⏰⏰⏰ The ugly truth about TIMESHEETS – what old school accountants don’t want you to know about how they charge when they bill you by the hour ??
You may not realise this but ‘Old School’ Accountants charge by the minute.
They are driven by timesheets.
What’s the problem with your accountant charging you using timesheets?
The problem is this…
If the accountant wanted to make more money out of you, what does he need to do?
“Take longer,” you say?
And you would be correct … he could take longer.
But the ugly reality that I’ve seen is this –
“an accountant who does timesheets could either take longer to make more money out of you, or he could just “SAY” he took longer.”
It’s like a dirty Donald Trump locker room secret that most accountants don’t want you to know about – a practice called “TIMESHEET PADDING.”
I’m guilty. I’ve fabricated some pretty spectacular timesheets in my time.
But I was expected to by my employer in order to ‘meet budget’.
That’s why I went out on my own to start INSPIRE CA and why we price our jobs UPFRONT and GUARANTEE that your investment in our fees will pay for themselves many times over in tax saved.
So next time you receive a bill from your Accountant ask him or her if they use timesheets to charge and if instead, they could move you to a fixed price or upfront fee so that you know exactly how much your bill will be.
Got a burning question about using Business Structures to save tax and create a family vault?
Book in, to TEST DRIVE AN ACCOUNTANT – a 15 min rapid fire Q & A session with an Inspirational Accountant.
Are Coffee Meetings Tax Deductible?
Ever wondered if coffee meetings are tax deductible?
Anyone who knows me, knows that I’m a big coffee freak. I have about 3 or 4 cappuccinos every day. My favourite coffee shop is Bellissimo. You’ve got to try it. It’s around the corner from Inspire and there’s also one around one from my house. I get it everywhere.
I was down there meeting with a prospective client the other day. I shouted the coffees, of course. I went to pay for the coffees and the kind girl behind the desk asked me, “Would you like a tax invoice?” It made me think, why would I need a tax invoice? Are coffee meetings tax deductible? So I went back to Inspire and asked the accountants this very question:
“Are coffee meetings tax deductible? What about other meetings that include food, are they tax deductible too?”
Here’s what they told me:
You can claim meals while you’re traveling overnight.
If you’re an employee going off to a conference, and you’re away from your usual home, then you can claim that meal.
There’s guidance from the ATO, but budget for about a hundred dollars per night. That means you might be able to go to the coffee club and grab a Bolognese, but I wouldn’t really be going to Jamie’s Italian and getting a full course meal.
You can claim meals supplies as a working lunch.
Say you got a team, this happens quite regularly during tax time, we’re really busy and we tend to work late. We go out and buy Domino’s. That’s fine because that’s all part of keeping the progress going, with regards to our work. If it’s related to our team being able to continue working, then that’s okay.
You can claim meals supplied from an in-house canteen or café.
I know this really cool engineering business in West End, who have a chef in-house and they supply meals to their team, throughout the day. What a great place to work? These items would be tax deductible and exempt of FBT.
You can claim snacks on the road, while you’re going as a business owner.
As a business owner, you might be out and about, meeting with clients throughout the day. Grabbing a coffee and a muffin, here and there, while you’re doing your day-to-day work is A-okay. Again, you’ve got to be reasonable. The ATO isn’t stupid. If you’re putting through 7-course at a gas station lunches, instead of a coffee here and a muffin, it’s probably not going to go down so well.
So there you have it! The 4 rules, with regards to how to make coffee meetings and meals tax deductible.
To conclude, My advice to you, as a fellow business owner is to:
- Focus on whatever investment you make into your business, whether it’s a coffee meeting here or whether it’s a Facebook ad there.
2. Ask yourself the question, ‘What is the return on investment you’re going to get from that?’ I always try to aim for 5 to 20 times our way. This is the focus point for you as a business owner, if it turns out to be tax deductible as a result, well bonus. If it isn’t, move on. There’s no point in trying to spend an hour trying to make a 20 cent tax savings on an orange mocha Frappuccino that you had on the weekend than risk that concern and anxiety that might come from being audited.
3. And most importantly, focus on the biggest bang for your buck!
Got a burning question about Tax, Your Accountant or Business Structures that can save you even more?
Book in to TEST DRIVE AN ACCOUNTANT – a 15 min rapid fire Q & A session with an Inspirational Accountant.
