During the holiday break, business owners should take some time to reflect on the past year, to try to understand what has worked and identify areas that need improvement.
With this in mind solid sales plans can be made for the next 12 months. The aim is to manage seasonal fluctuations, and maintain positive cash flows throughout the year. Once businesses have clearly identified their yearly peaks and lows they can create a seasonal management plan with the following considerations:
For businesses that have a peak period, managing inventory becomes a demanding and time-consuming task. Without careful planning, inventory can get out of line, resulting in heavy markdowns due to overstocks and serious cash flow problems.
Determine the need for seasonal staff. Work with staff to stagger schedules so that the business is fully operational during peak periods. This may involve more night work.
Make allowances and adjustments for unusual events, such as weather and one off promotions. Based on current market share, make profit estimations taking into account the busiest and slowest periods.
If you understand the nature of your customers' needs, you will be able to market your products and/or services far more effectively.
Different types of customer needs require different marketing and advertising strategies. These are the three most basic types of customer needs and how best to target them:
These are short-term needs that customers must respond to immediately, for example, lunchtime hunger or a plumbing problem.
To target customers with immediate needs you should constantly advertise and emphasise fast service, convenience and price.
These are real needs and wants that are not necessarily immediate, for example, a car service.
To target customers with actual long term needs you should regularly be advertising, as a deliberating customer will likely turn to familiar or recognisable outlets.
Make an effort to keep in touch with previous satisfied customers; this can ensure greater word-of-mouth recommendations.
These are needs that a person believes they have, but in reality is not a necessity. These tend to be luxury goods such as clothes or restaurants.
You should aim to emphasise the superior quality of your product or service because the customer will be likely to undertake comparisons.
The upcoming G20 week is fast approaching. As most people in the immediate Brisbane area are aware there will be significant changes to public access into the city centre. Due to road closures and security areas this includes but not limited to public transport, private transport, parking and general access to certain areas within the city. Harris Black, like other businesses within the city, will have increased building security and limited access for clients to our office. Commencing the week 10 November 2014 we will have reduced staffing and our office will be closed Friday 14 November 2014. Please refer to your Harris Black team member for further details.
GST sounds like a simple enough concept: businesses are required to pay 10% tax on most of the good and services they sell in Australia and include this amount in the sale price, thus passing the tax onto the consumer.
However, in reality GST is an incredibly complex series of compliance requirements, especially for small business owners. One of the more confusing parts of GST compliance is knowing whether or not your business should be registered for GST. We have compiled this guide to help small businesses understand whether or not they should be registered for GST.
Some businesses have to be registered for GST. If your GST turnover is over $75 000, or you provide taxi travel in exchange for payment, then you must be registered for GST.
GST turnover is calculated by deducting GST from your gross business income for the twelve month period leading up to the current month, or the same calculation applied to your projected earnings for the next twelve month period starting in the current month. If your turnover is edging towards this threshold, you should be checking each month because once you have exceeded it you must register within 21 days.
Some businesses register for GST voluntarily. One reason for this may be that they are anticipating reaching the $75 000 threshold. Another reason is that if you are registered for GST you can claim GST credits on purchases that you have made for your business.
Therefore, if your business primarily sells to other businesses who are registered for GST, then the additional cost in your sale prices will not actually have a significant impact on total sales, and you will be able to claim credits on GST you would have had to pay regardless.
If your GST turnover drops below $75 000, it may seem like a good idea to cancel your GST registration to save on paperwork.
However, this can mean that you actually end up owing the ATO retrospective GST on high-value assets that you have purchased in the ten-year period prior to cancelling the registration.
If you are cancelling your GST registration due to a drop in revenue then you will need to include a portion of the GST you claimed on these assets and repay it to the ATO in your final BAS.
Calculating these amounts is very complicated, and there are different amounts of GST payable on different assets, dependent on the value of the asset and how long it was held. It is advisable to seek professional advice if you are considering cancelling your GST registration.
The silly season is almost upon us. So with that in mind we thought we would list Harris Black's Top 15 South East Queensland Restaurants.
Making your business practices more environmentally-friendly can cut costs and give you a marketing boost. Here are a couple of tips to help the planet and your bottom line:
Waste includes something you bought, couldn't or didn't sell, and are now disposing of. You've been paying for resources you didn't fully utilise, and whether it's manufacturing material, excess packaging or just a lot of trash. Reducing your waste is the simplest and most cost-efficient way to reduce your ecological footprint. In most cases, it will actually save you money!
