Estate planning and SMSF can play a large role when it comes to Estate planning, which is an often-overlooked aspect of financial planning when executing your Will, superannuation, and wishes.

Estate planning determines how your assets will be distributed once you pass away. However, estate planning can be complicated and overwhelming, which is why Self-Managed Super Funds (SMSFs) have become popular.

SMSFs are a powerful tool for estate planning and managing your retirement savings.
Whether you’re new to estate planning or simply looking for a more efficient way to manage your assets, leveraging the power of SMSF can help you achieve your financial goals and ensure that your assets are distributed according to your wishes.

Understanding SMSF and its benefits for estate planning

SMSF is a type of super fund that is managed by its members. It provides more flexibility and control over your retirement savings compared to the public APRA super funds. SMSFs can invest in a wide range of assets, including property, shares, and managed funds. This makes them a popular choice for those who want to take a more active role in managing their retirement savings and buy property direct.

Estate planning and SMSF provide benefits for estate planning that should not be overlooked. Unlike other super funds, SMSF members have more control over how their assets are distributed after their passing. With an SMSF, you can nominate who receives your benefits and how they are distributed. This means your assets can be distributed according to your wishes, which can provide peace of mind for you.

SMSF vs. other estate planning options

An SMSF forms part of a structure to manage your estate planning wishes. This, combined with your wills, a family trust and other measures, ensure the correct outcome.

SMSFs also provide tax benefits for estate planning. For example, assets held in an SMSF are not subject to capital gains tax (CGT) when they are sold after the member’s death. This can provide significant tax savings for your beneficiaries.

Creating an estate plan using SMSF

Creating an estate plan using SMSF involves several steps.

We first must look at the Fund’s assets and the members’ wishes. Look at the age and composition of your SMSF . Are there others in the Fund that may continue after your death?

Those in pension mode may choose to allow the Death Benefits to be rolled over to a remaining dependent in the fund via the use of a reversionary pension. The advantage to this is that the benefit does need to come out of Super.

Other members may choose to prepare a binding death benefit nomination (BDBN). This legal document specifies who will receive your benefits and how they will be distributed after your passing.
When creating a BDBN, it’s important to consider the needs of your beneficiaries. For example, you may want to provide for your spouse’s retirement needs or ensure that your children receive an education. You should also consider the tax implications of your estate plan and how they will affect your beneficiaries.
Once you have created a BDBN, you should review it regularly to ensure it still reflects your wishes. You should also keep your beneficiaries informed of your estate plan so they know what to expect after your passing.

Understanding who is a dependent for Superannuation purposes

Under the Superannuation Industry (Supervision) Act 1993 (SIS), benefits may be paid to one or more of the member’s dependants or their legal personal representative (LPR), i.e. the estate, subject to the fund’s governing rules.(check Trust Deed)

A dependant for these purposes (known as an SIS dependant) includes:
• the member’s spouse – legally and de facto
• the member’s child (of any age), and
• someone with whom the member has an interdependency relationship (generally someone with whom the member has a close personal relationship and lives, and where one or each of them provides the other with domestic support and personal care).

A “SIS dependant “also includes someone who is a dependant within the ordinary meaning of that term (an ‘ordinary meaning’ dependant), such as a person who may not be a spouse or child but who depends on the member financially. If an individual is not an SIS dependant, they can only receive a member’s death benefits via the deceased member’s estate.

Common mistakes to avoid in SMSF estate planning

There are several common mistakes to avoid when creating an estate plan using SMSF.

These mistakes include:
• Failing to create a BDBN: Without a BDBN, your benefits may not be distributed according to your wishes.
• Failing to understand who may control your SMSF after your death.
• Failing to have your Trust Deed updated regularly and referring to this in the Estate planning process.
• Best practice is to have a corporate trustee
• Failing to set up the right pension and the conflict between DBBN and reversionary pension.
• Failing to recognize who is dependent vs nondependent.
• Failing to review your estate plan regularly: Your circumstances may change over time, so it’s important to review your estate plan regularly to ensure it still reflects your wishes.
• Failing to keep your beneficiaries informed: Your beneficiaries should be informed of your estate plan, so they know what to expect after your passing.

Choosing the Right Accountant for estate planning

Choosing the right SMSF provider is important for estate planning. You should look for a provider that has experience in estate planning and can provide professional advice.
Our role at Gartly Advisory is to help advise Trustees in the Estate Planning process.
In many cases, we will assist the Trustee in the decision process of whether it is appropriate to wind up the SMSF and to be strategic about their estate planning and smsf.

SMSF estate planning checklist

To help you create an estate plan using SMSF, here’s a checklist of things to consider:
• Create a BDBN and make sure your will works in conjunction with your super strategy
• Review your estate plan regularly.
• Brief your POA and appointer legal representative of your wishes post death as they should be appointed to your SMSF to act post death
• Keep your Deed up to date.• Keep your beneficiaries informed.
• Consider the tax implications of your estate plan
• Choose the right SMSF provider
Estate planning should not be overlooked.

By leveraging the power of SMSF, estate planning can give estate planning control over your retirement savings and can be used to create a tax-efficient estate plan. Peace of mind knowing that your superannuation ends up with the right loved ones is a powerful aspect of having an estate plan.

How can I make my small business successful is something all business owners strive to do. The road to success is not always smooth, and there are obstacles to overcome. However, with the right strategies and mindset, you can achieve your goals and thrive in today’s competitive marketplace.

In this article, we’ll explore some key tips and tactics that can help you take your small business to the next level. From defining your niche and target audience to creating a strong brand and building a solid online presence, we’ll cover everything you need to know to make your small business a success.

Defining my small business successful vision

Before we dive into the strategies that can help your small business succeed, it’s essential to understand what success means to you. Success means different things to different people, and what may be considered successful to one person may not be to another. For some, success may mean financial independence, while for others, it may be the ability to make a positive impact in the world.
Regardless of what success means to you, it’s crucial to have a clear idea of what you’re aiming for. Setting clear goals and objectives will help you stay focused and motivated as you work towards achieving your vision. It’s also essential to track your progress regularly and make adjustments where necessary.

