S & H Tax Accountants

Tag: Bookkeeping Basics for Small Business Owners

Unlocking the secrets of small business cash flow

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

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

Let’s dive in!

1. Understand Your Cash Flow Cycle

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

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

2. Develop Accurate Financial Forecasts

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

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

3. Monitor Your Cash Flow Regularly

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

4. Maintain an Emergency Fund

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

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

5. Invoice Promptly and Efficiently

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

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

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

6. Encourage Early Payments

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

7. Keep Your Expenses in Check

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

8. Use Technology

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

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

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

The bottom line

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

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

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

11/04/2023
Using financial reconciliation to keep your business on track

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

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

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

What is financial reconciliation?

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

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

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

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

Types of financial reconciliation

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

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

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

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

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

Why you need financial reconciliation

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

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

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

How to conduct financial reconciliation

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

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

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

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

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

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

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

Final thoughts

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

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

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

27/03/2023
Avoiding bankruptcy: Top reasons it happens and ways to prevent it
Starting a business is not for the faint of heart. A certain level of stress comes with carrying the responsibility of ensuring your company’s success. If things go wrong, it all falls back on you. That said, the freedom and sense of accomplishment of running your own business make the challenges well worth it.

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

Poor cash flow

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

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

Insufficient initial funding

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

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

Difficult market conditions

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

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

Poor financial management

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

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

Lack of market research

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

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

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

Legal issues

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

How to avoid bankruptcy

While the reasons businesses end up going bankrupt may seem numerous, there are some specific things you can do to make sure it doesn’t happen to you, such as:
- Maintain accurate financial records and regularly review your business’s performance.
- Develop a solid business plan that includes realistic revenue and expense projections.
- Diversify your business’s revenue streams to reduce reliance on a single source of income.
- Stay current on industry trends and market changes.
- Reduce unnecessary expenses and manage costs effectively.
- Seek professional advice from accountants, lawyers, and business consultants when necessary.
- Build up an emergency fund to help your business weather tough times.
- Avoid taking on too much debt and manage what you already have effectively.
By taking these steps, you can reduce the risk of bankruptcy and increase the chances of long-term success.

Final thoughts

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

If you are thinking of starting a new business but may have some concerns in mind such as financial success please contact S & H Tax Accountants. We are a local Accounting Firm, that has achieved great success with out clients. We have wonderful and experienced staff members who are able to assist you in issues regarding Cash Flow, Initial funding or even Financial Management. Please contact us on 03 8759 5532 or email us on info@sahtax.com.au.
23/03/2023
Business Update – 22 March 2023

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

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

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

Relief as Credit Suisse and UBS strike a deal

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

High fares and reduced capacity hurting airline recovery

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

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

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

Recession-proof suburbs do exist

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

Adelaide gets the first mobile phone detection camera

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

Virgin Australia IPO dampened amid Credit Suisse collapse

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

Further losses are expected this week for shareholders

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

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

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

Get in touch

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

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

21/03/2023
Business Update – 8 March 2023

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

Inflation is still a concern as the economy slowly recovers

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

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

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

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

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

Demand for EVs is stronger than ever

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

Australian companies still shedding jobs as recession looms

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

Queensland is considering legislation to keep solar panels out of landfills

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

Affordable rent is becoming rarer and rarer

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

New super tax rules only affect the wealthiest Australians

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

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

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

Get in touch

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

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

15/03/2023
Return on investment vs cost: how to weigh them when making business purchases

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

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

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

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

Return on Investment Formula

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

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

Let’s see an example

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

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

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

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

Calculating the ROI of obtaining new equipment for this project

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

Expected Revenue = $2500

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

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

Net Profit = $2500 – $1600 = $900

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

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

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

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

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

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

Final thoughts

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

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

08/03/2023
6 tips to paying down your personal debt in 2023

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

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

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

1. Take stock of your debt

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

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

2. Identify which debt is costing you the most

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

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

3. Consider consolidating your debt

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

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

4. Set a budget and save

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

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

5. Adjust your credit card habits

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

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

6. Increase your income

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

Final thoughts

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

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

02/03/2023
Business Update – 22 February 2023

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

What to do if you can no longer afford your mortgage

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

Woolworths expands controversial surveillance tool

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

Changes coming to superannuation rules

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

Chinese airlines flying through Russia have an unfair advantage

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

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

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

Everyone’s scrambling to get on board with AI

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

Meta follows in the footsteps of Twitter

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

Bitcoin is booming, but why?

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

Get in touch

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

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

01/03/2023
Employee vs contractor – what you need to know

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

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

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

The simplest way to remember is:

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

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

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

There are six factors to consider:

1. Ability to subcontract or delegate

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

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

2. Basis of payment

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

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

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

3. Equipment, tools, and other assets

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

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

4. Commercial risks

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

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

5. Control over the work

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

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

6. Independence

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

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

Final thoughts

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

14/11/2022
Employee vs contractor – what you need to know in AU

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

When you have an employee, you must withhold PAYG tax, pay super, and report and pay fringe benefits. Contractors generally look after their own tax obligations. However, you may still have to pay super depending on the nature of their work.

