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Business Owners - Whats your end game?


Business owners – what is your end game?

 Why do you own a business?

It's interesting to consider this because we are shocked at how many business owners haven't taken the time to consider this fundamental question. 

From a big picture perspective, having a business provides you with a lifestyle. That's it!

It gives you cash now to fund your family spending, and hopefully a lot of cash in the future when you sell your business.

And it's very similar to having a Self Managed Super Fund (SMSF), an investment property or share investments. They give you cash either now or in the future, or a combination of now and future.

Having a business, SMSF or an investment property is not the important thing – the important this is what is the cash you receive from owning these allow you and your family to do.

Your plans for what you do will do with your business, SMSF or investment property in the future are what we call your 'end game'. 

A good business mentor and friend of mind once taught me that "the point of having a business is to sell it – even if you don't want to right now."

This one pearl of wisdom could mean hundreds of thousands or even millions of dollars more for you in the future if you let it guide you now.

Here's how… as you run your business, start to make decisions now to plan for selling it – even if you don't plan to sell it for many years.

The biggest thing you can do is to make changes so that your business does not depend on you. If your business needs you to operate – can you really sell it? Absolutely not.

Setting up systems for your business is the key. You can then train your team to follows your systems, and then you can gradually delegate what you do to the right team members, and then you'll find that you've got a business that can partially run without you.

Would you like us to be your sounding board?

As your accountants, we can help you to work out your end game, and plan to have a business that you can sell for a much larger amount in the future because it doesn't depend on you.

Contact Complete Business Strategies today on 07 5439 1600 for a free initial meeting about creating your end game.

 

 

ATO payment plans

ATO PAYMENT PLANS

Do you get to the end of the quarter, and then realise you haven't put enough money aside to pay your tax obligations?  You are not the only one.  In this financial climate, it seems to be a never ending battle to have enough money to go around.

The ATO are always happy to help out.  You still need to lodge your activity statements and tax returns on time, even if you can't pay by the due date. You'll avoid a penalty for failing to lodge on time and show the ATO that you're aware of your obligations and doing your best to meet them.

If you're trying to do the right thing, the ATO will try to understand your situation and will help you where possible.

In some cases, they will need to know more about your financial situation and your circumstances so they can work with you to set up a payment plan that is manageable.

If you default on a payment plan, they may impose stricter requirements before agreeing to a new plan. For example, they may ask for a higher upfront payment or ask that payments are made by direct debit, or both.

If you need to set up continual payment plans, the ATO will want to know why.  In this case we may need to look at what you are doing to minimise the need for payment plans.

If you do make continual payment plans, and if you default on the arrangement (this can be not paying your instalments, or lodging further returns before the payment plan has been paid in full), the ATO may not grant you further payment plans.  You may also lose your concessional lodgement dates, so you may need to lodge documents earlier.  The ATO may also move your obligations from Quarterly to Monthly so you can manage your obligations more easily.

Don't wait for the ATO to chase you.  Contact us if you think you may have a problem meeting your payment obligations.  We will contact the ATO on your behalf, and put an arrangement in place which is manageable for you, and meets the ATO requirements.

 

Taxable Payments Reporting

From 1 July 2012, businesses in the Construction Industry need to report the total payments they make to each contractor for building and construction services each year

Details you need to report

For each contractor, you need to report the following details each financial year: 

  • ABN, if known
  • Full Name
  • Address
  • Phone Number
  • Gross amount you paid for the financial year (this is the total annual amount paid inclusive of GST)
  • Total GST included in the gross amount you paid

The annual report must be lodged with the Tax Office by the 28th August each year.  Penalties may apply if the report is not lodged on time.

What you need to do now

You need to report these payments to the ATO on the Taxable payments annual report. You can lodge this directly with the Australian Taxation Office or contact us to help compile this report.

If you haven't had any contractors you are still required to lodge a not required to report form which can be found at www.ato.gov.au/tparnilreport

If you cannot easily collate the information required above then you will probably need to change how you record your contractor information.

We can help so give us a call on (07) 5439 1600. We will charge you a fee for this based on exactly what is required but doing nothing is not an option or you may end up being targeted by the ATO for further compliance action and penalties. In that case you will still have to update your reporting system and the longer you leave it the greater the potential cost to you.

