S & H Tax Accountants

Tag: Small Business Accountant Cranbourne

  • Debt management tips for small business owners

    Debt management tips for small business owners

    For a small business owner, managing finances can be a daunting task. Keeping track of expenses, payments, and cash flow can be overwhelming, especially if you’re dealing with debt too. A business loan, line of credit or a business credit card can help your company hire new employees, purchase inventory, purchase equipment, and finance growth, but too much debt can become an unsustainable expense. Debt management is vital to the success and sustainability of any business. Read on for some tips on effective debt management as a small business owner.

    How to manage business debt

    Rank your debts: The first step in debt management is understanding which debts are immediate and which can wait. Ranking debts can help you address the most pressing ones first and avoid defaulting on any payments. Defaulting on loans and credit can result in a decrease in your business credit score and can harm your business financially in the long run.

    Consolidate debt: Consider consolidating your debts into a single monthly payment. This can make it easier to manage and track all your debts, avoiding missed payments and late fees. Consolidating debt also lowers the interest rate of high-interest loans, which in turn saves you money on interest payments.

    Increase revenue: One of the most effective ways to manage debt is by increasing your business’s revenue. Tweak your current offerings, expand your market, or even invest in new products or services that align with your brand’s vision. The more revenue you generate, the more money you’ll have to repay your debts without incurring additional interest expenses.

    Reduce spending: Cutting costs and managing expenses can also play a role in managing your debt. This can include negotiating with suppliers for lower prices, investing in energy-efficient equipment, and even renegotiating loan terms to lower monthly payments. Avoiding unnecessary expenses can help your business free up cash to pay off debts while also saving money for other business-related expenses.

    Seek professional advice: Finally, if you’re struggling to manage your debt, consider seeking professional advice. This can help you identify areas where you can improve, provide guidance on debt consolidation options, and create a budget that aligns with your business goals.

    Last words..

    Managing debt can be stressful and challenging for any small business owner, and we understand that. Remember you’re not alone in facing the challenges of business debt management. Countless small business owners grapple with these issues and navigate their way to financial stability and success.

    We are here to help. Feel free to call or send us a message.

    S & H Tax Accountants understand that taking care of your debt can be difficult at times, however it is very important to understand that debt can always be improved by using certain strategies like the ones listed above. Our accounting firm can help those who need assistance to shorten or even eliminate their debt. Book a consultation today with our experienced clients, so that you can get manage your business debt in the most efficient manner. Call us on 03 8759 5532 or you can email us on 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.

  • Why good financial advice is a great investment for your retirement

    Why good financial advice is a great investment for your retirement

    Retirement is a significant milestone that brings with it the need for careful planning and financial security. A well-planned retirement ensures that you can maintain your desired lifestyle without worrying about running out of money. One of the key components of successful retirement planning is seeking good financial advice. Obtaining professional financial guidance can contribute to a secure and comfortable retirement.

    The Benefits of Good Financial Advice

    Tailored Retirement Planning

    Every individual has unique needs and goals when it comes to retirement. A financial advisor can assess your financial situation, understand your objectives, and design a plan specifically to meet your requirements to ensure that your retirement strategy is both effective and achievable.

    Streamlining Savings and Investments

    A financial advisor can help you diversify your investment portfolio and allocate assets strategically to balance risk and reward. By doing so, they can improve the growth of your savings and investments while reducing potential losses to a minimum, setting you up for a more financially secure retirement.

    Tax-efficient Strategies

    Understanding the tax implications of various investment options can be complex. A financial advisor can guide you through the process and help you structure your investments in a tax-efficient manner. This not only improves your returns but also reduces your tax burden during retirement.

    Managing Inflation and Market Volatility

    Inflation and market volatility can have a significant impact on the value of your retirement savings. A financial advisor can help you navigate these challenges by protecting your investments and adapting to changing market conditions, ensuring that your retirement funds remain secure and continue to grow.

    Estate Planning and Wealth Transfer

    Good financial advice extends beyond retirement planning to include estate planning and wealth transfer strategies. It’s important to seek advice to ensure the financial security of your loved ones.

    When selecting a financial advisor, consider their professional qualifications, as well as their track record of success in retirement planning. This will help you gauge their expertise and ensure that they are well-equipped to address your specific needs.

    Understanding how advisors are compensated is crucial when comparing different providers. Make sure you are aware of their fee structure and any potential conflicts of interest. Transparency is key to building a trusting relationship with your financial advisor.

    A good financial advisor should provide regular updates on your portfolio performance and be available for consultations and meetings when needed. Effective communication ensures that you remain informed about your investments and can make well-informed decisions.