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

The simplest way to remember is:

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

But how can you be sure that you’ve got an employee or a contractor on your hands?

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

There are six factors to consider:

1. Ability to subcontract or delegate

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

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

2. Basis of payment

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

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

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

3. Equipment, tools, and other assets

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

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

4. Commercial risks

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

A contractor does assume the commercial risk. They are responsible for fixing any mistakes on their own time. This extra work would fall under the umbrella of the terms set at the beginning of the project. Your business does not have to pay for any extra time taken or materials used. You only pay once the work is completed.

5. Control over the work

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

Contractors are not subject to the same rules. They decide the way the work is done, so long as it meets the obligations laid out in the contract.

6. Independence

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

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

Final thoughts

It can be confusing to make the determination between an employee and contractor, but it’s important that you do so in order to meet your tax obligations and play by the rules. The ATO has a great tool to help you determine the status of your workers. If you are also in need of understanding your tax obligations please contact S & H Tax Accountants, our team of accountants are well-qualified, vastly experienced and extremely professional. Book an appointment today with S & H Tax Accountants, call us on 03 8759 5532 or you can email us on info@sahtax.com.au

14/11/2022
When to raise your prices

It’s an inevitability in every business – you have to raise your prices to continue making a profit. There are many factors that go into deciding how much to charge, all of which are dynamic. The rising cost of goods, inflation, and a changing market are just a few reasons why any small business has to reevaluate its rates regularly to stay competitive (and to stay in business).

While it may seem like you just set your prices or recently adjusted them, this is a task that should be done once a year at minimum – preferably more. Read on for some signs your business is ready to charge more.

1. You have a loyal customer base

Once you’ve been in business for a while, it’s likely that you’ve built up a loyal base. People will return to you when they know they will get a quality product. They’re also more likely to return when they get to know you personally.

If your business has a lot of customers who bargain shop because you offer rock-bottom prices, choosing to raise your rates likely won’t go well. Wait until you’ve established a base of loyal customers who will be happily willing to pay more knowing they’ll get fantastic, personal service from you.

People buy from those they know, like, and trust, so once they get to know, like, and trust you, they’re likely to keep coming back. Build relationships to foster that customer base.

2. It’s been a while since you raised your rates

The rate of inflation is reason enough to raise your prices, otherwise you’re operating at a loss. Keep track of the rate of inflation each year and adjust accordingly. People generally understand raising prices in times of high inflation–even if they don’t like it–since every business on earth must either keep up, or accept the loss to their bottom line. It’s just good business sense.

For decades, the average rate of inflation has hovered somewhere around the 3% mark, with some years worse than others. If you’ve paid attention to the news lately, you’ll know that things are a little different in 2022. Take into account what’s going on in the bigger picture, and then adjust your rates accordingly to avoid absorbing the hit.

3. You’ve added value

This doesn’t necessarily mean that you’re offering more literal services for the same price. Value can also come in the form of increased experience or new skills. When you and your staff have added value to what they’re able to offer, that can and should be passed along to your customer base. People are almost always willing to pay more for a superior product or service.

4. Your competitors are charging more than you

Be sure to take a look around to see what your direct competitors are charging. As your business evolves and becomes better with time, check to make sure that you’re comparing yourself against other businesses of the same class.

If you don’t keep up with regular rate increases, you may be surprised to find that competitors you initially considered to be equal to you have raised their rates significantly. You will then find yourself in a position where you have to raise your rates significantly in one go just to keep up. Keep on track by regularly checking what they’re doing.

5. Your close rate is over 80%

Some people like hard and fast numbers, so this is a good rule of thumb. You want to aim for your close rate to be between 75-80%. If it’s lower than that, you likely have an issue with perceived value. If it’s higher than that, you’re probably overworked and also attracting mostly bargain hunters – not a true loyal customer base.

If everyone is saying yes to your prices, you probably aren’t charging enough.

Final Thoughts

There is a lot to consider when raising your rates, and you don’t want to do too much too fast. Make a point to reevaluate your rates every six months, and you’ll find that you can keep your customer base while also keeping up with the increased cost of doing business.

If you need advice, on how setting new prices may effect your accounts and how this would then effect your costs, please contact S & H Tax Accountants. We have qualified staff that can help you in the best possible way. Book a consultation with one of our accountants today, call us at 03 8759 5532 or emails us at info@sahtax.com.au.

12/09/2022
4 Reasons to Switch to Cloud-based Accounting

If you’ve been considering making the move to a cloud-based accounting system, you’re not alone. Cloud technology has impacted many business functions, including making managing financial aspects of your business easier and more efficient.