Trustee Resolutions

Trustee Resolutions are important and can have significant consequences if not completed properly prior to 30 June each year.

If a Trustee fails to make a resolution to distribute the income of the Trust before the end of the financial year, the Trustee may be assessed by the Australian Tax Office on the Trust income at the highest tax rate of 49%.

 

IMPORTANT NOTE: Income includes Capital Gains. If you have sold a property or other asset during the year we recommend you contact our office to discuss the resolution.

 

What You Need To Do

Review the annual income for your trust (or trusts if you have a multiple trust structure) and advise our office before 15 June 2017.

a)   If it is likely the TRUST WILL HAVE TAXABLE INCOME to distribute for the year ended 30 June 2017 then you will need a 2017 Trustee Resolution.

b)   If it is likely the TRUST WILL NOT HAVE TAXABLE INCOME to distribute then you will not need a 2017 Trustee Resolution.

If you have any questions about this process please contact our office immediately. Failure to prepare a Trustee Resolution when one is necessary may result in the income of the Trust being taxed at 49%.

What We Are Doing

Despite the fact that preparing a trust distribution resolution before the end of the financial year can be quite complex, we need to comply with the interpretation of trust taxation laws.

The steps we need to undertake on your behalf include:

ü  Review of your prior year Trust Distribution Resolution

ü  Confirmation with you on the estimated Trust income of the trust for the year ended 30 June 2017

ü  Review of your Trust Deed to ensure that the income definition and distribution clauses in you Trust Deed allow the proposed Trust Distribution Resolution for 30 June 2017

ü  Advice about the most tax effective distribution of this estimated Trust Income

ü  Preparation of Trust Distribution Resolution and ensuring it is signed by the Trustees PRIOR to 30 June 2017

In most cases we will limit our fee to $275 and seek your payment authority per the enclosed confirmation form. That way we can keep our cost to you as low as we possibly can. In some more complex circumstances, our fee may be higher. If, for example, you have a large capital gain during the year or if there are other complicating factors with your trust that warrant additional involvement. If this applies to you we will contact you once we have received your confirmation to proceed.

What Else we can do so you Pay Least Tax Possible

In the current political environment where government is increasing taxes, we strongly recommend clients take this opportunity to also review their overall tax minimisation strategies. Our qualified team can provide expert up to date advice on tax planning and often the cost of that advice is recovered through tax savings.

If you would like to find out more about our innovative tax planning strategies or have any queries in relation to your trustee resolution please feel free to contact our office.

Also make sure you keep up to date with our facebook page and blog for all the latest tax saving and business improvement information.

FREE Money for QLD Businesses

$10,000 to Pay For Your Business Improvements - It's No Joke.

We know how tough business is and we hear every day from clients who really want to get help to make their businesses better. The hard reality of being in business though means that more often than not business owners are too busy to seek the right advice and even when they can find it, price can be prohibitive.

We know that first hand, we are in business ourselves and struggle to engage appropriate advisers for the very same reasons.

It also seems the Queensland Government understands the dilemma we face, so on October 25 they opened the Accelerate Small Business Grants Program. That program provides up to $10,000 to eligible small businesses in Queensland to help fund the services those businesses often desperately require to grow.

Are You Eligible for a $10,000 Handout?

The eligibility criteria is simple. To be eligible for the grant your business must:

  • have a minimum trading history of 4 years;
  • have a minimum turnover of $750,000;
  • have a maximum headcount of 20 employees at the time of application;
  • have an Australian Business Number (ABN);
  • have Queensland headquarters or significant Queensland operations;
  • have competitive opportunities in domestic or international markets;
  • be experiencing growth and have clearly defined high-growth opportunities;
  • declare if any owners or directors of the business are, or have previously been, bankrupt or insolvent.

What to do if You Meet Those Criteria and Want up to $10,000?

If your business meets those criteria then time is ticking because grants opened on 25 October and will only remain open as long as funding is available.

You should Call us Immediately on (07) 54391600 for a FREE No Obligation chat to discuss how you can access up to $10,000 in grant funding. There are some conditions attached to the funding and we can work with you to prepare your application so you have the greatest chance of success.

What Can the Funding be Used For?