The importance of a business plan

Having a solid business plan is essential for any small business growth. A business plan is a written and outlines your business goals, strategies, and financial projections. It serves as a roadmap for your business and helps you stay on track as you work towards achieving your goals.
A business plan should include a description of your business, your target market, your competition, your marketing strategy, and your financial projections. It should also outline your unique value proposition and how you plan to differentiate yourself from the competition.
A well-crafted business plan can help you secure funding, attract investors, and make informed decisions about the direction of your business. Our team can help you here.

Understanding your target audience

Knowing your target audience is crucial for the success of your small business. Your target audience is the group of people who are most likely to buy your product or service. Understanding their needs wants, and preferences are essential for creating a marketing strategy that resonates with them.

Once you have a clear understanding of your target audience, you can tailor your marketing messages, product offerings, and customer service to meet their needs.

Developing a unique value proposition

A unique value proposition (UVP) is what sets your business apart and helps with small business growth. It’s the reason why customers should choose your product or service over others. Your UVP should be concise, clear, and compelling.

To develop a UVP, start by identifying your target audience’s pain points. Then, think about how your product or service can solve those problems or meet those needs. Your UVP should communicate the benefits of your product or service in a way that resonates with your target audience.
Your UVP should be prominently displayed on your website, marketing materials, and social media

channels. It should be a key part of your brand identity and messaging.

Building a strong brand identity

A strong brand identity is essential to make a small business successful. Your brand identity is how your business is perceived by your target audience. It includes your logo, colour scheme, messaging, and overall aesthetic.

To build a strong brand identity, start by defining your brand values and personality. Think about what you want your brand to represent and how you want to communicate with your target audience. Your brand identity should be consistent across all your marketing materials, from your website to your social media channels.

Crafting a marketing strategy

A marketing strategy helps in reaching and engaging with your target audience. It is the fertaliser for small business growth. It includes the tactics and channels you’ll use to promote your product or service. A marketing strategy should be tailored to your target audience and should align with your business goals.

Leveraging technology to streamline operations

Technology can be a powerful tool for streamlining your business operations and improving efficiency. There are many software solutions available that can help you automate tasks, manage inventory, and track customer data.

Investing in a customer relationship management (CRM) system can also help you keep track of customer interactions and improve customer service. A CRM system can help you identify patterns in customer behaviour and tailor your marketing messages to their needs and preferences.

Managing finances, and taxes effectively find a good small business accountant

Managing your finances effectively is crucial in making your small business successful. It’s essential to keep track of your income and expenses, create a budget, and plan for unexpected expenses.
Investing in accounting software can help you automate financial tasks and generate reports that provide insight into your business’s financial health. At Gartly Advisory we love working with small businesses. It’s important to work with an accountant advisor who can help you make informed decisions about managing your finances, taxes and your future.

Understand where you are in areas such as:

• Taxes
• Profitability
• Your future
• And the value of your business

Take our 13-minute in-depth Value Builder quiz and get your free report

Continuously adapting and evolving

Lastly, it’s important to remember that making your small business successful is not a one-time event. It’s a continuous process of adapting and evolving to meet the ever-changing needs of your target audience and the marketplace.

Building a successful small business takes hard work, dedication, and a bit of strategy. By defining your niche and target audience, developing a unique value proposition, building a strong brand identity, and crafting a marketing strategy, you can create a business that resonates with your target audience and stands out from the competition.

Leveraging technology to streamline operations, building a strong team, managing finances effectively, and continuously adapting and evolving can help you stay ahead of the curve and achieve your business goals. Remember, success is not a destination; it’s a journey. Stay focused, stay motivated, and keep moving forward.

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Dividend vs keeping the profits in retained earnings

Should I pay a dividend from my company? When it comes to running a successful business, one of the most important decisions you’ll have to make is what to do with your profits. Should you pay a dividend to yourself as the business owner, or reinvest the money back into the company? It’s a question that many business owners struggle with, and there’s no one-size-fits-all answer.

We argue that paying dividends is a great way to reward the owners.

Others believe that reinvesting profits is the key to long-term growth and success. In this article, we’ll explore the pros and cons of both options, so you can make an informed decision that’s right for your business.

Understanding Dividends and How They Work

First, let’s define what a dividend is. A dividend is a payment made by a company to its shareholders, usually in the form of cash or additional shares or allocated to the loan account. Dividends are paid out of a company’s profits and are distributed on a regular basis, such as quarterly or annually.

There are different types of dividends, such as regular dividends, and special dividends.

Regular dividends are the most common type and are paid out on a regular basis. Special dividends are a one-time payment made by the company, usually when the company has extra profits. Stock dividends are paid in the form of additional shares of stock instead of cash.

Pros and Cons of Paying Dividends to Shareholders

Now that we know what dividends are, let’s explore the advantages and disadvantages of paying dividends to shareholders.

Advantages of Paying Dividends

One of the main advantages of paying dividends is that it can be a great way to reward you as the owner. Shareholders receive a share of the company’s profits, and this can help to attract new investors and retain existing ones.

Importantly paying dividends reduces Retained Earnings. This reduction in retained earnings for a small business helps :

• The flow of profits for tax purposes
• The impact of holding too much capital that exposed if there is a legal claim against the company.

Disadvantages of Paying Dividends

One of the main disadvantages of paying dividends is that it can limit the company’s ability to reinvest in the business. When a company pays a dividend, it’s taking money out of the company that could be used to fund growth initiatives or invest in new projects. If the company doesn’t have enough cash to fund these initiatives, it may need to raise additional capital through debt or the owners lending money back

Another disadvantage of paying dividends is that it can create expectations among shareholders. If a company pays a dividend, shareholders may expect the company to continue paying dividends in the future.

Advantages and Disadvantages of Keeping Profits in the Company

Now, let’s explore the advantages and disadvantages of keeping profits in the company, rather than paying dividends.

Advantages of Keeping Profits in the Company

One of the main advantages of keeping profits in the company is that it allows the company to reinvest in the business. By reinvesting profits, the company can fund growth initiatives, invest in new projects, and improve its products or services. This can help to increase the value of the company over time and attract new investors.

Keeping profits in the company can also help to reduce the company’s reliance on external financing. If the company has enough cash to fund its growth initiatives, it may not need to raise additional capital through debt or equity financing. This can help to reduce the company’s debt load and improve its financial health.

Disadvantages of Keeping Profits in the Company

One of the main disadvantages of keeping profits in the company is that it can inhibit profit reward and extraction. If the company doesn’t pay a dividend, shareholders won’t receive a share of the profits in the short term.

