

    To qualify as a deduction the expense must be directly related to earning your income; you must be able to prove the expense occurred, for example, with a receipt; and you cannot have been reimbursed by your employer for the expense. In the case of an expense that is both work and private, you can only claim a deduction for the portion that is related to work.

    Items that may count as deductions:

    • Vehicle expenses
    • Travel expenses
    • Clothing, laundry and dry-cleaning expenses
    • Self-education expenses
    • Home office expenses
    • Tools and equipment expenses
    • Overtime meals
    • Union fees
    • Client bad debts
    • Protective items, equipment and products
    • Income protection
    • Personal super contributions
    • Gifts and donations

    There are more items here that you may be able to claim as a deduction.

    3. Your home office expenses

    Even if you are an employee, if you work from home you may be able to claim deductions related to the cost of working from your home. These include items such as additional electrical, phone, and internet expenses.

    Among the things you can’t claim as deductions:

    • Anything your employer pays for or reimburses you for;
    • Any decline in value of items your employer provided;
    • General household items your employer provides at work (such as snacks);
    • Items related to your children and their education; and
    • Occupancy expenses such as rent and mortgage (employees typically can’t claim these).

     

    The Working from home expenses  can be claimed if you are working from home to fulfil your employment duties, if you also incur additional running expenses due to the fact that you work from home. In order to claim these expenses, it is essential to have records that show that these expenses incurred.

    The Car Expenses , in order to claim the deductions of your vehicle that you own or lease, you will need to calculate the expense, you can do so through the two methods; cents per kilometers or you can use the logbook method. For the logbook method, if you have been using the same logbook for the past 5 years, then you will need to add a line in the logbook, which will consist your odometer reading as at 30/06/2023. You will then need to complete the first page of the logbook that shows the start and the end of the period odometer reading.

    If you are working from home as an employee, you can use one of three methods for calculating your expenses.

    The Fixed Rate Method allows you to claim a deduction for additional running expenses for working from home. In this case, you can claim 67 cents for each hour you worked from home, but you must have a dedicated work area and keep records of time worked, either throughout the year or over a representative four-week period. The fixed rate method for calculating your deduction for working from home expenses has been revised. This revised method is available from 1 July 2022.

    The Actual cost method allows you to work out the deduction based on the actual costs incurred working from home. This includes electricity and gas, phone and internet, cleaning and consumables. The exact expenses you can deduct varies, depending on whether you have a dedicated work area.

    Final thoughts

    The end of financial year can feel overwhelming. However, with some information and organisation, it can be a lot less daunting. If you miss out on some deductions this year, make a note of them and keep track of them for next year. Consider speaking with an accountant so you can plan ahead and make the most of your deductions next year. We at S & H tax accountants can help to prepare and lodge tax returns.

  • Superannuation Guarantee Increase – 1 July 2023

    Superannuation Guarantee Increase – 1 July 2023

    For small business owners and payroll managers, staying up-to-date on the latest superannuation changes is essential. And, with the Australian Superannuation Guarantee (SG) set to increase from 10.5% to 11% from 1st July 2023, it’s important to understand what this means and how it could affect your business. As an employer, this increase, and subsequent increases, will have an impact on your payroll management and accounting systems.

    Here’s what you need to know about the SG increase.

    What is Changing with the Australian SG and When?

    Effective from 1st July 2023, the SG rate will increase to 11% of an employee’s OTE (Ordinary Time Earnings). This increase is part of a gradual, planned increase that will see the SG rate rise to 12% by 2025.

    Who Will be Affected by the SG Increase?

    All employers who pay their employees a wage or salary are required to make SG payments on their behalf. Therefore, all businesses employing staff in Australia will be affected by the SG increase.

    The extent to which your payroll management is affected will depend on how your employment contracts are structured, most commonly being a base salary plus Super or a total remuneration package that includes Super.

    What Can You Do to Prepare for the Australian SG Increase?

    If you’re a small business owner or payroll manager, it’s important to start preparing for the SG increase now. Key steps you can take include:

    • Reviewing your payroll systems and software to ensure they are set up correctly to calculate and apply the SG increase
    • Budgeting for the increased SG payments and adjusting your cash flow projections accordingly
    • Check your specific obligations on the ATO website

    The Australian Superannuation Guarantee increase is an important change that will impact all businesses employing staff in Australia.  We can help you understand your obligations and make sure you remain compliant so please get in touch if you need advice around this.

