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:

Assessing your values

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.

Define your business’s purpose.

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.

Decide on a growth path for your company.

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.

Develop the practices you can rely on

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.

Build a team that reflects your philosophy.

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.

Get out there and just do it!

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.

Identifying and recording obsolete trading stock write-offs for a small business involves several steps.

Its that time of year, when you should undertake you annual stock take. We suggest to be practical in your approach. Use scales and estimates for small items such as screws , widgets and small items.

A practical approach – obsolete items.

Here’s a general guide on how to approach this process:

1. Identify the stock items: Begin by reviewing your inventory records and identifying any old trading stock that needs to be written off. Look for items that are damaged, expired, obsolete, or unsellable due to other reasons.
2. When doing a stocktake, use round stickers (i.e. red dots) or straws to identify those items that you have counted.
3. Assess the value: Determine the value of the stock items that need to be written off. This can be done by assessing their original purchase cost, current market value (if applicable), or any other relevant valuation method.
4. Document the write-off: Maintain proper documentation for the write-off. This should include details such as the date, description, quantity, unit cost, and total value of the stock items being written off. Store this information for future reference, especially for tax and audit purposes.
5. Update inventory records: Adjust your inventory records to reflect the write-off. This helps ensure accurate reporting and tracking of your remaining stock items.
6. Tax considerations: See Geoff and his team

Remember, if need help contact us .

You should combine your stocktake with a sales budget that should be done for coming year

Once you have undertaken your list let us know and we will help you record it in your accounting system. Happy new financial year.

Sabotaging your business can happen in several ways. It’s a silent killer of businesses for growth and success. It’s like wood termites that infiltrates behind the framework of your home as a result when finally uncovered it results disastrously.

Where on the surface, a business can look amazing. Sillly things people do can turn a business into a disaster. So are you quietly sabotaging your business?

The other day I visited a modern-looking café. At the cafe the staff allocated me a table. However they failed to clean it resulting in us having to move the dirty dishes of ourselves. Only a small thing but bad service. Then after we finally ordered a coffee, it came in paper cups . The staff apologized, stating they had run out of cups. Though more likely lack of cups probably they weren’t clearing the tables and understaffed was the main reason for poor service and delivery.

Well, the outcome was a big nar. Next time we will go somewhere else; the poor service sabotaged customer service and what had the hallmarks of an excellent place for a coffee.

How and why people sabotage their business !

While it is unfortunate, there are several ways in which a business owner may sabotage their own small business. As a result here are a few common examples of what we see as pure an unecessary self sabotage of a business

Poor financial management is a killer for a small business . Failing to keep track of finances, not budgeting properly, or mishandling funds can quickly lead to financial problems and the downfall of a small business. Disregarding the ATO debt and even following up with your own debtors will as result lead to a cashflow disaster.

Fail to plan and lack of strategy. Not having a clear business plan, neglecting market research, or failing to adapt to changing trends can hinder growth and sustainability. Without proper planning and strategy, businesses may struggle to compete and survive. This includes exit planning.

Ineffective marketing and branding marketing efforts or a lack of brand development can make it difficult for a business to attract customers. Neglecting to promote the business effectively or failing to build a strong brand identity can lead to limited visibility and diminished customer interest. Unable to project your vision means you may not be attracting the right customers.

The big killer and one that can be easily fixed!

Poor customer service is a massive sabotage for a small business. Failing to prioritize customer satisfaction can damage a business’s reputation and result in lost customers. Ignoring customer feedback, providing subpar service, or not addressing customer concerns promptly can lead to negative word-of-mouth and a decline in sales.

The final one that impacts a business is Internal conflicts and mismanagement: Disagreements among business partners, ineffective leadership, or a toxic work environment can create internal conflicts that distract from the company’s goals. Poor communication, lack of accountability, or an unproductive work culture can impact by undermining employee morale and overall business performance. A toxic environment is a bad business.

A strategy for you to build growth.

Developing your growth and exit plan needs careful planning. A business owner’s reluctance to adapt and lack of resilience can unknowingly sabotage the business. A business owner must adapt rapidly to a changing business landscape. Sometimes the inability to adjust to market trends, consumer demands, or industry disruptions can lead to business failure.

Resilience, flexibility, and a willingness to embrace change are essential for long-term success.
Part of what we do for our clients is help them plan. For growth Growth, prepare for change and plan for an eventual exit.

As a Chartered Accountant and business adviser, we help you through the journey. Ask these questions if you are at a fork in your business journey pathway.

• Am I happy with my business and my lifestyle?
• Is it time to consider if the business still lights my passion or am i over it?
• If your business faces change or uncertainty, are you prepared for it or ignoring it will sabotage the business.
• What are my options now and into the future concerning my role and ownership in the business?