If you can produce your products or services or run your operation with less energy consumption, then you've not only saved money, you're also helping the environment. Solar energy for your business is a large upfront investment, but it can pay itself off in just a few years.
That is not just limited to manufacturing plants or operations. Every office discards rubbish bins full of recyclable paper, aluminium (soft drink cans) and plastic (water bottles). Work with your maintenance or cleaning service to ensure there are marked recycling bins throughout your office.
In order to survive and thrive, entrepreneurs and small business owners need to keep up-to-date with current business trends.
You should always be aiming to learn new techniques to improve your business. Here are some lessons that can help small businesses stay relevant and survive:
One of the most common ways that people now find businesses is using mobile phone or tablet applications. You should make sure that your business information is as up-to date as possible in these apps, and on any websites that help people find businesses in a specific area. Use these sites as a platform from which to promote services, products, business hours, contact information and special offers.
Cloud computing may represent a way to overcome any business functions that are inefficient and costly. This internet service is considered a cost effective and productive tool for small businesses. Cloud computing can be used to manage e-newsletters, payrolls and in-house email.
If you are looking to find investors and make money, it is essential to consider how to present a business plan effectively. Investors are now likely to want to see a short electronic slide presentation before a written business plan.
Carefully consider the information included in these slides and if necessary learn new digital media skills in order to achieve the desired impact. Putting a little effort into improving your public speaking techniques is also advisable.
Business owners and entrepreneurs may have goals beyond making money. The 'triple bottom line' refers to striving for a positive outcome for the planet, people and profits. It is important for business, whether large or small, to consider their social responsibilities and how their business practices impact the environment. Many businesses are now seeking ways to be more sustainable and to contribute to the community.
October 2014 monthly activity statement – due date for lodging and paying.
Quarterly activity statement, quarter 1, 2014–15 – due date for lodging and paying for taxpayers using electronic, agent or SBR to lodge.
Income tax for companies and super funds when lodgement of the tax return was due 31 October 2014 – due date for payment; and
Income tax for large/medium taxpayers in the latest year lodged – due date for payment with a lodgement of return due 15 January 2015.
November 2013 monthly activity statement – due date for lodging and paying.
David Alcock recently celebrated his 6th Year Anniversary with Harris Black. David commenced in 2008 as an Accountant and has progressed his way up to a Supervisor.
David has played a major role in mentoring staff and contributing to the growth of Harris Black.
Congratulation and Thankyou, David!
On 14 October 2014 the Government released its "Industry Innovation and Competitiveness Agenda" containing initiatives to boost business competitiveness. Among the initiatives are amendments to the tax rules for Employee Share Schemes (ESS).
- The Government will reverse the 2009 changes to the taxing point. This means that where options are provided, the taxing point will be deferred until the exercise of the option, rather than the grant of the option;
- The maximum time for tax deferral will also be extended from seven to 15 years;
- Eligible start-up companies will be able to provide their employees with options or shares at a at a small discount that will not be subject to up-front tax, as long as the employee holds the shares or options for at least three years;
- Provided certain conditions are met, start-up companies will be able to issue options with taxation deferred until sale; and
- A 'start-up' will be defined as a company having aggregated turnover of not more than $50 million, being unlisted and being incorporated for less than 10 years.
The proposed amendments include concessions allowing start-ups to issue options in circumstances where employees will pay no tax until the shares are ultimately sold. On sale, the shares will be subject to capital gains tax. Further concessions also mean that employees of start-ups may also receive an exemption from taxation for shares acquired at a discount of up to 15% to market value, where there is 3 year holding restriction placed on those shares.
While some of the above concessions will not be available for companies which are not start-ups, the proposals do allow greater deferral of the taxing point for shares and options issued to employees of all companies. Under the new proposals, the deferral period in respect of options can continue until those options are exercised, even in circumstances where any forfeiture conditions have already been removed and options have vested. While under the proposed changes deferral will still end if an employee ceases employment, the maximum time limit on deferral will be extended from 7 to 15 years.
The Treasurer will consult with industry to ensure that the draft legislation delivers the intended outcomes. However, the proposed changes are only intended to come into effect for shares and options granted after 1 July 2015.
Please contact Harris Black if you have any questions regarding the proposed changes to Employee Share Schemes.