It is expected the funding will be available for businesses to support and manage the improvements listed. But in general anything that will help your business make more money would be acceptable, including but not limited to the following:

  • Increasing Employment - This can be achieved through a general growth strategy.
  • Improving Management Systems - Technology has made the affordability of online and other management systems really cost effective. This grant can be used to review, implement, and train you and your staff on new and improved systems.
  • Improving Business Processes - How do you currently ensure your business is delivering optimal performance? The grant funding can be applied to developing and implementing an improved performance monitoring approach. This can even involve a team of advisors meeting regularly to map out, measure, and modify your Key Business Performance Indicators. Don't know what Key Performance Indicators are? Then use this funding to find out and how they can provide tremendous improvements to your profits, business value, and overall business outcomes.
  • Streamlining or Completely Upgrading Your Existing Business Processes. If you are a manufacturer and need funding to work out and implement a better manufacturing system, ERP, JIT, or MRP system then this is your opportunity to have the government subsidise your costs to make those improvements.
  • Entering New Markets - Want to export internationally or expand to new areas of Australia? Do the research, work out how best to go about it, and achieve the best results using government money to help pay your costs. What could be better?
  • Increasing Sales and Profits - Need some specific strategies to make those difficult sales, want to improve your social media or general advertising effectiveness? This grant can pay for up to $10,000 of your costs to actually help you make more money or increase the value of your business or both.

You should call us right now on (07) 54391600 to discuss how you can access up to $10,000 in grant funding to make your business better. Alternatively CLICK HERE to make an appointment with one of our specialist team and we can talk to you in person.

Call Now on 5439 1600 if you are serious about making more money and/or increasing the value of your business. The initial meeting and phone call will not cost you anything but may end up making you a lot more money in the long run.

 

Business Names

Why do I need to Register my Business Name?

This is a question we often get asked and the answer can be surprisingly simple:

"Registering your business name generally means nobody else can trade with that business name"

but....

It does not necessarily give you automatic rights to use that name where, for example, the name may be trademark protected. Look at this search which shows I could register the business name "Microsoft Windows".

So while ASIC have some similar names registered as can be seen from the search result, you would be able to pay and register this name for your new window cleaning business.

The Microsoft Corporation may have objections to you using this name as it is likely they have it Trademark protected so you may receive a legal letter from the corporation demanding you change the name.

The point I am trying to make is that in some situations having the business name registered is not the only consideration when deciding on your business name.

One example where a business name does provide rights though is if it does not infringe on the intellectual property rights of another person. This will generally be the case if you are the first person to come up with the name.

The Burger King Fable

The Burger King story is one that is often misquoted but it does make a valid point, albeit an historically inaccurate one. The popular story goes that a fish and chip shop owner in Adelaide had traded under the name Burger King for years when the US corporate decided to expand into the Australian market. Despite millions of dollars of legal resources the typical aussie battler forced the US giant to establish its operations in Australia as Hungry Jacks because his business name predated any interest in the name by the US company.

The reality was the name had been trademarked by an Adelaide business and it wasn't so much the name that had provided the protection but the registered trademark. Still, had the name only been registered there would have been some record and therefore some argument that the Burger King name was not available. Whether that argument held up though would have ultimately been a matter for the courts to determine.

So Why Do You Need to Register your Business Name?

The short answer remains because it will generally prevent anybody else from using the name in Australia.

The Name Register is managed by ASIC and in 2012 became a national register. Prior to that there were individual state registers so it is still possible for businesses with the same name to be registered in different states but any new name registrations will need to be unique.

What if You Have a Pty Ltd Company?

Company names have always been unique and it was never permitted to have duplicate company names. Registering a company name automatically confers on that company the right to use the company name as a business name. So a company called "Microw Soft Windows Pty Ltd" will allow the business to trade as "Microw Soft Windows " without paying for an additional business name registration. Therefore if you are planning to trade as a company think about naming your company the same as your business name and save the name registration fee.

How do Trusts Work with Business Names?

Trusts are a popular trading structure because of the potential risk and tax benefits. Unlike company's there is no national trust name register so you can call your trust pretty much anything you want. Importantly, naming your trust the "Microw Soft trust" will not confer upon you any name rights so you will have to consider establishing a trustee company called Microw Soft Windows Pty Ltd or registering the business name Microw Soft Windows.