Where to legally store your excess profits, so the tax man doesn’t take half. (HINT: It’s not in Panama!) ???
Imagine you’ve got an amazing business that is trading through a Trust.
You take out some profit to feed yourself, feed your family, put the kids in school and live comfortably.
But you still have some excess profit left over!
If you take it out, you’ll have to pay up to 49 percent tax.
What do you do?
Now the strategy here is actually to set up a company.
The purpose of this company is to receive a distribution from your business.
It’s a distribution of profits of your business.
So here’s where the tax savings come in …
Individuals pay up to 49 percent tax, but companies when they’re receiving a distribution from a trust, they only pay 30 percent tax.
So paying that profit to a company instead of an individual will save you 19% tax – 49% minus 30%.
Important: You can’t just do this distribution ‘on paper’.
The cash must go from your business into your company and into the company bank account.
Then you can use that money to invest in anything else like commercial property, residential property, you can invest in shares with the money in the company.
You may know these company structures by the following names –
- A company
- A Pty Ltd
- A corporate beneficiary and even
- A Bucket Company
I like to think of it as your “Family Vault”.
It’s a smart place to store the profits your business AND reduce the amount of tax you’re paying.
Got a burning question about using Business Structures to save tax and create a family vault?
Book in, to TEST DRIVE AN ACCOUNTANT – a 15 min rapid fire Q & A session with an Inspirational Accountant.
Pay Less, Little and No Tax in SMSF. It’s legal.
In every Self Managed Super Fund there are 2 sides. An Accumulation side and a Pension side.
Using Harvee’s plane analogy from the beginning, the accumulation side or phase of an SMSF is when the fund is actively growing. The same as when that plane is climbing to new heights. You can’t touch any of that money while it’s in accumulation and that accumulation side has a set tax rate of 15% on what it earns.
So step 1 in controlling taxation is saving tax on contributions.
For example, I contributed $30,000 this year into my Family Super Fund – it’s called the Keshi Super Fund, named after a family dog I used to walk.
If I chose not to dump the $30K into super, I would have paid tax on that $30,000 at my highest marginal tax rate of 49%.
So by putting $30,000 towards my goal of becoming a Self Made Success, I saved $10,200 tax because as I’m in accumulation, I paid at only 15% instead of 49% – my plane is ascending!
Now fast forward 33 years and my wealth plane has been ascending higher and higher, it’s 2049 and I hit what is called preservation age, which means the government allows me to start accessing my super.
The plane begins its descent towards landing at retirement, so I am allowed to bring some of my assets in the SMSF over to the Pension side.
Any idea what the tax rate is on the Pension Side?
Zero percent. Booyah!
So that $30,000 I contributed last year, not only did I save $10,200 on the contribution, but so too did the other 3 members in my Family Super Fund.
With the $120,000 now in the fund, from 4 members contributing $30,000, we used that as a deposit to buy a $500,000 Commercial Property.
If we held on to the property for 34 years, and let’s say it doubled in value over that time and it’s worth $1,000,000.
I can sell the property when the SMSF is in pension phase and pay ZERO tax on that $500,000 capital gain.
WOW, WOW, WOW.
Just to give you some context, If made the exact same property deal but brought it in my own name, outside of super, I would have had to pay $122,500 tax (based on my top marginal tax rate of 49%)
So that’s how the Accumulation side and Pension side of an SMSF work – 15% in accumulation 0% in Pension.
But that’s not all …
What if I told you we could use negative gearing inside of a Super Fund to turn that 15% tax rate in the accumulation phase, down to ZERO?
That is legit possible.
There’s thousands of us SMSF Millionaires who implement this strategy every day.
Week 3 of the Become a SMSF Millionaire, 12 week course the lesson is called “The SMSF Millionaire’s guide to paying Less, Little and even NO tax in your SMSF”. It’s very hard to get ahead if 50c of every dollar you earn is going to the Tax Man.
You can watch the entire Become a SMSF Millionaire Web Class at www.smsfmillionaire.com/go
Why Business Owners Need To Take Holidays, 8 to 12 weeks a year ⛷⛵️
I’m fresh off the boat from 9 magical days in New Zealand and instead of cheap souvenirs, I’ve got a game changing business strategy for you:
Grab a big 12 month calendar and map out all the holidays you want to take, aim for 8 – 12 weeks. Block out:
- the overseas holidays
- the local holidays
- the school holidays
- the summer beach camping trips
- the long weekends that coincide with a public holiday
- the long weekends that don’t coincide with a public holiday (c’mon you are a business owner after all!)