As the owner this has 2 serious disadvantages

• NO reward in short term for your hard work
• Taxation – distributing in a regular method allow better tax planning
• Not declaring a divided but still taking the money may create a DIV 7a loan – not advisable

Another disadvantage of keeping profits in the company is that it can create excess cash that isn’t being used effectively. A business owner should have a clear plan for how to reinvest its profits. If not, it may be better to distribute the profits to shareholders in the form of a dividend.

Finally take profits as you go and dont leave it for someone else if something goes wrong ie liquidation or legal action . Paying out dividends is like passing the gate way of no return. Be careful though as declaring a dividend with poor trading can lead to insolvent trading!

Criteria for Deciding Whether to Pay Dividends or Keep Profits

Let’s look at some criteria for deciding which option is best for your business.

Analyzing the Financial Health of the Company

One important criterion for deciding whether to pay dividends or keep profits in the company is the financial health of the business. If the company is financially stable and has excess cash, it may be a good idea to pay a dividend. However, if the company is in a growth phase and needs to reinvest profits to fund growth initiatives, it may be better to keep the profits in the company.

Considering the Company’s Growth Potential

Another important criterion is the company’s growth potential. If the company has a high growth potential, it may be better to reinvest profits in the business. Thereby funding growth. However, if the company doesn’t have many growth opportunities, it may be better to pay a dividend . Reward shareholders and extract the excess cash from the business.

Evaluating the Shareholder’s Preferences

Finally, it’s important to consider the preferences of the company’s shareholders. Some shareholders may prefer to receive a dividend, yet the other business owner may prefer to see the company reinvest profits in the business. It’s important to understand the preferences of the company’s shareholders and make a decision that’s in their best interests.

Look at the Franking account as a small business and see how this may impact your future tax liability personally. Remember declaring a franked dividend have credits attached. However, while tax is paid with the lowering of the company tax rate there may be top-up tax payable

Top-up tax is effectively the shortfall of tax that may be incurred in the event that a shareholder is on a higher tax rate ie tax credits typically for small business is @ 25% but you may have taxpayers on higher rates such as 32.5% and beyond

Conclusion and Final Thoughts on the Dividend vs. Profit Debate

In conclusion, the decision to pay a dividend or keep profits in the company is a complex one that requires careful consideration of the company’s financial health, growth potential, and shareholder preferences. While paying dividends can be a great way to reward shareholders and attract new investors, reinvesting profits can be the key to long-term growth and success. Ultimately, the decision will depend on the unique circumstances of each business. By weighing the pros and cons of each option and considering the criteria outlined in this article, business owners can make an informed decision that’s right for their company.

Renovating and flipping your home can be an exciting and rewarding experience as a homeowner. However, before you embark on a renovation project to sell your home for profit, it’s essential to understand the tax implications involved.

After watching TV shows like the Block, are you inspired to become a property flipper?
In this article, I will explore the basics of renovating and flipping your home, the ATO tax implications, and offer tips to help you maximize your profit while avoiding common mistakes.

The Basics: What is Renovation and Flipping your home?

Renovation is improving or updating your home, either for your enjoyment or to increase its value. This can involve anything from cosmetic changes, such as painting and decorating, to more substantial alterations, such as adding an extension or converting a garage.

Flipping, on the other hand, refers to buying a property to renovate it quickly and resell it for a profit. Flipping can be a lucrative business, but it does come with risk and requires careful planning and execution.

Understanding the ATO Tax Implications for Renovating and flipping your Home for Profit

Renovating and flipping your home is something that can be financially rewarding . When renovating your home for profit, there are several tax implications to consider. Firstly, it’s essential to understand the concept of your main residence and how it affects your tax obligations.

Your main residence is the home you live in. In many cases it is exempt from capital gains tax (CGT) when you sell it. However, suppose you renovate your main residence with the intention of selling it for profit systematically. In that case, you may be liable for tax . This is occurs when it was treated as trading stock due to the renovation business. This can be a complex area, so contact Geoff for professional advice.

What is Main Residence and Why it Matters for Tax Purposes?

As mentioned, your main residence is the home you live. It’s important to note that you can only have one main residence at a time. You must use it as your main residence to be eligible for the CGT exemption.

If you own more than one property, you may choose which one is your main residence. But you must nominate this in writing to the ATO. It’s also worth noting that if you rent out part of your main residence, such as a spare room, you may be liable for CGT on a portion of the sale price.

Renovating and flipping your Home can change you home from tax free to being subject to income tax.

Claiming Tax Deductions for Renovation Expenses

When renovating your home for profit, you may be able to claim tax deductions for certain expenses. These include materials, labour, and professional fees such as architect or engineer costs. However, keeping accurate records of all expenses and seeking professional advice to ensure you are claiming correctly is essential. It’s also worth noting that you cannot claim deductions for expenses that are not directly related to the renovation, such as general maintenance or repairs.

Tax Implications for Selling Your Home After Renovation

When you sell your home after renovation, you may be liable for CGT or income tax on the profit derived. The ATO may treat your activity as a business, and it becomes income of an ordinary nature classified as a business renovation business

Additionally, if you sell your principal residence and meet specific criteria, you may be eligible for the principal residence exemption.

The profit-making activity of property renovations – per ATO
If you’re carrying out a profit-making activity of property renovations, also known as ‘property flipping’, you:
• Must report your net profit or loss from the renovation in your income tax return
• You are entitled to an Australian business number (ABN)
• You may be required to register for GST if the renovations are substantial.

We can assist you here if you unsure what to do next. Call Geoff on 95979966 for a confidential discussion.

You may live in the property as your home for all or part of the ownership period, BUT it does not automatically mean that the profits from the sale are exempt from income tax. The main CGT residence exemption only applies to reduce capital gains; it cannot reduce amounts taxed on the revenue account if the ATO deems you in the property flipping business.

Examples of flipping vs home renos

Jock and Jill buy a house that needs renovation, move in and, over the next six months, renovate it, landscape it and then place it on the market. This is renovating your home to flipping. In the meantime, they acquire their next one and start the same process. The ATO may deem them in the property development business based on the actions and facts.

