S & H Tax Accountants

Tag: Tax Agent Cranbourne

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

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

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

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

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

    Key Themes of 2024–25

    1. Cost-of-Living Relief and Tax Changes

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

    2. Superannuation and Retirement Planning Updates

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

    3. New Compliance Measures

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

    4. Small Business Support and Instant Asset Write-Off

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

    End-of-Year Considerations

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

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

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

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

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

    Looking Ahead: 2025–26 and Beyond

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

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

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

  • New Law Denies Tax Deductions for ATO Interest Charges from 1 July 2025

    New Law Denies Tax Deductions for ATO Interest Charges from 1 July 2025

    As part of the 2023–24 Mid-Year Economic and Fiscal Outlook (MYEFO), the Australian Government announced a significant change to the tax treatment of Australian Taxation Office (ATO) interest charges. Now officially law, this measure will deny income tax deductions for certain ATO interest charges incurred on or after 1 July 2025.

    What’s Changing?

    Under the new law, taxpayers will no longer be able to claim deductions for the General Interest Charge (GIC) and Shortfall Interest Charge (SIC) incurred from 1 July 2025 onward. These interest charges are typically applied to unpaid tax liabilities and underpaid tax amounts.

    Which Charges Are Affected?

    • GIC (General Interest Charge): Applied to unpaid tax liabilities and calculated daily.

    • SIC (Shortfall Interest Charge): Applied when the ATO issues an amended assessment that increases a taxpayer’s liability.

    If these charges are incurred on or after 1 July 2025, they will no longer be deductible—even if the related tax debt or shortfall relates to an earlier income year.

    What Does ‘Incurred’ Mean?

    Whether you can deduct a GIC or SIC depends on when the interest is incurred, not the year to which the underlying tax liability relates.

    • GIC is incurred daily as long as a tax debt remains unpaid.

    • SIC is incurred in the year you receive a notice of amended assessment.

    This means that any GIC or SIC incurred after 1 July 2025—regardless of when the underlying tax issue arose—is not deductible.

    What About Pre-1 July 2025 Interest?

    The changes are not retrospective. GIC or SIC incurred before 1 July 2025 remains deductible under current tax law. However, if a previously claimed deduction for GIC or SIC is later remitted by the ATO, the remitted amount must be included in assessable income in the year of the remission.

    What Are the Practical Implications?

    • Taxpayers and advisors should carefully track when interest charges are incurred.

    • There may be a financial incentive to resolve tax liabilities before 1 July 2025, to preserve deductibility.

    • From 1 July 2025, remitted interest will not need to be included in assessable income, as it will not have been deductible in the first place.

    Conclusion

    This change reflects a broader trend by the Government to tighten the tax treatment of administrative penalties and interest. Taxpayers should review their current tax positions and consult advisors to ensure they are not caught out by these changes, particularly in planning payments and potential disputes with the ATO.

  • Tax Planning in Australia: A Strategic Guide for Individuals and Businesses

    Tax Planning in Australia: A Strategic Guide for Individuals and Businesses

    Introduction

    Tax planning is an essential aspect of financial management for both individuals and businesses in Australia. It involves the strategic arrangement of financial affairs to minimize tax liability within the legal framework. With the Australian Taxation Office (ATO) maintaining stringent oversight, effective tax planning ensures compliance while maximizing financial efficiency.

    What is Tax Planning?

    Tax planning refers to the analysis and organization of financial activities to legally reduce tax obligations. It differs from tax avoidance (which is legal but can be scrutinized) and tax evasion (which is illegal). Good tax planning involves using available tax deductions, offsets, exemptions, and structures to ensure that you are not paying more tax than necessary.

    Why is Tax Planning Important in Australia?

    1. Minimize Tax Liability: By taking advantage of deductions, offsets, and income-splitting opportunities.

    2. Improve Cash Flow: Less tax means more money available for reinvestment or personal use.

    3. Ensure Compliance: Avoid ATO penalties by staying within legal boundaries.

    4. Plan for the Future: Prepare for retirement, inheritance, and business succession in a tax-efficient way.

    Key Tax Planning Strategies

    1. Maximize Deductions

    Individuals and businesses should ensure they are claiming all eligible deductions. Common deductions include:

    • Work-related expenses (travel, uniforms, education)

    • Investment property expenses

    • Self-education and training costs

    • Charitable donations

    2. Use Superannuation Effectively

    Contributing to superannuation can be a highly tax-effective way to save for retirement:

    • Concessional Contributions (up to the annual cap) are taxed at 15%, often lower than marginal tax rates.

    • Non-Concessional Contributions can also be used strategically, especially when planning for retirement.

    3. Consider Business Structures

    For small businesses, choosing the right structure (sole trader, partnership, company, or trust) can significantly impact tax obligations:

    • Companies pay a flat corporate tax rate, which can be lower than personal income tax rates.

    • Trusts allow income to be distributed among beneficiaries in a tax-efficient manner.

    4. Capital Gains Tax (CGT) Management

    Selling investments or property may trigger CGT. Strategies include:

    • Holding assets for over 12 months to qualify for a 50% CGT discount (for individuals and trusts).

