S & H Tax Accountants

Tag: Tax Agent Cranbourne

  • Budgeting and cash flow forecasting: key to your business success

    Budgeting and cash flow forecasting: key to your business success

    In the unpredictable world of business, finding a little certainty can make all the difference. While the future remains a mystery, tools such as budgeting and cash flow forecasting can significantly reduce the level of uncertainty, allowing you to anticipate challenges, learn from past events, and enhance your ability to navigate your business.

    Budget vs. Cash Flow: the crucial distinction

    A common misconception is that a budget and cash flow are interchangeable. In reality, a budget is a projection of future possibilities, enabling you to consider various sales and expense scenarios. On the other hand, a cash flow provides a record of actual expenses and sales revenue that flow into and out of your business each month. Although they often deal with the same data, their applications differ. You might budget $1,000/month for online costs, whereas in the cash flow, you’d record the actual amount spent. Despite their distinct uses, cash flow and budgeting are often maintained on the same spreadsheet or similar accounting software for ease of use and comparison.

    The advantages of budgeting and cash flow forecasting

    The benefits of incorporating budgeting and cash flow forecasting in your business are numerous. They help predict and manage potential cash surpluses or shortages, plan for tax obligations, time new equipment purchases, determine when to buy in bulk, and even identify when you might need a small business loan or a line of credit.

    One particularly useful feature is the ability to track expenses and highlight any unusual cost increases or decreases. This allows you to take prompt action to address the issue. Additionally, these tools can help monitor sales levels and flag any underperforming areas of your business.

    Practical tips for effective budgeting

    Preparing an annual budget requires sufficient time – allocate at least two or three months for this process. Update your budget each month based on the actual cash flow. Keep in mind that the sales forecast is often the hardest part to get right. If you’re new to business, examine separate forecasts for different products or geographical areas and note any seasonal patterns in your business and industry.

    Sensitivity analysis: a proactive approach

    A sensitivity analysis, often referred to as ‘what if’ scenarios, can help you understand how different outcomes affect business performance. This analysis allows you to review the effects of changes in your revenue or costs. For example, if one customer contributes thirty percent of your turnover, what would happen if they stopped buying from you?

    The power of regular updates

    Regularly comparing your actual expenditure against your budget enhances your ability to predict future costs accurately. It’s good practice to review and update your budget and cash flow forecasts at least once a month, or more frequently if your business environment is changing quickly.

    Budgeting and cash flow forecasting are powerful management tools that can guide your business decisions. However, their value lies in their regular review and updating, ensuring their figures remain current and reflective of your business’s financial health.

    Contact us now for help with budgeting and cash flow for your business.

    Budgeting and Cash Forecasting are two very important aspects of a businesses financial position, thus it is important for every business to understand the effectiveness of these two concepts. S & H Tax Accountants offer the service of a business consultation, as we also do all taxation services whether it be for a company, sole trader or even a trust. Our team of accountants are committed and driven to help you to achieve your business outcomes. Book an appointment today with S & H Tax Accountants, call us on 03 8759 5532 or email us on info@sahtax.com.au.

     

  • Understanding and improving working capital

    Understanding and improving working capital

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

    How to improve your working capital

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

    Ways to reduce working capital needs

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

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

    Shortening cash cycles

    Another effective strategy is to shorten your cash cycles.

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

    Forecast your cash flow and profit-and-loss

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

    Wrapping Up

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

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

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

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

     

     

     

  • Differences between BAS and IAS

    Differences between BAS and IAS

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

    So what is BAS?

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

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

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

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

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

    Understanding IAS

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

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

    The instalment amounts will be payable as follows:

    IAS Key Dates

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

    How to Navigate BAS and IAS

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

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

    Wrapping Up

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

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

     

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

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

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

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

    Possible causes of missing profits

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

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

    Navigating financial statements

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

    Bridging the gap

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

    Dealing with creditors and debtors

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

    Understanding COGS

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

    The role of reinvestment and owner withdrawals

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

    The Bottom Line

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

    Contact us for a deep dive into your financials.

