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  Cash Flow Management Tips For Small Business 
 
Small businesses with cash flow problems put themselves at risk of failing or suffering financial hardship.
 

Cash flow provides a business with stability so they are able to pay employees, avoid loan defaults and pay the overheads necessary to keep their business up and running. Follow these tips to boost your cash flow so you can secure your business' future.

Perform a business health check

Preparing financial statements will give you an objective insight into the health of your business. Identifying if you have a cash flow problem is the first step to coming up with solutions. Looking into the following reports will allow you to see if your cash flow is up to scratch.

  • A balance sheet will tell you what your business is worth on any given day. The value of your business is calculated by subtracting your liabilities from your assets.
  • Profit loss statements reveal if your income is meeting your expense requirements. If your profit is dipping below your expenses it is time for a change.
  • Cash flow reports reveal the money that is going in and out of your business over a set period and identify peak and off-peak periods
Use a business budget

After analysing your cash flow situation, determine if your cash flow is cyclical? Creating a yearly budget is not only imperative to receive financing in future, but will also help you identify the best months in which to save to cover the quieter months. Where applicable, business owners can consider flexible rostering, whereby employing casuals and using a flexible roster can help you cut back on hours when you need to improve your cash flow in quiet periods.

When you have identified your quieter periods of the year, try to find additional revenue streams for when cash is low. Is there a product or service that could be introduced? Work with your team for new ideas to cover low cash months.

Get on top of your accounts receivable

Allowing late repayments jeopardises your cash flow and can put you in a tight financial spot. Avoid being out of pocket by implementing some of these credit policies:
  • Collect debts on time
  • Offer an early bird discount to incentivise early repayments
  • Set credit limits and payment terms
  • Make credit applications and carry out credit checks on all new customers
  • Penalise late payments with interest
  • Consider cutting down on inventory
  • Request upfront payment or a non-refundable deposit where viable, especially when dealing with large orders


  Improving Your Niche Marketing Strategy 
 
Improve your niche marketing strategy to stay ahead of the game.

A niche marketing strategy is one that targets a specific subset of a market and is not a strategy that is ideal for every business. However, if you have determined that a niche marketing strategy is right for your business, here are some things for you to consider to distinguish yourself from the rest.

Knowing and serving your customer

In a niche market, it is not only enough to just know your customers' demographics but also their beliefs, behaviours and desires. In doing so, you can better cater to their needs in your products or services and add more value to what you are selling. Customer service is especially essential for online businesses as there are no physical spaces to produce an in-store experience. Serving your customer digitally can involve the customisation of a product or service, promptly responding to queries, or packaging the product in a way that aligns with your brand.

Storytelling

An emotional connection with a product or service can influence a customer's purchasing decision - storytelling is one of the most powerful methods to draw an audience in. Changing the 'About Us' section to 'Our Story' on a niche family business website may be effective, but it's just as important for the story to reflect the brand. Some business stories are told through their employees' or customers' testimonials and successes. Niche retail businesses may tell the story of their product's symbolism, unique features, designer, artist, or maker.

Be selective with your advertising platforms

Using social media is one way to gain visibility and to have a digital presence, but social media channels are often saturated with competitors and other distractions. Depending on your product or service, some customers may prefer to visit industry-related websites or use a search engine directly, rather than clicking on an advertisement on Facebook. Other customers would prefer to trust their friends and to gain knowledge through word of mouth. These businesses may gift an item to a circle they want visibility in. Ensure your marketing channels are cost-effective for your business.

 
  Single Touch Payroll To Include All Businesses In 2019  
 
On 1 July 2018, the Australian Tax Office (ATO) rolled out Single Touch Payroll (STP). This changed the way employers with 20 or more employees reported their employees' tax and super information. Generally through payroll or accounting software that offer STP reporting (or through a third-party service provider), employers are expected to report information on withholding amounts, superannuation liability information or ordinary times earnings (OTE) and salary, wages, allowances and deductions.

The STP currently affects businesses with 20 or more employees, but just last month, the Senate passed a Bill for the STP to include all Australian businesses (including businesses with 19 employees or less), affecting at least an additional 700,000 businesses. Although the amendments to the STP are currently being reviewed by the House of Representatives, the change is expected to be implemented on 1 July 2019.

Businesses with 20 or more employees

If you do not have STP reporting already, it's not too late to get started. Alternatively, you can apply for a deferral. If you are unsure if your software has STP reporting, the ATO recommends talking to your software provider or tax professional.

Businesses with 19 employees or less

The effects on these businesses vary.

For now, businesses that already have digital payroll software are encouraged to talk to their software service provider to update their software if they want to start STP reporting. The ATO says businesses without such software will not be forced to purchase it, and different STP reporting options will be available by 1 July 2019 including:
  • Exemptions if you have unreliable or no internet connection.
  • Micro employers can report quarterly, rather than every time you run your payroll.
  • Low-cost STP reporting options will include simple payroll software and mobile phone apps at or below $10 a month for micro employers. 
Adjusting to digital payroll software is a lengthy process, so take the time now to research different cloud-accounting software. However, also consider that the ATO is still finalising low-cost cloud-accounting solutions for micro employees. 


  Common FBT Errors Employers Make 
 
The end of the FBT year is fast approaching and the ATO has revealed certain areas of concern for employers.

