Big Changes to Superannuation

There are some big changes to super happening in the coming months.

Here are three of the key changes.

1. GIVING CASUAL & PART-TIMERS A GO

From July 1 the $450 monthly income threshold that workers currently need to earn before they’re eligible for compulsory employer super contributions will be removed.

This means a large number of casual and part-timers will now be eligible for compulsory employer super contributions.

As the part-time share of employment is over 30% in Australia, this has been widely welcomed by the super industry and is estimated to help about 300,000 people, mostly women.

2. GOING TO 10.5 PERCENT

On 1 July 2022 the super guarantee rises to 10.5 percent.

This is important to know because if you do not pay an employee's minimum superannuation guarantee amount on time and to the right fund, you must then pay the superannuation guarantee charge (SGC) and lodge an SGC statement to the ATO.

The SGC is more than the super you would have otherwise paid to the employee's fund and is not tax deductible.

3. FLEXIBILITY FOR SENIORS

Other recent legislation passed removes the work test for super contributions for 67-75 year-olds.

Previously people aged 67 to 74 were prevented from contributing to super unless they were employed.

The new legislation means 67-74 year-olds no are no longer required to meet the 40-hour work test, provided their contributions are made via salary sacrifice contributions.

It’s important to note that people aged between 67 and 75 who wish to make personal deductible contributions to super will still be required to meet the 40-hour work test.

Another law change lowers the age threshold for the super downsizer scheme from 65 to 60.

Downsizer contributions are made to super funds from the proceeds of selling your home. The reduction in the age threshold provides greater flexibility for older Australians to contribute to their super.

There is a nil cashing condition applied to downsizer contributions, which means funds must be preserved within the super account until conditions of release are met. For more information about downsizing, visit ato.gov.au.

Let us help you get it right and sort out the tax and superannuation obligations for your team.

Do Your Independent Contractor Agreements Measure Up?

Contractor Agreements - As a business owner, it's vital that you classify workers correctly to minimise the risk of being penalised later for wrongly classifying contractors when they should be classified as employees.

It’s a common area of concern for business owners who engage contractors. Many Fair Work Ombudsman cases have resulted in severe penalties and back payments imposed for engaging someone as a contractor when they should have been paid as an employee.

What’s Required in Contractor Agreements?

You should have a comprehensive agreement with every independent contractor.

The contract should include:

• Details of the nature of the working relationship to demonstrate that a genuine contractor relationship exists.
• All rights and obligations of both the contractor and the business.
• Terms and conditions of the agreement.
• Whether superannuation applies.
• The main factors used to assess the worker as a contractor such as independence, ability to delegate work, the basis of payment, the use of tools and equipment, the degree of control or the ability to take on other work.
• The date of the next review of the contract.

Many factors are involved in assessing whether a worker is deemed to be an employee or contractor, and the relationship can change over time.

There is no single overriding factor in deciding if a worker is truly an independent contractor. Therefore, each working relationship must be assessed separately and individually.

Time to Upgrade Contractor Agreements

If a lawful agreement clarifies the terms of engagement and addresses all aspects of the working relationship, this will reduce the risk of later being penalised because of wrongly classifying a worker. But for the contract to be relied upon in court, it must address all aspects of the working relationship in enough detail that there is no room for misinterpretation of terms.

Now is a great time to review and upgrade any agreements you have in place with contractors. Do they measure up?

Talk to us about getting reliable agreements in place for all your independent contractors.

Access the ATO Contractor Decision Tool here.

Become a digital business

In the online, connected world that we now live in, it’s important for your business to become a digital business.

Digital technology has revolutionised the options you have available as a small business. There are a wealth of cloud-based solutions and apps to help automate your admin, enhance your productivity, open up your business data and market the company online.

Making the technology work for you

Becoming a digital business isn’t about using technology for tech’s sake. It’s about seeing the huge value and potential of applying digital processes and software tools within the company.

By moving your systems, processes and customer interactions over to digital, your small business can quickly become more streamlined, more efficient and more profitable. And with the ineffective elements of the business removed, you’re ready to grow, scale and expand.

Key benefits of digital transformation include:

Cloud accounting at the heart of the businesss

Cloud accounting moves your bookkeeping and financial management online. This gives you access to your accounts, reporting and key performance indicators (KPIs) through your web browser, on any internet-ready device. You can literally run your finances, invoicing, credit control and bank reconciliation from anywhere with Wi-Fi. And that helps you keep in control of the numbers..

Automation of low-level tasks

The manual tasks involved in company admin begin to eat into your business time. Many digital business tools have elements of automation built in, to help you automate the key time-consuming tasks and become more efficient. Automated bookkeeping, automatic bank reconciliation and automated payment collection all put hours back in to the business and help you do more.

