In Trusts we trust. Another way to make sure you pay enough tax and nothing more

Paying too much tax is bad. Paying your fair share is good. Black and white statements don’t come much truer than that but as we keep finding, people, honest people running good businesses to help their families, are regularly giving more than they need to. Put another way, more than they should. There are many reasons for this but just like a building inspector looking at a house that may be hiding a few issues, we here at Inspire often find that there are structural faults. Structural problems are always expensive – in buildings and especially when building a business.

We often talked about the importance of choosing the right business structure for you before setting out to change the world. If you do this you may well avoid paying a whole lot of tax that you didn’t have to pay during the all-important start-up phase. If you realise you’ve taken a wrong turn during your commercial journey, it may still be best to turn back and get on the right structural path. Sure you may have paid too much during the proceeding period but paying a price to stop the (cash flow) bleeding can still be a lifesaver.

Trusts, tried and true

Full disclosure: we like trusts because they work for our particular set of circumstances in that they:

Limit liability
Ensure we pay only what is required tax-wise
Free up more cash in concert with the right strategies

Aaah, strategy! That’s the thing. You can have the best tools ever but if you don’t know how to use them, you could end up hurting yourself… or your business.

Learn how to save thousands with Trusts

It’s important that we get this right so we go live on facebook Wednesdays to do open Q&As and talk through important business solutionsfrom 12.30pm. Don’t just think of this as some one-way, free advice. This is your chance to interactively learn and explore ways of improving one of the must-haves in business. Cash flow optimisation. A lot of businesses are giving away half, that’s right HALF of their profits in tax because they don’t know any better and no one’s shown them how to remedy that.

If that’s you or you think this may be you, feel free to join our regular Wednesday lunchtime conversations or simply check out the content we post daily.

If you’re a small business with questions around structures or other accounting related matters you would like some clarity on, just ask us – we’d love to help.

Recognise! Celebrating milestones is not only fun but functional

A lot has been made of the value of setting goals, knowing numbers, aiming high, feeling the burn (wait, what?) and a whole bunch of other aspirational catchphrases. They’re fun, they’re motivational and yes, sometime a little clichéd. But it’s amazing how effective they are at inspiring people (not just sports and business people) to take action and make things happen. Getting to know what works for you and your team by way of inspiring and extracting great, business promoting, world changing leaps forward is very important and ultimately useful.

But we’re missing the big picture if we’re not also “celebrating success”.

One of the great motivational tools that mobilises businesses to achieve something greater is the ability to stop, recognise and enjoy the passing of a milestone or a success that we’ve been building towards.

Almost 4 years down and still a lot to do

The more we do, the more there is to do. I think all small businesses will relate to this. We started off with a simple goal and a very simple approach. Help small business owners get the most out of their business so they can enjoy more of a better life with their families. Ensuring people had more time, minimised their tax and were able to help others in need, capped off the big ambition.

This week, Inspire turns four years old. Wow, four years! And while we are really pleased with what we’ve achieved and the prospect of setting sail for bigger and better things, I’d have to say that looking back (at what works and what doesn’t) helped us to keep looking forward. A target of $500,000 in saved tax for our clients turned into an achievement doubling that. Contributing funds and positive impacts to people’s lives started off as an idea but led to a new way of working and now even larger goals.

So 4 years of doing what we do is a wonderful milestone.

Milestones are great but they’re not targets

I just want to be careful here in recognising the difference between a target, an objective or a goal and a milestone. It’s great to pass a milestone but typically these are markers en-route to a particular objective – they’re not the destination. Nevertheless, it is very important to break up a long journey into a series of shorter trips. This helps maintain momentum and a regular sense of achievement.

I would discourage anyone from ignoring the smaller achievements along the path to potential greatness or at the very least, success. Instead, see them as chances to run a few checks and balances – how are we feeling, what are the numbers saying to us, what do we need to do to get past the next milestone? Refocus on achieving big goals.

As for us, our mission is to keep helping families thrive through the achievements of their small businesses and celebrate successes wherever and whenever we find them.