    • Offsetting gains with capital losses.

    5. Income Splitting

    Spreading income across family members in lower tax brackets (through trusts or family partnerships) can reduce the overall tax burden.

    6. Timing Income and Expenses

    Shifting income or deferring expenses to a different financial year can optimize tax outcomes. For instance:

    • Prepaying deductible expenses before 30 June

    • Delaying invoicing to defer income to the next financial year

    Common Pitfalls to Avoid

    • Over-claiming deductions: Ensure claims are legitimate and substantiated.

    • Neglecting record-keeping: Keep detailed records for at least five years.

    • Failing to seek advice: Tax laws can be complex and subject to frequent changes.

    Working with Tax Professionals

    A registered tax agent or accountant can provide tailored advice, especially in complex situations involving business operations, investment portfolios, or estate planning. Engaging a professional also helps in preparing accurate tax returns and avoiding compliance issues.

    Conclusion

    Tax planning is not just a once-a-year activity—it should be an ongoing process. With the right strategies and professional support, individuals and businesses in Australia can reduce their tax liability, improve financial health, and plan more effectively for the future. Staying informed and proactive is key to navigating the Australian tax landscape successfully.

  • Understanding Australian Accounting Standards

    Understanding Australian Accounting Standards

    Australia’s financial reporting landscape is shaped by a robust framework known as the Australian Accounting Standards (AAS). These standards ensure transparency, consistency, and comparability across financial statements, helping investors, regulators, and other stakeholders make informed decisions. Whether you are an accountant, business owner, or law professional, understanding these standards is essential for navigating the Australian financial environment.

    What Are Australian Accounting Standards?

    Australian Accounting Standards are a set of guidelines and principles that govern how financial statements are prepared and presented in Australia. They are developed and maintained by the Australian Accounting Standards Board (AASB), an independent body under the oversight of the Financial Reporting Council (FRC).

    Australia has fully adopted the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB), meaning that most Australian Accounting Standards mirror IFRS, often with some additional guidance tailored to the Australian context.

    Key Objectives of the Standards

    The main goals of the AAS are to:

    • Promote uniformity in financial reporting across industries.

    • Enhance comparability of financial statements internationally.

    • Provide clear guidance to ensure the financial position, performance, and cash flows of businesses are presented fairly.

    • Protect stakeholders such as investors, creditors, and regulators by ensuring reliable information.

    Structure of Australian Accounting Standards

    The AASB issues several types of standards, including:

    • Accounting Standards (AASB standards): Formal rules businesses must follow when preparing financial reports.

    • Interpretations: Guidance on how to apply the standards in specific situations.

    • Framework documents: Broad principles outlining the purpose and foundations of financial reporting.

    Each standard typically addresses a specific area such as:

    • AASB 16 – Leases

    • AASB 15 – Revenue from Contracts with Customers

    • AASB 9 – Financial Instruments

    • AASB 101 – Presentation of Financial Statements

    These standards align closely with the corresponding IFRS but may include Australian-specific additions (e.g., reporting obligations for not-for-profit entities).

    Who Must Comply?

    Compliance with Australian Accounting Standards is mandatory for:

    • Companies registered under the Corporations Act 2001.

    • Listed companies on the Australian Securities Exchange (ASX).

    • Certain government agencies and not-for-profit organizations.

    Some small businesses and entities that are not reporting entities may be allowed to prepare simplified financial reports under the Reduced Disclosure Requirements (RDR) framework.

    Recent Developments

    The AASB regularly updates standards to keep pace with changes in global accounting practices and to address emerging economic realities, such as:

    • Climate-related financial disclosures.

    • Digital assets like cryptocurrencies.

    • Sustainability reporting initiatives.

    In recent years, there has also been a focus on simplifying financial reporting for smaller entities to reduce compliance costs while maintaining transparency.

    Conclusion

    Australian Accounting Standards form the backbone of financial reporting in Australia. They not only uphold the integrity of financial information but also ensure Australia’s financial reporting practices remain globally relevant. For businesses, legal professionals, and investors, understanding and applying these standards correctly is critical to operating successfully in the Australian economy.

    If you are in need of an accountant, please contact S & H Accountants, we are based in Cranbourne and Cheltenham. We have a team of very well qualified, extremely professional and vastly experienced individuals who prioritise your needs and understand your tax obligations. To book an appointment please contact us on 03 8759 5532 or you can call us on info@sahtax.com.au

  • Australia’s Federal Budget 2025–26: Key Takeaways

    Australia’s Federal Budget 2025–26: Key Takeaways

    Treasurer Jim Chalmers has presented the 2025–26 Australian Federal Budget, emphasizing cost-of-living relief, tax reductions, and infrastructure development. However, it also marks a return to deficit spending, with government expenditures outpacing revenue. While certain initiatives have been welcomed, critics highlight gaps in funding for key sectors.