Fintech and payments

Keeping on top of your finances isn’t just about accounting. Financial technology (fintech) tools help you ensure that money is flowing into the business, cashflow is being managed sensibly. And online payments are being made, and collected, automatically – helping to maximise your financial health.

Job management and productivity

Planning and running your operations and project work can be tough. But with software project management and workflow apps connected up to your central system, you’re always on top of the workload and resourcing. Talk to us about which app would work in your business. 

Digital marketing and social media

Most consumers and business customers will begin a search for products/services online. So having a good website, a bold online presence and the right social media channels in place is vital for your sales and marketing strategy. By positioning your brand in the digital space, you make yourself relevant, easy to find and connected to your ideal customer base.

If you’re planning a digital transformation process for your small business, come and talk to us. We’ll help you review your systems and processes, identify your key business needs and recommend the software tools and apps that will build your ideal digital system.

Get in touch to start embracing the digital future.

Business tips: Hiring employees

In business, the people you hire are some of the most important assets in your business.

They’re your trusted workforce, the face of your brand and the people you entrust with growing your business.

Because of this, it’s vital that you choose the right talent, the right personalities and the right mix of people for your team. Making a mistake with your hiring can really hold you back, so be sure to put some real thought into who you need on your team.

Consider which roles you need 

From a staffing point of view, you need to think about what roles will be needed to grow your business and operate effectively.  

Can you do everything yourself and become a real jack-of-all-trades? Or do you need sales people, marketers, operations managers and shop-floor staff to get this thing going?

In an ideal world, you obviously want a big, effective team to run your operations. But payroll costs and your available funding can put a limitation on this.

Think about which roles you REALLY need and whether you can manage with a skeleton crew (but without the need for a ghost pirate ship!) or invest in more people.

Decide whether to outsource or go in-house

Something to consider is whether any of your business positions need to be full-time, in-house employees? Or if some roles can be part-time, or outsourced to freelancers and contractors?

Having full-time employees on the books gives you a permanent resource, with a team who are wholly focused on growing your business.

But employees are costly. Aside from monthly wages, you need to pay for holiday pay, sick pay and a staff pension scheme. A more cost-effective option can be to use freelancers, hiring in talent and resources as and when you need them.

Search your network for talent

Knowing the roles you need is one thing, but actually FINDING the talent is another.

Use your existing business and social networks and put out the word that you’re hiring. Word of mouth can be a great way to find people, but make sure that applicants fit the stated criteria.

Writing short, clear job descriptions for each role is a good way to outline the position, attract the best candidates and filter out the weak applicants.

Using a recruitment agency or a jobs website helps to spread your net wider and also takes some of the admin workload away. Once you have a shortlist of candidates, it’s time to start interviewing.

Check that applicants share your vision and values

A job interview is obviously about more than just running through the skills on a CV.

The successful candidate is going to be working very closely with you, so you need to know that they can do the job but also that they’re a good fit for the team.

Do they share your vision for the product/service and the future of the company?

Do they seem driven, with the right kind of can-do attitude?

Are they engaged by your company values and the WHY behind your business model?

And, vitally, do you get on with them as a person?

Having the best mix of personalities and talent in a team is so important. Getting the mix right creates a tight, well-focused team. Get it wrong and you’re looking at disharmony, a lack of productivity and a team that’s just not going to deliver the energy and value you need as the business owner.

Measure performance and fit

Once you’ve hired the challenges don’t stop.

As you all pull together to grow your business, you’ll need to have ongoing performance reviews. This includes checking in on how the team is performing as a group, whether there are any problems to iron out and how individual employees are tracking against their personal remit, targets and goals.

It’s not an easy ride, but with a positive, well-engaged team behind you, you give your business the best possible chances of success, growth and long-term prosperity.

Talk to us about Payroll Services including PAYG Withholdings, and STP setup. Ensure your staff are paid the correct rates and paid according to the correct hours worked.

Automation can ease your business workload

Small and medium-sized businesses are spending on average 120 hours a year on admin tasks, according to recent research into productivity at UK SMBs.

If your people are spending 120 hours wading through tedious and unproductive admin, that’s bad for the business and for your overall efficiency. Fortunately, technology and software automation can go a long way towards automating the low-level admin tasks.

Better productivity through automation

Automation is an important way to ease your business workload, with a host of different business apps and cloud solutions offering ways to automate your admin.

With ‘smart business tools’ increasing in number and choice, software is utilising automation algorithms, artificial intelligence (AI), machine learning and cognitive solutions to help remove the mundane admin tasks from your workflows.

Core processes that will benefit from automation include:

Automated bookkeeping

Just take a photo of your receipts, expenses and invoices and ‘optical character recognition’ (OCR) technology will digitise the output and pull it through into your accounts software. No data entry, no human error and no lost receipts! We can do the rest to ensure your records are accurate.

