The benefits of engaging a BAS Agent for your business

Do you spend too much time on your accounts? It could be time to engage the services of a BAS agent to help you with bookkeeping and ATO reporting.

Working with a BAS agent can benefit your business more than you may realise! We’d love to talk about how we can help save you time and money.

Many business owners starting out try to save on costs by doing their own bookkeeping, but this is one of the first tasks you can outsource to give yourself time and save money. If you can work on your business to generate more sales, why spend that valuable time on administration and accounts management?

A BAS agent is a registered tax professional who can provide a greater variety of services than a bookkeeper. BAS agents are trained in the complexities of GST and other laws – meaning you don't have to become an expert in areas that are not your passion or skillset.

What a BAS Agent can do for your business

Once the agent has become familiar with your business operations, they can not only take care of the transactional recording, financial reporting and compliance requirements, but they can assist you in better understanding your day-to-day business performance. A

BAS agent can become a trusted member of your management team along with your tax agent, providing accurate and timely financial advice and insights to help you make better business decisions and plan for long-term success.

BAS Services

A BAS agent can ascertain and advise the business owner on correct liability amounts and submit statutory reports to the ATO and other agencies on behalf of the owner.

BAS provisions include determining GST liabilities, PAYG withholding obligations, employee superannuation contributions, and submitting taxable payments reports and Single Touch Payroll.

What makes a great BAS Agent?

Professional BAS agents keep up with ongoing education and development, use industry best practices, take the time to ask questions and understand your organisation, and do their best to assist and advise your business.

They will work proactively to support the business by ensuring the integrity of the accounts and providing accurate financial reports. They will be able to discuss your business’s financial health, assess operations and systems, and give you valuable advice.

If you think it’s time to engage a professional BAS agent, get in touch and let’s talk about how this can benefit your business and save you time and money.

Employee Super changes from 1 November

From 1st November, if you have any new employees start work with you and they don’t nominate a specific superannuation fund, you may need to request their ‘stapled super fund’ details from the ATO.

We can help you with this.

Choosing a super fund

Most employees are eligible to choose a super fund when starting a new job. However, sometimes an employee might not make a choice.

For example, they might omit to complete the form, or they might not know the details of their existing fund or whether they actually have one.

This situation could leave the employer at risk of not meeting their superannuation guarantee obligations and incurring penalties.

Employers can request an employee’s ‘stapled fund’ (a fund linked to an individual) details from the ATO, starting from 1st November 2021.

What employers need to do from 1st November 

There are 3 steps.

1. Offer eligible employees and contractors a choice

When a new employee starts work, they can either specify a fund or decide to go with your default fund. Either way, you have an obligation to offer them a choice and pay super contributions into their chosen fund.

2. If no choice is taken, request details of stapled fund from the ATO

If the employee doesn’t make a choice. You can lodge a request for details of their stapled fund through ATO online services. You will need to provide the employee’s TFN and personal details.

3. Pay super contributions into the stapled fund

Where the ATO provides details of a stapled fund you must pay super guarantee contributions into it.

Essentially, you must take all steps you can to allow employees choice of super fund. But in cases where all avenues are exhausted you can use your default fund.

As your BAS Agent, we can lodge ATO requests for stapled funds on your behalf, including bulk requests where there are 100 or more new employees.

Get in touch. We’re here to help!

ATO Line of credit ending

As new reporting powers come into play, businesses are being warned against using the ATO as an alternative line of credit.

Debt Reporting Powers

In 2019, the ATO was afforded new debt reporting powers. While this took a backseat to the Covid-19 pandemic, the ATO is now cracking down on outstanding tax debt. 

Businesses without a payment plan, that are more than 90 days in arrears, and who owe more than $100,000 in tax are more likely to be reported to credit agencies by the ATO.

Impact on credit rating

In the past, business owners have sometimes used the ATO like a ‘line of credit’ by not paying their ATO commitments on time.

Taking this road is much more likely to have an adverse impact on your credit ratings and credit insurance limits. This, in turn, makes it more difficult to maintain or extend credit terms with suppliers.