Cloud-based accounting moves your accounting from being hosted on your computer’s hard drive to an online platform. Cloud-based platforms like QuickBooks and Xero offer important features that save you time and money, freeing you up to focus on other important business activities.

Here are 4 reasons to switch to a cloud-based accounting system.

1. Efficient invoicing

If your business relies heavily on invoicing, an online accounting system like QuickBooks or Xero makes invoicing incredibly efficient. You can email invoices to clients directly through your software and track how long it’s been since the invoice went out.

Clients pay you through a link attached to the invoice, making the payment process easier for them, which increases the likelihood they’ll pay you sooner. If they pay through the system, your platform will mark the invoice as paid automatically. If their payment is late, the system alerts you.

Further, you can set up your software to send automatic reminders about late payments. Taxes are automatically calculated for you and you can set up recurring invoices and retainers to further automate your invoicing.

2. Paperless accounting

Managing your accounting through a cloud-based system enables you to move away from paper accounting. You don’t have to worry about where or how to store years of paperwork and files because everything is securely stored in the cloud. Likewise, you don’t have to go through boxes of files to find a receipt from two years ago, you can simply access the information through your computer.

It’s easy for you to share your records with your accountant, bookkeeper or anyone else who may need to collaborate on your finances. You don’t have to mail them physical copies of your financial transactions and statements, you can email them the information or give them access to your software.

3. Accessibility

With a cloud-based accounting system like QuickBooks or Xero, you don’t have to be in the office in front of your computer to access your financial information. You can see your ledgers and reports from anywhere, on any device. If you want to work from home one day, you can log in to your software from your smartphone if you want, to send invoices, check your reports, or manage expenses.

4. Accurate reporting

An important component of running your own business is reporting. Accurate reporting enables you to better manage your finances and understand your profitability. It’s vital for making informed decisions about your business.

Cloud accounting provides you with accurate reporting at the click of a button. Using systems like QuickBooks or Xero you can easily access profitability reports, income and expense reports and year-end reports.

The information is available to you automatically–you don’t have to spend hours in front of a calculator going through every invoice to see your numbers. Simply by keeping your records in a cloud-based system, you can easily generate accurate reports.

Final thoughts

If you’re hosting your accounting information on your computer hard drive, it’s worth looking into cloud-based accounting to see if you can benefit from the switch. Given the ease of invoicing and accurate record keeping, combined with the accessibility of a paperless system, you may find cloud-based accounting software is the right system for you.

S & H Tax Accountants pride themselves in being efficient when it comes to our administrative skills or our accounting skills. However, we understand that not everyone is able to use these types of software, therefore S & H Tax Accountants are here to assist you. As well as all taxation services, we also provide bookkeeping services. Book in a consultation today with one of our accountants, email us at info@sahtax.com.au or you can call us at 03 8759 5532.

02/07/2022
Efficient business systems really pay off
Too many businesses fall over because the owner has not established efficient business systems. This typically happens because the business owner is so caught up in the day-to day running of the business that the fundamentals of good business management get forgotten. Often too it must be said that the owner simply doesn’t like bookkeeping or other administrative tasks, so these get put on the back burner.

The symptoms are familiar, and their results disastrous:
- Poor or non-existent record-keeping.
- Tax obligations are not met.
- Invoices go out late and debts remain uncollected.
- There is one cashflow crisis after another.
- Goods and services are incorrectly costed and priced.
Any of these factors can lead the business down the slippery path to failure, but all are avoidable. The whole point about putting in good systems is that they free you to spend more time working ON your business, not in it. Here are some tips on good business housekeeping.

Be business-like

To be in business and to remain in business, become a business person! In order to run a business, you must be business-like. It’s not sufficient just to be very good at what you do. Lots of people who are ‘very good at what they do’ have failed. The common cry: “I’m far too busy for that” is also no excuse. Are you ‘too busy’ to be a competent businessperson? If so, your business won’t last long. You must continue to develop your business skills.

To be a businessperson you have to make the effort to become something of an ‘all rounder’, not just a specialist player. You can offer outstanding goods or services, but if you don’t develop good business systems then you are not a fully rounded businessperson and your business will be in danger of failing.

Remember that other stakeholders in your business, such as the building material suppliers who give you credit and the bankers who extend loans and financing terms, are always assessing your business skills. If you consistently pay people late or can’t meet the terms of your debt agreements they will draw the obvious conclusions about your business skills.

How good business systems will help you

Good business systems will make your business stronger, more efficient and easier to run. They will also make your business far more attractive to future buyers because if you have developed clear operating and procedures manuals the business will be seen as an independently viable unit and less dependent on you.

Think for instance of what makes franchises so successful: it’s because they are designed so that people can buy a proven system and operate it after minimal training. They can do this because the business procedures are captured in simple, clear operating manuals.