Automated credit control 

Chasing up debts and late-paying customers takes time. Automated credit control apps track your debtor numbers and automatically sends out customised chaser emails as soon as an invoice is late. This reduces your credit control time, speeds up cash collection and cuts your aged debtor figure.

Automated payment collection

The easier it is to pay you, the faster your customers will pay. Automated card payments and cloud-based Direct Debit solutions allow you to automatically take payment from a customer as soon as an invoice is due. Some solutions will even automate the invoice matching and bank reconciliation process.

Automated reporting and forecasting 

The better your reporting and business intelligence, the easier it is to make informed decisions about your company strategy. Accounting platforms and fintech tools now offer automatic, real-time reporting and forecasting, giving you access to the important numbers and metrics, fast.

Automated digital marketing

Digital marketing is key to raising your brand’s profile. Marketing platforms offer important time-saving ways to schedule and post social media content, or email automation that sends a pre-programmed cadence of emails to specific target audiences within your wider customer base.

Talk to us about embracing the power of automation

If your admin is starting to hold you back, come and talk to us about how automation can pick up some of the heavy lifting as well as giving you the metrics you need for decision making. We can review you business processes and identify the automation opportunities, helping you choose the best apps to drive your business efficiently.

Contact us to discuss your automation opportunities. 

Scam Alert - Payment re-direction

As a business owner, high on your priority list is to protect your assets, employees, reputation and most importantly your customers.

Unfortunately, in this highly technological advanced world, businesses are more and more vulnerable to the scams which can be presented in many forms and guises. It is the adverse effects from scams which can have a devastating effect on your most valuable assets.

The damage done can be significant to your business, including financial and reputational. The scammers are capable of being manipulative in sophisticated forms without you even realising.

You will have heard of many types of cons over the years, whether it be overpayment scams, or fake directories & advertising scams to phishing, malware and ransomware scams. The business world is full of them and there are more being formed daily.

Let’s explore further into one of these scams and look at ways of protecting your business:

Payment Redirection

How this scam works

Protect Protect Protect

This is one headache that your business can do without!

If you need help setting up these processes, feel free to contact us

Chasing Invoices

When you’re a small business owner, sole trader or freelancer, chasing invoices and asking for payment on overdue invoices can be a delicate matter.

Without an accounts person or department, sometimes you’re trying to secure new work and chase invoices from the same person. That can be an awkward tightrope to walk.

Here are five tips for chasing payments while maintaining customer loyalty:

Automate reminders

Set friendly payment reminders that go out automatically – they tell clients they’re missed a payment without making it personal. It’s like your invoicing platform is giving them a nudge, rather than you doing it yourself. You can sign it off with just your business name, rather than your own.

Find out who’s behind the payments

Is there another person at the business who’s in charge of accounts or payments? Ideally, you want to be selling your services to your usual contact and chasing someone else to pay your invoices.

Enlist help from a friend

If you have a friend who also has a small business, become each other’s accounts support. Set your friend up with an ‘accounts@yourwebsite.com’ address and they can send out email reminders and follow-ups to your clients, or call them about the invoice. Maybe you can do the same for them.

Set expectations when you negotiate the job

Firm and clear payment terms make it easier to get paid faster and keep that cash flowing.

Set out your terms up front – it’s much easier to talk about your payment expectations when you organise the job, rather than once the invoice has been sent.

For persistently slow payers, consider offering an early payment discount or ask for more money upfront for the next job.

Be nice, but firm

There’s no need to be rude or aggressive to your clients when chasing payment; you want to maintain a positive relationship.

However, at some point you need to cut off their credit. Often saying ‘I’m very happy to do that for you, just waiting on payment of that last invoice’ will give them the impetus they need to pay you.

But if they persistently don’t pay, no matter how much you like the client, you’re not providing a free service! Stop working for the client and chase those outstanding invoices more assertively.

If you need help managing your outstanding invoices, get in touch for expert support and guidance.

Basics of business tax

Different business structures pay taxes in different ways, so it's important to have an understanding of the basics.

Although there are many taxes that a business might be affected by, the main ones are:

• goods and services tax
• income tax
• pay as you go withholding tax for employees
• payroll tax
• excise tax

Other taxes that a business could encounter are:

• fringe benefits
• capital gains
• property
• vehicle
• other duties and levies administered by state or local governments

Taxes Paid on the Business Activity Statement

Once your business is registered for the relevant taxes, several are reported and paid as part of the monthly or quarterly activity statement.

• GST is collected from customers and paid to suppliers, and you pay the difference between GST on sales and purchases
• PAYG Withholding for employees or suppliers that don’t provide an Australian Business Number
• PAYG Instalments contribute towards an expected income tax bill
• Other taxes paid on the BAS (if applicable) are fringe benefits instalments, fuel tax credits, wine equalisation tax and luxury car tax

Taxes and Other Fees Paid to State Revenue Offices

Some business taxes are paid directly to the state revenue office, such as land tax for property purchases and payroll tax once the state threshold of reportable wages is reached. Other common government duties include stamp duty on property transfers and land tax.

