Our July edition features pieces on:
Contact us on 03 9597 9966 if you have any questions relating to matters raised in any of our Client Newsletters.
You need to get your business noticed on social media platforms.
With more than half the world on social media, no business can ignore the importance of being online. Social media strengthens your connection to your target audience, builds a better brand reputation, and opens the door for new sales. Of course, it’s worth noting that there are a lot of social media platforms out there – and not all of them will be relevant to your company. Being successful with social media marketing isn’t about posting on every channel and hoping for the best. The key to success is finding the platforms that make sense to you. Here’s how you can decide which platform to use.
You’ll have difficulty choosing the perfect social media platforms if you don’t know your audience or which channels they use. If you haven’t yet, create a user persona. A user or buyer persona is a document that outlines critical characteristics of your target audience, such as their age, where they live, and what they like or dislike. Getting a general idea of your customers will help you determine which social media platforms they will be most active on. For instance, if you’re trying to reach a younger Gen Z crowd , you might opt for TikTok. Professionals would probably pick a social media platform like LinkedIn.
Now that you have your user personas, you can assess some of the most popular social media channels. Remember, there are various options, but some of the most common are Facebook, Instagram, YouTube, Twitter, and LinkedIn. Here’s what you need to know about each platform to make your decision.
The most versatile of all social media platforms, Facebook appeals to people of all ages and backgrounds. If you can only pick one social platform to start on, this is likely to be it. You can post everything from live videos to informational content to attract customers. Even better, Facebook has super-advanced targeting tools that make connecting to your preferred customer much more accessible. The more you learn through your Facebook ads and analytics, the easier it will be to target your campaigns on other social platforms.
Twitter is ideal if you’re the kind of company that prefers to post snappy content or news-based insights. This is the location where many people go for industry news and updates. If you’re on the cutting edge in your sector, then Twitter could be an excellent place for you. It’s common among technology companies and innovators. Twitter is also the social media platform that popularised the “hashtag”, which we use in virtually all social media today. You can add hashtags to your post to improve your chances of being found by the right person.
This platform is the ultimate social channel for B2B companies. LinkedIn is the place to be if you’re trying to build a professional brand or situate yourself as a thought leader. You can share industry insights, connect with other professionals, and recruit new talent. LinkedIn is beneficial for networking and establishing your business as an authority in your field.### LinkedIn
LinkedIn is the top social network media platform for B2B companies. If you want to build a professional brand or become a thought leader, start here. This social media platform perfectly showcases your products and services to other professionals. Sharing industry insights, blog-style posts, and business updates is the norm on this platform. Therefore, you can also boost your chances of landing your dream job by asking for endorsements of your skills.
YouTube is one of the most popular platforms globally. It’s ideal for creating video content for viewers everywhere. YouTube can give your business a voice. Consequently, You, as the small business owner, decide what to make videos about, whether it’s how-to guides or interviews with industry experts on complex topics. If you aim at a younger audience, you can use your YouTube videos to inspire shorter content on TikTok.
Instagram is built for visual content and focuses on creativity and beauty. It’s a great choice if your company has many attractive things to show, like an interior design brand, clothing line, or makeup artist. Like Twitter, you can use hashtags to attract the right audience and tag influencers. We noticed that Instagram is also a great place to interact with customers through new content types like reels, stories, and live videos.
TikTok should be part of your social media strategy targeting Gen Z and younger. Designed for short attention spans, it allows videos of up to 3 minutes. Content on TikTok needs to be short, snappy, and attention-grabbing. It should get to the point quickly. TikTok is great for short promo videos or how-tos. However, this platform is trend-based, so you can use these trends to get your content seen by more people.
Another key point is that you should research the channels and social media platforms and how they work before building your marketing plan. It is always worth studying. Get out there, get your business noticed, and help your business grow. Now, more than ever, small businesses need to get into the social media world and be noticed in our worsening economic climate. My suggestion is to start small. Facebook is a great start; grab your teenage daughter or son to lend a hand. Most of all, start, and you will be amazed at how easy it is!
The Pains of Rapid Business Growth
Here is a problem most business owners would love to have! Imagine facing the prospect of your business growing too quickly, making you almost unable to keep up with the pressure of customer demand.
Perhaps you have envisioned expanding to another location. You may also consider expanding interstate, increasing staff, or moving into a larger premises or factory.
Is this a good situation to have or not? Good growth vs. Bad Growth needs to be identified and managed. Many small business owners fail to realise that rapid business growth can result in specific dangers and potential liabilities that might capsize their company’s plans and growth. Expansion requires a robust strategy, cash flows, and what-if scenarios.
There are potential risks associated with business overgrowth that you, as the business owner, need to know the warning signs. Good growth is achieved by managing growth and knowing the warning signs. Let’s explore possible speed humps!
Business growth takes money, and working capital is relatively low during the early stages of development. Small business owners can start with a massive debt to feed their growth machine, and thus, here begins the vicious debt cycle. For some businesses, debt increases rapidly with growth and can eventually cripple their business.
After depleting your working capital, the next logical step would be to apply for another loan. While your revenue may seem to be growing, so will your debt. Manage the debt and ensure your business can manage the loan repayments.
Watching the sales come in may thrill you with the growing demand for your product or service. However, you have to ensure you can meet your customers’ requirements. In the face of rapid business growth, you are constantly challenged to maintain the quality of your service versus the increasing quantity.
In keeping up with growth, business owners are tempted to explore and venture into other sales areas. It is challenging to resist the temptation of new opportunities and larger contracts, distributions and bigger opportunities. However, if you stray too far from your primary business model, your business could falter. As they often say, stick to your lane. While trying to succeed in another unchartered area of your business, your original business model and earlier client base may take a backseat. Often, looking at the existing base might be best to ensure the opportunities have been exploited.
As your business experiences rapid growth, sometimes employees are not ready for development, both in skill level and capacity, leaving you in a challenging position. Your employees need to grow with the company, but giving them more significant responsibilities when they are not ready may be a recipe for failure. Chances are, you might lose some of your employees.
When the demand for your business increases, you may find that your profits are diminishing. This is because the costs of meeting this increasing demand will begin to outpace your business’ cash flow. You realise that you must pay for overtime for the extra hours your employees agree to work or ensure you have a larger inventory and incur substantial holding costs. Holding costs for stock can eat into working capital.
To make small business Goals, Write them down and make them happen.
Are you a small business owner with big aspirations? I am, too, but when I set my business goals, they were so secret that I couldn’t remember them. Sharing your goals can only happen if they go from head to paper.
It’s time to step beyond daydreaming and take decisive action. By writing down your goals and committing to a clear plan, you’re not just setting a course for your business but taking control of its destiny. This act of empowerment can transform your business from surviving to thriving. Here’s how to cut through procrastination and plan strategically for success.
Goals need a purpose; for some, as retirement is approaching, they should include goals related to exit planning, beaches, and golf.
For small business owners, every day is filled with demands. Regarding strategic planning, it’s easy to say, “I’ll do it tomorrow.” But procrastination is the silent killer of progress. Writing down your goals does more than commit them to memory—it commits them to reality. Set clear, actionable objectives with defined timelines and watch your daily decisions align more closely with your long-term aspirations.
Navigating the complexities of a small business can be daunting, but you don’t have to go it alone. Establishing a relationship with an accountability partner like a coach or mentor can dramatically increase your chances of success. They’ll help keep you focused, track your progress, and ensure your business meets and exceeds its goals. This support system provides guidance and instils motivation and determination, pushing you to move forward.
Planning your exit strategy early and realising that everything has an expiration date are part of the goals setting for small business.
Thinking about an exit strategy early in your business journey might seem premature, but it’s vital to your overall strategic plan. Planning for an exit three years down the line gives you a clear timeframe to boost the value of your business, streamline operations, and ensure you can leave (or sell) on your terms. This foresight prepares you for the future and brings a sense of security and peace of mind, knowing you’re ready for whatever comes your way.
A procrastinator would say a long time, but it’s really 12 months for some action. In reality, the best timeframe for setting goals—whether 60 days, 90 days, or a year—depends largely on the nature of the goals, the specific context of the business or personal objectives, and how the milestones are structured within that period.
So, in setting goals, consider this:
These short-term goals are useful for very focused, specific achievements that contribute to larger objectives. This timeframe is ideal for tasks that require quick results or when starting new initiatives that need to gain momentum quickly. Sixty-day goals encourage rapid progress and frequent reassessment, making them ideal for responsive and agile environments where conditions change quickly.
Often referred to as quarterly goals, 90 days is a popular timeframe for businesses and individuals because it balances the urgency of short-term goals with the foresight of longer-term planning. This period allows enough time to see significant progress on somewhat complex projects without losing the momentum that can dissipate with longer timelines. It’s also a practical period for iterating on feedback and adjusting strategies.