Here are five steps to a better business:
1. Good record-keeping and bookkeeping will help you keep on-side with the Inland Revenue Department. If you’re able to meet your tax obligations through sensible planning you’ll sleep better at night. You won’t fear a tax audit and you’ll know how your business is doing. You won’t be caught by a ‘sudden tax demand out of the blue’ because no such thing exists for a well-run business. You should always know which taxes are due, and when. You’ll suffer less stress.
1. Good business planning will help you set goals for your business, with specific steps on how to achieve these goals. Without goals, where do you think you’re going? Running a business without goals is like turning up at an airport and saying, “I’d really like to go somewhere.” The person at the ticket desk would think you’re clueless, to say the least!
1. Good cashflow forecasting will enable you to anticipate a possible cashflow problem (something all growing businesses experience from time to time) and take steps before the problem becomes a crisis. Banks will respect you if you anticipate problems and make plans in advance. Banks will not respect you—and will indeed categorise you as incompetent—if you tell them you’ve been ‘caught out’ by a crisis. Banks don’t like crises. They like you to go to them well in advance of any possible crisis with a plan in hand. This shows them you’re in charge of your business.
1. Good creditor and debtor control will improve your cash flow. Invoicing promptly and collecting debts on time gives you the cash to pay suppliers on time and get more favourable credit terms from them. It is a virtuous circle. Sloppiness in this department is one of the most common (and unnecessary) causes of business owners experiencing stress and anxiety. So pay your creditors on time and don’t let your debtors use you as a free banking service.
1. Realistic pricing and costing will ensure that you run your business in a competitive but profitable way. Poor skills in this regard could mean that you’re operating at unrealistic levels—even at a loss. For example, if you let costs get out of hand (such as overhead costs) your profits will erode. There is no point in increasing sales if you’re not increasing your profits.
In business you don’t have to be an expert at everything. For example, you might hate bookkeeping. Fine—but do get someone else to do it for you, don’t rely on a shoebox for your accounts! And you should at least understand the processes and the overall accounting picture even if you don’t want to do the ‘drudge work’ yourself.

Having poor systems is the road to stress and burnout. On the other hand good business systems will enable you to work smarter, not harder. They free you to work on your business rather than in it. That way, you’re more likely to avoid burnout and you’ll be able to take time off work because you can train others to follow your clearly documented systems and procedures. Systems are the way to build a better business and liberate yourself from it.

To help you with this, Our small firm S & H Accounting offers business services as well. We offer from starting up businesses, to bookkeeping, to all tax services related to business, etc. Our accountants are very well-qualified, vastly experienced and extremely professional. We aim to always meet all of our customers need, as we aim to provide the highest level of service possible, as we always satisfy the needs of our client, so that they reach the desired outcome. Book an appointment today, call us at 03 8759 5532 or you can email us at info@sahtax.com.au
01/07/2022
Differences Between an Accountant and a Financial Planner
When it comes to managing your finances, there are two professions that can help you understand your numbers, and ensure you have a plan to get to where you want to be. Accountants and financial planners can both play an important role in your financial success, but there are some important differences between the two.

For any successful business, it’s advisable to have both an accountant and a financial planner because their skills are so complementary and they can work together to help you better meet your financial goals.

There are areas where they are similar, of course. Both can help determine if your financial plans are feasible and can provide you with important strategies for managing your money. And while they can both advise you, neither can make decisions for you.

Here are the main differences between accountants and financial planners.

Accountants

Your accountant is responsible for keeping accurate financial records, making summaries, and undertaking analyses of your financial transactions. Depending on their role or specialty, they may also undertake auditing, inventory accounting, and financial forecasting.

They’ll also help ensure your business is compliant with tax regulations and may advise you on important financial issues related to your business, such as decreasing costs, setting prices or wages, managing expenses, and budgeting. Additionally, they can help you determine the best way to set up your business, how to increase your returns after-tax, and how to grow your business.

Further areas accountants can help you include
- Payroll
- Lowering your tax burden
- Preparing business plans
- Forensic accounting
- Selling, buying, or merging a business.
Financial planners

Financial planners advise you on your wealth management. Typically, they are specialists in areas such as tax planning, managing your portfolio, or retirement planning. They may also advise you on solving your debt or building your long-term wealth.

People who have specific financial goals in mind can turn to a financial planner to develop the best path forward to achieve those goals and improve their financial wellbeing.

Specifically, financial planners can help you with
- Philanthropic strategies
- Retirement planning
- Investing
- Estate planning
- Budgeting
- Inheritance tax planning
- Cash flow modeling
- Portfolio construction.
Who to hire and when

If you run a business, it’s a good idea to have both an accountant and a financial planner on your team. Both will help set you up for success, lessen your risks and develop strategies to enable you to thrive financially. Often, accountants will know of good financial planners to bring onto your team, and vice versa.

