Are you properly protecting your personal assets?

Recently, on the Reimagining Healthcare podcast with @YianniSerpanos, I answered the question “When should somebody be thinking about asset protection when starting a business?”

There are a couple of things to consider. When you have a director of the business (the person running the business) we actually don’t like them holding any personal assets in their own name.

Let’s say the business is sued and they’re successful. Then they end up suing the person personally. We don’t want to have that family home lost or any other investments in their own name. As an example, that can all be structured through a spouse’s name or in company or trusts that are set up well for the family.

The second part is also making sure your estate planning incorporates all these things. Estate planning is more than just a will. You need to consider what happens with company assets, trust assets and what happens with the super.

In terms of a good time to have that all in place, you should absolutely have that in place before you go into business. And, you need to check that it still makes sense as you start setting up all the structures and running up a business as well.

It’s quite complex stuff. You need to be working with an accountant who understands all this. They don’t need to do the actual estate planning themselves, but they definitely need to understand and work with the lawyers on how it all works.

Listen to the full length of my episode on the Reimagining Healthcare podcast with @Yianni Serpanos

If you need to have a chat with an accountant book in a strategy call at https://inspire.business/chat/

2 Key Pieces of Advice For SME Businesses in this Challenging Time

1) Make sure you have a plan for cash flow If you don’t already have a budget or forecast, make sure you go and do that for the next 3 to 6 months.

We’ve been helping our clients with this through our “Emergency Assistance Meeting” ( https://calendly.com/inspireca/eam ) and we answer the question, “When are you going to run out of money?” We had a client a couple months ago and the answer to hers was September. So if nothing else changes, her sales have dropped, she’s in hospitality, but she’s still allowed to do takeaway – if she keeps as she is, then she’s going to run out of money in September. And knowing that for her, she has peace of mind that she’s fine for June and July. Then, it gets a bit hairy in August, September, but she might be able to organise some other things before then to help her extend that date even further.

2) Make sure you keep communicating with key people to do with your business.
Now, for me, that’s clients and team. So, have you communicated that you’re business as usual, or are you working from home and what does that mean for clients?

Now, as business owners, we’ve got this huge responsibility we feel for our family. This also extends to the families of the people that we employ – they’ve got their own stresses and challenges throughout this time as well. One of them could be fearing job security. So just like we’re talking about certainty around cash flow, work out what’s happening with your team.

Now, talking to your team is probably going to end in one of three or four ways –

Standing them down;
Making them redundant;
Firing them for whatever reason;or
You’re going to keep them on, it’s business as usual, and they’re not going to get pay cuts.

What you need to reinforce with them as early as possible is what’s happening to the business and how it’s going to affect them. Are they losing their job? Cool, then they can go and move on and deal with that. Is it business as usual? Cool. Take the relief off their shoulders so they can get on and be productive in what they’re doing.

Communicate early, communicate often. People are looking for connection and direction.

Watch the full video with @SimonBell on the Zen Business podcast – https://www.youtube.com/watch?v=IH_K3yzQ_Rs&t=706s

How To Cut Down Expenses In Your Business

Here are some things to be mindful of when reviewing your costs – do we really need to be spending this?

Software – make sure you’re paying for the right amount of licenses for that software. Especially when people leave, some people don’t off-board, including myself I’ve found.

Accounting Fees – (and all advisors) are you actually getting the value from it?

Business coaching – I can sometimes see $20,000, $30,000 on the P&L. Again, make sure you’re getting the value out of it.

Personally, I would want to be seeing something like a 10:1 ROI. Here’s some perspective. Some coaches are awesome and there’s a lot of sharks out there as well. But, there’s some coaches I’ve heard some feedback that without that coach there would be no business. To a degree, you can’t really put a price on that. So I wouldn’t be silly with how you calculate your 10:1 ratio but, I definitely think that they need to be earning their money charging that sort of figure.

Team members – I would leave this till last. You don’t want to necessarily just fire people or reduce people’s hours. That’s not going to go well, not only for that person but it sends the wrong energy around the business. If you’ve got an under-performer in the business or someone who’s just causing trouble, then as a leader in the business, you have to deal with that. So, if you need to do some rejigging of your team, absolutely do that. You need to look after your business first rather than any single team member who’s behaving badly.