Setting goals for a year is common for strategic planning because it aligns with financial and business cycles. Annual goals are suitable for more significant, ambitious projects requiring a longer runway. This timeframe allows for the deployment of substantial resources and the alignment of multiple smaller projects under a larger umbrella, providing a clear vision of where you want to be at year’s end. It also matches the evaluation periods of most businesses and personal planning cycles.
• Complexity and Scope: If your goal is complex and requires coordinating many moving parts, longer timeframes might be necessary. Simpler, more direct tasks might be effectively accomplished in shorter periods.
• Urgency and Priority: How critical is the goal? If it’s highly urgent, shorter timeframes can create the necessary focus and intensity needed to drive actions.
• Feedback and Adjustments: If your project or goal benefits from iterative feedback, shorter cycles like 60 or 90 days could be beneficial as they allow for quick adjustments based on what is or isn’t working.
• Resource Availability: Consider your available resources, including time, money, and personnel. Some goals might require extensive resources that are only feasible over a longer period.
Ultimately, the best timeframe for your goals will depend on balancing these factors with your specific circumstances and end objectives. Often, using a combination of all three—setting immediate, short-term goals within longer, strategic plans—can provide both the motivation of quick wins and the guidance of steady, long-term vision.
.
I like to escape and think about my small business goals. A coffee and a notepad are all I need. Amazingly, I have set goals in various forms, from a vision board to a set of goals in categories. And you know, I can say I have achieved many of them every time.
Like any small businessperson, getting money in the door is the oil that oils the wheels of your business. So, your small business goals should be macro and broad and include a goal for achieving a revenue target.
Can you get through your business journey without goals? Of course, and by a stroke of luck, you might do okay. But those who commit to achieving are the lucky ones who reach the finish line with the amazing inner glow of what they have achieved.
Embarking on a business journey without specific goals might work out fine, and sometimes luck might even swing your way! However, those with a dedicated commitment to their objectives not only cross the finish line but do so with a radiant sense of accomplishment and a brilliant inner glow from what they’ve achieved.
Click here to download our Tax Planning Newsletter
We hope this edition provides you with valuable insights and practical advice for tax saving strategies as the 2024 financial year comes to a close.
Contact us on 03 9597 9966 if you have any questions relating to matters raised in any of our Client Newsletters.
Here are some of the hot 2024 tax planning questions we have received this year about tax and 2024 tax planning. Please let us know if we can help you in any way.
In 2024, the Australian Government will implement legislated tax cuts to ease the cost of living for taxpayers. Starting from July 1, 2024, these cuts will lower the 19% tax rate to 16% and the 32.5% tax rate to 30%, affecting all 13.6 million Australian taxpayers.
Effective tax planning involves understanding and meeting compliance requirements while employing strategies to reduce tax liabilities. Geoff can advise individual taxpayers and businesses in various structures, such as sole traders, partnerships, trusts, and small companies, on operating efficiently for tax purposes. Choosing the right structure , tax planning it all helps in wealth creation.
Yes, retirees in Australia must pay capital gains tax (CGT). There is no exemption based on age that frees seniors from the obligation to pay CGT. The Australian Taxation Office (ATO) considers capital gains as part of an individual’s total taxable income, regardless of their age. Note that no contributions can be utilised without meeting the tests post-age 65.
High-income earners in Australia can employ several strategies to lower their annual tax bills. These include making contributions to superannuation, using trusts, engaging in debt recycling, claiming franking credits, utilizing negative gearing, and accounting for depreciation. Additionally, participating in employee share schemes can be an effective form of remuneration that may offer tax advantages.
The temporary reduction in superannuation minimum drawdown rates is concluding, and SMSFs must now adhere to event-based reporting requirements.
The concessional contribution cap is set at $27,500 for the fiscal year, while the non-concessional cap stands at $110,000. These are going to increase to $30,000 concessional in 2025. Looks at brought forward provisions may apply if you have less than $500k in super in the year you are considering contributing.
Working with a proactive tax planning accountant can deliver great tax-saving results. Small business tax planning is crucial for managing your finances effectively. You should implement smart tax strategies. That’s why our clients like working with a proactive tax planning accountant. We can help you to maximise your savings, reduce tax liability, and improve your financial position. Proactively planning your taxes will help you legally minimise the tax you owe and optimise your financial resources.
Effective tax planning helps you manage cash flow more efficiently. By understanding your tax obligations in advance, you can plan for upcoming expenses and ensure sufficient funds are available to meet your tax obligations on time. Planning avoids the risk of cash flow issues and potential penalties from late payments.
Furthermore, tax planning enables you to make informed business decisions annually. You can choose strategies that minimise your tax liability by considering the tax implications of various financial transactions, investments, and business decisions. This strategy also helps maximise your after-tax profits. This strategic approach to tax planning can contribute to your business’s long-term growth and success.
One primary objective of tax planning is to reduce your tax liability. While it is essential to remain compliant with tax laws, there are legitimate ways to minimise taxes. This involves identifying and taking advantage of deductions, credits, and exemptions that apply to your business. By carefully analysing your income and expenses, you can find opportunities to reduce your taxable income and lower your overall tax result.
Timing is also crucial for tax reduction strategies. Strategic planning for purchases and expenses can optimise your tax deductions. For example, prepaying expenses before the end of the financial year allows you to claim deductions in the current year rather than spreading them over multiple years.
Another aspect of tax planning is evaluating the tax implications of your investment decisions. Whether you are considering purchasing a rental property, commercial property, or other business assets, assessing the impact on your cash flow and tax position is essential. By understanding the tax consequences of your investments, you can make informed decisions that minimise your tax liability and maximise your returns.
Contributing to your superannuation fund is an intelligent retirement planning strategy. Furthermore, it is a tax-effective way to save money. Contributions made from your pre-tax income are taxed at a lower rate than your regular income. Maximising your superannuation contributions can reduce your taxable income, potentially lowering your overall tax bill. This allows you to save for retirement while enjoying immediate tax benefits. Our strategy helps clients explore available options when deciding upon a contribution strategy.
Working with an accountant is a smart choice for small business owners who want to maximise their tax savings, ensure compliance, and achieve their financial goals. As your accountant, we play a crucial role in tax planning by providing expert advice, guiding you through the complexities of tax laws, and developing effective strategies tailored to your business needs.
As a new client, the first thing we do is review the previous Year’s Tax Return. We suggest reviewing last year’s tax return to understand your financial situation, identify any changes, and ensure that any prior advice was acted upon and is still relevant.
We would like to understand your circumstances. Please discuss any significant life or business changes with us, such as marriage, divorce, the birth of a child, the purchase or sale of a property, changes in business revenue or expenses, or any significant investment gains or losses. These changes can significantly affect your tax situation. If you own a business, review your business structure to ensure it’s still the most tax-efficient for your situation, considering any changes in tax laws or your business.
If you’re planning any significant financial transactions, such as selling a property or a business, remember we can help as your accountant to plan these transactions to minimise tax impacts.
Timing of Purchases
One of the essential aspects of small business tax planning is timing your purchases strategically. We can help you determine the optimal time to make significant purchases or investments to maximise your tax deductions.
Analysing your financial situation and business goals can provide valuable insights on when to make these transactions to minimise your tax liability.
Staying on Top of Lodgement Dates
Late lodgement of tax returns and failure to meet lodgement dates can result in penalties and interest charges. We aim to effectively help you stay organised and ensure that your tax returns are lodged on time.
Our experience and knowledge ensure we understand the latest tax laws and regulations that could affect your tax liability. We also know how to assist you in accurately reporting your income, deductions, and other relevant information to minimise the risk of penalties and reduce your tax liability.
Avoiding Unnecessary Spending
While tax deductions can be beneficial, it is essential to avoid unnecessary spending solely to obtain a tax deduction. Tax is one part of the decision-making process for small businesses. As your accountant, we will guide you on whether certain expenses are justified and aligned with your business goals. They will help you make informed decisions that make financial sense and avoid unnecessary spending that may not provide significant tax benefits.
Using a Tax planning Accountant, we stress that tax planning is an ongoing process that requires proactive engagement. It is recommended that the tax planning conversation be started well in advance of the end of the financial year. Being proactive allows you to assess your financial position, review your business goals, and develop a comprehensive tax plan.
Creating a robust SMSF trustee succession plan is critical for Self-Managed Super Funds (SMSFs) managed by aging trustees.
An effective succession plan ensures the smooth transition of control and management of the SMSF when the original trustees are no longer able or willing to manage the fund due to age, health, or other reasons. A trustee succession plan must encompass preparation, clear communication, and legal compliance.
SMSF trustee succession plan involves preparing for the future management of the SMSF, ensuring it continues to operate effectively and complies with Superannuation Industry (Supervision) Act 1993 (SIS Act) requirements. Remember to check that your new Trustee appointment is suitable and not a disqualified person to act as an SMSF Trustee.
Looking after you and your SMSF. It’s about safeguarding the fund’s assets and the beneficiaries’ interests, ensuring that the transition of trusteeship does not negatively impact the fund’s performance or compliance status.