Therefore, it's important to maintain a high level of communication with your creditors. 

Staying on the front foot

As business owners, if you owe tax, it's vital that you stay on the front foot with this ATO crackdown. We suggest you seek the advice of your BAS agent.

First Class Accounts Ovens and Murray, as your BAS Agent, are able to advocate on your behalf to deal with the ATO.

As Busy01 Consulting, we can also to assist with:

• preparing a business plan
• management advice
• cash-flow planning and projection
• systems development
• business expansion
• budget development
• trading-structure planning.

Get in touch to discuss which options are best for your business. 

Direct Debits and Online Payments

Do You Have Direct Debits and Online Payments Set Up for Your Business?

Making it easy for your customers to pay you is vital to business success. Getting direct debits and alternative payment methods linked to your business is so easy these days there's no excuse not to give your customers multiple ways of making payment.

Many service-based businesses choose direct debit arrangements with their clients to avoid late payment. If you’re often chasing overdue payments, consider implementing direct debit arrangements to reduce your administration time.

If you’re already using online accounting software, check the add-on solutions and choose one that integrates with your accounts. This means that the payment platform information feeds directly into your accounting software to be easily matched to customer transactions.

Make it Easy

You probably already have bank transfer information set up, but adding several other methods such as PayPal, debit cards, and credit cards allows customers to choose the method most convenient for them at the time. Many customers appreciate the automation and simplicity of direct debits.

Make sure your payment terms and conditions are clear on your website and invoices and don't forget to include all your chosen payment methods for customers!

Worried About Costly Fees?

You have the option to choose whether you will absorb the cost of the payment gateway processing fees or whether you will add the cost to your invoice and charge the clients extra. Your accounting software will then allocate the funds accordingly to invoice payment and fees received.

Better Transaction Recording

When you integrate direct debits and online payment methods with your accounting system, you dramatically reduce errors in recording customer payments – which means less time spent on your accounts!

Not Sure Where to Start?

If you’d like to make it easier for customers to pay you, talk to us about which solutions are best for your business. We can discuss which platforms have the best and most secure integrations with the accounting software you use.

We’ll help streamline your payment systems.

Could a 4-day week be a good fit for your team?

The pandemic has acted as an impetus for reflection, with many workers and business people reassessing the hours they work and the priority that work has in their lives.

A survey from Slack showed that 72% of respondents would prefer a hybrid approach to work – i.e. a mix of remote and office work. But there’s also a growing belief that we should be working fewer hours too and aiming for a ‘4-day week’. This would mean less time in the workplace and more time with our friends and families, with a greater level of underlying happiness as a result.

But do your people want to work fewer hours? Is the company ready to cope with a reduced staff on hand to get the job done? And what is the overall impact of working a shorter week?

The advantages of a 4-day week

The suggestion of a 4-day week is something that's been around for a while, but increasingly there's a ground-swell of support for the idea of working shorter hours and achieving a better work/life balance as a result.

In Iceland, 2,500 workers (1% of the total Icelandic population) took part in a trial of the 4-day week between 2015-2019. Most workers moved from a 40-hour week to a 35 or 36-hour week, giving them one extra day to focus on things outside of the workplace. The trail was a big success and has resulted in 86% of Iceland’s workforce now working reduced hours.

As a business owner, you’re no doubt already thinking ‘But how can my business still function if my employees are working less hours and are being less productive?’. But the interesting outcome was that productivity wasn’t negatively affected by this move to reduced hours.

So, could a 4-day week actually be a good fit for your team?

Your employees are just as productive

A 4-day week was trialled by New Zealand company Perpetual Guardian and the results were surprising. After spending two months testing a 20% shorter week, they found that their employees were ‘happier, more focused, and producing the same amount of work’. The Icelandic trial found the same result, that workers were equally as productive, with no drops in output, when working for only 4 days in the week.

