Posts Categorized: Business improvement & efficiency

18 Minutes – Get The Right Things Done

Over the weekend, I read Peter Bregman’s 18 Minutes (Find Your Focus, Master Distraction, Get The Right Things Done).  Bregman recommends that you should ask yourself three questions at the end of each day.

So what are those three questions:-

  1. How did the day go?
  2. What did I learn today?
  3. Whom did I interact with?

Bregman explore these three questions in a chapter titled It’s Amazing What you Find When You Look.  He suggests that at the end of the working day, take five minutes to review what went well and what didn’t, check what happened after reviewing your calendar and ensure tomorrow is more productive.

So what else does one need to do in the other 13 minutes? I will leave you to read the book; I highly recommend it to you.

At MRS, we will spend today planning for your success tomorrow.

Stay Smart Online Week

Last week, the Australian government, together with some 1,400 partners, ran Stay Smart Online week. The initiative aims at encouraging and educating both individuals and businesses to adopt safe online practices.

You find it at https://www.staysmartonline.gov.au/get-involved/stay-smart-online-week.

This page will take you to guidebooks on:-

  • How to protect yourself in 8 steps.
  • How to protect your business in 5 minutes.

There are a number of other guides and tools including helping the elderly and keeping kids safe.

With cyber crime on the rise, and in particular email scams and ransomware, we encourage you read through the web site. Prevention is better than cure!

At MRS, we will spend today planning for your success tomorrow.

Small business tax breaks

Now that a small business is defined by the ATO as one with group turnover under $10,000,000, there are many more businesses that can avail themselves of the many and valuable small business tax breaks.

The tax breaks can be summarised as follows:-

  • A company tax rate of 27.5%. Please note that companies with non-business income (that is “passive” income from investments, rents and trust distributions) will continue to pay company tax at 30%. Please also note though that small businesses will only be able to frank dividends at 27.5% so any tax saving is short lived if most profits are paid out as dividends.
  • The Small Business Income Tax Offset of up to $1,000 for non-corporate businesses (that is sole traders or those who receive a share of partnership or trust business income).
  • The choice to use the simplified depreciation rules. This is important for those businesses who wish to purchase assets costing less than $20,000 (ex GST) before July 2018. Please see our past blogs for further details.
  • The choice to use a simplified trading stock rules under which one can estimate their stock if they believe it is not changed by more than $5,000 (which probably means you need to do a stock take anyway).
  • The ability to claim prepayments (such as insurance and prepayments rents & interest).
  • 100% write-off of start-up expenses.
  • The ability to elect to pay GST on a cash basis.
  • The option to pay fixed dollar instalment amounts of GST.
  • The option to pay fixed dollar amounts of PAYG Instalments.
  • Access to the FBT car parking exemption.
  • The ability to provide employees with multiple work related portable electronic devices (lap-tops, tablets, calculators, GPS navigation receivers and mobiles) within the one year and free of FBT.
  • The ability to use the free ATO Small Business Superannuation Clearing House.
  • The ability to restructure under the new small business CGT restructure rollover relief provisions. Please note though that the small business CGT concessions are still only available to those businesses with group turnover under $2,000,000 and/or net asset value under $6,000,000.

So what does this mean to you?

It depends on what you are trying to achieve. There are occasions where we have and haven’t used these rules depending on the short and/or long-term benefits to our clients.  Grabbing at shiny red apples hanging on a tree is no substitute for proper planning.  We address these opportunities throughout the year, particularly so when undertaking pre year end tax planning review of our clients.

If this is all news to you then you should be looking  for a new accountant.  We welcome your call.

At MRS, we will spend today planning for your success tomorrow.

Getting your stocktake right

Getting your stocktake right is critical in order to understand how your business is performing. In order to be able to report correctly and properly understand how your business is performing you need to:-

  • Count your stock accurately and

  • Value your stock correctly and

  • Have your cost of goods sold section properly include all those expenses directly related to producing the goods you sell

Get any of these wrong and you won’t know where you are at (and heading). It is not uncommon to hear of small businesses who have taken on a large contract at a discounted price only to make less profit than they were before or even go out of business.  Our clients don’t have this problem as we focus on ensuring their accounting system correctly states their true cost of goods sold.  Consequently, we can then show our clients from our powerful analysis tools such things as how fast they can grow before running of cash and how much more cash will sit in the bank account if they reduce their average stock holding by say 10 days.