Start planning early. It can sometimes be a difficult decision or discussion, but dealing with dignity can mean no surprises. Don’t wait for health issues or other urgent matters to force a quick decision. Early planning allows for a thoughtful, strategic approach to selecting and preparing the next generation of trustees.
It also may mean reviewing the asset composition of the fund. This may result in uncomplicating the Funds strategy or selling down investments that require the Trustee’s time and experience to manage. Consult a Financial Planner if you require assistance in this area.
Consider potential successors’ capabilities, willingness to take on the responsibility, and their alignment with the fund’s goals. Successors can be family members, friends, or professional trustees. Discussing the responsibilities and expectations with potential successors is crucial to ensure they are prepared and willing to take on the role.
Check your Fund’s Trust Deed. You may need to update it to include provisions for the succession process. Consult with legal professionals to ensure the plan is legally sound and not inadvertently compromise the fund’s compliance status.
Documentation and Communication of your Trustee strategy
Document the succession plan clearly, including the roles, responsibilities, and process for transitioning trustees. Communicate the plan to all relevant parties, including current trustees, successors, and professional advisors such as your Accountant.
Keep your potential Trustees in the loop. This may either be by making them Trustees early or by keeping them informed annually with the audited financial statements.
As a trustee of an SMSF, your primary responsibility is to manage the fund prudently. Therefore you cannot receive compensation from the SMSF for fulfilling your trustee obligations, such as overseeing investments, administration, and compliance.
Review and update the succession plan regularly to reflect changes in the fund’s circumstances, membership, or legislation. This ensures the plan remains relevant and effectively safeguards the SMSF’s future.
A well-crafted trustee succession plan is essential for an SMSF’s long-term success and stability, particularly when managed by aging trustees. By taking a proactive approach to succession planning, SMSF trustees can ensure a seamless transition that protects the fund’s assets and the financial security of its members.
Ultimately, the goal is to ensure the SMSF continues to meet its members’ retirement goals, regardless of changes in its management. When it comes to Estate planning, peace of mind is thinking outside the unexpected and dealing with sometimes hard and awkward what-if scenarios.
To maximize your profit is not that hard. It would be best if you focused on a few changes in your business. Running a business allows your creativity to thrive. You are in charge and can make decisions that push you out of your comfort zone. Making a profit is one of the most important business operations.
When you make more than you spend, you are technically making a profit. Even a small profit is worth celebrating, so look at our short guide on maximizing your profit when running a business.
Cost-effective decisions
Always ensure your decisions are cost-effective. Consider whether your decisions will increase your income or overall expenditure.
● For example, if you want to sell artwork and make a living in the creative industry, it will be worth considering whether you could make more money selling your wares online or in a shop.
● A shop has overhead to consider, but an online space is entirely digital and may mean you ultimately make more money.
Remove unnecessary overhead. If you aren’t making money on a specific product or service yet still spending money to source, stock, or create, you may be making an unnecessary loss. Focus on removing any unnecessary overheads.
● Consider ways to cut back on expenses and save money. For example, if you are selling goods, ensure you shop around to get the best deal from the wholesaler.
Start small and grow gradually. When you are working to turn a profit, make sure you keep an eye on the services or products that sell.
● Avoid spending significant amounts of money on stock if it repeatedly fails to sell. Stick to your popular services and products and maximize profit by always selling what people will buy.
● Keep an eye on the specific services and products you have and make a list of the most popular sellers. Consider creating promotional tools and making those items or services as prominent as possible to catch attention.
Concentrate on your marketing. Remember, potential customers need to be aware that your business exists.
● Consider how you can market your business for free or as little expense as possible. Remember, you are trying to profit, so keep your expenditures low.
● Social media can be a powerful free tool. Consider using it to promote your business and enlist the help of your friends and family to get them to spread the word.
● Spend time pushing the products that sell well and develop innovative marketing campaigns for struggling stock. If customers know a particular item or service exists, it might pique their interest and make you an unexpected sale.
● Ask customers to leave you reviews and allow everyone who uses your business to offer feedback. You’ll build up a trusted customer base and be seen as more reliable than other businesses. It’s a great way to stand out from the crowd!
The most important thing to do is to keep your expenditures low. Once you’ve made enough to cover your outgoings, you’ll find everything else is a profit. Ongoing profit reporting is a must. Knowing your profit or loss every month means you are reviewing every opportunity to maximize profit.
Be bold and ensure people have a positive experience working with your business. Be creative and adventurous, and stand out for all the right reasons.
The government has just announced that from 1 July 2024 the standard concessional contribution cap will increase from $27,500 to $30,000
The non-concessional contribution cap which we calculate as four times the standard concessional contribution cap will also increase from $110,000 to $120,000.
This will also bring about a higher non-concessional bring forward cap of $360,000 if triggered in the 2024/25 year onwards.
We encourage our clients to continually review their superannuation plan. In many cases superannuation is an effective strategy moving forward as you are nearing retirement . Please contact us if we can assist you in this area
Divorce and your business. It can be a difficult and emotionally challenging process, and when a small business is involved, it adds another layer of complexity. A failed marriage may not directly cause a business to fail; it can significantly impact the business. Let’s explore where husband and wife work daily together in the business and where the wheels fall of the marriage.
The intersection of personal and professional lives can create unique challenges for couples who decide to end their marriage while still running a business together.
According to the website Marriage.com, it has been estimated by divorce lawyers that the divorce rate among entrepreneurs is approximately five to ten per cent higher than the average rate.
This means that, with the divorce rate in the USA being around 38%, the divorce rate for entrepreneurs could range from 43% to 48%. No doubt, it is similar trends in Australia as around the world.
Divorce is an emotionally charged event, and when business ownership is involved, the stakes can feel even higher. The tensions between the former spouses who continue to work together at the company can also create challenges.
The end of a personal relationship can significantly impact the dynamics of the business, affecting decision-making, communication, and overall productivity. It’s crucial for both parties to recognise and address the emotional challenges that may arise during this process.
One partner may often leverage the situation to cause employee unrest or divert funds to their own advantage.
One common issue that arises during divorce is a breakdown in communication.
As emotions run high, it can become increasingly difficult for divorcing spouses to communicate and make decisions together effectively. This breakdown in communication can directly impact the business’s day-to-day operations, leading to delays, misunderstandings, and potential financial losses.
Another emotional challenge is the conflicting interests of the divorcing spouses. While they may have shared goals and visions for the business before the divorce, their individual priorities may shift as they navigate the separation process. One partner may want out. This misalignment of interests can create tension and disagreements, making it challenging to move forward and make decisions that are in the business’s best interest.
As with any business dispute, a strategy needs to be carefully considered. We can assist here as we specialise in helping people exit from their business in times of dispute to protect their interests. Sometimes, you may feel you are being forced out by an aggressive partner.
When going through a divorce and your business as a small business owner, it’s essential to understand the legal implications. Therefore, you need to consider the best course of action for the business. Ensure you have a good lawyer who understands how business works and divorce implications.
One of the first steps in the divorce process is determining the value of the business. This involves assessing the business’s assets, liabilities, and overall financial health. Hiring a professional business valuator, independent of both partners, can help ensure an accurate assessment and avoid disputes over the value of the business.
In some cases, it is logical that one partner continues and the other is bought out. This may be an easy discussion or an emotional one where one partner feels like they are forced to leave.
The division of assets is critical to any divorce settlement, and the business is no exception. There are several approaches to property division, including selling the business and dividing the proceeds, one spouse buying out the other’s share, or continuing to co-own and operate the business together. Interestingly, of late, we have seen many clients romantically separate but still come together for the business. An improved relationship helps rebuild the years of bitterness that prevented the business from growing in the past.
Reviewing any existing shareholder or operating agreements is essential if the business is co-owned with other partners or shareholders; this is especially critical if outside owners are also involved. These legal documents may outline the process for transferring ownership in the event of a divorce and provide guidelines for resolving disputes. Therfore it’s imperative to seek the advice of a good lawyer here.
A collaborative approach can be particularly valuable for couples who choose to continue co-owning and operating the business post-divorce. By establishing clear roles, responsibilities, and decision-making processes, the former spouses can maintain a productive working relationship while keeping personal issues separate from business operations.
In some cases, once the initial anger, separation and legal matters are dealt with, there can be a sense of calmness. Former couples then acquaint each other and use the business as a common neutral ground to continue moving forward.
It can sometimes improve the business as matters of personality and indecision have been resolved, and a new journey begins.
These are crucial considerations, as the fate of the business can be impacted by the decisions made during the divorce proceedings. In any dispute of divorce and your business, what strategies will each partner employ to gain an advantage? How will a marital dispute affect the division of the business assets? These are all important factors to consider when navigating a divorce involving a business.
Once the divorce process is complete, developing a plan for moving forward and ensuring the business’s long-term success is essential. Here are some strategies to consider:
After a divorce, redefining roles and boundaries within the business is crucial. Clearly establishing each party’s responsibilities, decision-making authority, and areas of focus can help minimise conflicts and ensure a smooth transition. This also includes parity of reward vs effort and how major decisions will be made.