How do You Register a Business Name and What Does it Cost?

Registering a business name is a simple online process (CLICK HERE for a link to the ASIC site).

The fees to register a name are $34 for a single year or you can register a name for three years for $80 (fees current at the time of this post).

What Else Should You Know?

Starting a business can be complicated and getting the key decisions wrong at the beginning can be expensive to unravel. If you have not already spoken to us then give us a call on (07) 5439 1600 or CLICK HERE to make an appointment with one of our qualified staff and let us ease your burden. It may not cost much but could save you a lot of heartache and unnecessary expense down the track.

 

QBCC Licensing

QBCC Self Assessment - Is it Working? Do you Even Know About it?

It has been over a year since the QBCC introduced a new reporting regime and from what I have seen many tradespeople really don't have any idea things have changed. I wrote a blog back in September last year about the changes so won't repeat all of those details (CLICK HERE to read that post).

If you are a tradie and covered by the QBCC licensing regime then it is important to understand your "self certification and review" obligations.

Self Certification replaces the old annual review and means you have to regularly monitor (quarterly should be sufficient) your financial performance to ensure your Minimum Financial Requirements are met.

What are the Minimum Financial Requirements?

The Minimum Financial Requirements set out the level of asset backing you will need for your specific QBCC license class. The table below summarises those requirements by license.

 License Category  Maximum Turnover  Net Tangible Assets
 SC1  $ 200,000  $ 12,000
 SC1  $ 600,000  $ 36,000
 Category 1  $ 3,000,000  $36,001 - $156,000
 Category 2  $ 12,000,000 $156,001 - 480,000 
 Category 3 $ 30,000,000   $480,001 - $1,200,000
 Category 4  $ 60,000,000  $1,200,001 - $2,400,000
 Category 5  $ 120,000,000  $2,000,001 - $4,800,000
 Category 6  $ 240,000,000  $4,800,001 - $14,400,000
 Category 7  Over $240m  Over $14.4m

 

 

 

 

 

 

 

 

How is this Different to the Previous System? 

What is different to the annual review regime is that the Net Tangible Assets for your business dictate your maximum permitted turnover and it is up to you to monitor it "regularly" to ensure you don't exceed your permitted turnover. You will also have to keep quarterly management accounts and copies of your calculations to show your NTA is appropriate for your turnover so you can provide them to the QBCC if they request them.

For example, you may have a Category 1 license which you could think would entitle you to charge your customers up to $3m in a year, right?

While it makes sense to make that assumption it is not correct. If your Net Tangible Assets is say $40,000 and you have a Category 1 license then your maximum permitted turnover is only $679,982. To reach the maximum permitted turnover for a Category 1 license you will need Net Tangible Assets of $156,000.

The calculation of your maximum turnover is complicated but for a Category 1 license each $100 increase in your Net Tangible Assets will allow you an extra $2,000 in annual turnover. For those who want to see the actual formula here it is in plain English:

(((Actual Net Tangible Assets - Minimum Net Tangible Assets) / (Maximum Net Tangible Assets -  Minimum Net Tangible Assets)) x (Maximum License Category Turnover - Minimum License Category Turnover)) + Minimum License Category Turnover

We have many construction industry clients, specialise in helping them make more money and pay less tax, and we basically love working with that industry. We want you to do the best you can so our numbers geeks have built a helpful little tool to enable you to review your NTA and license compliance.

How Can We Help? 

CLICK HERE TO DOWNLOAD YOUR FREE MAXIMUM PERMITTED TURNOVER CALCULATOR

Don't make working in the construction industry any harder than it already is. The ATO are certainly not your friend with their suspicious approach and over the top reporting and compliance measures but QBCC compliance needn't add to your woes.

If the formula above does not make you shiver and you understand what is meant by Net Tangible Assets then we probably can't help. If however you are like the majority of our client QBCC licensees, and probably the majority of people in general too I suspect, then we can help you keep your quarterly reviews in order and make sure your license and livelihood is safe.

When it comes time to upgrade your license above the Self Certification 2 license then you will also need our independent certification that your financial position complies with the Category license terms.

The good news is that while making sure your Minimum Financial Requirements are compliant we can also provide you with some insight into your business and regular advice on your tax and financial obligations.