Any decision about business direction needs to be quietly evaluated. Sometimes not stopping and assessing you and your business as a package is a sure way to sabotage the business. Move forward with confidence by having a plan that works for you with a clear direction that make your business a winner.

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Dividend vs keeping the profits in retained earnings

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

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

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

Understanding Dividends and How They Work

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

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

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

Pros and Cons of Paying Dividends to Shareholders

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

Advantages of Paying Dividends

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

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

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

Disadvantages of Paying Dividends

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

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

Advantages and Disadvantages of Keeping Profits in the Company

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

Advantages of Keeping Profits in the Company

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

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

Disadvantages of Keeping Profits in the Company

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

As the owner this has 2 serious disadvantages

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

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

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

Criteria for Deciding Whether to Pay Dividends or Keep Profits

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

Analyzing the Financial Health of the Company

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

Considering the Company’s Growth Potential

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

Evaluating the Shareholder’s Preferences

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

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

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

Conclusion and Final Thoughts on the Dividend vs. Profit Debate

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

Unveiling the Power of a simple Business Plan for small business is Your Blueprint to Success

A Simple business plan for small business helps you dream big! Are you an entrepreneur or business owner aiming to achieve success in your ventures?

Do you find yourself constantly facing setbacks and challenges that just make it a little harder hinder your growth? The solution is in the power of a well-crafted simple business plan that kicks goals. A small business action plan is a blueprint that outlines your goals, strategies, and tactics to achieve success. It is your roadmap to success and helps you stay on track towards achieving your objectives.

A well-written and EXECUTED business plan not only helps you secure funding but also provides clarity and direction for your team.

So, let’s dive in and discover how a business plan can be your key to unlocking success in your business.

4 reasons Why every small business needs a simple business plan

A simple business plan is essential for every business, no matter how big or small. It provides a clear understanding of your business goals and objectives, outlines the strategies you will use to achieve them, and helps you identify potential obstacles and solutions. Without a plan, you risk losing focus and direction, making it difficult to achieve your goals.
You need a business plan for several reasons:

1. Setting goals and objectives: A business plan allows a small business to establish clear goals and objectives for the company, including financial targets, growth milestones, and other key performance indicators. This helps the business owner to focus on what needs to be achieved and how to get there.
2. Attracting funding: If a small business needs external funding, such as a loan or investment, a business plan is essential. It provides potential investors or lenders with a clear understanding of the business’s goals, strategies, and financial projections, which helps them determine whether or not to invest in the company.
3. Identifying potential challenges: A business plan forces the business owner to think about potential challenges that the company may face and how to address them. This helps the business owner to be prepared and to have contingency plans in place.
4. Making informed decisions: A business plan helps the business owner to make informed decisions about how to allocate resources, such as time and money. By having a clear understanding of the company’s goals and objectives, the business owner can prioritize tasks and investments more effectively.

You plan is a communication tool that helps share the your vision, mission, and values with employees, customers, suppliers, and other stakeholders.

Its your roadmap for the business future and helps everyone involved to understand their role in achieving the your set goals

The process of planning will help you identify your target audience! For you to know your competition, and develop a comprehensive marketing strategy. It is a tool that provides a roadmap for your team to follow. Action by setting realistic goals, measure your progress, and make adjustments as needed to ensure your success.

In short, a business plan is the foundation of your business. It provides a clear understanding of your business goals, identifies potential obstacles, and outlines the strategies you will use to achieve success.

Different types of business plans

There are several different types of business plans, each with its own purpose and audience.

Traditional Business Plan
A traditional business plan is a comprehensive document that outlines every aspect of your business, from your mission statement to your financial projections. It is typically used to secure funding, but it can also be used as a tool to guide your business operations.

Lean Startup Plan – recommended – keep it simple but actionable
A lean startup plan is a simplified version of a traditional business plan. It focuses on the essential elements of your business, such as your target market, value proposition, and key metrics. It is typically used by startups that are looking to test their business concept quickly and efficiently.

Internal Business Plan
An internal business plan is a document that is used to guide the operations of your business. It is typically not shared with external stakeholders and is used to keep your team focused and aligned with your business goals.

Strategic Business Plan
A strategic business plan is a long-term plan that outlines your business goals and objectives over a period of several years. It is typically used by established businesses that are looking to grow and expand their operations.

Key components of a business plan:

Executive Summary
The executive summary is the first section of your business plan and provides an overview of your business. It should be concise and compelling, outlining your business concept, target market, and competitive advantage.