A succession plan is essential if one spouse decides to leave the business or circumstances change. This plan outlines how ownership and management will be transferred and ensures business continuity. This can assist in the divorce settlement negotiations.
In many cases, there may be a plan that will exit the business, and a value-building plan is implemented to plan for the sale of the business. In any divorce and your business, distractions and emotions can lead to further hemorrhaging of profits. Once a plan is devised, stick to the narrative.
Navigating the complexities of divorce and your business ownership requires professional guidance. Working with experienced attorneys, accountants, and business advisors can provide valuable insights and help you make informed decisions that align with your personal and professional goals.
Divorce and small business ownership present unique challenges that require careful consideration and planning. Divorcing couples can navigate the process more effectively by addressing the emotional issues, understanding the legal implications, and adopting a collaborative approach. Moving forward post-divorce requires redefining roles, developing a succession plan, and seeking professional guidance. With the right strategies in place, it is possible to separate personal and professional lives while ensuring the business’s continued success.
Disclaimer: The information provided in this article is for educational purposes only and should not be considered legal or financial advice. It is recommended to consult with qualified professionals for personalised guidance based on your specific situation. Please reach out for a confidential discussion about your personal situation.
Profit Margin vs Markup can be calculated and result in different outcomes
Profit margin and markup are separate accounting terms that use the same inputs and analyze the same transaction yet show different information.
Both profit margin and markup use Revenue and costs as part of their calculations. The main difference between the two is that a profit margin refers to sales minus the fee of goods sold, while markup is the amount by which the cost of good increases to get to the final selling price.
Understanding these two terms can help ensure that price setting is done to get the best profit for your product or service.
If the price setting is too low or too high, it can result in lost sales or profits. Over time, a company’s price setting can also have an inadvertent impact on market share since the price may fall far outside of the prices charged by competitors.
An understanding of the terms revenue, cost of goods sold (COGS), and gross profit are important.
Your Revenue refers to the income earned by a business for selling its goods and services.
COGS refers to the expenses incurred by manufacturing or providing goods and services.
GROSS PROFIT profit refers to any revenue left over after covering the expenses of providing a good or service.
Making sure your cost of goods to Revenue is important
Monitoring the gross profit margin is essential for several reasons, as it provides critical insights into your business’s financial health and operational efficiency. Here are the key reasons why:
A higher margin suggests that the company is selling products at a higher markup over its costs, signifying better profitability.
Monitoring gross profit margin helps you as the business owner identify trends in cost structures and take action to manage costs more effectively. If the margin is declining, it could signal rising production costs or pricing pressure, prompting a review of suppliers, costs, or production processes.
Your product’s gross profit margin can influence pricing strategies. Understanding the margin allows businesses to adjust prices without dipping below profitability thresholds. It’s crucial Businesses can identify the most and least profitable by monitoring gross profit margins for different products or services. This information can guide resource allocation, product development, and marketing strategies to focus on the most lucrative areas.
Yes, increasing your markup can potentially lead to better gross profit margins, but it’s important to approach this strategy carefully to ensure it doesn’t negatively impact sales
Before raising prices, it’s crucial to understand your market’s price sensitivity. If your customers are price-sensitive, a higher markup could lead them to competitors. Market research and testing can help you assess how price changes might impact demand.
After adjusting your markup, closely monitor sales data and customer feedback. This will help you understand the impact of price changes on demand and customer satisfaction. Be prepared to adjust your strategy if you see adverse effects on sales volume.
While focusing on increasing markup, look for ways to reduce costs without compromising quality. Improved cost efficiency can enhance your profit margins without needing to rely solely on price increases.
Consider implementing price increases gradually. Sudden, significant increases can shock customers and drive them away. Smaller, incremental increases might be more palatable and less likely to cause a negative reaction.
Profit margin refers to the Revenue a company makes after paying COGS. The profit margin is calculated by taking Revenue minus the cost of goods sold.
The difference is shown as a percentage of gross Revenue.
For example, if a company sells a product for $100 and it costs $30 to manufacture the product, its margin is $70 or 70% gross margin
Profit margin is sales minus the cost of goods sold. Markup is the percentage amount by which the cost of a product is increased to arrive at the selling price.
Markup shows how much more a company’s selling price is than the amount the item costs the company.
Therefore the greater the markup, the more revenue a company makes. Markup is the retail price for a product minus its cost, but the margin percentage is calculated differently. In our earlier example, the markup is the same as gross profit (or $30) because the Revenue was $100 and costs were $70. However, the markup percentage is shown as a percentage of costs as opposed to a percentage of Revenue.
However, using the same numbers as above, the markup percentage would be 42.9%, or ($100 in Revenue – $70 in costs) / $70 costs.
Profit margin and markup show two aspects of the same transaction. Profit margin shows profit as it relates to a product’s sales price or Revenue generated. Markup shows profit as it relates to costs.
Markup usually determines how much money is being made on a specific item relative to its direct cost, whereas profit margin considers total Revenue and total costs from various sources and various products.
SMSF for Property development undertaken by an SMSF can be undertaken. We however strongly recommend seeking advice.
ATO has issued a warning about relates to the use of SMSFs to invest in property development in a manner that inflates the profits earned by the SMFSs when compared to the capital the SMSF commits to the venture.
An SMSF can as part of its investment strategy invest in property ventures. This is provided the investments are entered into on a genuine arm’s-length basis. As trustees, you should document your strategy including a risk analysis of the project.
If investments are entered into with related parties, even though on an arm’s-length basis, care still needs to be taken. Keep reading to understand what you should do!
A scheme that was identified by the ATO, an arm’s length third party contracts with a company related to SMSFs to build several units or apartments ie a property development. Those who control the SMSFs provide services to the company (which they control) and charge low fees to that company. Also, loan capital is provided to the development company at a low or no interest rate.
Inflated profits warning signs
In this scheme, the development company earns inflated profits. These profits (after the company pays tax on the profits) are then paid as fully franked dividends up a chain of companies to the SMSFs.
The development company in this case will have paid tax at a rate of 30% on the profits earned. When the profits reach the SMSF as fully franked dividends, the tax paid by the company is refunded to the extent of the SMSF only paying 15% of the profits. Hence reduced tax liability
The ATO would state that this means the SMSF contravenes the superannuation and tax laws. Furthermore, this is because the SMSF is earning “non-arms length income” (NALI). NALI earned by a superannuation fund is taxed at 45%. The SMSF may also be treated as a non-complying fund because it may have breached the “sole purpose” test. This means it will have lost all of its tax-concessional status.
• Limited Recourse Borrowing Arrangements (LRBA): While SMSFs can borrow to invest under LRBAs, there are strict rules about borrowing, especially when it comes to property development.
• Personal Guarantees: Trustees should be cautious about providing personal guarantees for loans, as this can risk personal assets.
Building the development and Contractor Selection: Engaging contractors for property development must be done at arm’s length,. This means competitive pricing and no preferential treatment to related parties. The building also needs good Project Management: Trustees need to actively manage the project or engage professional project managers to ensure the development is completed on time and within budget.
• Capital Gains Tax (CGT): SMSFs can benefit from reduced CGT rates on investment properties held for more than 12 months.
• Income Tax: Rental income and any profits from the sale of developed property are subject to income tax at concessional rates within the SMSF.
While an exit strategy requires a sale of property Liquidity and Exit is important considerations. Before embarking on a property development venture, consider how the SMSF will exit the investment. Property can be difficult to sell quickly, which may impact the fund’s liquidity. Especially if the member is of old age or needs to fund a pension
Gartly Advisory specializes in helping both clients establish and operate an SMSF and also those who undertake property development.
How do I sell my commercial business property? When selling your business, your business operations and HQ are an essential and strategic part of your business.
Most businesses operate from a premise of some sort, so when it comes to exit planning, your decisions on what to do with your business premises is equally important as one of the essential items that require serious discussion and planning.
When it comes to planning, the first thing to do is to review how and what you use your office, factory shop, etc., as part of the business on a day-to-day basis. For that reason, the location may be the reason for the business’s success,. Coupled with the possibility that the business building and surrounds such as a hotel, fun park or caravan park may be the selling point. The business HQ property may also have been purpose-built, and your business sale value may be exploited if the business and property are sold as one package.
Further your business may have multiple premises to consider, which factor into the strategy along with what can be sold, consolidated, and required moving forward.
As part of the exit strategy, take a moment to review the business. In short look at the location it operates to help you work through your exit planning:
The owner needs to review the property to ensure it is in a sellable state. Take a moment and look at:
There are some options to consider when it comes to your business real estate you own. These can be classified as follows:
Let’s first look at why you may not sell the freehold property and choose to keep it and sell only the business:
Opposite to the above, here are some valid reasons why you would sell the property at the time of selling the business:
Whatever you intend to do, take time to make sure the structure you have chosen to hold the business vs the property works for you from a tax and estate planning perspective.
