The New Year is always a great opportunity for business owners to take a step back and think about what they can do to improve on previous years.
Sometimes, the answers are glaringly obvious, but in other instances, you may have to think a little outside the box.
Even if you are entirely satisfied with your business's performance, it is no excuse to sit on your laurels. Circumstances beyond your control can impact your business's viability, so you need to remain vigilant. Furthermore, there is always room for improvements in every business, so you should never feel that you have nothing left to work on.
Here are our top five business resolutions for business owners in 2015:
With all the hype surrounding social media marketing, it is not uncommon for businesses to fall into the trap of making social media content for its own sake. This can be a costly mistake, and may even damage your brand in some circumstances. Concentrate on making sure that your social media marketing is informative, creative, and, most importantly, reaching the right audience.
If you have a vision for your business you should share it with your employees. Allowing your staff to participate in the realisation of planned goals will give them a sense of accomplishment and promote job satisfaction. Employees who are satisfied in their roles are generally more productive and are also more likely to remain in their positions for a longer period.
Even the self-employed can always benefit from a little extra training. By attending seminars, short courses, or even just reading relevant books you can make a huge difference to your business. Think about the area of your business that you are the least confident in, for example, marketing or IT, and make the decision to improve your knowledge.
A great way to start improving your organisation is by writing to do lists. You should begin by listing long term goals, and then slowly breaking them down into smaller tasks. If you do this, tasks will seem far more manageable, and you will be able to create a realistic timeline for completion.
Build your dream team
At the end of the day, the success of any business will be determined by its people. Of course, it is important to hire the right people at the right time. However, the thing that will ultimately allow your people to take your business to new levels of success is the ability to work together effectively.
If your staff members have good communication channels and productive working relationships with one another, it can make a significant positive impact on your business's productivity. In 2015, put a little bit of extra time and energy into promoting team collaboration in your business.
Superannuation should never be a "set and forget" strategy. With the new calendar year here, now is a good time to review your circumstances and perhaps set some new goals to help boost retirement savings.
There have been a few changes to superannuation which applied from 1 July 2014 and it is important to understand how they may apply to you. The following are some considerations.
The general concessional contributions cap is $30,000 for 2014–2015 (up from $25,000 for 2013–2014). For people aged 50 and over, there is a higher concessional contributions cap of $35,000 for 2014–2015.
It is a good habit to check your superannuation balance regularly. In addition to getting to know your super better, you may also want to protect your super from identity crime. For example, you may want to change passwords for accounts that can be viewed online.
You may want to consider consolidating multiple super fund accounts. This may help avoid paying multiple super fund fees, reduce paperwork, and make it easier to keep track of your superannuation.
Keep all your statements in a safe place, especially if you do need to maintain multiple accounts.
You may want to ask your employer about salary sacrificing super. Or you may want to consider reviewing an existing arrangement with your employer.
TIP: Professional tailor advice should be obtained before implementing a new retirement savings strategy. Please contact our office to discuss your circumstances.
Managing your cashflow is crucial to running a successful business.
Running out of liquid capital is one of the most common reasons that small businesses fail. Monitoring your cashflow and planning accordingly is important at every stage of the business lifecycle; however, it is especially critical that businesses experiencing rapid growth remain acutely aware of their cash availability.
The point at which many business owners trip up is in failing to realise that even a thriving and profitable business can easily run out of cash. If you believe that your cashflow might become
negative, meaning that your expenses may exceed your takings over a specified period, then you should investigate opening a line of credit for your business.
You should be firm and clear with customers and clients about when payments are due. Issue invoices immediately and have a system in place that will send out a reminder if payment has not been received by the specified date.
If you are experiencing a shortage of cash, then you should be open and honest with your creditors. There is a good chance that they will be amenable to a payment plan, so long as you discuss the issue early on.
The end of the FBT year is fast approaching, and it is a good time to reflect on your FBT plans for 2015-16.
Fringe benefits are benefits that you provide to your staff that fall outside the categories of traditional wages and salaries. Examples of common fringe benefits include cars, low interest or interest-free loans and school fees.
Fringe benefits are taxed differently to income, and business owners should be aware of the relevant compliance issues when negotiating salary packages.
The benefits are not subject to income tax. However, the employer must pay fringe benefits tax (FBT). Typically, the employer will reduce the employee's salary by the amount equivalent to the FBT incurred.
The FBT rate is usually 47%. However, it has been temporarily raised to 49% to prevent high income earners from circumventing the 2% budget repair levy. It will return to its normal rate on March 31 2017.