SuperStream provides employers with a single, simple channel for employers to make superannuation contributions electronically. The contribution data is sent electronically in a message format to the fund, and the contribution payment is sent electronically through the banking system – these are linked by a payment reference number, which enables the reconciliation by the receiving fund.
Contributions sent to an SMSF from a related-party employer are exempt from SuperStream and can be made using existing processes.
From 1 July 2014 to 2 November 2014
- All superannuation funds get ready to receive SuperStream contributions; and
- First contributions using SuperStream are sent as part of live trials
From 3 November 2014 to 30 June 2015
- Employers with more than 20 employees complete their SuperStream implementation.
30 June 2016
- Employers with less than 20 employees to complete their SuperStream implementation.
If you are ready early, there is no need to wait and you can start at any time that suits you.
Employers have options for meeting SuperStream obligations – either using a:
- software solution that conforms to SuperStream; or
- service provider who can arrange SuperStream compliance on your behalf.
Your options may include:
- upgrading your payroll software - your software provider will be able to confirm if this is required;
- using an outsourced payroll or other service provider;
- using a commercial clearing house or, for employers with 19 or fewer employers, using the free Small Business Superannuation Clearing House; or
- your default fund - they may also have an electronic channel they manage or can make transitional arrangements for you.
You will need to collect and store additional information about funds in order to send them contributions in accordance with the SuperStream standard. The new information you must include:
|New Information Required
|Bank account details
|Electronic service address
|Employee tax file number (TFN)
After collating all of the above, you should be ready to start but it is suggested, with the assistance of your software provider, you undertake a trial first.
Under SuperStream, all superannuation funds, including SMSFs, must receive contributions electronically in accordance with the reform.
From 1 July 2014:
- employers with 20 or more employees will start using the SuperStream standard to send contribution data and payments electronically; and
- all super funds (including SMSFs) must receive any employer contributions sent to their fund in accordance with the SuperStream standard.
From 1 July 2015:
- employers with 19 or fewer employees will also be required to send contributions data and payment electronically. However, they may choose to implement SuperStream sooner.
- Confirm with your employer when they will start implementing SuperStream. If you work for an employer with 20 or more employees, you will need to update your details with your employer.
- Make sure that your employer has all your SMSF details at least 60 days before their planned start date.
- Ensure your SMSF bank account is able to receive electronic contribution payments and can receive a contribution message with information about these payments in the SuperStream format.
- Provide your employer with your SMSF:
- your Australian Business Number (ABN)
- your bank account for receipt of contribution payments (BSB and account number)
- an electronic service address for receipt of a contribution data message.
You can get an electronic service address from your administrator or an SMSF messaging provider to receive contribution remittance information. Signing up with a service provider only takes minutes. There are low or no cost options available and you only need to do it once.
A register of providers is available at: https://www.ato.gov.au/Super/SuperStream/In-detail/Contributions/SMSF-messaging-service-providers
For SMSF clients of Harris Black, we suggest using Reckon Desktop Super provider for which the electronic service address is RECKONSMSF.
Please contact your Harris Black team member for further assistance.
The deadline to take advantage of the ATO's initiative to allow eligible taxpayers to come forward and voluntarily disclose unreported foreign income and assets with reduced penalties is nearing. The ATO has urged taxpayers with offshore assets to declare their interests ahead of a global crackdown on people using international tax havens.
The Tax Commissioner Chris Jordan earlier this year announced the initiative to allow eligible taxpayers to come forward and voluntarily disclose unreported foreign income and assets. In announcing the initiative, known as "Project DO IT: disclose offshore income today", the Commissioner warned that it provides a last chance opportunity for those who haven't declared their overseas assets and income, to come back into the tax system before 19 December 2014, to avoid steep penalties and the risk of criminal prosecution for tax avoidance.
It should be emphasised that Project DO IT covers both "inadvertent" and "intentional" actions to hide offshore income and/or gains. The ATO has advised that where taxpayers may be unsure as to their eligibility for the initiative, they can contact the ATO's Project DO IT team to discuss the issue and this can be done anonymously. Please contact our office for further information.
The mature age worker tax offset will be abolished by the Government from the 2014–2015 income year and later income years. However, a new expenditure program being delivered by the Department of Employment, Restart, will provide alternative support by way of subsidy of up to $10,000 to employers who hire mature age job seekers.