Your team still earns the same money

One potential worry for your employees is a drop in pay if they are working less hours. But under a 4-day work scheme, you continue to pay your team the same wages or salaries. So, although your employees are working less hours, there’s no drop in their income and no resulting money worries.

Your team is happier and more engaged 

Results of 4-day week trials globally have shown that employees on reduced hours are happier, more engaged and more energised for their work. So, rather than pushing your team to work a 40+ hour week and risking fatigue, burnout and disengagement, you ease off on the throttle. This give your employees a less pressurised work environment and a better level of happiness. And, as we know, a happy workforce is also a productive workforce.

A more sustainable business model

With your people spending less time in the office, factory or workspace, your business will be using fewer resources – and having less of an impact on the planet. Your utility bills will reduce, you’ll need fewer office supplies and your people won’t be commuting as frequently – all of which is great for your carbon footprint and the overall sustainability of your business.

Talk to us about the financial impact of a 4-day week.

Adopting a 4-day week does have a range of different benefits for your employees. And creating a happy, productive and engaged workforce is always a good thing to achieve.

If you’re concerned about the financial impact of a 4-day week, come and talk to us. We can look at your sales and revenue figures, alongside your staff utilisation numbers, to show you how your margins can remain the same (or even higher) by adopting a reduced working week.

Single Touch Payroll Phase 2 Expansion is Nearly Here!

The expanded Single Touch Payroll (STP) Phase 2 is due to start on 1 January 2022.

However, the ATO has recently announced that there will be some flexibility with the reporting start date being allowed up to 1 March 2022 if the business is not ready by 1 January.

Businesses must now report all employees via STP. Plus, concessional reporting options are no longer available unless the employer has extraordinary circumstances.

It's important to note that employers should be reporting STP to the ATO on the day they pay employees.

What’s New with the Expanded Phase 2?

The STP Phase 2 report includes extra fields to allow for more detailed payroll information. The additional details enable the data to be reported to multiple government agencies using standard payroll categories.

This means the government agencies receive accurate data directly from the employer without extra forms or time-consuming administration.

STP Phase 2 Improvements

• More income types and related special tax treatment.
• Reporting gross pay in separate elements such as bonus, commission or overtime.
• New employee tax file number declarations lodged directly with the ATO.
• Employee termination information.
• Clearer superannuation and lump sum payment reporting.
• Easier for employees at tax time and when dealing with government agencies.
• Better matching employer payroll data, employee tax return information, government agency payments and business activity statements.

The main payroll software providers are now bringing in phase 2 reporting categories, and in some cases, the changes have already happened in the background.

If you’re not already using an STP enabled payroll product, or you want to upgrade your software, talk to us about implementing a solution to make STP reporting quick and easy.

We can set you up with the right software or submit all the reports on your behalf.

Keeping debt low

Credit control: Having a large amount of debt in your business is bad for cashflow, weakens your overall financial health and brings down your credit score as a business.

So when customers don’t pay on time, that ‘aged debt’ is bad news for your finances. Aged debt can begin to stack up, adding to your liabilities and reducing the health of your overall balance sheet. So, it’s important to tackle late payment head on.

Get effective with your credit control

Being proactive with your debt management helps you speed up payment, reduce your debtor days and rein in your overall debt as a business

To improve the efficiency of your credit control:

• Make your payment terms clear – state your payment terms on all invoices and create a policy that’s part of the terms & conditions that customers sign up to.
• Run regular debtor reports – check your list of late invoices to see which customers are the late payers, and where the big debts are that need to be collected.
• Be proactive in chasing late payment – don’t be shy about asking a customer to pay their bill. Set up notifications and schedules to remind yourself to chase late-payers.
• Automate your credit control tasks – cloud accounting platforms have built-in tools or automated credit control integrations that can automatically chase your late-paying customers as soon as an invoice is overdue.

Talk to us about enhancing your credit control

If late payment and aged debt is weighing heavily on your balance sheet, we’ll help you set up the debtor reports and credit control processes needed to reduce this debt.

Get in touch to improve your credit control.