Income Tax for Businesses

Income tax is calculated after the end of the financial year, taking into account any PAYG instalments already paid.

Tax deductions for business expenses reduce your taxable income and, therefore, your tax bill.

If financial gain is made on the disposal of assets, such as property or shares, capital gains tax is paid on the amount of financial gain and is paid as part of income tax.

Income tax for business is calculated differently according to the type of entity.

Small Business Tax Concessions

Your tax agent can make sure you are claiming all the small business tax benefits that you are allowed through concessions that reduce the amount of tax liability.

For example, there are specific concessions for asset write-off, primary producers, fringe benefits or start-up expenses. Concessions also apply in some situations to reduce the amount of capital gains tax payable.

Thinking of starting or changing your business?

Talk to us about adding or cancelling tax registrations, concessions and planning for the various taxes your business will need to manage.

Making sure your business finances are in order

Getting your head around the basics of bookkeeping, accounting and good financial practice may not come naturally to all business owners. But the better you understand the numbers, the more control you'll have over your business and your decision-making.

To get you started, here’s a rundown of some of the main financial terms and how they apply to the financial management of your business.

Revenue and money coming into the business

Most of us understand that revenue is the income you generate through your sales.

If you multiply your average sale price by the number of units sold, this is the top level number you get. It’s a gross figure (i.e. before any deductions) and gives you a clear idea of how much money the business is generating through its sales activity.

Revenue can come from various sources, and each income source is known as a ‘revenue stream’.

Revenue streams could include product sales, income from services you provide, income from intellectual property you own (like patents) or income from assets the business owns, like property you rent out at a profit.

Having several revenue streams is a good idea, as it spreads your income generation across multiple areas and reduces the risk of one revenue stream drying up.

Expenditure and money going out of the business

Expenditure refers to any payments you make (either in cash or credit) against the purchase of goods and/or services.

In a nutshell, expenditure is the money that’s going OUT of the business, so it’s important to have a good grip on these costs and to make sure you’re not spending any more money than you need to.

Costs that would fall under expenses include your supplier bills, your payroll expenses, your operational overheads and the costs of any raw materials and goods you buy to keep the business running.

The less you pay out in these expenses and overheads, the more of your revenue will end up as profit – as we’ll see in the next section.

Profit and loss (P&L)

Your profit and loss statement (usually referred to as your P&L) is an incredibly important financial report to get your head around. 

The P&L summarises your revenues and expenditure over the course of a period – usually for the month, quarter or year that’s just ended – and gives you a breakdown of the profits and losses the business made during that period.

If you make more in sales revenues than you spend in outgoing expenses, you make a profit (and that’s vital to your success).

For any business to be financially viable, your financial model MUST be able to generate profit.

Without profits, the business can’t make money, you can’t reinvest back into the company to drive growth, and you (personally) won’t get paid anything.

Cashflow statements and positive cashflow

Your cashflow statement is another vital tool in your accounting toolbox. 

To keep the lights on in the business, you need enough available cash to cover your everyday expenses. Your cashflow statement shows you the cash inflows (money coming into the business from revenues etc.) alongside the cash outflows (payments to suppliers, or operational overheads etc).

For the business to have enough cash in the pot, your cash inflows MUST outweigh your cash outflows. This is called being in a ‘positive cashflow position’ and it’s a level of financial health that every startup should aim for.

By tracking inflows and outflows, and projecting them forwards in time to create forecasts, you can make sure there’s always available cash in the business.

Improving your understanding of the numbers

It takes time to pick up the financial jargon and accounting terms that will help you understand your accounts.

But don’t despair. As your business journey evolves you’ll gradually begin to get your head around the important business finances, numbers, metrics and reports.

Other important finance terms to understand include

• Turnover = the total sales revenue made in a period. It’s also sometimes called ‘gross revenue’, as it’s the number prior to any deductions being made.
• Assets = the things you own in the business, like equipment, property or cash etc.
• Liabilities = the things you owe to other people, like bills, debts and loan repayments.
• Balance sheet = a snapshot of your assets and liabilities on a given date.
• Working capital = your current assets minus your liabilities. In common usage, it’s the capital (money) you have in the business to keep the company operational and trading.
• Funding = bringing additional capital into the business, usually in the form of business finance products like loans, or through private investment from outside sources.
• Credit score = a rating given to the financial health and risk level of the business. The bigger the score, the lower the risk – and the better your access to funding.

If you’re planning for your business, get in touch. We’ll help you set up the ideal accounting system, so you’re in complete control of your finances.