Business Structures Made Easy! Part 1: The Basics

One of the most important decisions a business owner needs to make (after the name of the business of course!) is the choice of business structure. In fact, getting this choice right is so important that we begin the analysis of every potential client with their proposed business structure and we then work out from that point.

Click Here to Download our eBook “Business Structures Made Easy”

Choosing Your Business Structure

The choice of how to structure your business depends on a number of factors:

1. The type of business you operate;
2. Your personal financial circumstances;
3. How large you intend to grow the business; and
4. Whether you are building the business to operate or to sell.

A basic comparison of the most common business structures is provided below:	Sole trader	Partnership	Company	Trust
Cost to establish and operate	Low	Medium	High	High
Complexity	Simple	Moderate	Complex	Complex
Limited Liability	No	No	Yes	Yes (with a corporate Trustee)
Do I receive full profits made from the business?	Yes	No	No	No
Can I employ staff?	Yes	Yes	Yes	Yes
Do I have to pay myself superannuation?	No	No	Yes	No
Can I change the legal structure easily?	Yes	No	No	No
Ability for tax planning e.g. income splitting?	No	Limited	Limited	Yes
Is it easy to raise capital?	No	No	Yes	Yes
Is it easy to dissolve or exit?	Yes	Yes	No	No

 

Each structure has advantages, disadvantages and responsibilities which need to be considered before making a decision. While it is possible to change the structure as the business grows or your circumstances change, getting the structure right in the first place can avoid any unnecessary tax and administration costs. Your accountant or business adviser can help you make the right choice for your business.

Where Do You Go from Here?

Choosing the right business structure is extremely important. We strongly recommend seeking professional advice before making a final decision. We offer a wealth of experience in business structuring and can help you make the right choice now and avoid problems later on.

For additional information please look out for our future articles which look at each of the business structuring options in more detail.

Email Speed Dating: Tackling 50 emails in 50 minutes

Every second and fourth Friday of the month we hold the Inspiring Business at Inspire Cafe event. It’s a great way to wrap up a big week! Recently, I’d made a breakthrough in something that I now know a lot of people struggle with, so shared it as our “Win of the Week”.

One thing that has plagued me for quite a while was my inability to achieve what some call ‘Inbox Zero’.  Despite my best efforts, I had what I called ‘Inbox 120’. On average I ended each day with 120 unread emails!  The subconscious weight on my shoulders was overbearing and I realised something must be done.

Over a weekend, I was able to deal with the vast majority of these unread emails. Not only that, but I was able to apply what I learned with this exercise and now there’s no struggle to totally clear my Inbox each time I sit down to it. Until I shared this at the Inspiring Business breakfast, I didn’t realise it was such a common problem!

I’d love to share with you the ‘tricks’ I learned to kill 50 emails in 50 minutes.

Radio Silence: Allocate Uninterrupted Time

You can’t deal with your inbox piecemeal, with endless distractions. Block out time in your calendar ahead of time. Let your team know you’re going into ‘radio silence’ and just get it done!  Also make sure you’re not going to be interrupted by technology. Two things that can achieve this:

1. Disconnect from WiFi so you won’t be distracted by Facebook, incoming emails, the urge to check the news etc. Some of you won’t be able to disconnect from WiFi especially if your email is hosted online, but do your best to get rid of procrastination-related distractions.

2. Activate your phone’s ‘Do Not Disturb’ mode.  If someone calls or texts during Do Not Disturb mode, the screen of the phone stays blank. Usually you have the ability to make exceptions to this by tagging ‘Favourites’ in the contact list for family or close friends so they can get through to you if there is something pressing.

The Shot Clock: Set a Countdown Timer

A countdown timer in your peripheral vision does wonders for keeping you on task and focussed.  There are a number of ways you could do this, like using an App or a website  such as e.ggtimer.com.  Whatever your method, make sure you can see it while you work.

e.ggtimer.com has only one function, which is a countdown timer in a web browser. Choose how long you wish to count down, simply add the time after the web address, for example:

– 50 minutes would be: http://e.ggtimer.com/50minutes

– 60 seconds would be: http://e.ggtimer.com/60 (if nothing is written after your number, the site assumes seconds).

Keep It Simple, Stupid: Reply Using Four Sentences

Another thing that I struggle with is not getting too bogged down into the pleasantries. When your clients are also good friends, it’s hard not to check in on how their newborn is, or where they’ve travelled and so on … but there is a better method for doing that – it’s called picking up the phone!

But getting back to email: My tip is to simply get straight to the core of the email.

A website that has been designed to aid in this problem is four.sentenc.es. This policy keeps your responses brief, fast, and efficient, allowing you to respond in one minute or less to every email. The web site offers a template for a signature you can add automatically to your emails explaining your brevity.

Hit the Ground Running: Set Yourself Up for the Week

After reading a LinkedIn article a few months ago about starting your week on a Sunday afternoon, I’ve implemented a couple of recommendations from the article, including clearing email and small tasks before the week starts.  This stuff works a treat for your Monday Mindset!