Streamline your business administration with digital record keeping

Good record keeping is the mainstay of accounts management. It assists you to both meet your compliance obligations and provide verification for all your business transactions.

The Government requires that relevant records exist to support all business transactions – purchases, sales, payroll, and other business matters such as loans or foreign currency dealings. It is a business owner’s responsibility to maintain and store accurate records for all financial transactions.

Did you know that you are allowed to store all business records digitally? This is both more efficient and sustainable than having to keep years’ worth of paper records at your office.

The most important thing to take care of if you are moving to electronic record keeping is the security of your information.

Using cloud accounting platforms, such as Xero, with add-on apps and systematic electronic record keeping makes it so much easier to run your business. 

This is because you will not waste time trying to find documents when you need them; whether that’s for yourself, your bookkeeper or your tax agent.

Most government departments allow business records to be either in paper or digital format. The legal requirements for record keeping are the same, regardless of format.

All records must be:

• True and correct
• Unaltered once stored
• In English and legible
• Stored in a secure system, whether physical or digital
• Easily accessible if required
• Held securely for the statutory five to seven years, depending on the type of record.

For best protection, store records both locally on your business computers and secure external online storage. This makes the records easily accessible from anywhere at any time.

Always take care of who has what level of access to your documents and manage user access accordingly.

If you need help understanding which apps will work with your business systems, we'd love to hear from you.

Cost of Sales Affecting Gross Profit

Do you know how much it costs you to produce each product or service in your range?

The better you can understand this cost of sales – or cost of goods sold (COGS), as it’s more commonly known – the more ability you have to control your company’s profitability. When you know your COGS, you can set the right price point, control your profit margins and ensure that you’re maximising your gross profit.

But to do this, you need to understand COGS and how it impacts on your financial management.

Understanding your Cost of Sales

To take one of your company’s products or services from inception to delivery, you will incur a number of costs.

For example, if you’re a manufacturing business, these costs might include buying in raw materials, direct labour costs, the overheads for running the machinery in your factory, the costs of delivering the products and the sales and marketing expenses needed to sell the product to your target customers.

For you to manufacture a finished product and to generate a sale, all these costs are a necessary part of the process. They’re the direct costs of producing your goods for sale.

You calculate your COGS number for the period by looking at the value of your opening stock (or inventory), adding the cost you’ve incurred to produce the goods and then subtracting the value of the closing stock balance.

The COGS formula looks like this:

Opening Stock + Purchases - Closing Stock = COGS

So, if you started with an inventory of $10,000, this is how you’d calculate your COGS:

• Opening Stock: $10,000
• Purchases: $25,000
• Closing Stock: $8,000
• COGS: $27,000

Reducing your COGS to boost gross profits

The more sales you make at a given price, the higher your revenue (income) will be. Deducting your COGS number from your revenue figure gives you your gross profit – and gross profit is a key metric for tracking the health and profitability of your business.

A high COGS number reduces the size of your profit margin. And, in turn, a small margin will start to have a negative impact on your gross profit. Being able to control and manage your COGS, and its impact on your gross profit, is a vital skill for any product-based business.

Here are some ideas for improving the profit impact of your COGS:

Reduce your supplier costs

If you can reduce the size of the purchases made to produce your goods, that means less expenditure and less impact on your profit margins. Try shopping around for cheaper suppliers, or negotiating better prices with your existing suppliers to bring down costs.

Streamline your production process

The more complex your production process is, the more overheads and production expenses there will be. Taking a lean approach helps you to continually evolve your processes and remove the extraneous elements – cutting costs while still delivering a quality product.

Increase your prices to boost your margins

If your COGS number is eating into your profit margin, one way to resolve this is to increase your price point. This will help to increase income and boost your margin but does require caution. If prices get too high, this can damage existing customer relationships and make you uncompetitive in the market – so think carefully about any price increases before taking action.

Talk to us about improving your gross profit.

If you want to boost your gross profit and get COGS under control, come and have a chat with us. We’ll look over your expenses and overheads, and will look for the opportunities to reduce your goods-related purchases and push for a better profit margin on your products.