If you feel you can only hire one, that one will be based on your specific needs. If you’re working towards long-term wealth or other financial goals, considering investing, or concerned about setting up your estate, talk to a financial planner. If your needs have more to do with running a business, daily transactional financial activities, or dealing with your taxes, an accountant will help you.

Develop relationships with both

In an ideal situation, you’d have both an accountant and a financial planner on your team. Keep in mind that for them to help you to their best abilities, they need to get to know you, your plans, and your challenges. By developing a solid relationship with both and being open and transparent about your financial situation and any issues you face you can better enable both to help guide you toward success.

Final thoughts

Whether you’re planning for your business or for your personal finances, it’s a good idea to have someone around who can give you expert advice and advise you on the best financial path forward.

Need an Accountant, S & H Accountants are the one for you. We are one of the best accounting firms in Cranbourne. We offer all types of tax services not only for individuals but also for companies, trusts and businesses. Our team consists of well-qualified, vastly experienced as well as extremely professional individuals. We also do offer bookkeeping services, which will manage your transactions for you! S & H Tax Accountants aim to provide the best level of service to our clients. Book an appointment today, call us on 03 8759 5532 or email us on info@sahtax.com.au
08/03/2022
Pay as you go (PAYG) instalments – What is PAYGI?

Pay as you go (PAYG) instalments applies to small business or investment income of any entity – Sole Trader, Company, SMSF etc. Pay as you go (PAYG) instalments are regular payments made throughout the year to avoid payment of large tax bill when tax return is lodged at the end of the year. The instalments made are based on business and/or investment income. The payments made during the year will be offset against the tax owed, if any, for the year.

ATO estimate the tax payable in a year by taking the business and/or investment income reported in the most recently lodged tax return. Instalments amounts are calculated based on this income, current income tax rates and likely changes in the economy. The instalment amounts can be changed by the taxpayer if they expect a different income than previous years but will be penalized if the payment falls short.

PAYG Instalments are reported and paid through activity statements or Instalment notice. They should be lodged before the tax returns are prepared. Once lodged, it will create a debit entry (debt) in the Activity Statements with the ATO. If the return is not filed on time, ATO might accept the instalment amount on their own in certain situations. Taxpayers must pay attention to the communications received from ATO regarding this.

What happens when PAYG Instalments are paid?

When a payment is made, it shows as a credit entry in the Activity Statement report offsetting the debit entry created while lodging the return. The balance will be zero. When the tax return is prepared, the tax payable on taxable income will be reduced by the amount of PAYG Instalments reported during the financial year. If the tax owed to ATO is less than the Instalment amount, the balance will be refunded.

Example: –

Total PAYG Instalments of John for the year – $10,000

Tax on taxable income – $10,500

Since John has lodged the PAYGI return and paid the same, he will be liable to pay only the balance $500 at the end of the year.

If his tax on taxable income was, say, $9,500, he will receive a refund of $500.

What happens when PAYG Instalments are not paid?

If the PAYG Instalments are not paid, it will continue as a debt in the Activity Statement report of ATO. However, the tax return will still be prefilled with the actual lodged instalment amounts and this amount will be deducted from the tax payable for the year. Taxpayers should be very careful in this situation. The tax payable will be understated or refund receivable will be overstated here. If tax is payable (even after reducing the PAYGI amount, which was not paid), the payable amount will be shown as debt in ‘Income Tax Statement’ of ATO and the PAYGI amount will be shown as debt in ‘Activity Statement’ report of ATO. If the result is a refund (after reducing the PAYGI amount, which was not paid), it will be used by ATO to setoff the PAYGI debt and taxpayer will only receive the rest of the refundable amount, if any. If the refund is not enough to setoff the PAYGI debt completely, the balance will show in the Activity Statement report.

Example: –

Total PAYG Instalments of John for the year – $10,000. He lodged the returns, but never made payments.

Tax on taxable income – $10,500

Since John has lodged the PAYGI return, he will be liable to pay only the balance $500 as income tax at the end of the year. However, he will be liable to pay the PAYGI of $10,000 and will be shown as a debt with ATO in Activity Statement Reports.

If his tax on taxable income was, say, $9,500, his tax return will show a refund of $500. However, he will be liable to pay PAYGI $10,000 and will be shown as a debt with ATO in Activity Statement Reports. ATO will setoff the refundable $500 with this debt and John will be liable to pay the rest $9,500.

The scenario is similar for other entities like Sole trader, Company, SMSF etc. For more information refer ATO website.

Looking for an accountant, S & H Tax Accountants can help. S & H Tax Accountants offer all taxation services whether it be for individuals, companies or even trusts. However we also offer business services, such as registrations or Business Activity Statement (BAS) and even PAYG Installments. We understand that for businesses, these can tasks can be very daunting, that is why we offer the best level of services possible to all of our clients. Our team consists of well-qualified, vastly experienced and extremely professional individuals. Book an appointment today, call us on 03 8759 5532 or you can email us on info@sahtax.com.au.