In Summary

There’s quite a bit to implement here, but it’s all low cost and fairly easy to do. In summary, your moves are:

– Plan out and allocate uninterrupted time;

– Set a countdown timer;

– Reply using four sentences or less;

– Clear emails (and other small tasks) before the week starts.

Don’t Drive Your Business with Crap on the Windscreen – Why Xero Keeps it Clean

Imagine you’ve unknowingly parked under a tree full of birds, who all decide to use your windscreen for target practice. By the time you hop back in your car is covered in so much crap you can barely see the road, let alone what’s coming up ahead.

Now, would you start the engine and drive away?

You may think it’s a stupid question to ask. Of course you wouldn’t. That would be dangerous. But as we mentioned in our previous post of things that Business Owners need to implement to be successful, many businesses operate just as dangerously because their financial reports and forecasts aren’t up-to-date.

The shocking truth

Most accountants report on and deliver to clients using data that can be more than 11 months old.

It’s true. When accountants prepare a business’ End-Of-Year financials for June, they typically use bookkeeping records up to May the following year. And if the accountant provides any additional value (other than lodging the tax return), their advice is based made from the figures reported in these financials.

Ignoring everything that changed between July and May–practically an entire year.

As business owners, we often look to our accountants for advice. But if that advice comes only once a year, based on what may well be year-old data, how can we reliably hit our targets?

Fortunately for our business clients, Inspire CA takes advantage of a tool that can significantly improve report turnaround times.

Introducing cloud-based accounting software

The key to having live and (almost) real-time financial data is cloud-based accounting software. And that’s where our business clients have the advantage, because they all use Xero. We are solely Xero accountants.

Xero can connect directly with their bank, and receive expense information from photo-recognition data entry software and other add-ons to automate and streamline their reporting.

And because Xero is cloud-based, their data is never more than a few days old and can be reconciled quickly and easily each day, ready for reporting.

Another great benefit is their advisers can access the reporting and data just as easily. And as an adviser, there’s nothing like being able to run your eyes over a client’s reports and call to either congratulate them or see how things are going (depending on the figures).

The benefits of real-time reporting

It’s vital to know what’s happening in the business world in real-time. Trends are shifting more and more quickly, and you need to know how your business is performing and responding to internal and external forces. It’s the only way you can make clear financial decisions.

And that’s what makes cloud-based accounting such a smart business decision.

How many days after the month is over do you get your reports? If it’s more than 30 days, things really needs to improve. If you’re thinking about outsourcing your monthly bookkeeping, aim to have them ready no later than two weeks after the month is over. And if you’re doing your own bookkeeping, you should finish reconciling them within a week.

Make or break your business with Xero

Hopefully I’m preaching to the converted. But if you haven’t switched to cloud-based accounting software, do it now. You’ll have the information you need to make important decisions in real time.

Which is a lot better than trying to drive with business crap all over your windscreen.

Businesses for Good: Embedding the Concept of Giving into Everyday Life

One of the most exciting aspects of modern life is the feeling we wake up with every morning that something amazing could happen at any given time. The world is so huge, people are diligently working somewhere while we‘re asleep, and the world is so connected these days that if someone has an idea halfway around the world while we‘re sleeping, it‘s sitting in our Inbox when we sit down to have our morning coffee. That‘s an exciting way to live, and here at Inspire CA we‘ve always got our ear to the ground for new ideas – especially when it comes to making the world a better place.

Negative Inertia

Most people have difficulty overcoming the negative inertia that affects everyone. People at rest tend to stay at rest – the end result is that your chances of getting a donation or other contribution for a good cause goes up inversely with the level of effort required.

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When we were introduced to Paul Dunn and the Buy One Give One (B1G1: Business For Good) Project, we knew we‘d found one of those brilliant ideas.

Business for Good

B1G1 is an awesome concept. When your business joins up, it literally embeds giving into your everyday actions. It‘s called “micro-giving” and it is brilliant.

The examples are infinite. Your local coffee shop joins, and every time they sell a coffee, someone in the world got access to clean water – which we’ve even adopted right here at Inspire Café! Or you engage an accountant, and part of the fee you pay them automatically feeds a dozen people who are starving. It’s all about embedding the giving so it’s automatic, and about the giving being micro, so it’s painless and effortless – but cumulative.

Businesses get to choose the initiatives they want to support, and all it takes is joining B1G1 and configuring the impact you want to have. But that’s not all. It gets even more exciting when you learn about the Map.

The Map

The map can be found at http://businessesforgood.com, and Paul Dunn, current Chairman of B1G1, has created an awesome video explaining the sheer genius of the Business for Good Map below. On the B1G1 Map, you can see all the areas of the world where businesses have signed up with B1G1, and not only that – you can click on any individual business and see in real time the donations they’ve generated, precisely where those donations went and what for, and what other businesses support those specific initiatives. In fact, if you go to the B1G1 Map right now and type “Inspire CA” into the search box, we’ll pop up and you can see all the good we’ve done so far. Here’s a quick look:

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It’s brilliant. Removing the barriers that prevent people from doing well and making it into a constant, everyday part of normal life. No sudden efforts that then fade away, no stops and starts. Just a constant stream of good being done, all while we’re just living our lives and getting our work done.