It is crucial to check that assets, such as the business real property owned by the taxpayer, have been held by a ‘connected entity’ for at least half the business ownership period (or 7.5 years).
Where the necessary level of ‘connection’ does not exist, it may be possible to implement a restructuring without material cost to ensure that the entities are ‘connected. ‘
Where there is a question of whether the amount paid constitutes “rent”, a pivotal factor to consider is whether the occupier has a right to “exclusive possession” of the property. The payments will likely be classified as rent if such a right exists. – means no active asset!
If the arrangement allows the occupier only to enter and use the premises for specific purposes and does not amount to a lease granting exclusive possession, the payments are unlikely to be rent.
Of course, planning for any business should be part of every person’s business exit plan. Please note this is general advice. We welcome you to book a time to discuss your affairs and help you plan for a wealthy retirement.
Without a doubt, I would consider that Santa is one of the hardest-working people this time of the year. As an accountant, this time of the year we deal with the ATO and clients, but Santa has to deal with so much more. From employing elves to dealing with pesky kids not getting their presents, replying to letters and then spending half the night on Christmas Eve delivering presents.
So even if you don’t celebrate or are a non-believer, you must agree that the Jolly Man does a good job. To verify how much of a great job he does I asked ChatGPT for verification and here’s its result!
Hey ChatGPT how hard does Santa work?
The idea that Santa Claus is the hardest working person at Christmas is a playful and whimsical concept commonly found in holiday lore. It’s a way of emphasising the tremendous effort Santa supposedly puts into delivering presents to children all around the world in a single night. This notion is meant to convey the magic and generosity associated with the holiday season.
In reality, the concept of “hardest working” might not be applicable in a literal sense, as it’s all part of the fantastical and mythical aspects of the Santa Claus story. However, the sentiment behind it is to highlight the spirit of giving, kindness, and the joy of spreading happiness during the festive season. Many people, including parents, caregivers, and volunteers, contribute significantly to making the holiday season special for others through various acts of kindness, charity, and celebration. The idea of Santa as the “hardest working” person is more of a charming myth that adds to the enchantment of Christmas.
I am devastated and now understand this Ai doesn’t have a heart. Where is your Christmas spirit ChatGTP? But it has a point and a good reminder of how some people give in the spirit of Christmas this time of the year! Thank you to those who are helping others.
Despite the harsh reality of the clinical response from a machine that has no heart or Christmas spirit, I am still a believer. So I thought, I wonder how many presents Santa delivers on Christmas Eve?
Well, I thought I could stump ChatGPT on this one!
The number of presents Santa delivers around the world on Christmas Eve is not a specific or quantifiable figure because it is part of the fictional and magical elements of the Santa Claus story. The concept of Santa Claus delivering presents to children around the world on Christmas Eve is based on folklore and tradition, and the exact number of presents is not defined. It’s a whimsical and imaginative aspect of the holiday season, and the focus is more on the joy and spirit of giving rather than on a precise count of presents.
Did you know Santa uses ChatGPT to help him reply to the many letters he receives!
Absolutely devo now! This ChatGPT has burst my bubble one week out from Christmas Eve.
Finally, I thought, maybe a career change could be good. So I thought if his job came up, could I apply and what’s it worth?
ChatGPT give me some hope for a career change, please!
If we were to imagine Santa Claus as a real, employed individual, determining his salary would involve considering various factors such as job responsibilities, working conditions, and the scale of the operation. Here are some hypothetical considerations:
Global Workload: Santa would have an enormous workload, delivering presents to millions (or possibly billions) of households worldwide in a single night. The sheer scale and logistical challenges of this task could be considered when determining compensation.
Logistical Expertise: Coordinating the delivery of presents to so many homes across different time zones and geographic locations would require significant logistical expertise. This could be a factor in determining Santa’s pay.
Year-round Preparation: If Santa were to be involved in year-round preparations, such as toy production, gift wrapping, and maintaining the Naughty and Nice List, these ongoing responsibilities might influence his compensation.
Magical Abilities: Santa’s magical abilities, including flying reindeer and the ability to enter homes through chimneys, could be considered unique skills that might warrant special compensation.
Holiday Spirit: The symbolic value of spreading holiday cheer and embodying the spirit of generosity might be factored into Santa’s compensation, reflecting the positive impact of his work on society.
There it goes again – where is your sense of Christmas spirit ChatGPT?
I just think I probably wouldn’t qualify based on this response and probably couldn’t fit down the chimney anyway!
Ultimately, the idea of Santa receiving a salary is a fictional and imaginative concept tied to the folklore surrounding Christmas. In reality, Santa Claus is a mythical figure, and the joy and goodwill associated with him are not typically linked to financial compensation. The magic of Santa lies in the spirit of giving and the joy of the holiday season rather than monetary rewards.
Sounds like the pay is terrible! Maybe I won’t be a Santa after all!
Despite Santa being regarded as folklaw(if you in the ChatGPT camp) his story enables children around the world eyes light up at the thought of Father Christmas coming to their home with a sack full of presents. The folk law employs many Santa look-alikes brings joy to the world and helps companies like Mantal sell many Barbies!
As we start to close down, I take the opportunity to say to all my friends, that it is that time of the year to enjoy, relax be happy and pray for world peace
Merry Christmas everyone
The holiday season brings joy and celebration, but for small businesses, it can also bring challenges when it comes to cashflow planning
Cashflow, the lifeblood of any business. Cashflow is even more crucial during this period. Small businesses are starting to experience delayed payments, reduced sales, and increased expenses due to safety measures and additional costs associated with remote work or implementing safety protocols. The holiday season brings slow down and couple with higher interest rates the economy is changing
To address these challenges, small business owners must adopt proactive cash flow management strategies.
Between now and the 15th of January 2024 can be a cashflow bumpy ride for many small business. Its time to implement cashflow planning and effective strategies to manage cashflow. You can as a small businesses navigate through the Christmas season with aim of maintaining a healthy cash flow.
Here are our tips to make you get through the crazy festive season
The festive season often comes with additional expenses that are not part of the regular operating costs of a business. These can include staff parties, client entertainment, and Christmas gifts. To ensure you have sufficient cash flow to cover these expenses, it is crucial to forecast and plan ahead.
Take into account the estimated costs of these irregular expenses and incorporate them into your overall budget. By doing so, you can avoid any unexpected financial strain and ensure you have enough cash on hand to cover these festive expenditures.
Additionally, it is important to consider any potential price increases during the holiday season.
Maintaining positive cash flow during the holiday season can be a delicate balancing act for small businesses. One effective strategy is to extend your accounts payable, which involves delaying payment to your creditors for as long as possible. By doing so, you can reduce cash outflows and preserve more cash on hand.
Consider negotiating longer payment terms with your suppliers or vendors, and take advantage of any discounts they may offer for early payments. This is an old trick used in cashflow planning but be careful you don’t starve your suppliers who may in turn not supply you moving forward if you are a reliable payer . It’s a balancing act!
On the other side of the cash flow equation, it is crucial to optimize cash inflows. Actively communicate with your customers about changes to payment cycles and important cut-off dates. Issue invoices promptly and follow up on payment to ensure timely receipt of funds. Offering options such as partial payments or early payment discounts can incentivize customers to pay sooner, improving cash inflows during the Christmas season.
Send our regularly – remind and follow up those not adhering to your payment terms , this is crucial for cashflow management.
Invoicing is a critical aspect of cashflow planning, especially during the holiday season. To maximize your chances of getting paid on time, it is important to maintain active control of your invoicing process. Send out invoices as soon as possible to avoid any delays in payment. Consider implementing automated reminders to gently nudge customers about upcoming payment deadlines.
In addition, proactively communicate with your customers about your payment terms and any changes that may occur during the holiday season. By keeping the lines of communication open, you can address any potential issues or disputes promptly, ensuring a smoother cash flow and minimizing the risk of late payments.
For small businesses looking for a flexible cash flow solution during the Christmas season, utilizing credit cards can provide a much-needed buffer. When you pay your business expenses with a credit card, you can defer the payment until your next billing cycle. This can provide you with additional breathing room, allowing you to collect revenue from holiday sales before having to pay off your current balance.
Paying with credit cards also offers the opportunity to earn rewards, such as points or cashback, on your business expenses. These rewards can provide additional value and help offset some of the costs associated with the holiday season.
The downside however is important to use credit cards responsibly and ensure that you have a plan in place to pay off the balances in a timely manner to avoid accumulating excessive debt.
Even with careful planning and effective cash flow strategies, unexpected challenges can arise during the Christmas season. To safeguard your small business against cash flow shortages, it is wise to explore backup finance facilities. These facilities can provide you with additional funding when needed, helping you bridge any temporary gaps in cash flow. For some Invoice finance is one such option worth considering. But it will take time to set up and remember it’s a lag effect and must be repaid
With invoice finance, you can access funds owed to you in outstanding invoices before they are paid by your customers. This allows you to maintain a healthy cash flow by advancing the funds you need to cover upfront costs, overheads, and unexpected expenses. By leveraging your accounts receivable, you can access working capital quickly and flexibly, ensuring your business can navigate through the Christmas season smoothly. y to earn rewards and benefits associated with credit card spending.