Living-away-from-home allowance (LAFHA)

An allowance to compensate employees living away from home to work, employers are susceptible to claim reductions for ineligible employees, not obtaining the required declarations from employees, and claiming deductions for exemptions (such as invalid accommodation and food components).

Provided motor vehicles

Employers are reportedly not declaring the use of employer-provided motor vehicles on FBT returns, resulting in inconsistent exemption applications and additional compliance costs. A car benefit can be taxable even if the employee has not driven the car – it only has to be available for their private use.

Employee contributions

The ATO has identified that employers are often not able to show the employee's obligation to make an employee contribution. Without an agreement in place with the employee, employers are unable to offset an existing liability. It has also been reported that employers have been taking advantage of excess employee contributions from one fringe benefit type to offset an FBT obligation relating to another fringe benefit type.

 
  Resolving Tax Disputes: Government To Help Small Businesses 
 
The Federal Government intends to make it easier, cheaper and quicker for small businesses to resolve tax disputes with the ATO. It will establish a Small Business Concierge Service within the Australian Small Business and Family Enterprise Ombudsman's office to provide support and advice about the Administrative Appeals Tribunal (AAT) process to small businesses before they make an application. The government will also create a dedicated Small Business Taxation Division within the AAT.

 
  Home Office Running Expenses And Electronic Device Expenses 
 
The ATO has released an updated version of Practice Statement PS LA 2001/6, its guidance on calculating and substantiating home office running expenses and electronic device expenses that are claimed as tax deductions.

The basic principles have been amended to emphasise that you must actually incur the expenses you claim, and that there must be a real connection between your use of a home office or device and your income-producing work. On the other hand, the requirement that your income-producing use must be substantial – not merely incidental – has been removed.

There is new information on what type of evidence you need to be keep, and the cents per hour rate you can claim for eligible home office running expenses has increased from 45 cents to 52 cents per hour, effective from 1 July 2018. 


  ATO Issuing Excess Super Contributions Determinations 
 
The ATO has begun issuing determinations to people who exceeded their concessional superannuation contributions cap for the 2017–2018 financial year. These determinations will also trigger amended income tax assessments and additional tax liabilities. Individuals can elect for the ATO to withdraw their excess contributions from their super fund to pay any additional personal tax liability.

TIP:
Concessional contributions include all employer contributions, such as the 9.5% superannuation guarantee and salary sacrifice contributions, and personal contributions for which a deduction has been claimed.

You have 60 days from receiving an ECC determination to elect to release up to 85% of your excess concessional contributions from your super fund to pay your amended tax bill. Otherwise, you will need to fund the payment using non-superannuation money. 


  CAANZ Employment Evening 
 
Wednesday, 13 March 2019 saw the Harris Black team return to participate in this year's Chartered Accountants Australia and New Zealand's (CAANZ) Employment Evening.

The Employment Evening is a colourful event with invited chartered accountants such as Harris Black manning 'expo style' booths that are visited by hundreds of soon to be graduating accounting students. This year the Harris Black booth was manned by Director, Renee Bettenay, Workflow Manager, Kathryn Healy and key accountants, Lucy Moore and Daniel Wattimena. Across the evening our HB team spoke with many hopeful students regarding the opportunities and benefits of working with the Harris Black Team. Additionally, Renee and Kathryn sat with individual students for Mock Interviews which were designed to give attendees a taste of the interview process in the business world. This was a great opportunity for Harris Black to connect with upcoming graduates with a view to possible future employment.

As is our way, the Harris Black team went all out not only with supportive and informative conversation but on booth decoration also! Our booth was quite impressive and well visited with balloons, banners, merchandise giveaways, a guessing competition and a basket of goodies for the winner... Attendees were keen to spend time with the HB team and our staff were well engaged in conversation for the full 3 hours, answering questions, providing support and discussing the advantages of working with a firm such as Harris Black.

The HB Team enjoyed the event immensely and offer their congratulations to CAANZ on another well run Employment Evening event!


   
  Charity - MND and Me Foundation
 
Harris Black is proud to be supporting the "MND and Me Foundation".

The MND and Me Foundation was established by Scott Sullivan, who was diagnosed with Motor Neurone Disease (MND) in 2010 at the age of 38. The foundation specifically focuses on supporting Queenslanders living with MND. The funds raised through donations are used to improve the level of care of Queenslanders living with MND by enabling easier access to equipment, carer services and support groups. The foundation also funds research to help find treatments and a cure for MND.

Over the next 3 months, the team at Harris Black will be raising funds through various activities, such as lunch fundraising and a special morning tea which will include some HB Corporate Games.

To find out more about the MND and Me Foundation, visit their website here.

 
  Important Tax Date 
 
31 March 2019
  • Lodge tax return for companies and super funds with total income of more than $2 million in the latest year lodged (excluding large/medium taxpayers), unless the return was due earlier. Payment for companies and super funds in this category is also due by this date.
  • Lodge tax return for the head company of a consolidated group (excluding large/medium), with a member who had a total income in excess of $2 million in their latest year lodged, unless the return was due earlier. Payment for companies in this category is also due by this date.
  • Lodge tax return for individuals and trusts whose latest return resulted in a tax liability of $20,000 or more, excluding large/medium trusts. Payment for individuals and trusts in this category is due as advised on their notice of assessment.
21 April 2019
  • Lodge and pay quarter 3, 2018–19 PAYG instalment activity statement for head companies of consolidated groups.
  • Lodge and pay March 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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