It is advisable to seek professional guidance before entering into a new salary packaging agreement with an employee. The reason for this is that the calculations surrounding FBT calculations are extremely complex, and you may end up inadvertently disadvantaging them in the process, thereby defeating the purpose of salary packaging
There are four capital gains tax (CGT) concessions that can be applied to the sale of small business assets.
These concessions can be extremely effective in reducing your tax liability. It is in the interests of all business owners to be aware of the compliance issues surrounding these CGT concessions as it may help to form astute decisions relating to the use and disposal of business assets.
Detailed below are the four CGT concessions that are available to small business owners.
If your business has held an asset for over 15 years and you are over the age of 55 then there will be no CGT liability on the sale of that asset. The 15 year exemption is the most generous of the CGT concessions. In certain circumstances it can allow a person to completely disregard the tax payable on a capital gain.
To be eligible for the 15 year exemption, the asset must have been held for a minimum of 15 years, and the owner must be selling due to retirement or permanent incapacitation.
If the asset is considered to be active then your CGT is reduced by 50%. In order to qualify as active, an asset must be used in the day to day running of the business.
Active assets may be tangible or intangible. It must have been used in the day to day running of the business for over half the period of ownership, or over 7.5 years where the ownership exceeds 15 years. Only active assets qualify any of these four CGT concessions.
Small business owners may be exempt from up to $500 000 of capital gains over their lifetime. However, if you are under the age of 55 then the money must be directed into a superannuation account.
This allows you to defer your capital gain on an asset for up to a year. The capital gain may be deferred for two years or longer if you plan to acquire a replacement asset, or you incur expenses in the process of making improvements to an existing asset.
To qualify for the small business CGT discounts your business must be classified as a small business entity. This means that your annual income cannot exceed $2 million.
If the business does not qualify as an SBE, then the CGT discounts may still be applied if the owners hold less than $6 million dollars in total assets.
The concession may also apply where the assets are owned by an entity which you control, such as a company or trust, but the rules are complex and professional advice should be sought.
There are a number of things that you can do to make your workplace a more productive environment.
While it is extremely important to consider interpersonal issues that may impact productivity, you should make sure that you don't neglect the physical work space. Here are our top tips for boosting productivity:
Allowing a significant amount of natural light to reach your employees may do wonders for morale and energy levels. Numerous studies have shown that a lack of natural light can cause lethargy and low mood.
For many small businesses, full-scale renovations that facilitate larger amounts of natural light are out of the question. However, by simply rearranging desks to face windows or removing thick curtains, you may be able to give your business a significant productivity boost.
There are many benefits to open plan offices, and for many businesses it is simply a necessity due to space constraints. However, open plan offices can lead to a lot of noise that can be distracting for some people.
Depending on the noise levels in your office, you might wish to introduce a 'quiet room', or purchase noise cancelling headphones that people can wear if they are finding the noise to be a distraction.
Clutter obviously impedes productivity because it makes it difficult to find important documents. Furthermore, clutter in the workplace creates an impression of disorganisation that your employees may respond to on a subconscious level. Remember that clutter can also be digital! Make sure that your hard drives and shared folders are as organised as possible.
Research shows that having a couple of indoor plants inside an office can boost employee productivity by stimulating concentration and improving mood. This is a low cost way to improve the aesthetics and functionality of your workplace.
Business insurance can be a tricky area to navigate.
Being under-insured can spell the death of a small business, but, on the other hand, it is all too easy to end up paying insurance premiums that are too high. This can place a significant drain on your business's valuable resources.
Some common types of insurance that small business owners should consider include:
All businesses with employees must take out workers' compensation insurance to cover the costs of any injuries or illness incurred in the workplace.
If you do not have employees but regularly hire contractors, you should double check that they should not be classified as employees as this may land you in a serious position in the event of an injury.
If your business owns a motor vehicle you must have third party injury insurance, which is typically included in your vehicle registration. Depending on your financial position and the frequency with which you use your vehicle, it may also be highly advisable for your business to take out comprehensive vehicle insurance.
It is highly advisable for businesses to have public liability insurance, especially if they have a premises that is frequented by customers and/or clients.
Public liability insurance protects you against personal injury and property damage claims that occur on your premises due to negligence.
For many industries, professional indemnity insurance may be a wise investment. It protects your business against negligence claims made by clients. It will cover the legal costs of defending any claims and help in paying out any damages owing.
Any business that provides products directly to consumers should consider taking out product liability insurance. It will protect you against any financial damages or injuries caused by your products.