CLICK HERE to make a FREE No obligation appointment to have a chat about your QBCC license and business in general. Alternatively give the office a call on 54391600 and one of our team will be happy to help you out.

 

Air BnB - Know The Facts

Air BnB - Easy Money Just Laying Around Your Spare Room Right? 
 
So this Air BnB phenomena is amazing. I have heard of people taking long term leases on luxury houses for $3,000+ a week on the Gold Coast and then short term renting the place out for upwards of $2,000 a night through Air BnB. Now I am not suggesting you do that but if the property owner is aware and ok with subletting it seems to me to be a pretty good business model.

The question is though, how do you maximise your return on your Air BnB journey and also make sure you comply with the red tape.

The following points are just general in nature but if you require specific assistance then please give me a call on (07) 5439 1600 or book an appointment by CLICKING HERE
 
What's The Biggest Potential Problem?

Not an easy question to answer but I see two or three possible problems with Air BnB. The first two are general business problems not really specific to Air BnB but worth mentioning all the same:

1. What happens if you don't get enough business?

Every business needs to procure enough sales to make a profit or why are you bothering. There is nothing specific to Air BnB about this but it is still considering, especially if you are spending money to set your property up or, as in the example above, taking the financial risk of a long term lease.

2. What happens if the business you get is bad (or dangerous)?

A few years ago who would have ever thought to invite strangers into our home to stay? Really? People are generally nice but what about the one drug addicted yobbo who trashes the place and drinks your Grange collection?

3. How much tax will Air BnB cost you?

Unlike most accountants I want all my clients to pay tax and lots of it. The reason is simple, because if you are paying tax and I have done my job then you will also be making a lot more money than the bloke who is simply focussed on not paying any tax. So with Air BnB what sort of tax risks will you encounter?

You will certainly face an Income Tax liability on any profit you make from your Air BnB business. The profit will be the income you receive less any tax deductible costs you have incurred in making that income. So for example, any bank fees will be deducted off your income as will the costs of advertising and replacing linen etc that is used in your business. You will not be allowed to deduct the cost of furnishing the property or any costs incurred while the property was not available for rent. The latter is important because you may only have the property available for a few weeks of the year so your deductions may be limited.

Once you have worked out what your likely profit is going to be from your Air BnB venture you should then consider who is earning the income?

It may be possible for the income to be earned wholly by your adult daughter, sister, Uncle Arthur, or anybody who has a low marginal tax rate and doesn't earn any other income. They would therefore pay a lower tax rate than Mum who has a high flying corporate job earning over $200,000 per annum. You may also be able to interpose a company or trust to minimise the tax payable on the income. This is where I come in! While I want my business clients to be paying more tax, I want their rate of tax to be as low as it legally can be, and making the correct structural decision at the beginning of your venture can greatly enhance that minimisation strategy.

Please let me know if you want more information and I will send you our checklist of different business structures.

4. What about those nasty surprises?

This is where you can really stuff up with the Air BnB model. If you rent out a room in your own private home then you will lose any Capital Gains Tax exemption for that part of your home. That may mean that when you sell your house in a few years you find you have an unexpected taxable capital gain. Going back to what I said above, if the gain is taxable to Mum and she is still earning over $200,000 that cost could be quite high indeed.

Now I am not saying that's a reason not to do Air BnB in your private home. Just understand that there may be implications beyond the period you are actually renting the property and those implications could be costly.

So what is the answer?

Talk to me first. A 30 minute chat will cost very little and might end up saving you thousands or tens of thousands in unnecessary tax.

This is just a brief summary to make you aware of a couple of the issues to consider before you embark on your Air BnB journey. If you would like specific advice for your situation just give me a call on (07) 54391600 or CLICK HERE to make an appointment with one of our qualified advisers.

UBER - Know The Facts

A Shout Out to all the Uber Drivers - Here are a Few Facts You Really Need to Understand

Uber drivers are subject to some rules that are not the same as every other business operator. It is important therefore to understand what you will have to do if you are considering driving for Uber. If you require specific assistance then please give me a call on (07) 5439 1600 or book an appointment by CLICKING HERE.

Uber or Taxi? Does it even matter for the purposes of your tax?