That’s the goal… now to celebrate the milestone.

The Magic that makes a better lifestyle

Every Friday we just want to stop the world for a moment and give you a couple of real tips to think about that will make a real difference to your business and in your life.

It’s Friday and if the weekend hasn’t yet started for you yet, it will very soon. Or will it?

Quite a number of people work through the weekend and take a break on another day(s). However, a lot of people, particularly those in small business tend to work their core hours, then put in a few hours to take care of admin, then a little bit of designated panic/worry time over what the next month may or may not bring, then… Realistically though, everyone takes a break, be it short power-packed escape from the business say, every quarter or a more leisurely exhale once every year (or so) and pay the price later. But is this the best way to enjoy the fruits of your labour and if not, are their alternatives?

Alternative business lifestyles

I know a lot of people who work for someone or a company and they turn up Monday through Friday. Their desk/cubicle/office is their home from 9 to 5 (okay 8-6), five days a week, 48 weeks a year. Some of them like it, some just shrug, some genuinely love it. But what I find is that those that leave to start their own business, weren’t loving what they were doing previously – for a variety of reasons. They felt trapped, wanted to spend more time with family and/or friends or just felt that there was something better out there for them.

What a lot of them find though is that their new life is a combination of what we just talked about: core hours of work, stress, admin – a lot of work for less-than-anticipated reward.

There is another lifestyle that can be achieved and it’s probably closer to the one that we all envisage when we get started. That’s the one where, on a monthly basis, we:

feed our time energy and passion into the business,
take home an amount of pay that we’re happy with,
reward ourselves with a bonus if and when everything comes together and we post some outstanding results
enjoy more time than we thought possible with our loved ones, doing things we love
take care of the tax payments (only what you need to pay of course) and
service all expenses – overheads, subscriptions, debts

Some of you are living this life already as opposed to thrashing around in the ocean of small business, coming up for air when you can and calling it a holiday. What you need is a little magic!

The secret behind the magic number

Like all good magic tricks, it looks baffling, impossible even. But when you’re shown how it was done you say, “wow, that was a lot simpler than I thought it would be.”

If it feels like those 6 points are magic, it’s because they are. These are the basics that make up the magic number that we talk about so often and so passionately. You’ve heard the saying, “you can’t hit what you can’t see?” In this case it’s true.

Tip: Go ahead and assign dollar values to each of those 6 points. When you add them all up, you will have the magic number your business needs to come up with to live your alternative lifestyle, the one you always wanted.

So go on, find the magic in your magic number (we can help you with that) and have that weekend you’ve been wanting – every weekend.

And now for the (very) good news. Wine is tax deductible

Just calling wine’s tax deductibility “very good news” feels a bit like saying that Australia is large when at 7.69million km2 it ranks sixth in the world in land mass. So the wine thing is pretty huge. There are some provisions, of course. You can’t simply park yourself at your favourite wine bar for the afternoon and loudly declare, “…and the government will pick up the tab.”

So having breathlessly explained the rules around this phenomenon on a recent facebook live, we thought we’d share the news once again, but this time at the laptop – with a merlot at my elbow.

We have to have rules, though

We were outside a local bottle shop a while back stocking up for a client event and wanted to welcome our 50+ guests with social drinks and so on. It occurred to me to check with Ben if wine was tax deductible and as a single ray of sunshine burst through the clouds, a rainbow appeared just behind him, as he said:

“Client gifts are not classed as entertainment and because they (bottles of wine) are gifts (and) they are intended to be “consumed later or over time.”

Glorious!

Caution: deduct responsibly

Now for some, there may be a temptation to head down to the nearest bottle shop with a large van or ute, but the same rules of good business that we love and cherish, must still govern your purchasing decisions:

Know and respect your numbers and ensure that you are earning a multiple somewhere north of x4, for example, with regard to return on investment (ROI)
Drink responsibly and encourage joyous recipients to do the same. (Keep that phrase, “consumed later and over time” in the back of your mind)
Keep your receipt – during times of mad panic and overwhelming happiness it’s easy to forget the little things

So far as allowable deductions go, the wine purchase and gifting can be an economically sound alternative to the cripplingly expensive, 14 course degustation at (fill in your favourite fine dining restaurant). Of course, the exquisitely-crafted taste sensations might do your palate a world of good but may leave a sour taste in the mouth when seeking out deductions and ultimately paying less tax.