While the focus of cashflow planning during the Christmas season is primarily on generating sufficient cash flow to cover expenses, it is equally important to plan for the post-holiday period. Many businesses experience a lull in sales and cash inflows immediately after the holiday rush. To mitigate any potential cash flow challenges during this period, it is crucial to plan and budget accordingly.
Review your financial statements and cash flow forecasts to identify any potential gaps in cash flow post-holiday season. Consider adjusting your budget and expenditures to align with the anticipated decrease in cash inflows. This can include reducing discretionary spending, negotiating payment terms with suppliers, and exploring cost-saving measures to maintain a healthy cash flow during the quieter months.
Managing cash flow during the Christmas season is crucial for the success and sustainability of small businesses. By implementing effective strategies such as forecasting and planning for irregular expenses, extending accounts payable, maintaining active control of invoicing, and exploring backup finance facilities, small businesses can navigate through the holiday season with a healthy cash flow.
Remember to maintain strong vendor relationships, utilize credit cards for deferred payments, and seek professional advice when needed. With careful planning and proactive cash flow management, small businesses can thrive during the Christmas season and beyond.
Click here to download our December Newsletter
Superannuation remains a cornerstone of financial planning for most Australians. In this issue, we provide you with a practical to-do list to make sure that your super is working optimally for you. This to-do list includes consolidating your super, reviewing your investment strategy, checking your beneficiary nominations and insurance within your superannuation. Undertaking these tasks can significantly impact your long-term financial health and security and will be crucial for ensuring your retirement savings are working effectively for you.
Tax challenges can arise in unexpected ways, such as dealing with lost or destroyed records. We provide guidance on how to navigate missing records to ensure compliance and accuracy in your tax affairs.
In this issue we also provide the latest values for goods taken for private use, and note that lesser or greater values may be used if you provide the evidence for your valuation.
We provide insights into how you can actually have two “main residences” for Capital Gains Tax purposes – but this is a complex area and there are many conditions which must be met. Let us know if you need help with this issue.
We alert you to the ATO’s more robust approach to tax debts, the particular areas on which they are focused, and ways in which you can in certain instances restructure your debt.
Lastly, we look at the taxation of superannuation death benefits. There is much you can do to ensure that your beneficiaries will not pay tax on your death benefits. A vital task is to ensure that your beneficiary is a “tax dependant” and we explain what this means.
We hope this edition provides you with valuable insights and practical advice.
Contact us on 03 9597 9966 if you have any questions relating to matters raised in any of our Client Newsletters.
Are you feeling trapped and forced out of your business by an aggressive business partner making your life hell?
This situation can be incredibly stressful, leaving you powerless and questioning your dreams, motivation and aspirations. But fear not because help is here.
Let’s explore the common signs and tactics that aggressive business partners use to push their partners out and strategies to regain control and protect your interests.
Being forced out of your business is a nightmare and unacceptable. The good thing is you don’t have to face it alone.
The first step is to recognise that your partner is becoming aggressive and no longer interested in a fair and harmonious partnership. You can start proactively protecting your rights and negotiating a more equitable arrangement.
Dealing with an aggressive business partner can be a challenging and emotionally draining experience.
Identifying the warning signs early on would be essential to prevent further damage to your business and personal well-being. Here are some common signs that your partner may be becoming aggressive:
1. Control and dominance: An aggressive partner may exhibit controlling behaviour, making decisions without consulting you and exerting authority over every aspect of the business. They may disregard your opinions and ideas, leaving you marginalised and undervalued.
2. Lack of transparency: Transparency is crucial in any business partnership, but an aggressive partner may withhold important information or keep you in the dark about critical decisions. This lack of transparency can lead to a breakdown in trust and hinder your ability to contribute to the business effectively.
3. Undermining and belittling: Aggressive partners often resort to belittling and undermining their counterparts to assert dominance. They may criticise your work, question your competence, or blame you for any setbacks, eroding your confidence and self-esteem.
4. Financial impropriety: Dishonesty with finances is a major red flag. If you notice irregularities in the company’s financial records or suspect your partner of embezzlement or mismanagement, it’s crucial to address the issue immediately to protect your assets.
Watch for these signs early will protect yourself and your business by being proactive. By acknowledging the problem, you can regain control and work towards a more equitable partnership.
An aggressive business partner can devastate your business, both financially and emotionally. Their actions can undermine the stability and success of the venture, leaving you feeling powerless and defeated.
Here are some of the expected impacts of dealing with an aggressive partner:
1. Decreased productivity: Constant conflict and power struggles can significantly impact productivity and efficiency within the business. The toxic environment created by an aggressive partner can decrease motivation and collaboration among team members, leading to reduced output and missed opportunities.
2. Loss of clients and business opportunities: Aggressive behaviour can drive away potential customers away by a hostile environment. Additionally, an aggressive partner may make impulsive decisions or alienate critical stakeholders, resulting in missed business opportunities and damaged relationships.
3. Legal complications: Dealing with an aggressive partner can lead to legal battles and disputes. If your partner engages in unethical or illegal practices, you may face legal consequences or have to defend your reputation in court.
4. Negative impact on personal well-being: The constant stress and anxiety of dealing with an aggressive partner can take a toll on your mental and physical health. Please seek help as soon as possible if you are experiencing this.
It’s important to prioritise self-care and seek support from friends, family, or professional counsellors to navigate this challenging situation.
The impact of an aggressive partner can be far-reaching, affecting your business and personal life.
When confronted with an aggressive business partner, knowing your legal rights and responsibilities as a business owner is essential. Understanding the legal implications can help you protect your interests and make informed decisions.
Partnership agreements: Review your partnership agreement to understand the rights and obligations of each partner. Here are some options to consider:
Corporate laws and regulations: Understanding your legal rights and obligations can give you leverage when dealing with an aggressive partner.
Breach of fiduciary duty: If your partner breaches their fiduciary duty, which includes acting in the business’s best interest, you may have grounds for legal action.
Alternative dispute resolution: Mediation or arbitration can effectively resolve conflicts with a business partner without resorting to costly and time-consuming litigation. Explore these options to find a fair and mutually beneficial resolution.
Our role as Dispute Strategy Accountants is to help you explore your options and implement the right strategy. Please reach out to you have any questions or would like to devise a strategy!
Please make sure to document everything: Keep a detailed record of all interactions, decisions, and incidents involving your partner. This documentation can serve as evidence in case legal action becomes necessary and provides a clear timeline of events.
Be open in your communication.In doing so you can try to address the issues with your partner through open and honest communication. Express your concerns and attempt to find common ground. However, be prepared for resistance, and don’t hesitate to seek alternative solutions if communication fails.
Empathy and active listening by giving your partner your full attention and seeking to understand their perspective. As a result this shows respect and can help foster a more constructive dialogue.
Focus on interests, not positions: Uncover the underlying interests or needs driving your partner’s behaviour, furthermore, instead of focusing on your differences. Find common ground and work towards a mutually beneficial solution.
Set clear boundaries: Establishing clear boundaries and expectations can help prevent future conflicts. Clearly define roles, responsibilities, and decision-making processes to ensure everyone is on the same page.
Look for that win-win position. Look for win-win solutions. Explore compromises that address both your interests and your partner’s.
Seeking professional help can provide you with the expertise and guidance necessary to navigate the complexities of dealing with an aggressive business partner.
These preventive measures can minimise the risk of encountering an aggressive partner and protect your business from potential harm.
Empowering yourself as a business owner after facing an aggressive partner!
A good strategy gives you peace of mind!
Never go head-on with an aggressive business partner. Plan and deal with financial facts and events. Always consider what you would like as the outcome of resolving the situation before starting any partnership negotiations. Professional accounting and legal help lead a suitable path with one goal in mind resolution: to move forward but not destroy what you have built!
If the dispute is resolved, let’s look at the culture of the business, how to prevent it from happening again and the transparency of decision-making. Do we also have to put a strategy to repair the damage done to the organisation that resulted from the distraction the dispute has caused? Let’s look at how this has impacted staff, suppliers, customers, and your family.
Remember to prioritise your well-being and seek support from your network. You can rebuild, recover, and continue on your path to success. Look beyond the problem; the solution may be to be empowered in a new business structure. Don’t let anyone force you out of your dreams!
🔒 Customer Retention Engagement Strategies . Lets explore Unlocking the Secret to Keeping Your Customers Engaged in a competitive market 🔒
🚀 Small businesses are facing unprecedented challenges in today’s competitive market. With rising interest rates and soaring fuel costs, it’s more important than ever to focus on customer retention strategies that will keep your business thriving. With another interest rate just hitting small businesses we need to start to put strategies in place as we progress into 2024.