We issue our clients with a stock take checklist. Please ask us for a free copy.

At MRS, we will spend today planning for your success tomorrow.

Questions for all business owners

We all know that the world is changing at an accelerating rate and becoming more online. At a conference last week, I saw a great example of this as evidenced by live numbers at http://www.internetlivestats.com/.  Click on the link and look at the numbers – you will be amazed.  So the questions for all business owners are, how are you changing your business to remain relevant and to maximise the opportunities that are now available?

The sad fact is that for most businesses, the answer is nothing. It is not only true in adopting new technologies that improve operational processes, but it is particularly true in respect of marketing (where technology now means that marketing is now push marketing not pull marketing).

To help you understand the tools you can use to improve your processes, we are looking at running a seminar on modern technologies. Please register your interest by emailing seminars@mrsaccountants.com.au

At MRS, we will spend today planning for your success tomorrow.

The top 10 benefits of cloud accounting

The cloud is still a widely misunderstood tool. This is a pity as there are compelling reasons as to why your accounting file should be in the cloud.

Here are our top 10 benefits of using cloud accounting:-

  1. You can access your numbers anytime from anywhere and do so easily. So can we.
    So can your bookkeeper.
    So can someone else in another store.
    So can anyone else that you need or wish to give access to.
    Access can be granted with differing rights to access certain areas and perform various functions (such as access payroll records and generate a profit and loss). 
  2. You can issue invoices from anywhere at anytime, even from a tablet or mobile.  No more waiting until you get back to the office.  You can even speed up your cash flow by taking payments on the go. 
  3. The four big players in this space, Xero, QuickBooks Online, MYOB and Reckon Hosted, all include the option to automatically upload bank transactions.  You don’t have to, but it does save time – so you either pay your bookkeeper less or spend less time yourself bent over the keyboard. 
  4. With automatic bank feeds, it becomes much easier to keep your numbers up-to-date.  Remember that old saying – what you can measure you can manage (and by extension, what you can manage you can control and what you can control gets done).  You will have the power to know what is happening in your business at all times.  The days of business owners being in the dark as to their true situation until a Tax Return is prepared some time after 30th June should, finally, be a thing of the past.

  5. As multiple people can access the same file, gone will be the common problem of the client, the bookkeeper and the accountant all wanting to work on the file at the same time yet only one having the current file at any one time.  No more re-entering invoices, no more incorrect restores, no more avoidable time wasting, no more wasted and costly time in delivering or collecting a back-up of a desktop file and other such annoying problems. 
  6. It is sometimes months after year end before we finalise a client’s financials (we only have two arms so we can’t finalise them all in July).  Cloud accounting packages allow us to access a client file at all times.  The closer we are to the time of each transaction, the greater value we can be to our clients. 
  7. You don’t have to load upgrades to the software – it is done for you. 
  8. No more version control problems between a client and their accountant. 
  9. We have for some years used programs such as LogMeIn to access clients’ computers remotely whether that be to obtain reports, fix problems, etc.  Those remote access programs are comparatively cumbersome.  With cloud based programs, we can just login once you have set us up as a user.  We can then answer your queries far more quickly and efficiently. 
  10. When up and running and used properly, cloud accounting should reduce accounting fees and, more importantly, enable us to provide a better service.

 If you are not yet using cloud accounting, then we welcome the opportunity to discuss your needs and discussing solutions. We are software agnostic – we don’t push only one program as some accountants do as we recognise that one program does not suit all needs.  We recommend what is best for you.  Call us for a free initial meeting to discuss your business and its needs.

At MRS, we will spend today planning for your success tomorrow.

Positive cash flow is king

It’s not all about profit. Positive cash flow is king.  There are many businesses that have failed which have been profitable and even had a great good or service.  Yet that doesn’t translate to survival if cash flow is negative.

Various studies of small business failure all list poor or inadequate cash flow as the number reason for small business failure – and do so by a long way with most surveys attributing this as the main reason in anywhere from 70% to 90% of cases.

One should never go into business without understanding such things as:-

  • How big is the market.
  • Who is the competition.
  • What are the direct costs of producing the good or service.
  • What are the other costs of running the business.
  • If you need staff, where are you going to find them and how are you going to train them.
  • How much cash do you need to get started and then grow – and how long before you can repay yourself.
  • If you need bank finance, what are the measures by which they are going to approve your loan application both initially and on-going.