In terms of saving you money and allowing you to chip away at your tax bill, we often ask people to:

Consider the value of the return on investment;
Understand what the actual client or customer really values; and must importantly,
Personalise the gift. Just because our words about tax deductible wine were still ringing in your ears when you were thinking about gifts, you should still consider handwritten thank you notes and possibly inviting yourself around for a quiet wine later on.

Tip: Do read this article again later – you could be forgiven for only retaining the title and subtitle the first time around.

I have a pool so now I can buy an office – smsf magic trick #31

Recently we’ve been speaking about the many and varied ways technology allows us to run a business and the different ways of working people can enjoy as a result. This led us to reviewing some really cool home office set-ups, as well as touching on the benefits of co-work spaces. Of course there’s always the tried and true hiring or leasing of office space which also works for some. Which is also to say, it doesn’t work for everyone.

Why?

Lots of reasons perhaps starting with the overreliance on an office to make a strong statement to your market like:

we’re bold and creative;
we’re huge and ready to take on the world;
we’re loaded down with liquid assets so you know we won’t bail on you;
we’re social, we want to help so feel free to drop by or make an appointment for an in depth chat about your growing business.

(We like number four but as always the focus has to be on adding value, not so much, “don’t you just love the office?”)

The leasing of an office or business space may well be an absolute necessity. For example, most gym businesses have to have somewhere to set up the weights and cardio equipment – they need space. If this is the case you can’t really run a really large, traditional, weightlifting gym from your apartment.

Help me, I’m being held against my will by my commercial lease

That’s a plea for help we hear a lot. Perhaps you do too.

Quick story. We charged into a lease agreement a while back. A substantial space that upon reflection was too big, too ambitious and we ended up regretting it to a certain extent. Eventually we were let out of the lease, marginally older and a lot wiser.

We found a great co-share arrangement after that and we’re happy… but still ambitious. And it seems our ambition may have found a home – for our business. Check out our throwback link to what we liked for a really solid solution to our commercial space question. There’s something in it for you too.

Purchase your own commercial property

We love this option because it increases the value of the business, we’re not tied to a lease per se and the right arrangement allows us to take on tenants. Tenants who, potentially, may themselves become either valuable resources to us or even clients further down the line.

Great, so how do we secure that commercial property if we don’t want to overreach financially?

A super idea

Did you know that superannuation is not just a lockbox full of your hard-earned money that will only be made available to you after you’re deep into your 60s? That’s the common perception but it doesn’t have to be the case.

Self-managed super funds (SMSF) have provision to be able to make acquisitions such as yup, a commercial property. This is wonderful because now your business can pay its rent into your super. Great for your future, great for your fund and great for your business. Okay, so maybe you don’t have enough in your own SMSF to secure a commercial property but the rules tell us that you can pool your funds together with up to 3 other entities’ SMSF. This may effectively quadruples your investment potential – all things being equal of course.

Tip: ideally, they are family members’ SMSF’s that you are pooling. Keep in mind that while you may love your mates, things can get murky quite quickly outside the family super environment.

It’s not rocket science, nonetheless it most certainly is something you should talk to your accountant about. There’s really no reason you shouldn’t at least consider purchasing property using SMSF. With the ability to pool those resources, it’s a good time to call us about dipping a toe in commercial property.

Saving tax is a year round sport. And finals time is just around the corner (the angry coach edition)

Australia is full of people who are very familiar with, if not completely nuts for, one sport or another. They might have a favourite team, a favourite player or simply play on weekends or maybe after work. This is not all people by the way but our friends at the Australian Bureaus of Statistics (ABS) tell us that 60% of Australians over 15years of age actively participate in sport.