Company Description
The company description provides a detailed overview of your business, including your mission statement, history, and ownership structure.

Market Analysis
The market analysis section outlines your target market and identifies potential opportunities and challenges. It should include information on your competitors, market size, and trends.

Products and Services
The products and services section provides a detailed description of your offerings, including their features, benefits, and pricing.

Marketing and Sales Strategy
The marketing and sales strategy outlines how you plan to reach and sell to your target market. It should include information on your advertising, sales, and distribution channels.

Financial Projections
The financial projections section provides an overview of your projected revenue, expenses, and profits over a period of several years. It should also include information on your funding needs and sources.

Management and Operations
The management and operations section provides an overview of your team and their roles, as well as your business operations and processes.

Including these key components in your business plan can help you create a comprehensive and effective document that will guide your business towards success.

YOUR marketing plan

A marketing plan is essential for small business It outlines how to reach and sell to your target market,. It provides a roadmap for your marketing activities. A well-crafted marketing plan can help you to identify your target audience, develop compelling messaging, and choose the right marketing channels to reach your audience.

To create a marketing plan start by identifying your target market. This should include a detailed description of your ideal customer, including their demographics, psychographics, and buying behavior.

Developing financial projections and budgets

Financial projections and budgets are essential. They provide an overview of your projected revenue, expenses, and profits over a period of several years, as well as your funding needs and sources.

To develop financial projections and budgets, start by estimating your revenue and expenses for the coming year. This should include a detailed breakdown of your costs, including fixed and variable expenses.

Next, project your revenue growth over a period of several years. This should be based on your market analysis and sales projections.

Finally, identify your funding needs and sources. This may include loans, investments, or crowdfunding.
By developing financial projections and budgets, you can ensure that your business is financially sustainable and that you have the resources you need to achieve your goals.

We help local businesses in surrounding areas of Ormond, Bentleigh and Brighton to action their projections

Common mistakes to avoid when creating a simple business plan

Creating a business plan can be a daunting task, and it’s easy to make mistakes along the way. Some common mistakes to avoid include:

Focusing too much on the product or service

While your product or service is important, it’s not the only factor that will determine your success. Be sure to focus on other key components of your business plan, such as your target market, marketing strategy, and financial projections.

Ignoring your competition

Understanding your competition is essential to developing a successful business. Be sure to include a detailed analysis of your competitors in your market analysis section.

Overestimating your revenue projections

While it’s important to be optimistic about your business’s potential, it’s also important to be realistic. Be sure to base your revenue projections on market research and sales data, rather than wishful thinking

Neglecting to update your business plan

Your business plan should be a living document that evolves and changes as your business grows. Be sure to update it regularly to reflect changes in your market, competition, and business operations.
Avoid common mistakes, you can create a comprehensive and effective business plan that will guide your business towards success.

Resources and tools to help you on your way

Here are some useful resources and tools include:

Small Business Administration (SBA)
The SBA provides a wealth of resources and tools for small business owners, including business plan templates, financial calculators, and market research tools.

SCORE
SCORE is a nonprofit organization that provides free mentoring and coaching services to small business owners. They offer a variety of resources and tools, including business plan templates and financial planning tools.

LivePlan
LivePlan is a cloud-based business planning software that provides a variety of tools and resources to help you create a comprehensive and effective business plan.

By utilizing these resources and tools, you can streamline the process of creating ensuring that your plan is comprehensive and effective. Get out there and follow your dreams

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

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

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

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

Easy ways to Reduce Costs in Your Business

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

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

Let me introduce you to Derek Morin.

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

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

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

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

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

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

E = equal no change required

Simply known as the “PURE.” method!

Morin treated the PURE method like a game.

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

Tools & Services That Can Help You Reduce Costs

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

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

Profit leaks can occur from both Revenue and Expenses.

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

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

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

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

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

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

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

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

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

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

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

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

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

Does a business as a partnership pay tax?

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

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

Joint debts – DANGER

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

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

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

What are my business structure options

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

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

Reach out if we can help you further help on 95979966

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

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

Cash flow when it trickles it is painful!

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

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

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

Slash costs but make sure it is for the right reason

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

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

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

Helping local manufacturing businesses

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

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

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

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

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

Understand your numbers

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

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

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

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

The Federal Budget 2022

Here is our quick summary of the Federal Budget handed down on Tuesday. The Budget focused on keeping business and the economy going during uncertain times. It would be also be drafted with a focus on the following Federal Elellection due soon. Media reports indicate that if there is a change of Government, the ALP will publish a newly revised budget in July or August this year, which may not result in all initiatives etc., being fulfilled or modified.