But on the other hand, the ATO may deem the profit as income as a property flipping business.
Whereas Freddy and his wife buy a house and move in. They slowly renovate and enjoy it as their home. Freddy decides after a few years to sell and buy a bigger one. Provided they meet the CgT exemptions as their principal residence, then the gain on the sale would be exempt

Tips to Maximize Your Profit While Renovating Your Home

To maximize your profit while renovating your home, planning carefully and making informed decisions is essential. Firstly, consider the location and market demand for your property. Renovations well-suited to the local market and adding value to the property are more likely to result in a higher sale price. Setting a realistic budget and sticking to it is essential, as overspending can eat into your profit margin. Finally, consider enlisting the help of real estate agents, builders, and tax experts to ensure you are making the most of your renovation project.

Action – tread carefully when flipping your homes!

Renovating your home for profit can be lucrative, but it’s essential to understand the tax implications involved. By understanding the concept of your principal residence, claiming tax deductions correctly, and seeking professional advice, you can maximize your profit while avoiding common tax mistakes of being a flipper

Deciding to implement an SMSF setup is something that needs a plan if undertaken.We are observing that our clients are taking the opportunity to review their Superannuation and retirement goals, The markets are changing, and people are beginning to plan for their retirement strategy.

We are receiving several questions from clients asking whether, given the current market fluctuations of their investment in the superannuation, it is a great time to take charge of your own Superannuation. Some are evaluating if it is a great time to take control by setting up a new Self-Managed Superfund, commonly known as an SMSF.

Investment choices

Clients are considering a range of investments when it comes to their SMSF. These include commercial property, shares, and less conventional investments such as bitcoin as part of their investment strategy. Please do your research for your circumstances and ensure the appropriate Investment Strategy is documented for your Fund.

We can work through with you your strategy to purchase a residential property or commercial property within your SMSF. The key is understanding what restrictions are in place before starting this process.

There are several benefits to being your own Trustee of your SMSF. And hence the ability to run your own Fund. For example, as a Trustee, you can react and manage your superannuation savings. This is because you have greater control and flexibility over your investments. You can take a more hands-on approach to acquire or selling investments within your super fund. This includes responding quickly to opportunities to realign your investment portfolio as the market changes.

But you also need to be aware that being an SMSF comes with the fact that there’s more work for you as a trustee to manage your investments. In doing so, you must ensure you have the expertise and confidence to evaluate your investments. You also need to ensure your SMSF is following its investment strategy. We can certainly assist you here, but you must be prepared to keep records and understand that your SMSF investments are for retirement.

ASIC does not recommend setting up an SMSF with a small balance. Typically a fund should have a combined balance of $200,000 plus to be a viable Fund. You can combine your benefits with other family members, and please discuss with us if this is your option.

Not always easy to be a Trustee

Running an SMSF also takes time and effort. You must ensure that your super fund SMSF is managed properly and that you are achieving returns. As a Trustee, it is also essential to follow the rules there. There are there strict laws within the superfund environment that you, as a trustee, understand. We can help you here to make sure you keep on the right side of the Superannuation laws.

As an SMSF specialist advisor, we can help you to review whether a self-managed super fund is a suitable vehicle for you to establish. We welcome you to make time and discuss your needs in relation to your soft-managed super fund needs and your retirements.

Reach out and contact us:

Our latest PODCAST

For those who may have an SMSF borrowing, our latest podcast may be of interest to you. Join me as we discuss the current landscape for SMSF and borrowing

https://welcome-what-makes-your-business-tick.simplecast.com/episodes/smsf-and-borrowings-the-current-trends-j6judYcO?fbclid=IwAR2E-yPV3fU2Ib-g9gFM7X6LyTslnbAgSQI9orZaIvCNKqx6KWeCNgN8aLE

Cost reduction by reducing expenses means great profits, right or wrong?

What is Cost Reduction & Why Is It Important for Business Owners?

Cost reduction is one of the most important aspects of running a successful business. It can help businesses save money and increase their profits. But doing it correctly will achieve great results for your bottom line. Expenses slashed for the sake of it may be detrimental. As a business owner, you need to be aware of different cost reduction strategies and how they can help you achieve your goals. By understanding the basics of cost reduction, you will be able to make better decisions when it comes to managing your finances. So let’s look at cost reduction and why it is essential for business owners.

Cost reduction must be done systematically. As the saying goes, you need to spend money to make money. Therefore, cost reduction should be evaluated with what the end game is to achieve profit improvement and efficiency.

Easy ways to Reduce Costs in Your Business

Are you looking for ways to reduce costs in your business? Well, look no further! From taking advantage of new technologies and automation to cutting unnecessary expenses! First of all, a cash budget is an important tool to use. This helps you monitor expenses against actual.

Our latest Value Builder email that we have engaged with our business clients this month looked at a simple way to help work out which costs could be reduced. (if you want to join this email list call our office on 95979966)

Let me introduce you to Derek Morin.

Morin founded Tabarnapp to create after-market sales applications for Shopify website owners.

The business was a success, but when his partner, who handled the company finances, left the company, Morin was forced to look closely at his profit & loss (P&L) statement. Morin saw potential improvements, so he made notes in the margin next to each line item he wanted to change as part of his cost reduction strategy.

To save time, he started using a single letter beside each entry to represent the action he wanted to take:

P stood for “Plus,” something profitable, and he wanted more.

U stood for “Unnecessary,” an expense he could eliminate.

R stood for “Replaceable,” a cost that could be replaced with a better or cheaper option.

E = equal no change required

Simply known as the “PURE.” method!

Morin treated the PURE method like a game.

Every month he scrutinized his P&L with the same four-letter system. Morin engaged his team to act on each item that needed improvement. He became obsessed with squeezing out a few more dollars of profit every month.

Tools & Services That Can Help You Reduce Costs

Are you looking for ways to reduce costs without sacrificing quality? Cash budgets and reviewing the cost drivers in your business are essential. Typically wage costs are high ticket cost items. Look how you can get the most out of this resource by increasing productivity.

Look for Profit leaks that are a reality for many small businesses and can significantly impact their bottom line. Therefore, it is crucial to identify and repair these leaks as soon as possible to maximize profits.

Profit leaks can occur from both Revenue and Expenses.

Common Causes of Profit Leaks in Small Businesses, so start reducing unnecessary costs.

Small businesses often face a lot of challenges when it comes to managing their finances. For example, profit leaks can be a huge source of lost income and can cause severe damage to the company’s bottom line.