    Economic Outlook

    The budget projects an underlying cash deficit of $27.6 billion, shifting away from last year’s surplus. National debt is expected to reach $940 billion by June 2025. The government argues that increased spending is necessary to support Australians facing economic pressures, though opposition leaders warn of mounting debt risks.

    Taxation Adjustments

    A major highlight of the budget is personal income tax relief. The tax rate for earnings between $18,201 and $45,000will be lowered from 16% to 14%, providing relief for low and middle-income earners. However, personal income tax revenue is still forecasted to rise by 27%, while corporate tax revenue is set to grow by only 6%, raising concerns about an increasing tax burden on individuals.

    Cost-of-Living Support

    To help Australians manage financial pressures, the government has introduced several measures:

    • Energy Bill Assistance – Extended rebates to help offset rising energy costs.

    • Healthcare Investment – Additional Medicare funding to boost bulk billing and lower medicine prices.

    • Education Expansion – A $1 billion fund to develop and enhance early childhood education centers.

    These initiatives are aimed at easing inflationary pressures and improving household affordability.

    Housing & Infrastructure Commitments

    The government has allocated $800 million for the ‘Help to Buy’ scheme, supporting first-home buyers and single parents. However, only a small percentage of applicants are expected to receive assistance, given the high demand.

    Additionally, $54 million has been dedicated to the construction of 1.2 million new homes. While this aligns with government housing goals, industry experts argue the funding is insufficient to address Australia’s growing housing crisis.

    Areas Lacking Support

    Despite significant spending, some crucial sectors have received minimal or no additional funding, sparking criticism:

    • Mental Health – No major investments despite increasing demand for services.

    • Higher Education – No reforms to university funding or student loan structures.

    • Environmental Protection – Insufficient funding to meet conservation and sustainability targets.

    Conclusion

    The 2025–26 budget provides much-needed short-term financial relief, particularly through tax cuts and cost-of-living measures. However, concerns persist regarding rising national debt and the long-term sustainability of these policies. Critics argue that greater investment in mental health, education, and environmental protection is essential for securing Australia’s economic future.

  • The Importance of Accountants in Australia

    The Importance of Accountants in Australia

    Accountants play a crucial role in the financial landscape of Australia, contributing to the smooth functioning of businesses, individuals, and the nation’s economy as a whole. From small businesses to large corporations and individual tax returns, accountants provide essential services that ensure financial accuracy, compliance with regulations, and strategic advice that drives growth. Their expertise is indispensable across various sectors, highlighting the immense value they bring to the table.

    The Role of Accountants in Australia

    Accountants in Australia are responsible for a wide range of financial services, including bookkeeping, auditing, tax preparation, financial reporting, and consulting. They act as trusted advisors, helping individuals and businesses navigate the complexities of the Australian financial system. Below are some of the key areas where accountants have a significant impact:

    1. Taxation Services

    One of the primary responsibilities of accountants is managing taxation matters. In Australia, tax laws can be intricate and subject to change, which can be a challenge for individuals and businesses to navigate without expert help. Accountants ensure that their clients comply with the Australian Taxation Office (ATO) regulations, avoid penalties, and take advantage of any tax deductions or incentives available.

    Taxation services also include preparing and filing personal income tax returns, business activity statements (BAS), and ensuring that businesses remain tax-efficient. Accountants can also advise on complex matters such as Goods and Services Tax (GST), payroll tax, and superannuation contributions.

    2. Financial Reporting and Analysis

    Accountants assist businesses with accurate financial reporting, which is crucial for decision-making and operational efficiency. These reports include profit and loss statements, balance sheets, and cash flow statements, which provide an overview of a company’s financial health. Accurate financial reports help management assess performance, make informed decisions, and present data to stakeholders such as investors and creditors.

    For larger businesses, accountants often help with financial forecasting and budgeting, ensuring that the organization remains on track and adapts to changing market conditions.

    3. Business Advisory Services

    Beyond traditional accounting tasks, many accountants in Australia act as business advisors. They provide valuable insights into business strategy, cost management, and growth opportunities. Accountants work closely with business owners to develop strategies for increasing profitability, managing risks, and improving operational efficiency. They may also advise on business structures, mergers and acquisitions, or financing options to help companies grow sustainably.

    4. Audit and Assurance Services

    Auditing is another key function of accountants in Australia. An audit is an independent evaluation of a company’s financial records and processes to ensure they are accurate and in compliance with accounting standards and regulations. For many companies, especially public-listed companies, audits are a legal requirement to ensure transparency and accountability to stakeholders. Accountants also provide assurance services that give stakeholders confidence in the integrity of the financial information being presented.

    5. Compliance and Regulatory Guidance

    Australia has a rigorous regulatory framework for businesses and individuals, and accountants are essential in ensuring compliance with various laws and standards. This includes adhering to the Corporations Act, Australian Accounting Standards, and tax regulations, as well as specific industry requirements. Accountants help businesses avoid costly mistakes by ensuring they comply with regulatory requirements, reducing the risk of legal issues or financial penalties.