So people that follow sport tend to learn the rules of the game, have a firm view about the best way of doing things, consult experts and take in their opinions. Some people will look up to the “stars of the game” and decide to emulate them, watching their moves carefully and attempting to replicate their success. We’ve heard it said that some fans spend as much energy preparing for the season as the professionals do. In short, they just want their team to finish the season on top and share in the euphoria of another great year.

On the other hand, when their team loses, especially if they get annihilated in the finals, there are tears (don’t argue, real fans and players sheds real tears)! These tears are followed by a decision to train the house down and do whatever it takes over the off-season to prepare for the next season. This intensity is coupled with sworn oaths (with swearing sometimes) that this will never ever happen again!

And yet… it’s just a game. Well it’s more than a game to them – obviously. But yeah, up to 40% of Aussies might say it’s just a game.

And yet, when we get hit with a large tax bill, sometimes as a result of not knowing any better or just being caught on the hop by some changes in the rules, many people just kinda shrug it off. “Oh well, let’s get on with it, see what happens next time.” Or maybe there isn’t a second thought even given to next year, let alone achieving a better result.

Not good enough!

It’s time to get ANGRY, people – fight harder for those tax savings

When we take on a client, we know that they are playing for keeps. The money that we can save them at tax time could and often does make a big difference to their families. At Inspire, as we’ve said many times before, we are on the side of the small business owner who is working hard make a better life for their family and positively impact the lives of others.

We do back ourselves to make a difference to almost any business, almost immediately but we need to work with our clients. It’s not just a case of rocking up at the tax deadline, filling out some returns and then popping the champagne corks. No. preparation is a must, thinking differently is a must, being willing to take on new habits is a must and getting and staying focused on the safeguarding and growth of your profits by minimising unnecessary expenditure is an absolute must. Oh and you’ll need a trusted coach (accountant). One that seeks out opportunities, is not backward in coming forward with straight up advice and is just as motivated as you are to make sure you make the most of your (tax season). Inspired?

Finals are just around the corner

Next month marks the official launch of tax season 2016-17. While the rest of the winter codes are still jostling for position, we recommend you start getting ready for your best season ever. Last year we managed to save our clients over $1,000,000 in tax. This year we want to prove to you and ourselves that it was no fluke.

If you’d love to throw yourself a victory street parade in July, just ask us what you need to do to prepare, today.

The motivational benefits of knowing your numbers

We believe there is a quantifiable psychological benefit to having a clear view of critical numbers. But instead of trying to quantify them here, early on a Monday morning, let’s just focus on proving to ourselves anecdotally, that it’s true – more inspiring that way.

To me, it’s hard to think straight when there’s sweat in your eyes and your body is crying out for a break from burpees, sit-ups, wind sprints and squats but that’s the consequence joy of signing up for a weekend session with a personal trainer. Here’s what does make sense in the middle of all that straining and “paying the price” for those pastry delights with your morning coffee: knowing how many reps to go, before you can take a breath and relax if only for a few, fleeting moments.

When the trainer roars, “c’mon, only 20 seconds to go” during an exercise, a weird thing happens. The focus almost immediately shifts from dealing with the pain and regretting ever signing-up for PT, to counting down towards the goal and realising that you’re almost there. Five seconds to go. Suddenly, you know that successfully completing the session is in the bag. Weirdly, the pain has stopped, you’re focused and you can actually see the finish line. And time! You’ve done it. Believe it or not, you’re smiling. It could be relief, achievement, pride or a combination of all those things.

And you wouldn’t have made it if your trainer hadn’t given you a magic number to aim at: 20seconds to go.

To business then

Sales professionals the world over, dating back more than half a century from 1960s real estate offices to modern day outbound call centres, know that having a sales target is a motivator, a compass and a necessity. You can’t hit a target you can’t see. In many cases, the shorter range targets are easier to hit. Tell your staff that they need to hit $1.75m in sales in the next 12months and it might happen. Break it down to weekly goals, even daily and chances of success will have increased significantly.