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

  • Decoding the language of financial ratios

    Decoding the language of financial ratios

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

    Financial ratios: what are they?

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

    They reflect the financial relationships vital to your business operations.

    The power of financial ratios

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

    The ratios that matter

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

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

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

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

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

  • Avoid These 5 Costly Accounting Mistakes

    Avoid These 5 Costly Accounting Mistakes

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

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

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

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

    Mixing personal and professional finances

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

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

    Letting accounts receivable slide

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

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

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

    Not using tech to track your expenses

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

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

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

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

    Final tip: Don’t go it alone

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

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

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

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

  • 5 essential steps to crafting a solid business plan

    5 essential steps to crafting a solid business plan

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

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

    • Gather Relevant Information

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

    • Crunch the Numbers

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

    • Write the Body of the Plan

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

    • Seek Feedback

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

    • Edit and Tighten

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

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

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

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

  • Launching a business? Ask these 9 questions

    Launching a business? Ask these 9 questions

    Starting a new business can be incredibly exciting, but it’s important to thoroughly evaluate your business idea before taking the plunge to ensure you’re creating a sustainable and successful venture. To get started, here are 9 questions to consider as part of an overall evaluation process.
    Save yourself money, time, and heartache down the line by investing a little time now.

    What customer problem does your business solve?

    Your business should aim to solve a customer problem in a unique and innovative way. An idea can be cool or interesting, but that doesn’t necessarily mean that it can meet an existing need in the market.

    If you can identify a problem that many people face and create a business that offers an effective solution, you have a much higher likelihood of success.

    How well does this business fit the current market conditions?

    External factors, such as changes in the economy or advances in technology, can have a huge impact on whether a business will thrive or fail. The rise of sharing and gig economy apps is a great example of this. These apps not only gave consumers more affordable options for daily tasks and errands, but also provided individuals with a new way to earn money on their own schedules.

    Think about any new opportunities that may be available in the current economy and technological landscape.

    What limitations will you encounter?

    Costs may be high, requiring careful planning. It’s possible that you’ll need to educate your customers and convince them to adapt to your business before they’re ready to use it. And let’s not forget about the competition that already exists in the market.

    Are there other businesses already doing what you want to do?

    Find out what’s the closest thing to your business idea already in the marketplace and ask yourself, “Why is my business idea better?” It’s a tough question, but if you have a convincing response, you might just have a good idea.

    Competitor research is key when evaluating your business idea. Knowing who your competitors are, how they operate, and what their strengths and weaknesses are will help you create a successful strategy.

    What is your understanding of the current market and trends?

    Study your market – How big is it? What are the demographics of your market? Who will be your target audience? How much of the market is already cornered by your competition? This will help you to really hone in on your target market.

    What resources do you need to start your business?

    Starting a business requires resources, including financial capital, intellectual property, and staff. Make sure you have the necessary resources lined up, or can access them easily before getting started.

    Knowing what barriers to entry exist is important. These barriers could include high startup costs, tough competitors, or regulatory hurdles that may need to be overcome.

    How will the business make money, and how long will it take?

    Think about how your business will generate income, and how long it will take to get it to a point where it is self-sustaining. Will you be able to keep it afloat until it reaches that point?

    What are the potential risks you face?

    Not every business idea is a guaranteed success. There are always inherent risks involved in starting a new venture. Evaluating these risks and creating contingency plans to address them is an important part of the evaluation process.

    Starting a new business will take long hours, hard work and sacrifices. You’ll have to pour money and time into getting the business off the ground, possibly at the expense of time with your family and friends and financial security. Make sure this is something you really want to do.

    Who is on your team?

    Assembling a great team is vital to starting a successful business. Think about the skill sets necessary for your business idea and start building a team that can bring it to life.

    Not everyone is an expert at everything. So when evaluating a new business idea, you have to ask yourself whether you have the right skills to pull off launching and running the business, or who you can gather around you to support you.

    You can’t do it alone!

    Good luck

    While it might seem that we asked you all these questions to deter you, what we really want is to help you think about what you’ll need to do to turn your idea into a successful business.

    Considering these questions will leave you with a better understanding of the viability of your business idea and the steps needed to make it a success.