    When to Seek Financial Advice

    While it’s never too early or too late to seek financial advice, certain life events and milestones may prompt you to consult a professional. These include major changes in your financial circumstances, such as receiving an inheritance, experiencing a job loss, or approaching retirement age. Periodic financial check-ups can also help ensure that your retirement plan remains on track and adapts to any changes in your life.

    Investing in good financial advice can have long-term benefits for your retirement planning. With the right financial advisor by your side, you can look forward to a comfortable and fulfilling retirement.

     

    At S & H Tax Accountants, we understand that every individual has different goals and outcome that would like to achieve. That is why our team is so passionate about being able to guide our clients to reach their goals. S & H Tax Accountants provide financial advise to all of our clients, as our staff members are well-qualified and experiences. We make it a point to provide you with the most highest level of service possible. To make an appointment today at S & H Tax Accountants contact us on info@sahtax.com.au or call us on 03 8759 5532.

     

  • 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

  • What is a balance sheet and how does it help me manage my finances?

    What is a balance sheet and how does it help me manage my finances?

    You’ve likely heard the phrase “in the black.” Your balance sheet is the tool that shows you whether your business is indeed “in the black.”

    Your balance sheet includes a section for your assets (things you own or will receive that have value), your liabilities (what you owe to others) and equity (retained earnings and funds from investors) at a specific time. The relationship between these three sections shows how financially healthy your company is. If your assets outweigh your liabilities, you’re in the black. However, if you have more liabilities than assets, you’re in the red – which is undesirable.

    But how does a balance sheet help you to manage your finances? Read on to find out.

    Track your assets and liabilities over time

    Most companies prepare a balance sheet quarterly, but you can certainly complete yours more or less frequently than that. The key is to prepare one regularly to understand how you perform over time.

    When you have a set of successive balance sheets, you can clearly see how your assets and liabilities measure up on average. For example, you may have had a costly period with critical equipment requiring replacement or repair. That balance sheet might not look so good if that’s the only one you have to interpret.

    But when measured against other balance sheets, you may see that it was just an anomaly from which you have handily recovered. Perhaps the improvements even helped you to earn more money once they were complete. There’s no way to know unless you use several balance sheets together.

    Measure risk

    Your assets act as security for your business because if you found yourself in a situation where you had to, you could sell them to cover your debts. This is how you determine how liquid your business is. Your balance sheet easily identifies how much you own and how much you owe, so you have an easy way of assessing your liquidity.

    This also enables you to determine how much risk your business faces. If you find you couldn’t readily pay what you owe by liquidating your assets, it would be clear that you couldn’t currently take on any more risk by borrowing money or buying something new.

    Calculate decisions

    Similarly, your balance sheet will help you see if now is a good time to spend your money or if you should hold off. For example, if your business is healthy, with plenty more assets than liabilities and easily able to pay shareholders, that would indicate a good time to make some capital improvements.

    If you find things more precarious, your balance sheet will guide you to hold off on making any major purchasing decisions until you’re in better shape. It may even indicate you need to find a way to offload some debt to get back on track.

    Use with other financial statements

    Your balance sheet helps you see your assets and liabilities clearly. It becomes even more useful when used with the other two main financial statements: income statements and cash flow statements.

    An income statement (which may also be called a profit and loss statement or an earnings statement) shows your revenues, expenses, and profitability. It tells you what you earn and the costs you incur to make that revenue.

    Your cash flow statement will show what money came in and went out of your business during a specified period. Its primary purpose is to highlight your ability to operate based on how money moves through your business.

    Together, these three financial statements give you a clear picture of how your company operates and how financially healthy it is.

    Final thoughts

    If you’re unfamiliar with financial statements, a balance sheet can initially seem intimidating – especially if it shows that you’re in the red. However, once you prepare one for your business, you will find it invaluable to help you see where you stand and what you can do about it.

    Get in touch to have your balance sheet questions answered and learn more about how we can help you prepare this critical financial statement.

     

    Recording your financial information is a useful way of identifying your financial position. S & H Tax Accountants are able to assist you with recording your financial information accurately as well as being able to guide and assist you to reach your financial goals. Whether it be a balance sheet or income statement, our accountants can do it all. Book an appointment today at S & H Tax Accountants, call us at 03 8759 5532.