Cost reduction strategies are essential for small businesses to remain competitive and increase their profits. Implementing cost-saving measures can help companies reduce expenses, increase efficiency, and maximize profits. In this article, we will discuss various strategies that can be used to reduce costs and increase profits for small businesses. These strategies include streamlining processes, lowering overhead costs, outsourcing non-core activities, leveraging technology and automation, improving employee productivity, and taking advantage of tax incentives.

As the economy faces a potential recession or, at the very least, interest rates bite, now is the time to take proactive action on those costs that may now not be adding value to the bottom line.

Effective Sales Tools for the small business smart checklist

Do you use tools that help grow sales in your business? Sales are the lifeblood of any business. Yet how many of us have had training in closing a sales deal as small business owner? With a new year about to start, it’s time to review your sales process and help your business grow.

Set a budget that you and the team can aim for in 2023

Working with your customer

The art of selling is to focus on the prosperity and happiness of your customers!

“Don’t bother telling the world you are ready. Show it. Do it.” – Peter Dinklage

Setting up an effective CRM system lets you manage your customers and their relationship with you. Are your customers frequent users of your business that need weekly or monthly sales follow-ups? Not only about purchasing but post-sale follow-ups. These measures all drive sales. You can plan as sales intelligence allows you to understand your customer’s future needs.

For more information about factors like occupancy rates etc, see our other article keeping customers coming back.

The more touch points you have with a customer, the more chances they will remain with you. The longer they remain with you, the more valuable they become, leading to business value. Business value is what will deliver you business freedom

Take a moment and ask yourself how much in terms of revenue my business has done:
– For This week
– For This year
– Compared to this time last year

Are you having the best year ever? Are you monitoring these vital statistics?

After you have addressed these vital questions, now look at the trends. Data in your accounting system is your friend. Look at:
– Trends of turnover
– Forward orders
– What sells when, how and why
– What doesn’t generate a large margin
– What stock gathers dust, and why

So your XERO, Quickbooks or MYOB will be able to produce some of these valuable sales reports. Accountants like us can help you work out what is profitable and what should become a runt or no longer stocked product or service.

Your sales department should be focused machine on the yearly budget. What I hear you say “ I don’t have a sales department “ If you don’t, then adopt one, even if is you.

Your sales checklist to create effective sales tools

Check if any of the statements apply to you.

• I do not waste time training people who are not trainable in sales.
• I manage the company’s daily sales quota.
• I always keep sales brochures available for potential customers.
• I keep a written copy on just in case.
• I know how to close a sale so that the customer benefits and I make money.
• The company supports my sales effort wholeheartedly from concept to close.
• I have a multifaceted system of referrals and word-of-mouth.
• I am fully aware of what customers need and want and adapt to them.
• I keep sales and marketing costs low, even if it means lost sales from time to time.
• I make my appearance, company, and product as attractive as possible.
• I create focus groups and record responses and reactions for my evolving action plan.
• I involve every staff member in various aspects of strategy development, allowing each the opportunity to contribute.

Look at where you are taking your business’s sales.

In small businesses, effort = reward. Small leads to large, and smart sales plans lead to profit and adding value to your business.

Ignore your accounting system at your own peril. Make sure you monitor your sales, follow the trends and focus on the end game. A healthy sales result for 2023!

Running my business as a Partnership or as a sole trader you need to tread carefully.

These simple entities are popular, as they are easy to set up. They are also simple to manage and have fewer complications than that of a company or a family trust, making reporting easy to prepare.
However, they are most suited to businesses operated by family members, individuals or those working on a small scale.

It’s worth noting that a partnership can be between people, trusts or companies. A sole trader is just you.
The danger lies in where the partners are individuals. This joins them at the hip, and they have the same legal liability as sole traders. This means that “YOU” can become personally liable for all partnership debts. Yours and your partner’s.

For simple arrangements, there are minimal partners needed to form a partnership. Husbands and wives are easy . They often have no need for a partnership agreement. A bank statement in joint name will be sufficient evidence for the tax office to recognize that a partnership is trading. This is further evidenced by the ABN details recorded.

Friends and unrelated parties often start partnerships. While it is crucial that a partnership agreement is executed, in our experience, it usually isn’t. In fact no one even thinks about the partnserhip rules as they are so keen to make the business happen.

Sometime its not a great idea to be in partnership at all . Take John Dutton from Yellowstone . When you like to make your own decisions, being in partnership wont work. He is a strong willed man and what he says goes. If your a John Dutton then dont go into business with anyone as it wont work.

When a dispute often arises over money, happier times and past friendships go out the door. All handshake agreements are forgotten, and conflict resolution often becomes protracted if no formal agreement exists.

In summary, a partnership agreement should indicate what each partner contributes to the business, either in the form of intellectual, equipment, capital or time. It should also outline how the profits will be split.

How often are partners paid profits, and who does what? There are no wages paid to partners in a partnership; therefore, this often is one reason other entity structures work better.

Does a business as a partnership pay tax?

Partnerships as an entity and therefore do not pay tax.
The profits the business makes are distributed to the partners.
The partners pay tax at their applicable tax rate. The good thing is that losses get distributed directly to the partner and, in many cases, can be offset against other income.

Likewise, the amount of loss that can be offset against a partner’s other sources of income is their share of the partnership loss and not the amount of money they contributed to the Partnership. The ability to distribute losses can be a tax benefit in the set-up stage of a business. Likewise for those who act a sole trader.

Joint debts – DANGER

Like a marriage, Under partnership law, each partner is jointly liable for the Partnership’s debts.

This is where danger can strike as if one partner is financially unable to pay their share of the partnership debt; then creditors look to the other partners to make good. In the event of the business failing or a claim for damages against the business not being covered by the business’s assets, each partner’s personal assets are available to meet the debts.

There are no disadvantages to a partnership relating to Capital Gains Tax. Partners can claim small business tax relief on the sale of a business.CGT tax liability. This can be split when a partnership with more than two owners is involved in a business.

What are my business structure options

Most business owners are conscious of putting a fence around their business and protecting themselves from legal action for negligence, debt and the ATO. It is why acting as a sole trader or in a partnership has personal exposure and could be likened to walking on a tip rope over a high cliff.

For some starting out as a sole trader or Partnership is a cheap and easy option to put a toe in the water. However, if the business is successful, it is beneficial to stop and reconsider. I am using the most tax-effective and protective structure for me moving forward.