- the birthday celebrations
- the weddings
- personal and professional development courses
- business planning weekends – working ON your business, not IN
Once you’re done, tell us in the comments below where on earth you’re heading in the next 12 months (I want some inspiration!)
The back story on why holidays and travel is good for business …
This is an inspirational process and will do wonders for you as a business owner.
Most people plan out their holidays around their work.
They hope there will be some spare time and money leftover for holidays each year.
But the problem is, there never seems to be enough time or money leftover!
And sadly another year goes by with no time for play… Sad face emoji
What a shame, seeing as how big & beautiful the world is.
The successful business people I know plan their work around their holidays, and I too have been doing it for the last 12 years.
Plan the year ahead by blocking out at least 8 – 12 weeks of holiday time.
Work out where you want to go.
Work out how much you need to save.
And then reverse engineer your business to fund the lifestyle you want to live.
Why is this important?
- Light at the end of the tunnel.
The business journey is tough at times, long days, late nights, weekends. You’re almost always ‘ON’. Knowing there is some downtime on the horizon can do wonders for your subconscious and allows you to focus intensely on the task at hand.
- Work life balance.
Your family and friends will know when they can enjoy some good quality time out with you.
If they know there is a good 10 weeks of planned holidays, they won’t worry so much if you have to work late or work through a weekend here and there.
- Holidays give you time to think.
I have my best ideas when on holiday! I’m a big picture type thinker and getting out of the office (and sometimes the country) gives me some precious time to THINK BIG, THINK LONG TERM, THINK RADICAL IMPACT.
- Holidays ensure you have deadlines.
Have you ever noticed how much you get done the week before, you take 2 weeks off to go camping on Stradbroke island with limited wifi or reception?
You somehow move mountains so you can switch off and enjoy the trip.
You find a way to make it happen.
That’s the power of putting holidays first.
Since my first real overseas holiday at the end of year 12, I’ve been able to –
- Salsa in the streets of Cuba
- Find spiritual sanctuary with the sharmans of India
- Volunteer in remote communities in Mexico, Brazil & Africa
- Follow Carnival street processions in Rio De Janeiro
- Eat the freshest sushi in the fish markets of Japan
- Snorkel the Blue Hole in Belize
- Ride elephants through the jungle in Sri Lanka
- Endure nude Sauna in Sweden
- Speak at an International Conference in Maui, Hawaii
- Sip the finest Madeira Wine in Portugal
- Get Bali Belly, Delhi Belly & Port Moresby Belly…
- Follow the ancient INCA trail to Machu Picchu
- Scoff pizza and beer in New York
All while building a successful investment portfolio and multiple businesses.
In fact, it was those priceless experiences that fuelled my own entrepreneur journey, and I’m confident that TRAVEL will do the same for you.
I truly believe it when they say,
“Travel is the only thing you buy that makes you richer.”
But how do business owners fund their Big Goals – like 8 to 12 weeks a year holiday?
They Become a Cash Rich Business.
Here’s the process –
- Put Your Profit First – A percentage of every dollar that comes in, goes first to your profit war chest.
- Every quarter, 50% of your Profit War Chest goes to –
- 50% to Building a nest egg – I invest in cashflow producing assets like Shares, Property (Residential & Commercial) & Precious metals.
- 50% Spreading your wings – You can drive that new car, enjoy regular holidays, eat out, drink that nice bottle of wine etc.
- Enjoy the holiday. Recharge. Open your eyes to the world. Be present with your family.
- Build a better business. Going on holiday leaves room for your team to make decisions and helps you see the gaps in your business systems and where the business still depends on YOU. Fix it.
You can use the code ‘wanderlust’ to get $10 off the next Become a Cash Rich Business [Workshop] – A short course in cashflow acceleration for small business owners who love family but not numbers. The CRB method will help you rapidly get on top of debt, start to amass a rainy day fund and worry less about the ups and downs of cashflow – RSVP at inspireca.com/events.
So where are you going in the next Financial Year?
Share your travel plans with me and the rest of the Inspiring Business Community here.
Get Cashed Up