💡 But how do you keep your customers engaged in times of uncertainty and into 2024? Let’s explore some actionable steps that can help you strengthen your bond with customers and boost your bottom line.
1️⃣ Show Genuine Appreciation: 💙 Take the time to show your customers that you genuinely appreciate their business. Personalized thank-you messages, exclusive discounts, and surprise gifts can go a long way in making them feel valued and important.
2️⃣ Stay Connected: 📲 In today’s digital age, staying connected with your customers is easier than ever. Utilize social media platforms, email newsletters, and customer loyalty programs to keep them engaged and informed about your latest offerings and updates.
3️⃣ Offer Exceptional Customer Service: 🌟 In a competitive market, outstanding customer service is a game-changer. Go above and beyond to resolve any issues promptly, listen to their feedback, and provide personalized solutions. Remember, happy customers are more likely to spread positive word-of-mouth recommendations.
4️⃣ Tailor Your Offerings: 🛍️ Understanding your customers’ needs and preferences is crucial. Regularly analyze their buying patterns and tailor your products or services to meet their evolving demands. This shows that you value their feedback and are committed to providing them with the best possible experience.
5️⃣ Create a Sense of Community: 🤝 Build a community around your brand by organizing events, webinars, or online forums where customers can share their experiences and engage with each other. This not only fosters a sense of loyalty but also provides valuable insights into their needs and desires.
💥 Remember, customer retention is not just about keeping your existing customers happy; it’s about turning them into brand advocates who will spread the word and bring in new business. sustainability and Corporate Social Responsibility.
Consumers are increasingly concerned about the impact of businesses on the environment and society. Small businesses just as big business does need to demonstrate their commitment to sustainability. They can do this by showing their corporate social responsibility by implementing eco-friendly practices, reducing waste, and supporting local communities. Failure to do so could result in reputational damage and loss of customer loyalty.
Let’s navigate these challenging times together by implementing customer retention strategies that work By showing genuine appreciation, staying connected, providing exceptional service, tailoring your offerings, and creating a sense of community, you’ll position your small business for long-term success.
So now you have read this, what are you going to do to keep clients happy in 2024? Act today , set a sales target to enable you to achieve your results in 2024.
📢 Share this post to help other small businesses thrive in a competitive market. Let’s empower each other to overcome challenges and celebrate the power of customer loyalty! 🙌
Need an accountant who can help talk to Geoff and his team we understand small business
#CustomerRetentionStrategies #SmallBusinessSuccess #EngagedCustomers #BusinessGrowth #ThrivingInACompetitiveMarket
In the November edition of the Client Newsletter we delve into the intricacies of nominating a superannuation beneficiary, examining the various types of nominations and the legal requirements they must meet.
Additionally, we tackle the complexity of tax residency in Australia. As the recent AAT case reveals, citizenship is not the sole determining factor; other elements, including double tax agreements, are pivotal to consider.
This edition also introduces you to the prospective Energy Incentive, offering a bonus tax deduction aimed at enhancing energy efficiency within your business.
Qualifying as an interdependent or financial dependant is another topic we explore, shedding light on how to ensure potential beneficiaries receive a death benefit.
Click here to download our November Newsletter
Contact us on 03 9597 9966 if you have any questions relating to matters raised in any of our Client Newsletters.
5 Startup Mindset Shifts You Must Make as you launch your New Business.
Starting out. Grab that winning mindset from day one to conquer challenges and thrive in the competitive business world.
Starting a new business is an exhilarating experience requiring a unique mindset.
Business owners are like modern-day supermen/women, equipped with the determination and courage to face any challenge head-on. The excitement of embarking on a new small business venture is unparalleled, as the possibilities are endless, and the potential for success is immense.
With the right startup mindset, you as a small business owner, can conquer any obstacle that comes your way. When starting out in a new business, having the right mindset is crucial for success.
It is important to approach every task with a positive attitude and unwavering belief in oneself. A business owner must be confident to take risks and make bold decisions, even in the face of uncertainty.
This mindset of fearlessness and optimism sets entrepreneurs apart from the rest and fuels their drive to succeed.
The mindset of a business owner starting out in a new venture is akin to that of a superhero. Like Superman, they possess extraordinary powers to overcome challenges and achieve greatness.
Don’t be afraid to step out of your comfort zone and push the boundaries of what is possible. Their unwavering determination and resilience will enable you to navigate the ups and downs of business.
Starting out in a new business requires a mindset that embraces failure as a stepping stone towards success. Every setback becomes an opportunity to learn and grow, allowing business owners to improve their strategies and approaches continuously. With this mindset, entrepreneurs can turn obstacles into stepping stones towards achieving their goals.
Most people assume starting a successful business requires a great idea and a substantial cash injection. Both are correct, but to truly make your dreams a reality, the truth is your transition to being a business owner begins with a new mindset.
.
If you really want to be a successful business owner, you need to shift how you think about yourself, the world, and your business!
Here are some of the most valuable mindset shifts you should make before you begin your small business journey
If you’re thinking of starting your own company, do yourself a favor and read the book Mindset by Dr. Carol Dweck. Dr. Dweck has inspired countless business leaders and entrepreneurs because she teaches what it means to abandon the “fixed” mindset.
Premiership winning Coach at Collingwood, Craig Mc Crae, recommended it, and so do I. It helps keep you in the mindset zone.
Most of us have a “fixed” mindset. This is the belief that there’s a limit to your skills, what you can do, and what you can achieve at any given time. While that might seem like a humble position, it can be detrimental. Why it place limitations on you and your company from day one?
Shifting to a “growth” mindset means embracing the belief that you can improve anything, including your company, skills, and future, whenever you choose.
Focusing on constant growth ensures you’ll always work to make your business bigger and better.
We’ve all heard that quality matters more than quantity, but many of us are still hardwired to seek out volume instead of value.
Prioritising quality over quantity means using your resources and people as effectively as possible to generate the best results. In the same way, prioritising quality over quantity as a business owner means you’re more cautious about which projects you take on and which clients you work with.
This can save you from making expensive mistakes. Don’t take on a contract or a sale if it leaves you potentially out of pocket to get work in the door.
You may find that being a business owner brings a fair share of impostor syndrome. This is the belief that you’ve come to a place where you don’t deserve to be.
Without delay you need to remove that thought if you want to thrive.
Above all ,everyone feels this way occasionally, but never undervalue yourself,
You need to understand what your value is and be confident in yourself.
As can be seen take the time to regularly remind yourself what you’re good at and what you’ve accomplished so far. Tell yourself you deserve to be where you are and act like a small business champion.
There will always be new trends and technology to understand. Learn, embrace and grow you and the productivity of your business.
You need to be willing to keep up with the changes. Committing to a mindset of lifelong learning can help with that.
If you cultivate a constant curiosity and development attitude, you’ll be more likely to seek ways to improve your business. Being a lifelong learner makes you more agile, adaptable, and willing to evolve as your business grows.
A learning startup mindset requires shifting from seeing failure as an opportunity to learn. Take your mistakes as the lessons they are and use them to help you grow.
Confidence in yourself is a big mindset tool. With this in mind, your Mindset is best when you have the tools and people behind you to make it a success when you launch. This includes people who will provide direction, support, encouragement, and objectivity.
Without delay the tools are in the form of your documented plan, the 90-day launch and the financial targets to hit need to be implemented.
The most compelling evidence is that mindset medicine helps keep you focused.
Without a doubt any great business owner will tell you passion and money will only get you so far.
Take your, mindset, attitude and mental framework to keep pushing forward and achieving your goals. Shifting your mindset in the five ways mentioned above will prepare you to thrive.
Business owners possess the superhuman qualities of determination, fearlessness, and resilience. With the right mindset, you can overcome any challenge that comes their way and achieve phenomenal success. So gear up, put on your entrepreneurial cape, and embrace the adventure of starting your own business!
Can you live in SMSF residential property held by your Fund?” No not directly, but follow the rules at retirement, and it may be possible.
As you retire, retirement planning opens up opportunities for living and the next stage for your SMSF, your lifestyle and your needs.
An SMSF is established for the sole purpose of meeting your retirement objectives. And this is the overal objective of holding any assets in the Fund!
Retirement planning involves planning and managing your assets into the senior years of your life. Opportunities arise as clients look at the strategies such as the downsized option for superannuation contributions along with other strategies. At this stage in life, you may wonder if you can live in the SMSF residential property after retirement. The property may be a residential holiday letting or an apartment.
Unfortunately, there is a misconception that you can move into the SMSF property as soon as you retire, regardless of whether the property is still in the SMSF. This is a big misconception as, at present, the Trustee of the Fund still owns the property, and it still forms part of your existing investment strategy.
Selling the residential property to a member prior to retirement is not allowable as it may breach the non-arms-length rules.