This is where planning and budgeting are so important. You will be forced to address all these issues and more.  You will need to assess priorities to various tasks and needs.  Planning and budgeting provide clarity and removes foggy uncertainty and fear.

Too many small businesses either fail to undertake any of these tasks, or may be at best scratch out some kind of profit and loss statement. Sadly most people plan their holidays better than the very thing that will generate income, support their family and pre-occupy most of their waking hours. We have planning templates as well as specialised software which can generate not only a P&L but a cash flow, balance sheet and a funds statement (showing where money will come from and where it will go).  We can then play with various high and low forecasts.  We can then go and show you the measures by which a bank may finance you and assess you in their annual reviews (bankers love our reports).  This includes giving you a dashboard to regularly check your progress and performance.

We welcome the opportunity to meet with you in a free one hour meeting to understand your business and to explain they ways we can help.

At MRS, we will spend today planning for your success tomorrow.

Why is planning so important?

Why is planning so important?  No doubt you had numerous ideas over the summer break on ways you can improve your business in 2017.  Don’t let that impetus and initiative slip away!  The medium by which to bring those thoughts together and generate results is to bring everything together in a business plan.

Planning requires thought, analysis and decisions to be made in context of other factors and considerations (and not in isolation).  Planning requires clear thinking, rather than knee-jerk reaction, and forces you to take a breath.  It is no coincidence that those businesses that plan tend to be more successful.  It is that focus that also ensures that key people work on the key tasks and aren’t consumed by dealing with what were really unimportant but neglected matters that have become urgent.

Some think it requires you to lock yourself away for days on end.  It doesn’t.  It will however take time as will the on-going reviews of performance.  Planning gives you a roadmap and series of goals to measure yourself against.  It also gives not clarity but also focus to your employees.  Don’t lose those ideas you had!  Set aside time to plan and put it into writing.

A good plan is like a road map: it shows the final destination and usually the best way to get there (H J Judd)

At MRS, we will spend today planning for your success tomorrow.

 

 

Single Touch Payroll is coming

Single Touch Payroll is coming. Single Touch Payroll (STP) will require all employers to report to the ATO at the time of every pay how much they are paying and to whom.  No more advising the total of all wages at W1 and tax thereon at W2 on the following activity statement (with the detail only being provided to the ATO with the supply of the PAYG Payment Summaries after the end of the year).

A test program is underway. It will become optional from July 2017 and mandatory for all employers with 20 or more employees from July 2018.  Once the systems is fully up and running the need for PAYG Payment Summaries (group certificates) will be dropped as the ATO will know exactly how much has been paid as of an employee’s last pay.  Employees will be able go into their MyGov account and see these details – as well as the super that is to be paid.

STP will also allow employers to provide employers with TFN Declarations and Super Choice forms.

Thankfully it was announced in September that the proposed requirement for employers to pay the PAYG WH to the ATO at the time employers are paid has been dropped – exactly how cashed up did they think the typical small & medium sized business is?

So if you don’t have a complying and/or efficient payroll system, now is the time to explore your options. Speak to us about your options and what you need to do.

At MRS, we will spend today planning for your success tomorrow.

ATO’s small business benchmarks

The ATO’s small business benchmarks have recently been updated for the 2014 financial year. They cover over 100 industries and in particular the sort of cash industries the ATO love to audit.

The ATO use this as one of their main tools for identifying businesses to audit and actively select anyone well outside their norms. Please refer to the June 2012, 2013 and 2014 edition of Tips and Traps to see how the ATO has assessed substantial income tax and GST shortfalls as well as hefty interest charges and penalties.  They are eye watering amounts.

Their data is split into three groups based off turnover. They also have some regional and metropolitan ratios.

If the ATO has a small business benchmark for your business then we will discuss it with you in your annual general meeting. If you like to learn more though in the meantime you can go to:-

Before closing I must though express a personal view on benchmarks. They can be a great tool but must be used with care as:-

  • You may not be comparing apples with apples. Even if the right industry has been selected there can be natural differences between say a newly established business and one establish some time ago.
  • There is great danger in comparing oneself to a norm. It is not the average you should be comparing yourself to but the upper quartile.

I also wish to add that we are trialling some non-ATO industry benchmark software of which you will hear more later.

At MRS, we will spend today planning for your success tomorrow.