01/03/2022
How Accounting Software Can Increase Profits

Most small business owners who use accounting software quickly master the basics. They automate processes like invoicing and payroll, track expenses, and view real-time financial reports to manage cash flow and make better business decisions.

But what many business owners don’t take advantage of are key insights that can improve customer care and increase sales. Here are some smart ways you can use your accounting software to help boost your bottom line.

Gain insights that increase sales

If you’re not tapping into your accounting software analytics to better understand your customers, you’re missing a major opportunity to close more sales.

Most accounting software can highlight your biggest spenders and buying trends. How would knowing who your best customers are, your biggest selling products, and how much each customer spends impact your marketing decisions – not to mention help you fine-tune your sales strategies?

By the same token, when you know which products and services aren’t selling, you’ll be able to make more profitable purchasing decisions. Most accounting software offers inventory tracking to help you decide what to keep on the shelves, which products to sell off at a discount, and which items to phase out altogether.

Improve customer care and boost profits

Accounting software can offer peace of mind when you know your financials are accurate and up to date. But another major advantage of an online accounting solution is how much time you’ll save by automating processes like invoicing and payroll – giving you more time to follow up with clients and seek out new prospects.

We all know how important the personal touch is when it comes to sales. So why not use your accounting software customer data to help remember your customers’ birthdays or thank them when they’ve hit a milestone – spending more than $5,000 on your products, for example?

With enhanced customer data at your fingertips, your business will earn a reputation for personalized service. You’ll be able to respond quickly when a customer calls with a question about a product or an order. And you’ll be able to suggest substitutions and offer valuable add-ons based on their buying preferences, so upselling becomes a snap.

How will you use accounting software to grow your small business?

Savvy business owners take the first step toward better profitability when they stop thinking of accounting software as simply a financial management solution and start thinking of it as a comprehensive tool for business growth.

You may be surprised at the many ways accounting software can help you better serve your customers or improve your sales strategies when you look at its true potential.

Now that you have a handful of ideas for making better use of your accounting software, what will you do differently to enhance customer care, improve your profits and continue to grow your business?

If you need assistance with managing your accounts, such as recording your information in an accounting software, please feel free to contact S & H Tax Accountants. We have wonderful staff members who are qualified and always ready to help. Book an appointment today at S & H Tax Accountants, call us at 03 87590 5532 or email us at info@sahtax.com.au

17/12/2021
Why Bookkeeping is Crucial to Your Success
Keeping track of sales, earnings, expenses, and purchases is fundamental to the overall health and sustainability of your business. Effective bookkeeping produces the data you need to evaluate your current practices, anticipate challenges, and set attainable future goals.

But despite their proven importance, many business owners dread and avoid accounting tasks. In fact, 40% of surveyed entrepreneurs claim that bookkeeping is one the worst parts of running a business!

Wondering if it’s really worth the aggravation?

Here are four reminders of how effective bookkeeping is the cornerstone of small business success.

Keeping track of reimbursable expenses

A reliable system for tracking reimbursable expenses ensures you reap all the benefits you’re entitled to when filing your taxes. Expenditures sorted into categories, such as “food”, “travel”, and “office supplies,” can be catalogued quite simply with online bookkeeping software.

Using a dedicated credit card for business expenses, and updating your records on a monthly basis, will put money back in your pocket come tax time.

Measuring profitability and planning for the future

In order to grow your business, you must be able to track and compare its finances from one year to the next.

In addition to reconciling the books and bank statements every month, effective bookkeeping generates records you can use to gain a comprehensive overview of your business. This data can help you:
- measure year over year profits;
- identify opportunities to cut costs;
- plan for major expenses (such as new office space, equipment, or staff); and
- develop data-based strategies for expansion.
Preparing for tax season

Few things are more stressful for business owners than scrambling to get poorly maintained financial records ready for tax season. In addition to the panic of last-minute filing, inaccurate or incomplete documentation can lead to serious penalties, fines, and even an audit.

In the United States alone, 40% of small businesses pay an average penalty of $845 per year for late or incorrect filings!

Save money and get peace of mind with sound bookkeeping. You’ll be assured of compliance with regulations, and will receive a reliable estimate of amounts owing long before your tax bill is due.

Final tip: ask for help

Most entrepreneurs are passionate about developing new business ideas – not crunching numbers. Employing a professional bookkeeper, even on a part-time or as-needed basis, can help optimize your accounting and increase overall profitability.

There’s a good reason 71% of small businesses outsource at least one accounting function to help manage tasks like payroll, closing the books each month, and managing accounts receivable.

It’s well worth it. Invest in effective bookkeeping and you’ll build a solid foundation for a resilient, forward-moving small business.