  • Essential steps to managing your family’s finances

    Essential steps to managing your family’s finances

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

    Budgeting

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

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

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

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

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

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

    Saving

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

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

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

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

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

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

    Planning for the future

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

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

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

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

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

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

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

     

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

  • Bookkeeping Basics for Small Business Owners

    Bookkeeping Basics for Small Business Owners

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

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

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

    Faithfully track expenses

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

    Business Finance Man Calculating Budget Numbers, Invoices And Fi

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

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

    Systematic invoicing and filing

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

    Here are a few tips for professional invoicing:

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

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

    Save time with accounting software

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

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

    Online bookkeeping offers numerous advantages, such as:

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

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

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

     

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

  • Unlocking the secrets of small business cash flow

    Unlocking the secrets of small business cash flow

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

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

    Let’s dive in!

    1. Understand Your Cash Flow Cycle

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

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

    2. Develop Accurate Financial Forecasts

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

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

    3. Monitor Your Cash Flow Regularly

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

    4. Maintain an Emergency Fund

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

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

    5. Invoice Promptly and Efficiently

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

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

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

    6. Encourage Early Payments

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

    7. Keep Your Expenses in Check

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

    8. Use Technology

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

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

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

    The bottom line

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

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

     

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

  • Using financial reconciliation to keep your business on track

    Using financial reconciliation to keep your business on track

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

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

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

    What is financial reconciliation?

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

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

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

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

    Types of financial reconciliation

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

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

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

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

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

    Why you need financial reconciliation

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

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

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

    How to conduct financial reconciliation

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

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

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

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

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

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

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

    Final thoughts

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

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

     

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

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

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

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

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

    Poor cash flow

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

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

    Insufficient initial funding

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

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

    Difficult market conditions

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

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

    Poor financial management

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

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

    Lack of market research

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

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

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

    Legal issues

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

    How to avoid bankruptcy

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

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

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

    Final thoughts

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

     

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

  • Business Update – 22 March 2023

    Business Update – 22 March 2023

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

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

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

    Relief as Credit Suisse and UBS strike a deal

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

    High fares and reduced capacity hurting airline recovery

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

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

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

    Recession-proof suburbs do exist

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

    Adelaide gets the first mobile phone detection camera

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

    Virgin Australia IPO dampened amid Credit Suisse collapse

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

    Further losses are expected this week for shareholders

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

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

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

    Get in touch

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

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

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

    Financially Savvy Women: 5 Strategies to Improve Your Financial Literacy

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

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

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

    What is financial literacy?

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

    Seek out information

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

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

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

    Find an advisor you trust

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

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

    Build an emergency fund

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

    Check your credit score

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

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

    Continue educating yourself

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

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

    Final thoughts

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

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

  • Differences between active and passive investing and why they matter

    Differences between active and passive investing and why they matter

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

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

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

    Active Investing

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

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

    Passive Investing

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

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

    Which one earns the most money?

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

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

    Who is each type of investing for?

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

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

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

    Final Thoughts

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

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

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

  • Business Update – 8 March 2023

    Business Update – 8 March 2023

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

    Inflation is still a concern as the economy slowly recovers

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

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

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

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

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

    Demand for EVs is stronger than ever

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

    Australian companies still shedding jobs as recession looms

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

    Queensland is considering legislation to keep solar panels out of landfills

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

    Affordable rent is becoming rarer and rarer

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

    New super tax rules only affect the wealthiest Australians

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

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

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

    Get in touch

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

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

     

     

  • 6 tips to paying down your personal debt in 2023

    6 tips to paying down your personal debt in 2023

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

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

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

    1. Take stock of your debt

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

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

    2. Identify which debt is costing you the most

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

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

    3. Consider consolidating your debt

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

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

    4. Set a budget and save

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

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

    5. Adjust your credit card habits

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

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

    6. Increase your income

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

    Final thoughts

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

     

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

  • Business Update – 22 February 2023

    Business Update – 22 February 2023

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

    What to do if you can no longer afford your mortgage

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

    Woolworths expands controversial surveillance tool

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

    Changes coming to superannuation rules

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

    Chinese airlines flying through Russia have an unfair advantage

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

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

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

    Everyone’s scrambling to get on board with AI

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

    Meta follows in the footsteps of Twitter

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

    Bitcoin is booming, but why?

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

    Get in touch

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

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

  • Business Update – 15 February 2023

    Business Update – 15 February 2023

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

    RBA governor’s statement met with confusion

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

    Faster internet is on the way

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

    ATO seeks to boost the use of eInvoicing

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

    Households spending power decreased due to inflation

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

    Homeownership becomes less likely the younger you are

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

    Real estate auctions pick up again

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

    Money laundering is alive and well in Australia

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

    The government seeks SME thoughts on payment times

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

    Disney cutting 7000 jobs

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

    UNSW psychiatry professor seeks to redefine burnout

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

    Get in touch

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