    6. Superannuation Management

    For individuals, managing superannuation (Australia’s pension system) is another key area where accountants play an important role. Accountants assist individuals with superannuation contributions, investment strategies, and retirement planning. They ensure that individuals are meeting their superannuation obligations while also maximizing the value of their superannuation savings for a comfortable retirement.

    Why Accountants Are Crucial for Australian Businesses

    Businesses in Australia, from startups to established enterprises, rely heavily on accountants to maintain financial health and comply with the law. Without the expertise of accountants, businesses would struggle to stay afloat in an ever-evolving financial and regulatory environment.

    Some of the key benefits accountants bring to businesses include:

    • Financial Management: Accountants help businesses maintain proper bookkeeping, manage cash flow, and ensure accurate financial reporting, which is essential for sustainable growth.

    • Strategic Advice: Accountants offer insights into cost reduction, investment opportunities, and strategic planning, helping businesses remain competitive in their industry.

    • Tax Efficiency: Accountants can help businesses minimize their tax liabilities through proper planning, tax-effective investment strategies, and identifying eligible deductions and credits.

    • Risk Management: Accountants are skilled in identifying and managing financial risks, ensuring that businesses are well-positioned to weather economic downturns or unexpected challenges.

    The Value of Accountants to Individuals

    For individuals, accountants offer more than just tax preparation. They are key players in personal financial planning, helping with wealth management, estate planning, and investment strategies. Accountants guide individuals in optimizing their financial decisions, such as when to make significant investments or how to structure personal finances to reduce tax liabilities.

    Additionally, accountants assist individuals with retirement planning by offering advice on superannuation and creating a comprehensive plan to ensure financial security in later years.

    Conclusion: Accountants as Pillars of the Australian Economy

    Accountants in Australia are indispensable for the smooth operation of businesses and the financial well-being of individuals. They ensure tax compliance, provide strategic advice, manage financial reporting, and help businesses thrive in an increasingly complex financial landscape. With their deep expertise, accountants not only help their clients achieve financial goals but also contribute to the overall economic stability and prosperity of the nation.

    Whether it’s through efficient tax management, providing business advice, or guiding individuals toward better financial decisions, accountants play a central role in shaping the financial future of Australia. Their services remain vital to ensuring that individuals and businesses remain compliant, financially healthy, and positioned for long-term success. If you are in need of an excellent accountant, contact S & H Accountants on 03 8759 5532 or you can also email us on info@sahtax.com.au.

  • Sole Trader Tax

    Sole Trader Tax

    Sole Trader Tax in Australia: A Guide to Your Tax Obligations

    Starting your own business as a sole trader in Australia can be an exciting and rewarding journey, offering the freedom to work for yourself. However, as a sole trader, you also need to understand your tax obligations. This includes income tax, Goods and Services Tax (GST), and other requirements that come with running a business. In this article, we’ll guide you through the essentials of sole trader tax in Australia to help you navigate your tax responsibilities with ease.

    1. What is a Sole Trader in Australia?

    A sole trader is an individual who runs a business on their own. As a sole trader, you’re legally responsible for all aspects of your business, including any debts and obligations. Unlike other business structures, such as companies or partnerships, a sole trader operates as an individual, meaning there is no legal distinction between the owner and the business itself.

    This structure is relatively simple to manage, with fewer regulatory requirements compared to larger business entities. However, it’s important to understand that your business income is treated as part of your personal income for tax purposes.

    2. Income Tax for Sole Traders

    In Australia, sole traders are required to pay income tax on their business profits. Your income tax is calculated based on your net business income (income minus allowable business expenses). The amount of tax you owe depends on your total taxable income, which includes income from your sole trader business and any other income you might have (such as salary or investment income).

    3. Goods and Services Tax (GST)

    In Australia, Goods and Services Tax (GST) is a 10% tax applied to most goods and services. Sole traders are required to register for GST if their annual turnover exceeds $75,000. If you are under this threshold, registering for GST is optional, but it may be beneficial if you expect to deal with other GST-registered businesses or plan to claim GST on business-related purchases.

    4. Allowable Business Deductions

    As a sole trader, you can reduce your taxable income by claiming deductions for allowable business expenses. These are costs incurred in running your business that are necessary for producing income.

    5. Pay As You Go (PAYG) Instalments

    While sole traders are generally required to pay tax at the end of the financial year, some may be required to make Pay As You Go (PAYG) instalments during the year. This system helps you pay tax in smaller amounts as you earn income, rather than one lump sum at the end of the year.

    If your business is expected to earn over a certain amount, the ATO may automatically require you to pay PAYG instalments. The ATO will send you an instalment notice with the amount you need to pay. You can adjust the instalment amount if your income changes during the year, but you must keep track of your income to avoid penalties.

    7. Final Thoughts

    Becoming a sole trader in Australia can be a great way to start your own business, but it’s important to stay on top of your tax obligations. From income tax to GST and superannuation, managing your taxes properly will ensure that you meet your legal obligations and avoid any unpleasant surprises at tax time.