This month the Harris Black staff have listed the top 12 habits to break this year to improve efficiency at work.
- Take 10 minutes at the beginning of each day to prioritise your tasks;
- Don't answer every email as soon as it arrives, review emails between tasks;
- Turn off email alerts on outlook;
- Reduce workspace clutter. Jobs not being worked on should be put away so as not to distract you from what you are working on;
- Removing mobile phones off desk so alerts do not interrupt what you are currently working on;
- Plan your work and work your plan;
- Learn to delegate;
- Create a To-Do List at the start of the day;
- Have the courage to say "no" when you are busy/ the interruption is not urgent;
- Complete the important jobs first, not the easiest (eat the frog);
- Have stand-up meetings…..the discomfort of standing for long periods is intended to keep the meeting short; and
- Don't procrastinate and then rush jobs.
Late last year, the Murray Financial System Inquiry called on the Government to restore the general prohibition on direct borrowings by superannuation funds.
The review was of the view that there was an emerging trend of superannuation funds using limited recourse borrowing arrangements (LRBAs) to purchase assets, and that over time growth in direct borrowing would pose risks to the financial system.
The Inquiry, chaired by David Murray, recommended that the current superannuation borrowing exception in the super rules should be removed on a prospective basis. Importantly, it was recommended that superannuation funds with existing borrowings should be permitted to maintain those borrowings. However, funds disposing of assets purchased via direct borrowings would be required to extinguish any associated debt at the same time.
The Government is expected to respond to the recommendations in late March 2015.
The ATO has issued a Ruling which explains the goods and services tax (GST) treatment of a surcharge imposed by a merchant on a customer in respect of a credit card transaction concerning supplies of goods or services by the merchant to the customer.
According to the Ruling, a credit card surcharge imposed by the merchant on the customer for a credit card transaction forms part of the consideration for the supply of the goods or services made by the merchant. The merchant will need to take into account the credit card surcharge that is connected with the supply of the goods or services when calculating the correct amount of GST.
The Ruling covers a number of scenarios involving credit card surcharges. The ATO provides the following basic example of a credit card surcharge imposed by a merchant on a customer for a purchase of a shirt, being a taxable supply:
Anna purchases a shirt with a price of $55. A sign at the store's counter states that a surcharge of 3% of the price will be imposed if payment is made by credit card. When Anna pays for the shirt using her credit card, the merchant imposes a surcharge of $1.65 on the sale. The price of the shirt is $56.65 as the $1.65 surcharge forms part of the consideration for the shirt. The GST payable in respect of the sale is $5.15, being 1/11th of the GST inclusive price of $56.65.
Note the ruling also discusses the ATO's view on the GST treatment of surcharges imposed on debit card transactions.
The following link provides a number of alternative scenarios involving credit card surcharges.
The ATO has finalised a number of its rulings (a GST Ruling and several Income Tax Determinations) relating to the application of the tax laws for Bitcoin and similar crypto-currencies.
The ATO says all these rulings have application to tax periods before their date of issue (ie 17 December 2014) as they discuss laws that were already operative. However, it notes the Tax Commissioner will not generally apply compliance resources to tax periods that started before 1 October 2014 for goods and services tax (GST), or 1 July 2014 for other tax issues, for taxpayers that can show they have made a genuine attempt to determine the tax treatment of Bitcoin and have then adopted a consistent position regarding the tax treatment of Bitcoin in those past tax periods.
Some key points on the ATO's view on Bitcoin:
- Transacting with Bitcoin is akin to a barter arrangement, with similar tax consequences.
- Bitcoin is neither money nor a foreign currency, and the supply of Bitcoin is not a financial supply for GST purposes. Bitcoin is, however, an asset for capital gains tax (CGT) purposes.
- The records you require in relation to Bitcoin transactions are as follows:
- the date of the transaction;
- the amount in Australian dollars;
- what the transaction was for; and
- who the other party was.
If you receive Bitcoin for goods or services you provide as part of your business, you will need to record the value in Australian dollars as part of your ordinary income. This is the same process as receiving non-cash consideration under a barter transaction. The value in Australian dollars will be the fair market value which can be obtained from a reputable Bitcoin exchange, for example.
December 2014 Monthly BAS due for small businesses who report and pay GST electronically.
January 2014 Monthly Activity Statement - due date for lodging and paying.
Quarterly Activity Statement Quarter 2, 2014/15 - due date for lodging and payment.
Superannuation guarantee charge (SGC) statement due for lodgement.