    Set your business on the path to success – reach out to us today!

    Starting a new business can be a little daunting, as there is so much to consider whilst doing it. Another factor to consider is the financial position, as it is important that a business has a stable financial position when it is commencing to operate. S & H Tax Accountants offer the service of a business consultation, our accountants are well qualified and vastly experienced. Thus are able to guide you in the correct way and help you to achieve the business of your dreams. Book an appointment today with S & H Tax Accountants, call us on 03 8759 5532 or email us on info@sahtax.com.au

  • 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

     

  • 6 Essential Accounting Terms for Small Businesses

    6 Essential Accounting Terms for Small Businesses

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

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

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

    1. Cash Flow

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

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

    1. Profit and Loss Statement

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

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

    1. Gross vs Net Profit

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

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

    1. Balance Sheet

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

    1. Accounts Receivable & Accounts Payable

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

    1. Bad Debt Expenses

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

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

     

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

  • Your End of Financial Year Checklist

    Your End of Financial Year Checklist

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

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

    1. Your income

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

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

    2. Your deductions

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

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

    Items that may count as deductions:

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

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

    3. Your home office expenses

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

    Among the things you can’t claim as deductions:

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

     

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

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

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

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

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

    Final thoughts

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

  • 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.

  • 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.

  • How small start-ups can level the playing field against established competitors

    How small start-ups can level the playing field against established competitors

    Starting a small business is both exciting and daunting. While the entrepreneurial spirit may drive you to take the leap of faith, the reality is that you may be entering a market that has already attracted some large competitors.

    It can be intimidating to think about competing against larger, more established competitors, but it’s not impossible. Here are some steps you can take to help your small business take on larger, more established companies.

    1. Identify your unique selling proposition (USP)

    Your USP is what sets you apart from everyone else. That USP could be the quality of your product, your excellent customer service, your laser-like focus on one area of expertise, or your innovative approach to solving a problem.

    When identifying your USP, ask yourself what it is that makes you different. Explore why you felt there was a need for your offering–what pain point are you solving that others aren’t already solving? Did you create this business because you noticed a gap in the market? Did you see a problem that didn’t yet have a solution?

    Take time to identify what makes your business unique and use that to your advantage. Highlight your USP in your branding and marketing strategies.

    2. Focus on your niche

    One of the advantages of being a small business is you can be more niched than larger companies. Focus on a specific niche within your industry and become an expert in that area. By honing in on a particular area or pain point, you can create a loyal customer base that appreciates your expertise and the value you bring to the market.

    3. Build strong relationships with your customers

    As a small business owner, you have the opportunity to build personal relationships with your customers. Take the time to get to know your customers and their needs. Provide excellent customer service and go the extra mile to make them feel valued. Ask them what they’d like to see you offer, or how you can serve them better.

    Clients and customers like the personal touch, and they appreciate feeling seen and understood. When you can have a one-on-one relationship with your customers, they’re more likely to stick with you.

    4. Embrace technology

    Technology can level the playing field for small businesses. You can use technology to automate processes, streamline operations, and reach customers online. Embrace social media and digital marketing to expand your reach and build your brand. Use tools like customer relationship management (CRM) software to manage your customer interactions and track your sales pipeline.

    Technology isn’t just for the big companies. Anyone can use it to improve productivity and enhance the customer experience. By leveraging technology, you can compete with larger companies without breaking the bank.

    5. Collaborate with other small businesses

    Collaborating with other small businesses can help you reach a wider audience and gain credibility. Look for opportunities to work with businesses that complement your products or services. For example, if you run a boutique clothing store, you could collaborate with a local shoemaker to offer a bundled product. By working together, you can tap into each other’s customer base and create a mutually beneficial relationship.

    6. Offer excellent value

    Large companies may have more resources, but that doesn’t mean they always offer the best value. As a small business, you can provide excellent value by offering personal service, high-quality products, and competitive pricing. Make sure you price your products and services competitively while still maintaining profitability.

    By offering excellent value, you can build a loyal customer base that will choose your business over larger competitors.