    Make sure to:

    • Register for an ABN (Australian Business Number) if you haven’t already.
    • Keep accurate records of your income and expenses.
    • Lodge your tax return on time and pay any tax owed.
    • Stay up-to-date with changes in tax law, such as the GST threshold or superannuation contribution limits.

    If you’re unsure about your tax obligations or need help managing your tax affairs, Contact S & H Tax Accountants Today. We have an excellent team, that is always willing to help and prioritises your growth! Book an appointment today, call us on 03 8759 5532 or email us on info@sahtax.com.au

  • What are the different type of taxation obligations in Australia

    What are the different type of taxation obligations in Australia

    Different Types of Taxation Obligations in Australia

    Australia, like many countries, relies on a robust tax system to fund essential public services, infrastructure, and social welfare programs. The Australian taxation system is progressive and multifaceted, with different taxes imposed at the federal, state, and local levels. Understanding the various types of tax obligations is essential for individuals, businesses, and organizations to ensure compliance and optimize their financial planning. In this article, we’ll explore the different types of taxation obligations in Australia, highlighting the major taxes and how they affect taxpayers.

     

    1. Income Tax

    Income tax is one of the primary forms of taxation in Australia. It is levied on the earnings of individuals, businesses, and corporations, and is a major source of revenue for the government. The Australian Taxation Office (ATO) is responsible for administering income tax.

    • Personal Income Tax:
      • Individuals in Australia are taxed on their taxable income, which includes wages, salaries, business income, investment income, and certain government benefits.
      • The income tax system in Australia is progressive, meaning the rate of tax increases as income rises. The rates for individuals (as of the 2023-2024 financial year) range from 0% for income below a certain threshold, to 45% for income above AUD 180,000. There is also a Medicare Levy of 2% applied to most taxpayers’ income, which helps fund the country’s public health system.
      • Taxable income can be reduced by deductions for work-related expenses, charitable donations, and certain other expenses, as well as tax offsets for eligible individuals.
    • Corporate Income Tax:
      • Australian companies pay tax on their profits, with the standard corporate tax rate being 30%. Small businesses with an annual turnover of less than AUD 50 million may qualify for a lower tax rate of 25%.
      • Companies can also claim deductions for legitimate business expenses, such as wages, rent, and operating costs, to reduce their taxable income.

    2. Goods and Services Tax (GST)

    Goods and Services Tax (GST) is a value-added tax applied to most goods and services sold in Australia. It is one of the most widely encountered taxes for businesses and consumers alike.

    • GST Rate: The standard rate for GST is 10%, which is added to the price of most goods and services.
    • Who Pays GST: The tax is ultimately paid by the consumer, but businesses are responsible for collecting and remitting it to the ATO. Businesses that are registered for GST must charge GST on their taxable sales and can claim GST credits for the GST paid on business-related purchases.
    • GST Exemptions: Some goods and services are exempt from GST, including certain healthcare services, educational courses, and basic food items.

    3. Payroll Tax

    Payroll tax is a state-based tax levied on businesses with a certain level of payroll. This tax is paid to the state or territory in which the business operates, not the federal government.

    • Who Pays: Employers are required to pay payroll tax if their total taxable wages exceed the threshold set by the state or territory in which they operate. This threshold can vary significantly from state to state, but in many places, it starts around AUD 1.5 million annually.
    • Rate: The payroll tax rate typically ranges from 4% to 6%, depending on the jurisdiction. For example, in New South Wales, the rate is 5.45%, while in Victoria, it is 4.85%.

    4. Capital Gains Tax (CGT)

    Capital Gains Tax (CGT) is a tax on the profit made from the sale of certain assets, such as real estate, shares, and business assets.

    • Who Pays CGT: Both individuals and businesses are subject to CGT when they dispose of an asset and make a capital gain. The tax is calculated on the difference between the asset’s purchase price (or cost base) and the sale price.
    • Exemptions: Primary residences are generally exempt from CGT (though there are exceptions), as are certain assets held for longer than 12 months, which may qualify for a 50% discount on the capital gain.
    • Taxable Event: The tax is triggered when the asset is sold or otherwise disposed of, such as when it is gifted or transferred.

    5. Fringe Benefits Tax (FBT)

    Fringe Benefits Tax (FBT) is a tax paid by employers on certain non-cash benefits provided to their employees or associates. This tax is designed to capture benefits that are provided in lieu of salary or wages, such as company cars, low-interest loans, or subsidized housing.

    • Who Pays: The employer is responsible for paying the FBT, not the employee. However, the cost of FBT can influence an employer’s decision to provide fringe benefits.
    • Rate: The current FBT rate is 47%, which reflects the total grossed-up value of the benefits provided to employees.

    6. Stamp Duty

    Stamp duty is a tax levied by state and territory governments on certain legal documents and transactions, such as the transfer of property and vehicles.

    • Property Stamp Duty: When purchasing property, buyers must pay stamp duty, which is calculated as a percentage of the property’s purchase price or market value. The rate varies between states and can be a progressive tax, where the rate increases as the property value rises.
    • Vehicle Stamp Duty: Buyers of new or used vehicles must also pay stamp duty, based on the value of the vehicle or its market price.

