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  Handing Over Your Business To Family 
 
Keeping your business in the family when you decide it's time to retire 
is a common choice for many owners.

When planning to hand your business over to your children or any other 

family member, there are precautions you should take to ensure that the business model is protected in a way that you wish. Family members who have shown an interest within the business need to undergo the proper training and education for the position. This process may take years and should not be considered only a few weeks before the business owners retire.


Choose the right successor

When changing ownership of any business to a family member, think about who will be the best fit for the business. While it may be an appealing option to set up your children financially, ensure that they have the necessary skills and commitment to effectively take over the business. One strategy to help choose an appropriate successor is by having meetings to discuss various aspects of the changeover. Planning out what will be discussed in each meeting when you decide you are going to change ownership will help to create a seamless transition.

Have a succession plan

Having a well-defined plan in place will be of assistance when changing ownership of the business. A succession or exit plan will outline who will take on the business once you leave, and the manner in which the transition will take place. A formal succession plan can help to guide your business through a smooth transfer of ownership. This will allow you to teach your successor the ways of the business and the correct process of doing various tasks. This also helps to teach and maintain the order in which the business has always operated, making the change easier for customers and clients. After the transition has taken place, your successor can then choose to make any changes to the business model that they think could improve the business. They can now do this with an appreciation and understanding of how and why things have been done a certain way in the past.

Manage legal requirements

A major part of the succession plan involves managing the financial and legal issues that arise with the changeover of a business. A common mistake many business owners make when handing the business over is thinking they are still in charge, which is not the case.

Define your role going forward

By overstepping the boundaries and trying to be over-involved after you no longer own the business, you can cause conflict between yourself and your successor which will impact negatively on the business. You need to respect the new person you have appointed as an owner and let them run the business on their own. There is the option for you to be a silent partner or advisor, so you can be there as a soundboard and offer advice should they need it, but anything more can become overbearing. Make sure you prepare yourself for what no longer owning the business will mean such as how you are going to fill your time that was previously spent working.

 
  Choosing The Right Business Location 
   
When setting up your business, choosing a location can be a critical factor in its success.

Unless you are completely home-based, you will need to decide where you will conduct your business either by leasing or buying premises. Each organisation has varying requirements, so it is necessary to consider your needs and priorities when deciding on a business premises that will best suit you.

Know your business


The types of premises will depend on your business. Ones that offer professional services may consider choosing long or short-term leasing options that will allow you to conduct customer and business meetings from a central location. If you run a retail or hospitality organisation it will involve deciding on the best location to sell your products, both size and location wise. For those that involve manufacturing, wholesaling or selling over the internet, selecting a business location will not impact on attracting customers.

Identify customers

Identifying who your customers are and how you can best meet their needs can also assist in choosing a location. Researching relevant information, such as where they live and work, and how far they will potentially travel to buy your products or services, can help you decide on a location that is practical for existing customers and attractive to new ones.

Assess the location

There are many external elements of a location that can affect your business. Look at the traffic in the area and work out how it can support or hinder you, as well as what services are in the area in which you choose to locate. You may consider asking other businesses in your desired location for some advice on the best providers for services such as gas, electricity, water, phone and internet. Access for both customers and employees is also a large factor when assessing the location. Consider whether it is easy enough for clients to find and employees to travel to every day. Making your business accessible can allow you to obtain a wider pool of staff.

Remember your legal and environmental obligations when choosing a place to set up your business and check with the local council for any planning and building restrictions if necessary. For example, you could consider how possible noise produced by your business would affect the local community. Before making any big decisions, consider seeking further legal or professional advice.

 
    Perks For Your Employees That You Can Afford 
   
Supporting your employees doesn't have to break the bank. You can provide perks in the form of policies rather than material rewards.

Creating a work environment with actionable benefits can increase productivity whilst attracting and retaining skilled employees.

Flexible work

An attractive perk that an increasing number of companies offer is flexible hours. Small businesses are often in the best position to offer flexible work arrangements, as schedules tailored for the individual can still allow work to get done efficiently. This gives employees a healthy work/life balance.

Note also that Employees who meet certain conditions defined under the Fair Work Act have the right to request flexible and part-time working arrangements from their employer. In these situations, an employer can only refuse such a request on reasonable business grounds.

Support

Sometimes employees need time off with short notice or something in their personal lives affects their ability to work. Business owners can make a positive impact on employees that are experiencing problems or hardships. This could be through listening and talking them through their approach to work or providing active support with altered work hours until things have settled down. Looking after an employee in a time of need helps to create a supportive environment that staff are more likely to enjoy working in.

Novelty days

Having a novelty day weekly or monthly can provide a fun atmosphere and give employees a day to look forward to. For example, you could implement initiatives like a "bring your pet to work" day, assuming that no one is allergic and the pets are sufficiently well trained as to not cause disruption in the workplace. If your workplace has a dress code, "casual Friday" could be a good way to boost morale at the end of the week.

 
    Director Penalty Regime For GST  
   
Currently, the director penalty regime makes the directors of a company personally liable for their company's:
  • Pay as you go (PAYG) withholding obligations; and
  • Superannuation guarantee contribution (SGC) obligations.
Legislation has been introduced into parliament on 4 July 2019 with new provisions that enable the ATO to seek recovery of unpaid GST of a company from its directors.

For un-lodged Activity Statements, the proposed changes will allow the ATO to estimate the entity's GST and require the amount to be paid within 21 days otherwise the director will become personally liable.

This means that the ATO can take enforcement action against the director personally where SGC, PAYG(W) and GST is unpaid, including garnishee notices and bankruptcy proceedings.

Recommended action

With the extension to the director penalty regime to be introduced from 1 October 2019, directors should ensure now that they:
  • Are aware of the GST affairs of their company
  • Identify any potential risks or exposure
  • Ensure that the company has adequate controls around its GST accounting and BAS preparation processes
  • Are aware of any un-lodged Activity Statements
  • Assess who is the most appropriate person to be the director
If you have any further questions or would like further details about a GST or risk review and its benefits, please do not hesitate to contact Bjorn Kirberg our Senior Tax Advisor or your Harris Black team member.

 
    Harris Black News 
   
Our warmest congratulations to HB Manager Tomoka Kawamoto and her husband, Anthony, who are expecting their first child in November. Tomoka will be going on maternity leave for an anticipated 9 months from November 2019. Exciting times… a tiny, new addition to their own and the HB family!

 
    Important Tax Dates 
   
21 August 2019
  • Lodge and pay quarter 4, 2018–19 activity statement if lodging by paper.
28 August 2019
  • Lodge and pay quarter 4, 2018–19 Superannuation guarantee charge statement – quarterly if the employer did not pay enough contributions on time.
21 September 2019
  • Lodge and Pay August 2019 monthly business activity statement.
     
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This material is for guidance only, any professional advice should be obtained before acting on any information contained herein. Neither the publisher nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this newsletter. We recommend that you contact your Harris Black team member before making any decision to discuss your particular requirements or circumstances.

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