Listen to the the full length of my episode on the Reimagining Healthcare podcast with Yianni Serpanos

If you need to have a chat with an accountant book in a strategy call at https://inspire.business/chat/

JobKeeper: The Distinction Between Business Participants & Employees

FAQ – “Can you please clarify, the employee versus business participant? I do collect a wage and exclude myself as an employee and have added myself as a business participant. Is this correct or incorrect?”

An employee has to be on your payroll before the 1st of March. This applies to the same eligibility criteria as any other employees.

As a business participant, the business had an ABN from the 12th of March. You run the business, you’re actively in the business, doing things for the business. You’re either a partner, a direct shareholder, a beneficiary of a trust or a sole trader.

The important distinction between employee and a business participant is that they can’t claim for both; It’s only one or the other. If you are already on the payroll and you are already paying yourself a wage, you have to keep paying yourself that $1500 per fortnight minimum to be eligible for reimbursement. If you’re a business participant, that’s not the case.

If you need help with JobKeeper or need to speak to an Accountant, book a strategy call with one of our accountants: https://inspire.business/chat

Critical Reasons to Stay On Top Of Your Bookkeeping

JobKeeper Reporting

By the 14th of each month (no longer the 7th), you’ll need to report your JobKeeper-related GST turnover, as well as making sure your payroll information is correct as you’ll be reporting that to the ATO.

Preparing BAS

When it’s BAS time, either monthly or quarterly depending on the lodgement cycle, your accountant will start nagging you a couple of days after the month. There’s some people who have already done it by the first or second of the month and there’s some who don’t get it done by the due date of the BAS.

Getting your Tax done annually

The worst thing when you do your bookkeeping is rushing it to meet deadlines. Because often, you get things wrong especially if you do it yourself. Do what you do well and outsource this sort of stuff. I’ve finally done that myself, even though I can do bookkeeping, but it’s so nice not having to worry about it and getting someone else to do it on a regular schedule.

There’s reasons why people are going to chase these numbers so it’s super important to have this done correctly and on time.

If you need help with JobKeeper or need to speak to an Accountant, book a strategy call with one of our accountants: https://inspire.business/chat

Buying a car with the $150,000 instant asset write off

We’ve had a lot of clients ask us, “how does the increased instant asset write-off of $150,000 apply to a purchase of a car?”
Here are a few things to consider:

When you’re purchasing a car, you have to keep in mind that there are separate rules and limits around how much you can depreciate for a motor vehicle. The maximum you can depreciate is actually a lot lower than the instant asset write-off.

The instant asset write-off is $150,000 (recently extended until the end of this calendar year), but the car depreciation limit is $57,581, plus GST if your business is registered for GST. Keep in mind, there’s also a limit that you can claim for the GST which is actually one-tenth of the original figure ($57,781), so the maximum GST is $5,758 for the GST claim. (This is also before adjusting for any private use.)

If you’re looking upwards of a 60K car, you may want to double check your tax expectations because you can’t just write-off the whole thing. This applies to what the ATO calls “motor vehicles”, but not quite what they call “commercial vehicles”.

Vehicles such as Utes could be single cab, dual cab, or trucks as well. They are not limited by that $57,581 depreciation limit. What you look for is, has it got a payload of more than 1 ton, or is it designed to carry more in payload kilos than it is to passenger kilos? You can get the specs of the vehicle and have it assessed.

If you’re ever unsure, please get in touch with your accountant, and make sure you know what the tax implications of purchasing a car is.

Don’t think that just because the instant asset write-off was $150,000, you can go and buy a Range Rover, and expect to claim the whole lot on tax.

Can you appeal a knock back for Cashflow Boost if you believe you’re eligible?

Yes. Reading the legislation as it applies, if you fail, then there is an appeals process for special circumstances that you can go through.