    7. Superannuation Contributions Tax

    In Australia, superannuation is a system that requires employers to contribute a portion of employees’ wages into a superannuation fund to support the employee’s retirement. Contributions to super are taxed at a lower rate than ordinary income.

    • Employer Contributions: Employers must contribute 11% of an employee’s earnings (as of 2023) into a superannuation fund. This is known as the Superannuation Guarantee (SG).
    • Tax on Contributions: Contributions made by employers to employees’ super accounts are taxed at a flat rate of 15% for most people, which is lower than the individual income tax rates. However, individuals earning more than AUD 250,000 per year are subject to an additional 15% tax on contributions above this threshold.

    Conclusion

    Australia’s tax system is comprehensive and designed to cater to various aspects of personal, business, and economic activity. Understanding the different types of tax obligations—such as income tax, GST, payroll tax, and others—is essential for ensuring compliance with the law and minimizing the risk of penalties. For individuals, businesses, and investors alike, staying informed about the changing tax landscape and seeking professional advice when needed can help make the most of available tax deductions and exemptions, ultimately contributing to a more efficient and fair tax system for all Australians.

    If you need assistance in makings sure which tax obligations are eligible for you, then please contact S & H Tax Accountants today. We have an excellent team of well-qualified, vastly experienced and very professional individuals. Book an appointment today with S & H Tax Accountants as we prioritise your growth, call us on 03 8759 5532 or you can email us on info@sahtax.com.au

  • What is Accounting

    What is Accounting

    What is Accounting?

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

    Accounting can be divided into several branches:

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

    Advantages of Accounting

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

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

    Disadvantages of Accounting

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

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

    Conclusion

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

  • Small business savvy: tips for managing your business finances

    Small business savvy: tips for managing your business finances

    When you run your small business, you have a lot on your plate. That makes it tempting to let some tasks slide, especially tasks that are related to finances, which can be challenging and often outside your preferred skill set or experience.

    Here are some financial best practices for managing your business, so you can have the best chances of success.

    Pay yourself

    As a small business owner you may be tempted to keep putting every cent you earn back into your small business, but it’s important to compensate yourself as well. You need to pay your own bills and be financially sound personally. You’ll also need to have money set aside for your retirement.

    Make sure you draw a regular income from your business that you use to take care of your personal expenses.

    Have a separate business bank account

    Keeping your business and personal finances together makes it more difficult to track how your business is doing, and how you’re doing. When you have separate bank accounts for your business and personal finances you can more easily monitor where and how you’re spending money. Finally, it makes things easier to track for tax purposes.

    Have separate accounts for your business and for your personal finances and deposit your salary (see the above tip) into your personal account.

    Have a good billing strategy

    When you own a business you’ll deal with clients who are slow to pay their bills. Money your clients owe you isn’t accessible to you until it’s in your bank account. Monitor your invoicing system to see which clients pay you on time and who takes their time paying your invoices. If you have too much money tied up in unpaid invoices, you may need to adjust your payment policies.

    Consider charging interest on late payments or giving more strict terms. Or you could offer a slight discount if they pay within 10 days of invoicing. See if you can charge a deposit for your goods or services so you still have some cash flow while waiting for clients to pay the remainder.

    Remember to invoice immediately and follow up before the payment deadline, so you aren’t stuck waiting for payment. If your clients are large companies with their own payment terms, find out what those are and be mindful of them when billing.

    Keep your receipts

    Now that there are digital platforms for managing the financial aspects of your business, you don’t have to have physical receipts taking up space in your office. Instead, you can go paperless, and keep all your receipts digitally.

    Make sure you know the laws in your area for how long you have to hold onto receipts, pay records and other financial documents and keep them for at least that long. If you do still use paper receipts, make sure you have a way of storing them so they’re easy to manage and find when you need them.

    Have a budget

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

    Final thoughts

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

    Want to learn more about how we can help you stay on top of your finances? Contact S & H Tax Accountants today. We do not only offer taxation services, but we also offer business assistance, such as registering a business or even just business advice. We have a wonderful team that will assist you with any questions that you may have as we always aspire to prioritise our clients growth. 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

  • Financial statements showdown: what each report shows you about your business

    Financial statements showdown: what each report shows you about your business

    Understanding financial statements might sound daunting, but it’s crucial for small business owners to stay on top of their game. Each financial report offers unique insights into different aspects of your company’s health. This listicle will break down the essentials, helping you make informed decisions and ultimately steer your business toward success.

    1. Balance sheet

    What is it?

    The balance sheet provides a snapshot of your company’s financial position at a specific point in time. It details what your business owns (assets), what it owes (liabilities), and the equity held by shareholders.

    Why it matters

    • Assessing net worth: By understanding your assets and liabilities, you can easily calculate your company’s net worth.
    • Financial stability: The balance sheet helps you gauge whether your business is financially stable or if it’s relying too much on borrowed funds. 

    Practical tip

    Regularly review your balance sheet to make informed decisions about investing and financing to foster growth. For example, if you notice a high level of liabilities compared to assets, consider strategies to reduce debt.