Unless…

…the numerical targets allocated out are not aligned to the overarching goal, the big number, the one that counts. It’s all well and good to get everyone from the front desk/counter/room to the chief decision-makers motivated with target numbers but it all falls flat if they achieve them but the business does not.

Start with the most magical of magic numbers: turnover, expenses and PROFIT (yup, all caps, italicised, underlined and bold). If everyone’s individual numbers (KPIs, SLAs and other three-letter acronyms) flow from that critical number, they will have something solid to aim at. This will absolutely allow them to have a real and quantifiable impact on your business’ goals. The key though, is to align your big goals and from there, identify the numbers that will get you there. Feel free to contact us if you’d like to identify and work towards your magic numbers.

Then, cue relief, achievement, pride. And as personal trainers and physios the world over would say, take a quick water break and get ready to do it all again.

Let’s GO!

Before we go… You’re not a bank, so don’t act like one

Every Friday we just want to stop the world for a moment and give you a couple of real tips to think about that will make a real difference to your business and in your life.

Cash flow remains a hot topic and so it should. We have spoken about it before both in our articles and during some of our videos and facebook live sessions. However, I thought I’d leave you today with this one point to ponder and reflect on over the weekend.

“Am I a bank and/or does my business make its money on the futures market?”

Well maybe, in which case stop reading and get back to studying the various money markets.

If you’re still with me, it means that we need to talk about something Paul Clitheroe send on one of the morning shows yesterday and it’s something that deep down, we all know. We need to spend less than we earn to get ahead. Here’s the thing though, maybe you do and you still find yourself unable to shift the needle. Perhaps you even find yourself sliding backwards a little bit. Why? How? How is this possible? What do I do?

Hope for the best, plan for the worst

Have you heard that before? Rather than looking at this as a pessimistic view, think of it as realism. The mistake a lot of small businesses make when looking at their expenses is that they calculate them based on what should come into the business and ignoring what might.

If you believe the simple formula: expenses = income – profit, well good at least you’ve not simply said, “well the expenses are the expenses and we’ll just settle for whatever’s left over.

Tip: Protect your profits, put them to one side, you’ve worked for them, you’ve earned them, they are yours.

Okay, so you know that in a good month your million dollar business might turnover $100k. Great. And you know that on average you’ll turnover $83,333. Alright but what about the down months where, because of seasonality or what-have-you, you’re only going to make $60k… for two of the next three months. If you’ve simply averaged out your expenses to say $63k/month you’re in for some pain through this time if you have not adequately planned for these eventualities.

Tip: Look more closely at your numbers by hitting the zoom-in icon on your finances. Looking at individual months is sometimes more helpful than predictions based on annualised numbers.

Let’s be upfront

The other thing you can do and should do to get the cash flowing in the right direction is invoice for at least a part if not all of your fee upfront. This indicates that you are committed and that the customer/client now has a vested interest in the goods and/or services you provide. Importantly, it also places you in a better position cash flow-wise.

Another important point: obviously, you wouldn’t agree to say, 30day payment terms and then add an interest component to the invoice. You can’t – that’s not what you agreed to and, as already mentioned, you’re not a bank. If the payment is late, maybe but by then the horse has bolted in a way – you’re already 30days+ without any kind of payment. Let the pains begin.

Tip: remember, offering generous payment terms is not a must. Get comfortable with setting terms on your terms and sticking to them.

With a sound reputation for getting results and providing valuable customer service, you’ll find, as we do, that people won’t mind paying upfront.

Have a great weekend!

(Facebook) friends don’t let friends pay through the nose

If we didn’t care, we wouldn’t bother. But we do and that’s why we like to stay connected with clients past, future and present by any means necessary. There are those that believe that an accountant is a “suit” to be visited once a year or once a quarter if you run a business or if things get really messy. And who could blame them for thinking that’s the case. Many people have told us that this is their belief because they themselves are treated like a quarterly tick in the box or worse still an ATM. Ouch!

But it’s a good point. As accountants, we can’t just tell people we care, hit them with a bill and “see you later”. Accounting, just like trust, should be a two-way street and to us that means providing more than filing, processing and billing.