The short answer is, yes it does matter because the Tax Office have specific rules for taxi's which define a taxi as a 'vehicle made available for public hire that is used to transport passengers for fares'. It would be difficult to argue Uber vehicles were therefore anything other than a taxi and Uber drivers must comply with the same "tax" rules as other taxi drivers.

So what do those rules mean?

  • You must register for an ABN.

As an Uber driver you are carrying on an enterprise, or business and are required to have an ABN whether registered as a sole trader, company or trust.

As an aside, you should also understand the risk and tax implications of each of the possible structures for your business. Please let me know if you want more information and I will send you our checklist to different business structures.

  • You must register for GST.

Unlike other businesses where a turnover threshold is applied before GST registration becomes compulsory, ALL taxi drivers (which includes Uber drivers) are required to be registered for GST.

  • You must keep appropriate records.

The ATO require all records relating to your business to be kept for 5 years. That date starts from the date of your Income Tax assessment so if you lodge your tax returns late then you will have to keep records for longer.

The good news is that you can keep your records electronically. That means Uber drivers, who all seem pretty tech savvy to me, can scan or photograph their records and file them on the cloud, their phone, or use other electronic media. Back ups are always a very good idea too but once electronically captured you generally won't have to keep the actual paper record.

Records that you should keep are copies of all fare receipts, expense receipts for your business costs, bank statements, and other business related documents such as loan agreements and other legal contracts.

  • You should open a separate business bank account.

A fundamental of any business enterprise should be a separation between your personal finances and those of the business. It is therefore absolutely critical you have a separate bank account for your business transactions. That way, you will have a discrete record of all deposits received and withdrawal/payments made and there is a better chance your accounts will be accurate.

  • If your vehicle is not used 100% for Uber business then you must also keep a logbook to calculate the business use of your vehicle.

A logbook records the business and personal use for your vehicle. Unless you have two cars then it is highly unlikely your Uber vehicle will be accepted to be 100% business so a log book is essential to prove your claim for your vehicle costs. Without it the ATO may not allow any expenses for your vehicle and that could mean a lot of unnecessary tax to pay.

As a general rule, you will need to keep a logbook for 3 months every 5 years or when your vehicle or usage changes.

This is just a brief summary to help guide you through your Uber journey. If you would like specific advice for your situation just give me a call on (07) 54391600 or CLICK HERE to make an appointment with one of our qualified advisers.
 

Buying a Business?

Happy New Year – Have You resolved to Buy a Business This Year?

Ok, so the true new year is 30 June as we all know. The party's over, hangovers recovered, and resolutions are to be implemented. If you have resolved to work for yourself and are thinking about buying a business then you need one piece of advice before you do anything else:

Buying a Business? Call Us FIRST – Please!!

Why Bother When we Just Won't Understand the Amazing Opportunity?

My job as an accountant is to ensure you get the right advice to understand the possible outcomes of your decisions. It is not to tell you whether or not you should buy that "once in a lifetime" business opportunity. Buying a business is an exciting decision to make and believe me, as an accountant with many grey hairs, I do understand your excitement.

Unfortunately I have also witnessed business decisions go horribly wrong and the common issue with many of those disasters is not getting the right advice at the beginning.

What is Due Diligence?

At the core of your business buying decision should be facts and analysis. This is called Due Diligence and is where a good accountant can help you get the best outcome by ensuring you make a fully informed decision. The purpose of all due diligence is to inform you, they business buyer, of as much information to enable you to make a fully informed decision about the business you are looking to buy. Your due diligence should be systematic and comprehensive and this is the reason you should call your accountant first. A good accountant will understand your position, your personality, and most of all the due diligence and acquisition process. While much of the due diligence can be undertaken by yourself, so cost should not be an issue, your accountant will guide you towards the questions you should be asking and help you understand the answers. Too often I find out about clients' buying businesses after they have finalised the purchase contracts and it is then often too late to ensure the due diligence process was sufficiently robust. When this happens I am reminded about Warren Buffet's that basically says:

"It's far better to buy a great business at a fair price than a poor business at a cheap price"

Conclusion

If you are serious about buying a business to support your financial and lifestyle objectives then get serious about how to achieve the best outcome. Don't cut corners with your due diligence and use the expertise of your accountant to ensure you properly understand the business you are considering.

CLICK HERE for our useful Due Diligence Checklist