    2. Income statement

    What is it?

    Also known as the Profit and Loss Statement, the income statement outlines your company’s revenues and expenses over a specific period. It reveals whether your business is making a profit or incurring a loss.

    Why it matters

    • Operational efficiency: By reviewing your income statement, you can identify how efficiently your business is operating.
    • Profitability: It shows your ability to generate profit by increasing revenue or reducing costs.

    Practical tip

    Keep an eye on trends in revenue and expenses. For instance, if your operating expenses are consistently rising, it may be time to re-evaluate your cost management strategies.

    3. Cash flow statement

    What is it?

    The cash flow statement details how cash enters and leaves your business. It is divided into three sections—operating, investing, and financing activities—showing how well your company manages its cash.

    Why it matters

    • Liquidity: It helps you understand your company’s ability to meet short-term obligations.
    • Expense management: By tracking cash flows, you can make more informed decisions about spending and saving.

    Practical tip

    Pay close attention to the cash flow from operations. If you’re consistently seeing negative cash flow, it’s a sign that you need to improve your operational efficiency or adjust pricing strategies.

    4. Statement of changes in equity

    What is it?

    This lesser-known but important report details the changes in the equity section of your balance sheet over a specific period. It includes contributions from shareholders and retained earnings.

    Why it matters

    • Investment decisions: Helps investors understand how their investments are performing.
    • Retention strategy: Shows how profits are being reinvested into the business.

    Practical Tip

    Use this statement to communicate with potential investors. Highlight how you reinvest profits to fuel growth, showcasing your commitment to long-term success.

    5. Financial ratios

    What are they?

    Financial ratios are derived from your financial statements and provide deeper insights into your company’s performance. Key ratios include profitability, liquidity, efficiency, and solvency ratios.

    Why they matter

    • Quick insights: Ratios offer a quick snapshot of your business health.
    • Benchmarking: Compare your ratios with industry standards to see how your business stacks up.

    Practical tip

    Calculate the current ratio (current assets divided by current liabilities) to assess your short-term financial health. A ratio above 1 indicates good liquidity.

    6. Notes to the financial statements

    What are they?

    These notes provide additional context, explaining the methods used in preparing the financial statements and offering detailed breakdowns of certain items.

    Why they matter

    • Transparency: Enhances the transparency of your financial reporting.
    • Clarity: Helps stakeholders understand the numbers better, leading to more informed decisions.

    Practical tip

    Ensure the notes are detailed and clear. Transparency builds trust with investors and other stakeholders, making them more likely to support your business.

    Finally

    Understanding your financial statements is not just about compliance; it’s about gaining the insights needed to make strategic decisions. Whether it’s evaluating your net worth through the balance sheet, assessing profitability via the income statement, or managing liquidity with the cash flow statement, each report offers valuable information.

    Ready to take control of your financial health? If you need advice or assistance, reach out to S & H Tax Accountants today. Our team consists of well qualified, vastly experienced and extremely professional. Book an appointment with us today, contact us on 03 8759 5532 or you can email us on info@sahtax.com.au

  • The importance of bookkeeping

    The importance of bookkeeping

    As a business owner, you’ll need to stay informed about your finances and your financial situation. You do this through bookkeeping. Bookkeeping is the process of recording transactions in your business. This includes any transactions, credit card charges and any other financial activity that happens within your company.

    How good bookkeeping helps you

    Bookkeeping is vital for any business. First, it helps you understand your finances. Bookkeeping gives you insights into your income and expenses, such as:

    • How much money you’ve made
    • How much money needs to be paid for bills or salaries 
    • How much money should be put away for taxes or other unexpected costs 

    Bookkeeping also helps keep track of all your business transactions. A good system will serve as an audit trail showing every transaction that has taken place within your company. This includes purchases from suppliers, sales made to customers and bills paid out by suppliers or employees (like salaries). 

    If there are any irregularities such as missing items on purchase orders then this information will quickly become apparent. You get transparency into your business, a way to ensure you remain compliant with laws, and valuable insights to help you make smarter decisions. 

    When to hire a bookkeeper

    There are many scenarios where it makes sense to hire a bookkeeper. These depend on your business set up and your own abilities. 

    You should consider hiring a bookkeeper if you have

    • More than one employee
    • Multiple business locations
    • A complex business structure
    • Concerns about making errors in your books that could lead to fines or penalties
    • Too much work to do and bookkeeping constantly gets pushed to the side
    • A lack of experience with bookkeeping and are uncertain about how to go about it, so you avoid it.

    What a bookkeeper can provide for you

    Expertise

    Bookkeepers are experts at managing, sorting and recording your business’s financial transactions. They’ve spent time developing their skills and experience. During that time, they’ve also seen and resolved bookkeeping-related issues that you may come up against. Their expertise makes them more efficient at managing those issues. 

    Beyond that, they understand business trends and challenges others in your industry face, and can help you move through those as well. They also know what questions to ask to help you make important decisions and can share best practices with you. 