Reach out if we can help you further help on 95979966

SMSF and commercial property is an investment often held by an SMSF and is a good strategy. Is holding your business premises, Factory or shop in an SMSF a good strategy?

Allowing your SMSF to hold your business real property is a fantastic opportunity for the small business owner to isolate its business asset from the main trading company. It also means you can become a long-term tenant of your SMSF.

There are some distinct advantages for both estate planning and long-term protection strategies of your asset in an SMSF. Any property strategy it must be done properly and there are a few items that you need to address before undertaking this measure in your self-managed fund.

SMSF advantages holding business real property

It is the only opportunity that you have under superannuation law to transfer a business real property from yourself into the Fund. Normally it is not possible to transfer property however your business premises is one exception.

Holding your business real property allows your super fund to grow organically and means that instead of paying rent to a landlord you are paying yourself via your SMSF and growing your retirement funds.

It’s a clever way to pay off your assets and at the end of the day when you retire you can then rent the property to others or have your family be part of your SMSF and they take over the asset
Before purchasing the property or transferring the property with a commercial property take time to work through your Funds investment strategy and how the asset will be acquired by your Fund.

How your Fund can acquire property:

Your fund can acquire the property in a number of ways and these include:
1. Establishing a borrowing in relation to the acquisition of the property however needs to be done in connection with using a bare trust arrangement it is essential that we need a separate bare trust from the SMSF assets If you’re borrowing to buy a commercial property, it needs to be under a limited recourse borrowing arrangement (LRBA). involved.

per the CPA – Borrowing – who can lend the SMSF the money?

There are no restrictions on who can provide the finance for the SMSF, meaning it could include any financial institution, a related entity or a member of the fund.
An LRBA is not a regulated financial product. However, as discussed earlier ASIC has stated that an adviser cannot recommend an SMSF trustee invest in property through their SMSF unless the adviser is appropriately licensed under the AFSL regime. Geoff Gartly has an ASFL and can appropriately advise you in this area.

2. If your Fund has sufficient monies, it can buy in your SMSF and commercial property outright

Or we can arrange for additional contributions to be contributed to help ensure there are sufficient funds.

3. The fund can in some circumstances acquire a commercial property in partnership with yourself or others providing there is no borrowing attached.

Arm’s length dealings

Once you have purchased or transferred the property into the Fund, then you must ensure that you put a commercial lease in place. This is important for both external parties or yourself if you’re running to get back to yourself at a market rental. Importantly once in place, you must ensure rental payments are made per the lease agreement. Failure to do so may make the Fund non-complying.

The property holding Strategy

It comes down to strategy when working out if SMSF and commercial property is the right mix.

Often overlooked is the fact that property and improvements can only be done from cash from the Fund and cannot be done from borrowing, and this should be factored in from the outset
Your SMSF Property strategy should include a :

• Vision for the long-term use of the property
• How the Fund will pay any shortfall if monies borrowed
• What happens if the business owner dies
• If your business is sold, do you rent out or sell the property

Any property sold in a retirement strategy may result in low or no tax payable depending upon the strategy adopted.

We recommend you seek proper advice and the information we have provided is of general nature only

.Au domain names are here. On 24 March 2022, anyone with a local connection to Australia (including businesses, associations, and individuals) has been able to register a new category of domain name known as au

These shorter, more straightforward domain names end in .au  NOT, com.au and effectively create 2 domain names These will than .com.au, .net.au, .org.au, .gov.au or .edu.au.

Do you have a “.com.au” domain name?

Existing domain name.com.au license holders have been provided priority to register the .au direct equivalent of their domain name until 20 September 2022,

After this date, any domain names that have not been allocated will become available to the general public.

This new option for domain names creates opportunities for businesses, organizations and individuals; however, it could also provide another opportunity for cybercriminals to utilise your name for a fraudulent activity like business email scams and the like.

Choosing not to register your name as yourname.au and just keeping your name.com,au opens your business up to fraudsters and possibly unethical behaviour by competitors

Check with your domain provider or go to a reputable Australia domain name seller and register your name before the due date.

A domain name ending in .au signifies that the person or organization using it has a connection to Australia.

Many small businesses haven’t registered their domain name and use the standard xxx.gmail.com which is not great branding. Therefore its a great opportunity to look at your branding and improve your online presence.

In .au we have several different namespaces serving different sectors and purposes and with different rules for who can register them and what name they can have.- see auda website for an explanation

‘Open’ .au namespaces

The open namespaces are those in which the public can register names, provided they are eligible.

Each namespace serves a specific type of enterprise or purpose and rules for who can register in them, and what names they can register to vary between them.

The rules for who can register what names in these open namespaces can be found in the .au Domain Administration Rules: Licensing.

https://www.auda.org.au/au-domain-names/au-domain-names

If you are a business in Victoria, you may be eligible for the newly opened Small Business Specialist Advice Pathways Program.

This grants $2,000 to “employing small businesses to access professional advice and services to help them make informed business decisions and plan for the future.”

Eligible projects include:

a) Advice and analysis regarding the management of cash flow, preparation of cash flow budgets and projections,

b) Profitability analysis and formulation of financial management and/or operational business strategies,

c) Strategic analysis to revise business planning and/or governance arrangements,

d) Advice regarding the management of debts and liabilities, or

e) Advice and/or representation regarding commercial agreement contract terms (i.e. commercial leases or commercial supply contracts).

Applications close on 30th September so jump on this offer fast.

It’s a great time to join our Valuebuilder business program and plan your business for the future.

Contact Michelle on 9597 9966, and we can send you the link to apply for the grant and tell you more about how you can join the short-track Valuebuilder program.

Our Valuebuilder program will identify areas where we can help your business improve cash flow and growth and strategically plan your future.

In the meantime, if you would like to get your value builder score, follow the link here:

https://score.valuebuildersystem.com/gartly-advisory-pty-ltd/geoff-gartly

The downsizer contribution is an after-tax contribution. Therefore when it hits your SMSF or super fund, no tax is payable on the way in. It also means upon retirement, and it can be paid as a benefit. A benefit that is returned tax-free when you withdraw the funds from your SMSF

Legislation passed

Last week parliament passed legislation, resulting in the downsizer contribution to allow house owners over the age of 55 to access this strategy. The lowering to age 55 is expected date for the enactment would be later this year (2022)

Downsizer contributions help you to increase your super balance. The downsized strategy a great way to catch up on lost retirement savings and grow your retirement nest.