Need assistance with bookkeeping, S & H Accounting can assist you as we also offer bookkeeping services. As mentioned above that bookkeeping services are essential for not just businesses but also for individuals. Our team also consists well-qualified, vastly experienced and extremely professional. We aim to provide our clients with the best level of service possible, as we prioritise our clients growth. Book an appointment today with S & H Accountants, call us on 03 8759 5532 or you can email us on info@sahtax.com.au.
11/05/2021
How to Avoid Costly Inventory Problems
Inventory is the lifeblood of your business. It is the largest asset on your balance sheet and your company’s biggest revenue-generator.

It goes without saying that poorly managed inventory can do serious damage to your bottom line. Businesses without clear strategies for streamlining the in and out flow of goods will have trouble meeting their customer’s demands and will see mismanaged stock corrode their profits.

Follow these tips to ensure your business doesn’t fall prey to common – and costly – inventory problems.

Implement a system for accurate stock tracking

Whether you have a modest stockroom or a large warehouse, it’s important to know precisely when products are coming in or shipping out, so you’re able to re-stock efficiently.
- Factor in lead time when calculating your basic stock, so you don’t run out of a product before new supplies can be delivered – disappointing your customers and missing out on revenue opportunities.
- Implement an automated inventory management system to track fill rate and inventory returns for all products, and get a better handle on exactly how much stock you have at any given time.
Avoid excess inventory

Excess inventory is a financial drain on your business in more ways than one. It costs money in extra overhead, increases insurance costs, and reduces your liquidity – not to mention the space taken up by extra merchandise could be better allocated to more profitable products.

Here are a few ways efficient inventory management can help avoid the problem of dead stock:
- Don’t purchase large orders of stock simply because they’re being offered at a discount. It might take much longer than anticipated to sell the products and turn a profit – in the meantime, your order gathers dust in your storage room.
- Calculate and stick to a realistic safety margin so you only buy what you are reasonably sure you can sell. A good system for tracking sales and profits – and checking it often – is essential to making better buying decisions.
- Liquidate your overstock by selling products at discounted prices. You also might consider returning excess inventory to your vendor (it may be worth it even if you have to pay a re-stocking fee).
Prioritize your inventory needs

You can avoid inventory mismanagement by putting better systems in place to prioritize your inventory needs. You should always know which products have the highest turnover ratios and ensure those items are always on hand.

One approach is to divide your inventory into three groups (A,B, and C) based on their dollar impact on your business . You’ll get a clear sense of which items to purchase more of and avoid needlessly tying up cash stocking up on the non-essentials.

Final tips for better inventory control

If you’re looking into switching to or upgrading your accounting software, look into a solution that includes inventory pricing and availability features. And be sure to invest in training to ensure your staff knows how to use inventory tools – and has a firm handle on overall inventory management practices.

With enhanced customer data at your fingertips, your business will earn a reputation for personalized service. You’ll be able to respond quickly when a customer calls with a question about a product or an order. And you’ll be able to suggest substitutions and offer valuable add-ons based on their buying preferences, so upselling becomes a snap.

How will you use accounting software to grow your small business?

Savvy business owners take the first step toward better profitability when they stop thinking of accounting software as simply a financial management solution and start thinking of it as a comprehensive tool for business growth.

You may be surprised at the many ways accounting software can help you better serve your customers or improve your sales strategies when you look at its true potential.

Now that you have a handful of ideas for making better use of your accounting software, what will you do differently to enhance customer care, improve your profits and continue to grow your business?

Inventory needs and stock tracking are key elements of a business, however in order to maintain these elements, having a good accountant is a must. S & H Tax Accountants is a small firm that prides it self on the service that we provide, as we aim to offer the highest possible level of service to our clients. Our accountants are well-qualified, vastly-experienced and extremely professional. Book an appointment today with S & H Tax Accountant, contact us info@sahtax.com.au or call us at 03 8759 5532.
14/05/2020
How to set your small business payment terms
Healthy cash flow is important for any business, but particularly for small business owners in those first few “make it or break it” years.

Business owners who set clear payment terms with their customers, invoice quickly, and follow up on late payment can avoid the dreaded cash flow crunch that can quickly put them out of business.

These simple guidelines for setting payment terms can help you get paid quickly and maintain a steady cash flow.

Decide on your terms

The purpose of your payment terms is to outline exactly how and when your customers must pay you.

Some business owners draw up a document to share with potential customers outlining their fees and terms. Others just include them in their work contracts and invoices.

However you decide to communicate your payment terms with customers, make sure they include:
- when payment is due
- accepted forms of payment (i.e. cash, credit, debit, Paypal, e-transfer)
- your preferred currency (if you serve international customers) and
- early payment discounts and/or late penalties
Payment now, NET10 or NET30?