Here are the critical points that we believe will impact our clients:
• 120 % tax deductions for small and medium business spending on Training and new technology
• No further extending the temporary full expensing of equipment investments
• $1.3 billion to businesses to fund apprenticeships
• ATO will be allocated more money to chase tax cheats
• PAYG system to better match a business trading result
• TPAR reporting changes to make it easier for businesses to report
• Super pension drawdown rates halved till the start of July 2023
• As previously announced before the Budget, the work-related COVID 19 test expenses incurred by individuals will be tax-deductible.

Small Business Full Expensing is finishing up!

The full expensing instant tax deduction has not been extended, meaning businesses will have to install or use the new equipment by June 30, 2023, to claim full expensing provisions.

In replacing full expensing, we have a New Technology & Training Tax Break

The new temporary tax break is for businesses that invest in either new technology or employee training and skills development.

Employee Training
As of Tuesday night, for every hundred dollars a small business spends on training their employees, they will get a $120 tax deduction,

Technology incentive

As of Tuesday night, every hundred dollars small businesses spend on digital technologies — such as cloud computing, e-invoicing, cyber security and web design — results in 120% tax deduction.
Limited to Investments of up to $100,000 per year will be supported by this new measure; however, if you are spending more, please see us as the existing immediate write off provisions still apply till 2023

How it works in real life, reducing the cost of Training or technology!

For example, Smith Co Pty Ltd has engaged an RTA business in Australia to provide Training staff to its employees online. The total cost of Training was $10,000. Smith & Co Pty Ltd will be able to claim 120% (i.e. $12,000, as a tax deduction concerning these expenses)

The True Cost of the Training from a cash point of view

Cost of training $10,000, payable now when you buy it
Claim tax deduction of $12,000 (still to be clarified – 2023 year )?
Real cash tax-saving @ company tax rate $ 3120
Net cost of training $6,880

A reminder that Loss carryback rules still apply for the next two years

Loss carryback provides a refundable tax offset that eligible corporate entities can claim:
• after the end of their 2020–21, 2021–22 and 2022–23 income years
• in their 2020–21, 2021–22 and 2022–23 company tax returns.
Eligible Companies can obtain the offset by choosing to carry back losses to earlier years in which there were income tax liabilities. The offset effectively represents the tax the eligible entity would save if it could deduct the loss in the earlier year using the loss year tax rate. As it is a refundable tax offset, it may result in a cash refund, a reduced tax liability or a reduction of a debt you owe us.
Loss carry back tax offset – Australian Taxation Office. https://www.ato.gov.au/Business/Loss-carry-back-tax-offset/?=redirected_losscarryback

Fuel costs temporary relief

Petrol and diesel excise will be reduced by half for six months, saving 22 cents for next six months. Hoping this is passed on to the small business at the petrol bowser

Tax Bonus when you lodge your 2022 return

Low Middle-income tax offset (LMITO) — in 2022 can put up to another $1,500 against your tax refund once you’ve done a tax return in 2022

Draw down rates for Self Funded Retiree Pensions – 50% reduction till June 2023

Starting out in a new business and being your small business startup journey

I remember many years ago how exciting it was to begin the small business journey.

It has been a journey twenty years later that’s is full of ups and downs, fun and pain and plenty of laughs.

Twenty years in and I have no regrets. In fact, anyone that can do it, should. Yes like all of us I have made some dumb decisions but I don’t have any regrets? No way, in fact, I have also made some good decisions too.

There have been a lot of characters I have met in my business career over the last twenty year’s. Some shady ones, some terrific ones and some that have become lifelong friends. Yes, I have been used, abused and ripped off but I have also been supported, encouraged and led to opportunities.

Starting out needs support

Your business startup relies on lots of support from friends family and associates. You really know who are your friends and where your support comes from. For me, it was my wife and kids who have driven me to success. There have also been many friend’s who have looked out for me along the way.

You see as an accountant many don’t see you as a small business person but there to help others. It took me a long while to accept that I too am a small business owner with the same pain, enjoyment and problems that you too have in small business.

Tips for business startups

So what advice can I give you as a new budding small business owner :

1. Just go for it! Have no regrets and enjoy the ride. Believe in yourself! Destroy the non-believers and the dream stealers. If you make strategic decisions based on evaluation then your business will grow.

2. Set goals. Set a road map don’t amble along in business with no direction. A person who knows his direction might get lost along the way but will always find the way to their final goal or destination.

3. Celebrate success, acknowledge others and enjoy the ride. Failure will happen but pick yourself up learn to understand what went wrong. Remember the sun shines tomorrow and you can do it all again. Don’t give up and follow the plan.