Do you qualify to meet the downsized contribution strategy?

Per the ATO there are some of the eligibility criteria you must satisfy are:
• The home must be in Australia, have been owned by you or your spouse for at least ten years, and the disposal must be exempt or partially exempt from capital gains tax (CGT).
• You have not previously made a downsizer contribution to your super from selling another home or from the part sale of your home.
• Before (or at the same time) making your contribution, you must provide your fund with the ‘Downsizer contributions into super form.’

The downsizer contribution strategy can work for many who meet the downsizer criteria. It means your investments can grow in a protected environment at a low or upon retirement in the pension phase with no tax environment. This, together with other strategies, can form part of your retirement strategies.

Talk to Geoff, who specialises in SMSF advice and small business exit strategies to help businesses transition from business to enjoyment by unlocking their wealth from large family homes and businesses.

The last 2 years have highlighted major issues for small businesses and cash flow is one on top of the list.

Small businesses have been plagued by closures and staff absenteeism due to Covid. This can account for why some businesses’ cash flow is facing an uphill battle in recovery. But there is also a fundament lack of planning by some small businesses. Not knowing where you going is like a hose that you turn on it flicks and turns and you have no control.

Cash flow when it trickles it is painful!

Typically when cash flow impacts things blow out. Our friendly ATO becomes the bank of last resort. Changes in Debt reporting on CRA reports of tax debt may make it harder for some small businesses to recover. It’s a tool the ATO now can use to be recognised as a Creditor in the public domain like any other supplier. Don’t ignore the ATO as they won’t don’t like taxpayers that don’t engage with them. Better to open up to them about your situation than ignore them and shovel your way out of a hole later on.

Nether the less positive cash flow is an opportunity that every business can undertake.

Don’t be like an emu with its head in the sand. Take a positive stand. Start with predicting when the cash will come in. Fundamentally 80% of the hard work is done if you know that the cash is coming in the door. Struggling to predict cash in the door . Start with Sales Budget . Look at last year’s monthly turnover and then replicate that into the coming year. Then don’t forget to invoice your customer. It’s surprising how many people forget or delay the invoicing process

Slash costs but make sure it is for the right reason

When it comes to costs, slash where appropriate but don’t slash costs that are fundamental to the business or costs that help you make money. As a small business accountant Gartly Advisory can help you.

When you’ve worked out your budget put it straight into your cloud software and each month see if the actuals are close to or better than what you predicted. So when the cash starts rolling in remember the golden goose 10% for the ATO, 10% for investment and 10% for you.

A Share trader is regarded by the ATO as conducting a share trading business when it comes to reporting your tax, based on factors around how you and how often you invest. An investor is looking long term and will not frequently undertake a systematic approach.

Tax law regards Share trading is assessed as income on a Revenue Account, and no Capital Gains Discount can be claimed.

Share traders and tax

However good news for share traders is, share losses are allowed as a tax deduction un S8-1 of the ITA997. A share trader can recognize unrealized losses and gains as the change value in the share process can be reflected. Whereas a Share Investor will only recognize losses and gains when they are realized. An investor can access the cgt 50% tax discount concession if shares are held for 12 months.

Your shares held as a share trader are considered trading stock and must be included as part of your year-end income statement. Your share stock can be valued at either cost, market, or replacement value, enabling you to determine the best tax result for you. If your records are in order, you can choose which suits your taxation circumstances for each parcel of shares

Factors that may classify you as a share trader

A share trader is considered in business if

• There is a system
• Operating to a plan
• Maintains regular trading in a systematic way
• Record system to track transactions and revenue earned
• The volume of the equity trading
• The reliance on share trading to earn a regular income

Determining if you are a trader will always be a matter of fact, and based on the above, your actions will determine whether the ATO would consider you a trader. Repetition – the frequency of transactions or the number of similar transactions – is a crucial characteristic of business activities as a share trader.

The higher the volume of your share transactions, the more likely it is that you are carrying on a business.

Changing from trader to investor

If your activities change from trader to investor, your shares are no longer trading stock.

At the time of the change, you treat your shares as if:

1. just before they stopped being trading stock, you sold them to someone else (at arm’s length and in the ordinary course of business) for their cost
2. you immediately bought the shares back for the same amount.

Take the time to consider your position. Look at your facts and consider what has been outlined above.

The information provided above is of general nature and not specific to circumstances. Please contact us if you would like to discuss your specific situation.

Local manufacturing businesses based in the South East area in Melbourne such as Moorabbin and areas such as Currum Downes and Seaford can take advantage of bringing forward tax incentives to help their manufacturing business.

Helping local manufacturing businesses

Gartly Advisory are Melbourne Accountants based in Ormond. We love servicing manufacturing businesses. Our advice to the manufacturing businesses is that we help is to take advantage of these incentives. Modernise your systems and save tax!

Manufacturing, like every business experiences growth and also tough times. We have seen that those businesses that chose to invest in new equipment and technology thrive ahead of those that don’t.

Technology can save labour costs and also the accuracy of delivery of the product. One of our small businesses was able to almost replace one staff member by investing in the latest machine that delivers quicker and more accurate production of materials.

We work in interesting times but in saying that we encourage our clients to stick to their goals and vision.

As small business accountants, we work with our clients to strategically plan their futures. A successful manufacturing business will understand its metrics. They know how many widgets to produce that result in a healthy gross profit result.

Understand your numbers

Understand your numbers, your capacity and your opportunities. Knowing this data allows for careful planning as your business grows.

Over the next month take the time to analyse three key products that you make and sell. Understand the costs and time components. The next step is to look at your Gross Profit margin and see how this impacts the bottom line? Are you making enough from manufacturing

Understanding your market and pricing gives you a competitive advantage when it comes to growing your customer base. Businesses will be forced to look at price increases moving forward. The cost of manufacturing will increase and therefore price rises will need to be factored in to maintain profits. Make sure you have the data to do so.

Gartly Advisory are Chartered Accountants in Ormond. We love helping manufacturing businesses. Reach out and see if we can help you to make your manufacturing business shine in the local Melbourne market.

Your home can be exempt from CGT providing it is your castle. You need to do a few things to make sure it meets the ATO

The ATO considers several factors when determining if a dwelling is considered a client’s main residence. Various tests in relation to different factors to determine to see if you meet this test as your home. This may vary depending on the circumstances and it may be several factors.