The Restart program offers a wage subsidy of up to $10,000 (including GST) to eligible employers of mature age job seekers. The job seekers must be 50 years of age or older, and have been unemployed and receiving income support for six months or more. To receive the full payment, a business must employ the same employee for at least 30 hours per week for an ongoing period of two years. The Restart wage subsidy can also be claimed on a pro-rata basis if you hire a mature age worker part time, for at least 15 hours a week.
The AAT has mostly allowed a company's deduction claims for research and development (R&D) expenditure at the 125% premium rate, but disallowed other claims in respect of overlapping expenditure.
Over an extended period, the taxpayer conducted various plant trials to test possible ways to improve its copper and lead concentrators and its copper smelter. The taxpayer sought to deduct a considerable part of its expenditure incurred during those plant trials at the premium rate of 125% as "research and development expenditure".
The Commissioner refused most of the taxpayer's claims arguing they were not deductible at the premium rate because they were "feedstock expenditure", which is expressly excluded from the statutory definition of "research and development expenditure" under the tax law. The Commissioner also argued that, due to an overlap of the taxpayer's R&D activities at its Mt Isa copper concentrator and Mt Isa smelter, certain expenditure became "feedstock expenditure" and was not deductible at the 125% rate.
The AAT allowed most of the taxpayer's claims, but accepted the Commissioner's arguments on the overlap issue.
The Commissioner has appealed to the Federal Court against the decision.
A security interest in corporate property must be registered on the Personal Property Securities Register (PPSR) as soon as possible.
A recent Federal Court decision involving a loan from a self-managed super fund (SMSF) to a company which was later placed into voluntary administration has highlighted the importance of understanding the new Personal Property Securities regime. The Federal Court held the SMSF trustee was merely an unsecured creditor in relation to the commercial loan to the company after finding that its security interest had not been registered on the PPSR in time to avoid the interest vesting in the company (in liquidation).
The take-home message from the case is that a failure to register a security interest on the PPSR within 20 business days of the creation of a security agreement over corporate property leaves the lender/mortgagor in the hands of the gods in terms of later perfecting the security. For corporate property, a failure to register within 20 business days means that the security interest must have been registered at least six months before the administration or winding up of the grantor company.
The Administrative Appeals Tribunal (AAT) has affirmed a decision of the Commissioner that a payment made to an individual for compensation for domestic assistance was assessable as ordinary income under the tax law.
In 1997, the taxpayer's husband suffered a serious injury while white-water rafting during a team-building exercise organised by his employer. The husband was unable to work and the taxpayer gave up full time work to become a carer.
In 2012, the husband lodged a claim for compensation for domestic assistance under the Workers Compensation Act 1987 (NSW) in respect of the domestic assistance provided by the taxpayer. The Workers Compensation Commission awarded the taxpayer a lump sum of around $179,000.
The AAT said there was no basis that the compensation payment could be described as a loss of income earning capacity as argued by the taxpayer – rather, it was of the view that the payment was to ensure that the taxpayer was provided with a sufficient payment to cover her loss of income.
A medical practitioner has been, in the main, successful before the Administrative Appeals Tribunal (AAT) in seeking to have losses from his olive growing activities deducted from his other assessable income. The taxpayer had carried on an olive growing and olive oil production business for 15 years.
The taxpayer had applied to the Tax Commissioner to be relieved from the "non-commercial loss provisions" under the tax law for the 2010 to 2014 income years, inclusive. Under those rules, unless he is granted relief, he has to wait until the olive oil business starts to generate profits before he can claim his losses. The Commissioner refused the taxpayer's application.
The AAT held the Commissioner's decision not to allow the taxpayer immediate access to his losses was not the correct or preferable decision. The AAT decided the taxpayer should be allowed the relief from the "non-commercial loss provisions" under the tax law for the 2010 to 2013 income years, but not the 2014 income year.
The AAT also made several recommendations to the Commissioner as a result of issues raised during the proceedings. These were that the Commissioner:
- considers the use of an alternative approved form for applications of this nature;
- ensures, as far as possible, that any alternative approved form:
- asks applicants to provide all the information the Commissioner considers necessary for a proper consideration of the application; and
- takes into account the legislative amendments enacted in 2009 (ie the income requirement which means that taxpayers with taxable income over $250,000 have to rely on the Commissioner's discretion).
- provides additional guidance to the Commissioner's officers.