No matter at what stage you are in business a big congratulations It’s not easy to run a small business and the statistics say many don’t succeed in the first three years.

Live life to the fullest and grab every opportunity with no regrets. All the best.

Many of us launch a new business based on an idea or a need to sell our professional or trade expertise.

Business startups offer challenges

Starting a new business will provide you with new challenges and opportunities! It’s fun, it’s exciting and it will be rewarding.

Whatever your reason for starting your new business, your future will be an exciting time. However, it requires careful planning, lots of energy and the ability to follow through with the journey during times of toughness.

Geoff and his experienced team of professionals can guide and advise you on launching your new business and making it successful from day one!

Whether you are yet to start or are in the early stages of launching your new business, we can help you to work through the logistics and questions that everyone has.

Practical startup tips

Here are some practical tips that can help you start your new business:

• Talk with us so we can gain an understanding of what you are trying to achieve, your dreams and business aspirations.
• If you are buying an existing business, we can help make sure it’s the right one for
• We will discuss and explain the different structures available (sole trader, partnership or company).
• We can set up your company or family trust if that is the right structure for you.
• We can clarify what you need to do to meet ATO regulations when getting started and applying for an ABN.
• We will help you establish a practical business plan, cash flow projections, budgets and trading forecasts. We will help you set a 90-day action plan.
• We can help you present your program to your Bank manager if you’re looking for finance.
• We can also advise on the best sources of finance.
• We can work with you to ensure that you set up the right accounting systems in place to manage the financial paperwork.

We have helped lots of small businesses start out. We know you will have lots of questions such as dealing with government red tape and other businesses as this may be something you haven’t done before. We can help you determine what are the essential tasks in the first few months to get your business off to a flying start.

We welcome you to contact us for a FREE initial consultation. Please call us on 03) 9597 9966.

When I die what happens to my business and my affairs? Will my business continue or just stop?

If you were running as a sole trader and you die, in most cases, your legal personal representative will step in . It is their role to manage your business. They can assess if the business needs to be wound up, sold or transferred to a beneficiary.

Your business asset forms part of the assets of the estate. Therefore legally executed will , can help give certainty to your wishes.

Many clients are unsure of the process of what happens once they die.

There are several matters that should be dealt . These need to be dealt with in a timely matter when it comes to a sole trader business.

What happens after I die? The process of winding up my affairs

The process that can take place after death include

• The business continuation is a going concern ! – The longer the business is left un-managed, the greater chance that the business value may disappear
• Your executor will take control of your business until its decided upon . It maybe be sold wound up or given to a beneficiary as part of the estate distribution
• Choose your executor wisely that can deal with your business affairs
• Until probate takes place, its best to ensure if a beneficiary is to inherit the business that, this takes place as soon as practical. If this cant take place then allow a beneficiary to act as a caretaker mode
• Reassure customers and suppliers of the situation., Ensure, where possible, that the business remains of value and assets are protected from going missing
• Chase down outstanding monies and secure the business assets from theft. Stop and people thinking well the business owner has died they won’t care!

The business forms part of the estate and impacts the final distribution to beneficiaries. Often upon the death of a sole trader, there may be outstanding debts to the ATO, suppliers and financiers. If there are insufficient assets upon realisation to pay the debts, the estate is placed in bankruptcy.

Sometimes a business who is a sole trader dies suddenly leaving lots of debt. If the estate is unable to pay, then the estate becomes bankrupt. Pleas talk to us if this maybe your situation for a person you are acting for after death.

For those who run their business in a Company or a Family Trust

If you choose to operate your business as a Company or a Trust, your legal representative should be appointed as the Director or Trustee in your place. In this case, the business would continue. The ownership if the shares were owned by you it may form part of your estate. This may include any loan account owing to or from the Company.

If your ownership of your business is held by your Trust then you will need to consult your Trust Deed and control will also be held by the appointor and or Trusteee. This is an interesting area of law and taxation and we suggest you consult us.

Careful planning required

We suggest careful planning of your affairs. Planning will ensure that when it comes to your business, your wishes and adhered to and that a plan in cases of death has been considered to assist the executor in managing the sale of the business. It is why for many reasons, Life Insurance is recommended. Insurance will ensure that insurance proceeds can cover some of these unexpected business expenses.

If you are an executor you need to act to preserve the business value and we can help here

As a final tip is to make sure all registrations such as GST, ABN, social media accounts and WorkCover have been cancelled. This will avoid recurring notices. We can assist you here!

We welcome you to contact us and discuss a plan so that we can guide you on how you would like to finalize your affairs after the man upstairs has called you for higher duties.

https://calendly.com/geoff-gartly/complimentary-new-client-meetup

Reach out if you need our help