What makes a home regarded as your home and makes your home exempt from CGT?

The main residence test for a dwelling is based on facts and takes into factors such as:

▪ whether they / their family live there

▪ how long they have lived there

▪ their intention to occupy the dwelling

▪ is the mail delivered to your home?

▪ are your personal belongings there ie have you physically moved in

▪ is it your house address officially on the electoral roll,

 ▪ whether they have connected utilities such as electricity and gas etc

If you acquire a dwelling and move in ‘as soon as practicable, it will be treated as your main residence from the acquisition date.

Change of circumstances

Of course, if your circumstances change, you may nominate another dwelling or take advantage of the six-year absence rule in relation to your existing home. This can continue to make home exempt from CGT.

Many people often purchase a house move in and then find after several months that the mortgage repayments are impacted due to a change of circumstances. They rent out the property and then wonder if they will then have to pay CGT on their home?

The good news in certain circumstances your house will still remain exempt

To make sure you meet the six-year rule you need to ensure it is your main residence before it was used to produce assessable income; and that you haven’t nominated another property as your main residence for the same time period. 

After establishing the property as your main residence, it is possible to move out and rent the property out for up to six years.   

Per the ATO (summary)

Your property stops being your main residence when you stop living in it.

However, for CGT purposes you can continue treating the property as your main residence:

• for up to 6 years if it is used to produce income, such as rent (sometimes called the ‘six-year rule’)
• indefinitely if it is not used to produce income.

During the time that you treat the property as your main residence:

• Your home continues to be exempt from CGT to the same extent that it was exempt when you stopped living in it, even if you start renting it out after you leave
• you cannot treat any other property as your main residence (except for up to 6 months if you are moving house).
• If you do not use your former home to produce income (for example, you leave it vacant or use it as a holiday house) you can treat it as your main residence for an unlimited period after you stop living in it.

The good news is if you move back into your home and then down the track you move back out the six-year rule is reset, and the exemption applies for another six years. Of course, if you only have one home and you leave it empty or for the kids to use it then as long as it does not earn an income it remains exempt indefinitely.

However, if you acquire a new home then the above exemption ceases. Make sure if you are renting your property out then please don’t hesitate to contact us and discuss your circumstances. We welcome you to contact us if you need some advice phone 95979966

SMSF Trustee role needs to be considered in your Estate planning

Your role as an SMSF Trustee and incapacity are crucial to consider in running an SMSF. Have you thought about what happens when something goes wrong, and you run an SMSF?

Control is one of the main reasons many establish an SMSF. As an SMSF Trustee, you can control your own SMSF. You can control how the Funds investments and the strategy on how and where. What happens if you can’t do it anymore?

What happens if things go wrong?

One day, you may not be able to meet your SMSF Trustee responsibilities. This can happen due to a loss of control or incapacity might be due to an accident, illness or death. But, in most cases, it will unexpectedly leave you with ongoing financial matters for your that need resolving unless you have done some forward planning.

Under the SMSF legislation, a person with a legal disability (including mental incapacity) cannot be a trustee or an SMSF.

Incapacity as an SMSF Trustee

When you are not able to act as a Trustee, someone else must step in on your behalf. They basically act as an SMSF Trustee in your capacity. Your incapacity results in you having to relinquish control of your Trustee role. When appointing someone to act on your behalf make sure the decision is based on Trust. Trust that the person who steps in understands and acts on your wishes and needs.

We also point out that for ease of SMSF Trustee appointment, we recommend that the structure of your SMSF includes a Corporate Trustee rather than individual trustees.

Seek legal help that gets it right!

Your health and financial welfare are paramount for more information read our blog on Estate Planning.

It’s a great reason you need an adequately prepared and executed Will. Have you made an Enduring Power of Attorney( EPOA)? Preparing an EPOA (enduring power of attorney )will assist you in both ensuring someone can step in and continue sorting out your financial affairs. They can then step in and manage your SMSF.

 If you become incapacitated, they will undoubtedly have to set up in your shoes as an SMSF Trustee. Therefore choosing the wrong person or no person can result in your wishes not being adhered to. Or worst still, someone appointed as your replacement  SMSF  Trustee with the wrong intentions.

It’s essential that you choose wisely and that this person is someone you trust and has the financial ability to make the right decisions. Make sure you discuss their role and support this by considering executing Binding Death Nominations in the SMSF.

Reversionary pensions for those in pension mode are a great tool to enable the pension to be transferred to your partner upon death.

Now is the time to Act – not when incapacity strikes

 Implementing tools in the case of incapacity as an SMSF Trustee will also issue some clarity of your estate planning wishes.

Thinking ahead and planning means if and when things don’t go as planned, you have a well-thought-out plan that will ensure your estate and any assets are dealt with your wishes.

Super Guarantee Charge reminder.

This is just a reminder that employers must meet their SGC obligations by the due date for the last quarter, which is  Thursday 28^th April 2022.

The date super has been paid is when the payment hits the employee’s super account, not the date that an employer pays the super to the clearing account.

In some circumstances, It can take several days for the employer’s super contributions to clear through a super clearinghouse. Then it will be processed and recorded against the employee’s account. We, therefore, recommend paying the employee super guarantee at least 5 working days before the ATO due date. This will allow enough time for your payments to be processed before the quarterly due dates. Your cloud accounting software provider may state that the super has to be paid even earlier than this for processing times. . This is especially around the end of the financial year.

We also recommend making monthly or fortnightly super payments to reduce any risk of late payment. If you are going to do this, make sure the total SG obligation for the quarter is received into your employee’s super fund by the ATO due date.

The ATO is watching. STP reporting and information provided by Super Funds means that the ATO can see if you have met your obligations. If you are having trouble meeting your obligations, don’t hesitate to get in touch with us to discuss your situation, and we can work with you to find a solution.

Most search easter eggs according to google in 2021.

This is what Australians were searching for when it came to Easter Eggs and chocolates in 2021.

1. Cadbury Creme Egg
2. Mini Eggs
3. Kinder Surprise
4. Cadbury Caramilk
5. Kit Kat Bunny
6. Lindt Gold Bunny
7. Violet Crumble Bunny
8. Kinder Mini Eggs
9. Ferrero Rocher Squirrel
10. Smarties Easter Egg

What’s your favourite?