They are structuring the process a little bit more, but at the moment, you can send your information to an email address and state your reasons why: cashflowboostreview@ato.gov.au

You can say, “Hey, look, I failed because of this, this and this, but here’s the circumstances why I believe, ordinarily, I should be eligible”

Listen to the full episode with Natasha Hawker on the HR Heroes Podcast – https://player.whooshkaa.com/episode?id=642364

Pass One of These Alternative Tests To Qualify For JobKeeper

There are rules and tests around the following – the name of each test is;

Started the business recently
Business disposals, purchases or restructures
Fast-growth business – where you’ve had a substantial increase in turnover over the last 12 months
Entities affected by drought or other natural disasters, like the fires that Australia had late last year, early this year.
Businesses with irregular turnover (seasonal)
Sole traders or small partnerships with sickness, injury, or leave.

These alternate tests actually include a lot more businesses which I think is great. We might have a client who passes two or three of these alternate tests, but you only need to pass one.

For further details, please read the rules around each test, or reach out to us.

Listen to the full episode on the HR Heroes Podcast – https://player.whooshkaa.com/episode?id=642364

What Happens If You Get Bookkeeping Wrong

If you or the bookkeeper gets it wrong, it’s going to cost you money in some way, whether that may be missing out on GST, claiming GST where you’re not meant to or it might cost more in tax or accounting fees.

Here’s some common bookkeeping errors we see:

Using the wrong GST code

If you don’t code your GST right on transactions, you’re either; over claiming GST – which is essentially illegal, or you’re under claiming it – you’re not getting the tax back owed to you.

It’s either business owners who DIY their bookkeeping or they’re not having the best bookkeepers who aren’t really going through the numbers properly.

Lodgement delays and penalties

We’ve seen clients who basically need to redo their whole bookkeeping because it was done so poorly resulting in lodgement delays, penalties or nagging from the accountants.

Transactions coded to the wrong account

This could hurt you when you’re trying to make business decisions and you’re not getting accurate information.

Balance sheet transactions coded to the profit and loss statement

It’s very common to overstate or understate your profit with this easy mistake.

We often see people when processing payroll through Xero and it puts it on the profit and loss, then they allocate payments of payroll to the wages account – basically, you’re doubling what your payroll expense looks like and your profit is going to look shocking.

Double paying suppliers

This is double paying suppliers if the payments aren’t getting reconciled correctly. People pay them and also enter them through the bills section, so that ends up being a double payment there.

Following up clients who have already paid (or the reverse is having huge debtors)

You’re following up clients who have actually paid their bill, because of your lag in reconciling your money received or having a huge debt balance because you’re not following up your debtors at all.

Stock is out of whack – can affect your tax bill

This is probably more towards the manufacturers or businesses who sell actual physical products, where your stock is all out of whack.

The problem with having your stock out of whack is if you’re making large purchases of materials, like raw materials, and then you’re leaving them on your profit and loss rather than on your balance sheet on your stock – you’re not reading your financials right either.

In conclusion

So if you need help with bookkeeping, I highly recommend Efficiency Partners. We’ve referred multiple clients over to Allison and her team and they do what is called a “cleanse” – where they basically clean up your books, then maintain them from that point onwards.

During that process, they’ve actually found thousands and thousands of dollars for clients who have missed claiming things. Specifically, when they buy assets, a lot of the time, they forget to put the asset actually in the system. So there’s thousands of thousands of dollars there that have been starved of GST. So, it is very important that you get it right.

For bookkeeping enquiries, get in touch with Allison Joyce at allison@efficiencypartners.com.au or efficiencypartners.com.au

Penalties For Illegally Claiming JobKeeper Benefits

This is very real and as a reminder, the ATO and the Tax Practitioners Board, who licence tax agents have fired shots across the bow to accountants. They’ve sent out newsletters and emails to us basically saying, “If you do the wrong thing, you’re risking your registration and obviously fines and penalties.”

Another thing I’ve seen in the accounting community is that accountants are going to be dobbing in other accountants if they see the wrong thing happening.

If the ATO has caught you trying to milk the stimulus measures, you risk not only losing your tax agent registration, they’ll ask you to pay it back and you’ll probably lose all access to any other stimulus measures you are otherwise eligible for.

So not just the JobKeeper if you fudge those numbers but cash flow boosts or others as well. You just don’t want to risk it! The reporting now with the ATO has access to cross-check information that you give them. I think you need to be very careful if you get caught and you say, “Oh, well I didn’t know.” Well, you really need to make sure if you’re going to claim it that you’re eligible.