    The Australian Superannuation Guarantee will impact all businesses in Australia thus, S & H Tax Accountants are here to help you. We understand that with this new increase, there will need to be changes in the payroll system as well as being financially prepared for this increase. Book an Appointment today with S & H Tax Accountants, you can call us on 03 8759 5532 or you can email us at info@sahtax.com.au.

  • Mastering the basics: A guide to accounting principles for small business owners

    Mastering the basics: A guide to accounting principles for small business owners

    As a small business owner, you know that managing your finances is crucial to the success of your business. But with so many accounting principles and practices out there, it can be challenging to know where to start. That’s where we come in! In this guide, we’ll break down the essential accounting principles that every small business owner should know. We’ll discuss how these principles can help you keep track of financial transactions, create accurate financial statements, and make informed decisions for your business. So, let’s dive in, shall we?

    Why Are Accounting Principles Important for Small Businesses?

    Accounting principles are the foundation for any successful business. They provide a uniform framework for recording and reporting financial transactions, ensuring consistency and accuracy in your financial records. By adhering to these principles, you’ll be able to:

    • Make better financial decisions based on accurate and reliable data
    • Monitor your business’s performance and identify areas for improvement
    • Meet legal and regulatory requirements for financial reporting
    • Build trust with investors, lenders, and other stakeholders

    Let’s explore some of the key concepts you need to know.

    IFRS: International Financial Reporting Standards

    International Financial Reporting Standards (IRFS) – as the name implies – is an international standard developed by the International Accounting Standards Board (IASB).

     

    IFRS is used in more than 110 countries around the world and is a set of principles that help companies around the world show their financial information in a clear and consistent way. Think of it like a common language for money matters, so everyone can understand and compare how businesses are doing financially, no matter which country they’re from.

    Accrual Accounting vs. Cash Basis Accounting

    When it comes to accounting methods, there are two main options: accrual accounting and cash basis accounting.

    Accrual Accounting is the more widely accepted method, where you record transactions when they are earned or incurred, regardless of when cash changes hands. For example, if you invoice a client for services provided in December but don’t receive payment until January, you would record the revenue in December under accrual accounting.

    Cash Basis Accounting, on the other hand, records transactions when cash is received or paid. In the example above, you would record the revenue in January when the payment is received.

    Double-Entry Accounting: The Backbone of Financial Record-Keeping

    Double-entry accounting is a fundamental accounting principle that requires every transaction to be recorded in at least two accounts: one as a debit and one as a credit. This system ensures that your books are always balanced and makes it easier to detect errors or discrepancies in your financial records.

    Here’s a simple example: When you purchase inventory for your business, you would record the transaction as a debit to your inventory account and a credit to your cash account.

    By using double-entry accounting, you’ll have a clear and accurate picture of your business’s financial position, allowing you to make better financial decisions.

    Practical Examples and Case Studies

    To illustrate how these accounting principles can be applied in practice, let’s look at a few real-life examples:

    • Example 1: A local coffee shop owner uses accrual accounting to record sales and expenses. They track their daily sales and expenses, recording them as they are earned or incurred, rather than waiting for cash to change hands. This allows them to monitor their cash flow and make informed decisions about purchasing inventory, hiring staff, and investing in new equipment.
    • Example 2: A freelance graphic designer uses cash basis accounting for their business. They record income when they receive payments from clients and expenses when they pay for software, supplies, or other business costs. This simple approach helps them stay on top of their cash flow and ensures they have enough money to cover their expenses.

    Becoming knowledgeable in accounting principles has the power to transform the way you run your small business. A strong grasp on your financials enables you to make informed decisions and accelerate revenue growth.

    If you need assistance, we’re here to help.

    When choosing accounting methods, it is essential to choose the one that suits your business. As for small businesses, the cash-basis accounting method can be quite effective, however large businesses tend to use the accrual accounting method to manage their transactions. If your business needs assistance in deciding which accounting method would be more appropriate for them , please contact S & H Tax Accounting. Our team of accountants are well-qualified and rather experienced, we aim to provide the best service to our customers. Please book an appointment today, call us at 03 8759 5532 or you can email us at info@sahtax.com.au