    7. Stay nimble

    A huge advantage of being a small business is your ability to pivot and adapt. You can make an adjustment in much less time than a large company can. Traditionally, large companies stay more focused on their traditional offerings, preferring not to experiment or make changes, which gives you an edge.

    Stay nimble and be willing to adjust your strategy as needed. Keep an eye on market trends and be open to new opportunities. As you become more of an expert in your field you’ll be able to anticipate changes in the market.

    Don’t be afraid to experiment and try new things. By staying nimble, you can stay ahead of the competition and adapt to changing market conditions.

    By identifying your USP, focusing on your niche, building strong relationships with your customers, embracing technology, collaborating with other small businesses, offering excellent value, and staying nimble, you can take on the big players in your industry. Remember, success doesn’t happen overnight. It takes hard work, dedication, and a willingness to learn and adapt. Keep pushing forward, and you’ll get there.

    We understand that it can be difficult to start-up a business, that is why we here at S & H Tax Accountants are here to help. Our accountants are well-qualified and experienced and thus, are able to give accurate advice and help their clients. We aim to provide the best possible service to our clients such as collaboration with small businesses and ways to make an excellent customer base. Book an appointment with S & H Tax Accountants call us at 03 8759 5532 or email us at info@sahtax.com.au.

  • Managing Debt and Creating a Debt Repayment System

    Managing Debt and Creating a Debt Repayment System

    Debt can be a significant burden on one’s financial life. It can cause stress, anxiety, and make it difficult to achieve financial goals. However, with a little planning and dedication, anyone can create a debt repayment system and get on the path to financial freedom.

    Here are some tips for managing debt and creating a debt repayment system:

    Take Stock of Your Debt

    The first step in managing debt is to understand the extent of the problem. Make a list of all the debts you have, including the balance owed, interest rate, and monthly payment. This will help you determine which debts to tackle first and give you a clear picture of your overall debt situation.

    Focus on High-Interest Debt

    High-interest debt, such as credit cards or personal loans, should be your top priority. These debts often have interest rates of 15% or higher, making them the most expensive debts to carry. By paying off high-interest debt first, you can save money on interest charges and free up more money to pay off other debts.

    Create a Budget

    To pay off debt, you need to free up money in your budget. A budget can help you track your expenses, identify areas where you can cut back, and allocate more money towards debt repayment. Be sure to include debt payments as a fixed expense in your budget, so you don’t fall behind on payments.

    Consider Consolidating Debt

    If you have multiple high-interest debts, consolidating them into one loan can make it easier to manage and potentially lower your interest rate. You can consolidate debt by taking out a personal loan or using a balance transfer credit card. Just be sure to compare interest rates and fees to ensure you’re getting a good deal.

    Make Extra Payments

    Making extra payments towards your debt can help you pay it off faster and save money on interest charges. Even small extra payments can make a big difference over time. Consider using any extra money you receive, such as a tax refund or bonus, towards debt repayment.

    Automate Payments

    Setting up automatic payments for your debt can help you stay on track and avoid late fees. Many lenders and credit card companies offer automatic payments, so you don’t have to worry about remembering to make a payment each month.

    Stay Motivated

    Paying off debt can be a long and challenging process, but staying motivated can help you stick to your debt repayment plan. Set small goals along the way, such as paying off a credit card or reaching a certain milestone, to help you stay on track.

    In conclusion, managing debt and creating a debt repayment system requires discipline, dedication, and a plan. By taking stock of your debt, starting with high-interest debt, creating a budget, considering consolidating debt, making extra payments, automating payments, and staying motivated, you can pay off debt and achieve financial freedom. Remember, it’s never too late to start, and every small step towards debt repayment counts.

     

    We understand that managing your debt can be difficult and tiring. To relief your stress, contact S & H Tax Accountants. We are a local accounting firm that is known as one the best firms in Cranbourne. We have excellent staff, that can help make a debt repayment system, as our accountants are well-qualified and experienced. Make a booking today at S & H Tax Accountants, call us on 03 8759 5532 or you can email us on info@sahtax.com.au.

  • 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.

  • 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.

  • 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