To live in SMSF residential property, it is necessary to transfer an asset to a member upon retirement
Member payments are the distribution of the member’s superannuation entitlement within the SMSF. The benefit is calculated based on the proportion of net assets at market value. Accessing superannuation entitlements is subject to conditions of release.
These conditions include reaching age 65, or, retirement, or medical incapacity. Not meeting one of these conditions means members cannot access their superannuation entitlements from the SMSF
Transferring the residential property from an SMSF as a Member Payment at Retirement.
As the Trustee of the SMSF, which is you, can determine that it will pay a lump sum. Your decision will be to sell the property or assets or undertake an in-specie transfer to the member.
Another term used for residential property transfer from an SMSF is known as an “in-specie transfer.”
In this case, the market value of the asset transferred within the SMSF decreases the member’s balance drops by the same value to reduce the amount held by the Fund on the member’s behalf.
A property that can be held in a superannuation fund can be transferred out of the Fund to satisfy as a member payment providing it meets the SIS conditions.
First Step. the Trust Deed. Check that the SMSF Deed will determine whether if the Deed permits in-specie transfers of assets. The Deed also outlines any specific processes that the Trustee must follow.
The asset being transferred must be valued at its market value. Where it was part of a borrowing arrangement check that it has been fully discharged.
The member also must have sufficient member entitlements in the Fund to cover the value of the asset being transferred. Complicated transfers where the value is greater than the value of the benefit need a professional plan. Reach out, and we can help work through your strategy.
We suggest you check with your solicitor in relation to the legal matters. Your solicitor will ensure any property transfer is done correctly. As accountants, we can advise you if there will be any income tax implications behind your strategy. There may be stamp duty savings but the solicitor can help you here. Therefore to be legally binding the asset change of ownership needs to be properly documented.
Seek advice surrounding your requirements to avoid any costly mistakes.
This article is general and should not be construed as personal advice. You should consult a qualified professional for advice specific to your circumstances.
Our Client Newsletter this month includes articles about:
Click here to download our October Newsletter
Contact us on 03 9597 9966 if you have any questions relating to matters raised in any of our Client Newsletters.
How to Build a Business You Love, A Business With Purpose: 7 Steps To Help You Find Your Passion And Grow Profits
Creating a business you love is not something that can be done overnight. It requires a lot of introspection, creativity and planning. You can do many small things to ensure your business has a purpose and that it aligns with your values. The key lies in breaking the cycle of doing things just for the sake of it. Instead, create an atmosphere where you’re creating a business for the pure joy of it. The rewards will follow and grow with your passion. In this blog post, we will discuss seven practical steps you can take to help you find your passion, and grow with purpose as a business owner:
Do you have love and passion for your business? When you first start to consider building a business, the first thing you should do is assess your values. This will help you identify the values that are important for your business, and for you as a person. There are many ways you can go about this; one way is to identify the core values that form the basis of your personality. You can also look at the core values of your industry, and choose those that feel most aligned with your values. Once you have identified your core values, you can also look at how they align with your business. This is important, as you want to ensure your business is aligned with your values.
When assessing your values, you must consider why you do certain things. This will help you to decide on a purpose for your business. Purposes are important in business and can help businesses align with their core values, and best fit their customer’s needs. A business with a purpose will generally align more with customers’ needs and have a higher success rate.
Another important step is deciding on the growth path for your business. This can help you to start aligning your actions to your values. It is important to start with a growth path that fits your values and is feasible. This can help you avoid wasting months or years of your life on a growth path that does not align with your values or business goals.
As you build your business, you will find that much of your time will be spent on practices. These practices can be for your staff members or your own business. Some of the practices you will find yourself investing a lot of your time in are: – Training. Businesses thrive on people who are fully trained and know how to do the job. You will need to invest time in training your staff members on best practices and make them fully aware of your values and purpose. – Managing expectations. In any business, people will have expectations. You must manage expectations by setting realistic expectations and aligning actions with values. –
Planning and forecasting. Businesses thrive on planning and forecasting for profit growth. Again, you will be on a constant planning and forecasting cycle if you get excited about your plan. Planning and forecasting will help you to make well-informed decisions and align your company’s growth path with its purpose. – Day-to-day operations. As an owner, you must monitor day-to-day operations and ensure your practices run smoothly. Practices must be well organized and managed. – Communication. Businesses thrive on communication and must ensure they communicate with their staff members and clients. Communication is a two-way process.
Many small businesses struggle with hiring the right team members. This can be because they did not plan well for their company’s growth. They might not have planned for their hiring, or they might have hired the wrong people. Hiring a team that reflects your philosophy and values can help you avoid many of the struggles businesses face when hiring the right team members. It is important to note that you should hire for fit, and not just for skills. You should hire for values. This does not mean you should hire people with the same values as you, but it means you hire for a values fit. You can hire for values like passion, tenacity, creativity, etc. You can hire for less obvious values, like how people approach work. You can hire for values like high integrity or kindness.
Businesses thrive when profits grow when they have a purpose; you must align values. It is important to assess your values and those of the industry that you play in. This will help you identify the core values that are important to you and most aligned with your industry. When you have identified these values, you can start working towards creating a business with a purpose and a growth path aligned with these values. One of the practices that you can employ is building a team that reflects your philosophy. This will help you to avoid hiring team members who do not align with your philosophy and help you to get team members who reflect your philosophy.
Self-Managed Super Funds (SMSFs) allow individuals to take control of their retirement savings and invest in assets they have confidence will be right for their retirement strategy.
Property investment is a popular choice for many SMSF trustees. However, it’s crucial to understand the rules and regulations surrounding this investment strategy.
Let’s explore the golden SMSF property rules of holding property by your SMSF!
Before delving into the specifics of property investment, it’s essential to emphasise the importance of responsible SMSF management. As an SMSF trustee of your Fund, you have a fiduciary duty to act in the best interests of your members and beneficiaries. This is fundamental behind the SMSF property rules.
This means prioritising the maximisation of retirement savings as the sole purpose of your SMSF. All members in an SMSF need to be Trustees. They must understand the rules and regulations, and understanding your obligations is crucial to ensure compliance and protect your members’ financial well-being.
Investing property through an SMSF can be more complex than many trustees initially assume. T
To help you navigate this investment strategy successfully, let’s address some common property investment misunderstandings and provide valuable insights into the rules and regulations.
Location and careful planning is the key, but SMSF Rules Apply.
Selecting a property that has a return and can be sold when it is right is important. Buying and trying to borrow for an SMSF purchase in Humpy Doo won’t get Bank support. It also may be hard to sell down the track when it comes to realising assets for retirement. Property investment for retirement needs clear objectives, and using emotion and ideas of holiday thoughts is the wrong approach.
It’s important to note that the SMSF property rules and regulations significantly impact structuring the SMSF property purchase. While you may have extensive knowledge about property investment, you must familiarise yourself with the specific rules that apply to SMSFs.
The Superannuation Industry (Supervision) Act (SIS Act) governs how you, as a Trustee, can operate your SMSF. It’s crucial to understand the rules and regulations it entails. Interactions between different sections of the SIS Act can make navigating SMSF property investment complex.
When it comes to property ownership within an SMSF, certain limitations apply. If you get them wrong, it can be disastrous and costly. General rules you need to understand before committing to a property contract for your SMSF.
1. You cannot purchase a residential investment property owned by you, any related individuals, or any companies or trusts you, including any related individuals, control. It’s essential to be aware of this restriction and avoid any schemes or attempts to circumvent the rules.
The SIS Act includes an anti-avoidance provision that imposes significant fines and potential imprisonment for those caught trying to bypass the regulations.
2. You can buy a commercial property you own, but proper valuations etc. apply. Please seek our advice advice in this area.
3. You should never buy a residential property for an SMSF borrowing situation where there are two contracts i.e. one for the land and one for the build
It could be costly to get it wrong. This could include fines, making your fund non-compliant or worse still trying and reverse the transaction.
Note any property owned by your SMSF, including beach houses or apartments, etc. cannot be used by you or any of your relatives. Even renting the property to relatives at market rates is not permissible. Some attempt to circumvent the rules and this could lead to severe penalties. It’s essential to prioritise compliance and act responsibly to protect your SMSF and its members.
LRBAs can be a valuable tool for funding property investments within an SMSF. You cannot Cross-collateralise SMSF properties. Therefore, this means multiple properties are used as security for a single loan. Each property needs to have its own bare trust and loan arrangement. It’s important to seek professional advice when considering LRBAs to ensure compliance with the regulations.
When using an LRBA to fund your SMSF property investment, it’s important to consider the character of the asset. This means the loan proceeds must only be used to acquire a single asset.
The fund cannot change the character of the asset while the loan is in place. I.e. cannot split the property or convert a property into a commercial space or enterprise.
.
Purchasing a property investment within an SMSF can be a complex undertaking. We offer advice as a Superannuation accountant, and as a licensed financial accountant in SMSF, we can help you make informed decisions. Plan your property purchase and ensure it is done correctly to meet your investment strategy and long-term retirement planning needs.