In the business world it’s customary to be paid within 30 days of invoicing. However, as a small business owner you can set the payment terms that suit you best.

If you’re a freelancer, you might require partial payment up front with the balance due upon completion of services. Depending on the industry standard and whether your clients pay electronically or by cheque, you might stipulate a shorter or longer payment deadline.

In the digital age it’s not uncommon for small business owners to set a NET10 or NET 14 deadline – or to negotiate payment terms on a client-by-client basis.

Taking into account what works best for you and your customers and being clear about expectations will make it more likely you’ll be paid on time.

When to invoice – and when to follow up

It’s in your best interest to invoice immediately. After all, the sooner you request payment, the quicker you’ll receive it.

Some small business owners offer an early payment discount as an incentive to pay faster – typically for NET30 invoices at a rate of 1.5-2%. Many customers will appreciate the opportunity to save money, and many business owners don’t miss the small amount taken off the bill.

Customers who routinely pay late may be motivated by a late payment penalty – also in the 1-2% range of an early payment discount.

Make it a policy to email a friendly reminder on the date payment is due. If payment is late, follow up with a phone call the next day to find out when you can expect payment.

Final tips
- Take advantage of cloud-based accounting software that can be accessed anywhere there’s an internet connection, including via your smart phone, to generate invoices
- Be willing to negotiate with late payers; partial payment is better than not being paid at all.
- Make sure you have the correct name on your client’s invoice to avoid payment delays.
Having clear payment terms outlined on paper can help avoid misunderstandings and frustrating payment delays.

And should you ever need to take legal action to deal with a late payer, having documented evidence that you clearly communicated your payment terms up front will be in your best interest.

Starting a business, can be a little difficult. However, S & H Tax Accountants offers business services, which include from starting your business, to bookkeeping, all tax related services and etc. Our accountants are well-qualified, vastly experienced and extremely professional with their clients. We prioritize the needs of our client and aim to provide the highest level of services to all of our clients. Book an appointment today, call us on 03 8759 5532 or you can email us on info@sahtax.com.au
14/05/2020
Three Ways an Accountant Can Save You Money

Many small business owners think they’re saving money by handling their financials themselves. While it’s a real asset to learn bookkeeping basics, cash flow management and your tax obligations, hiring an accountant to oversee your finances has many benefits. Leaving your books to a pro will free up time so you can focus on serving your clients and implementing plans for growth. Here are a few ways an accounting professional can help you save money that you can reinvest back in your business.

Finding money

There’s no one more suited to discovering “found” money than an accounting professional. Hire an accountant to sort your books and systemize your bookkeeping; better record keeping is the easiest way to allow you to quickly see – on a monthly, weekly or daily basis – where your money is going so you can cut costs. Keeping your accounts up to date will also help you understand which of your business investments yield the greatest returns so you can be more strategic about spending. An accountant can spot trends that you can take advantage of to earn greater profits – and even find savings with vendors, staff and operating expenses. Hiring someone to manage your accounts will also reduce the costly errors that are commonplace when business owners try to manually track their expenses.

Avoid tax penalties

Your accountant may be your trusted advisor when it comes to staying up to date with the latest regulations for small business taxes. She can also provide you with expert advice on how to maximize your benefits and minimize your taxes each year. Don’t underestimate the cost savings of hiring someone to complete your tax forms correctly and submit them on time. Penalties for small businesses who neglect to file their taxes on time – or at all – can quickly add up; the longer you wait to file, the more interest you’ll be charged and the likelihood you’ll incur additional penalties. A business that is already struggling may not be able to pay a tax fine and find themselves closing their doors. If your small business is ever audited, having an accountant on board will let you rest easy knowing you won’t be hit with a penalty for errors or omissions.

Business advisory services

Your accountant possesses business knowledge that can help you make more informed decisions. Rely on your accountant for advice when you draft or revise your business plan; those key insights on assessing profitability will help you move your business in the right direction – and avoid wasting time and money on strategies with a lesser chance of success. Look to your accountant to help you determine your most valuable clients, how much money you need to invest in a growth plan and which marketing strategies yield the best ROI. Having someone you can rely on to help set targets and monitor your progress is an invaluable asset that can help you not only save money, but earn higher profits.

The bottom line? Your accountant can do much more for you than simple bookkeeping or ensuring you’re on the right side of the tax authorities. Hire a small business accountant and you’ll be doing a lot to help increase your chances for long term growth and success.

Need an accountant? S & H Tax Accountants, are one of the best firms in Cranbourne. Our team consists of accountants that are well-qualified, vastly experienced and extremely professional. We offer all taxation services for individuals, businesses as well as trusts, we also offer bookkeeping services. Our firm aims to provide all of our clients with the best level of services possible, so that we can reach the outcomes that you desire. Book an appointment today with S & H Accountants, contact us on 03 8759 5532 or you can email us on info@sahtax.com.au

14/05/2020