We have a lot to share… for free

Every business is different so to do our job well, we listen first then offer advice, strategy and services accordingly. But we also love to share as much as possible. After all, a well-informed client is the best type of client to have. If you check out our facebook page/ on a regular basis, you’ll see content ranging from

tips and tricks,
short vids with “how to’s”
Shout outs to clients that are doing well and business and life leaders that inspire us
Ways in which we try to positively impact lives
Opportunities to attend specialist sessions that benefit your business in the short and longer term
The odd rant
Invitations to weekly interactive live sessions
Links to articles that inform, inspire or instruct

So why do we do this? Are we disruptive for disruption’s sake? No, not at all. Inspire is here to help, young families in particular, reap the benefits of well-run, profitable businesses. And even though there’s a lot that can go wrong with small businesses, there’s an awful lot of things that can (and should) go very, very right. Ensuring as much as possible goes right with the numbers side of our clients’ life’s work is our primary focus but it’s not something we can do well using just one medium.

By any means necessary

Social media is fantastic because we get to connect with clients, followers and friends on their terms and as time permits. However, we see (and seize) opportunities to meet up in the office, at talks and events, dinners both planned and spontaneous – anywhere. And ultimately it’s not always about the numbers but the number of positive impacts we can have on people’s businesses and lives – whether we know them yet or not.

So if you’re yet to try us out , meet with us or give us a call, hopefully we’ll see you on facebook where we’ll do all we can to save you tax, maximise your cashflow and keep small businesses heading in the right direction… for free!

What’s not to like about that?

We liked this… Take your work home with you… and leave it there

The rising cost of office space, particularly in the CBDs, highlights the need for businesses to get even smarter about how and from where they run their enterprises. The traditional office can work, so do co-workspaces but have we forgotten one obvious option?

One of the things we hear quite often from business owners, employees and people in general, is that they have to deal with a “killer commute”. Hours and hours are lost each week on public transport and gridlock in big cities but some business owners decide to simply work from home. A step further actually. They have based their business at home.

Now, we are all about ensuring your business does the best job it can to support your family and make your life better. Yet here, we are encouraging you to blur the line between work and family. Well not really. Well, not at all. If you are say, a consultant of some kind, maybe client-facing meetings only really happen at their place or at conferences, it’s not a bad way to save on expenses and even reduce tax. And that is something we do advocate. Strongly.

The best rent-free offices we’ve seen to date

This whole idea came up when I first noticed some of these really cool home offices. They range from the simple to the absolutely stunning but none of them look like the owner had settled for a space in which to merely slump over a laptop. Home offices can (obviously) look great and if you’re heading down that road, you may as well do it really well and take pride in it.

Besides, you will be able to:

Eliminate your commute or at least limit it to a (really) short walk
Claim a portion of your utilities such as water and electricity at tax time
Claim a portion of the interest charged on your mortgage! (yup!)

Have a word to us about your circumstances if you’re looking at better ways to work. If your business can be run from home, we’d love to help you sort through the numbers so feel free to drop us a line.

House rules

Isn’t a home office a bit limiting though? Well you don’t have to usher clients to the nearest coffee shop to have meetings because you could of course welcome them to your home office. To make sure that those work/home lines don’t get too blurry though, there are a couple of pointers:

Separate entrances work best – clients shouldn’t have to trip over toys or rub shoulders in the corridor with your teenage kids. A lot of home offices have separate approaches or are entered via a side door.
Common walls are the enemy – Loud music heard through the walls are distracting and may paint an unflattering picture of your business.
Really lean into the office décor, look and feel – if you really want to work well at home, ensure your space doesn’t remind you of your bedroom, or broom closet. Invest in its functionality with some of the money you save on office rent.
Keep a coffee machine or beverage bar in your office – if you find yourself wandering towards your own kitchen to make tea or coffee 4 times a day, eventually you’ll realise that your lounge and TV is just a few steps further on from the fridge! Yikes!

We’re sure there are few more important tips to consider but for now, think about how you could decrease your expense burden (both time and money) within your business and increase family time… and we’ll do the same.