    Guidance

    Your bookkeeper not only helps you maintain accurate records, they understand your financial circumstances. They help you assess how to make important business decisions, such as whether now is a good time to grow or when you should hold back. They can also identify trends in your industry and help you take advantage of those opportunities.

    Finally, they can assist you with budgeting, and sticking to your budget. They’ll help you come up with a realistic financial plan that enables your business to grow while achieving short- and long-term goals.   

    Time savings

    As a business owner, you likely have many activities to focus on. In bookkeeping alone there are numerous tasks to be responsible for, such as:

    • Collecting and recording transaction data
    • Sorting receipts
    • Classifying expenses
    • Invoicing customers
    • Paying vendors
    • Managing payroll. 

    Bookkeepers take on those tasks so you don’t have to. It’s not just about the energy you put into them, it’s about the fact that unless you’re an expert at bookkeeping, it’ll likely take you longer to complete these activities than it would take a bookkeeper. That can add up to a lot of extra hours. 

    By hiring a bookkeeper,  you save yourself that valuable time for other activities such as marketing, perfecting your products or even spending time with family. 

    Money savings

    There’s a time cost to doing your own books, but there’s also a potential money cost in the form of missed opportunities. The time you spend doing your own books is time you could potentially be out creating or taking advantage of new opportunities for your business. Your bookkeeper frees you up so you have the time and energy to identify potential opportunities. They can also advise you on whether you’re in a good financial position to jump on those possibilities. 

    Additionally, the expertise bookkeepers bring to their activities means they’re likely to save you from costly mistakes that could affect your finances. 

    Final thoughts

    There are many good reasons to hire a bookkeeper. Whether you do it on your own or hire someone, bookkeeping is an essential part of running a successful business. If you’d like to learn more about how we can help you, contact us today for more information. 

    S & H Tax Accountants, also offer bookkeeping services to our clients. Bookkeeping is an essential part of managing a business or even organising expenses for an individual. We have a team of individuals who are well-qualified, vastly experienced and extremely professional. If you need assistance with bookkeeping contact us today and book an appointment today, call us on 03 8759 5532 or email us on info@sahtax.com.au

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

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

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

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

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

    Be clear about your goals

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

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

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

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

    Check their qualifications

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

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

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

    Ask questions

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

    Additionally, inquire about

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

    Find out their payment structure

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

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

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

    Final thoughts

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

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

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

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

    What is the Current Ratio?

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

    Inputs: the building blocks

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

    Current Assets might include:

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

    Current Liabilities cover:

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

    The formula (I promise it’s easy!)

    Ready for the magic formula? Here it is:

    Current Ratio = Current Assets / Current Liabilities

    An example to clear things up

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

    Current Ratio vs. Quick Ratio

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

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

    Wrapping it up

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

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

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

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

  • Record keeping for construction businesses

    Record keeping for construction businesses

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

    Contractor paperwork documentation and procedures

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

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

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

    Using Digital Tools and Software

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

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

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

    What to look for

    Real-time reporting capability

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

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

    Accessibility

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

    Good Support

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

    Security

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

    Construction project management tool checklist

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

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

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

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

    Get in touch with us if you have any questions. 

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

     

     

  • Navigating cash flow challenges

    Navigating cash flow challenges

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

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

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

    Problem: Lack of cash reserves

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

    Solution:

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

    Problem: Expensive borrowing

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

    Solution:

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

    Problem: Decreasing sales or profit margins

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

    Solution:

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

    Problem: Outstanding Receivables

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

    Solution:

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

    Problem: Uncontrolled business growth

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

    Solution:

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

    Problem: Too much inventory or seasonal changes in demand

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

    Solution:

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

    Problem: Inaccurate forecasting or bookkeeping practices

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

    Solution:

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

    Final thoughts

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

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

  • Changes to NFP Self-Review Return

    Changes to NFP Self-Review Return

    Changes made to NFP Self-Review Return

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

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

    The Self-Review Return

    The self review return will

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

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

    ATO publishes guide for NFP self-review returns

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

     

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

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

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

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

    They are invaluable tools for businesses

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

    Why you need a budget

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

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

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

    Financial forecasting helps you determine where your business is headed 

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

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

    Goals help you budget and forecast more effectively

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

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

    Final thoughts

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

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

  • Financial best practices for small business

    Financial best practices for small business

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

    Pay yourself

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

     Have a separate business bank account

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

    Have a good billing strategy

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

    Keep your receipts

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

    Have a budget

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

    Final thoughts

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

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

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

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

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

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

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

    Regularly review your costs

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

    Check your statements with a fine-tooth comb

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

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

    Be on the lookout for deals

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

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

    Look at ways to bring more money into your business

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

    Amp up your marketing efforts

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

    Manage your receivables effectively

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

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

    Make any cut backs strategically

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

    Reevaluate your pricing

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

    Keep an eye on external influences

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

    Understand your customers

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

    Monitor your competitors

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

    Use the situation to your advantage

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

    Rely on the data

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

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

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

    Working closely with your accountant is a game changer

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

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