If this aligns to your values, you can join today. There is literally no reason not to. Join today and experience what it’s like to know that everything you do not only benefits you and your business professionally, but benefits the world – and benefits it in a real-time way you can literally see on the map.

De-Mystifying Superannuation Contributions and Bonus Structures

Every good employer knows that rewarding your employees properly is the best investment in your company’s future you can make. (Maybe tying for importance with the correct business structure!)

With a competitive salary as the base, the Superannuation program intends to provide all workers with resources in their retirement through a cooperative funding between their employers over the years and their own personal contributions.

Bonuses paid out as part of an overall motivational compensation structure or as a reward for a particular service can be a fantastic tool for motivating and rewarding employees as well. Unfortunately, for many employers bonuses in relation to Superannuation Contributions is a confusing and intimidating field.

One unfortunate result of this confusion is fewer employers offering their employees bonuses of any kind. But the bonus is one of the most powerful tools we have to recognize and reward the people who make our businesses hum. Here’s our fast guide to superannuation contributions and bonus structures.

Superannuation Guarantee

We all know that superannuation is based on the employee’s ordinary time hours – that is, their usual set work time. In the case of a bonus, the first question to answer is whether or not the bonus should be considered part of these ‛regular’ hours:

If the bonus is a reward for achievements during an employee’s ordinary time hours, then the bonus sum incurs the usual superannuation guarantee requirements. This is the case for the majority of bonus payments made to employees under a salary agreement.

However, if the bonus is linked to a specific project or performance that is wholly outside of the employee’s ordinary hours, then Superannuation Guarantee payments are not necessary.

For example, if the employee takes it upon themselves to develop an internal program without direction from management and this is deemed an extraordinary effort that deserves a bonus as reward, these monies would not be counted as part of the company’s superannuation contribution burden.

Contribution Base

Business owners should also keep in mind that bonuses paid out do not necessarily affect the contribution base for superannuation contributions.

For example, in the 2013/2014 financial year, the base is $48,040 per quarter. Thus, any compensation package for an employee (which includes all bonuses and salaries as separate from ‛special’ bonuses discussed above) that exceeds an average of $48,040 per quarter hits the ceiling on contributions and thus the company does not have to pay more in superannuation contributions no matter how far the employee’s overall compensation exceeds the base.

What does it mean?

In the end, the benefits of motivating employees with bonus payouts far exceed the difficulties these bonuses cause in terms of tax and superannuation contributions.

The procedures and equations are not terribly difficult once the basic concepts have been mastered, and the company that offers a generous bonus structure in addition to a competitive base salary will of course attract the best talent in their field.

But everyone needs a little help now and then, and if you’re confused about superannuation and bonus issues, feel free to sign out and we can explain everything in clear language.

Looking for more? Here’s some resources from the ATO:

http://law.ato.gov.au/atolaw/view.htm?docid=SGR/SGR20092/NAT/ATO/00001

http://www.ato.gov.au/Rates/Key-superannuation-rates-and-thresholds/?page=21#Maximum_super_contribution_base

This guest article was written by Nick Webb, Financial Adviser of Brisbane Wealth Management firm, Stonehouse Wealth Management.

Ensure you Insure – The Golden Egg

I would like to share a story with you. It’s a story that will be familiar to a lot of you, especially because of its similarities to the classic tale of ‘The Goose That Laid The Golden Eggs’.

In a lot of ways, this story of the Golden Goose is a situation I face every day – but what does this have to do with Financial Planning?

The answer is that the story of the Golden Goose is one that many of my clients across all ages, income levels, and social positions deal with.

Would you insure the Goose, or the Eggs?

It all comes down to a single, fundamental question: If you had the mythical Goose that laid Golden Eggs, would you insure the Goose, or the Eggs?

All of us are alike in basic ways. We all have a source of income, we all carry some debts, and most of us have at least one dependent – a child or a spouse, or both. But one of the fundamental mistakes people make is thinking of insurance as something other than what it really is: Income Protection. Believe me, I know: I was once pretty naive about this subject too. Just like most of my clients, my answer to the question used to be: The Goose, of course!

Despite how fast most people come up with this answer, the answer they offer to my follow-up question is usually the same. When I ask, do you currently insure your income or your car? They almost always reply their car. And yet your income is the Goose in this metaphor, and your car is one of the Golden Eggs. Once you start labelling things like this, the illogic of insuring a car and not insuring your income becomes plain.

Income Protection: The Golden Goose

Income Protection will not only provide you with the means to sustain a lifestyle for you and your loved ones should you be rendered (through illness or injury) unable to work. I urge you to consider this paradigm that is so readily overlooked by the majority of us in our daily lives. While it is undeniably important to insure your Eggs, don’t forget to insure the Goose as well – that is, yourself!

Have more questions? Looking to fund your insurance from your superannuation?

Please get in touch with the team at Inspire CA or Nick Webb directly if you would like to learn more about Income Protection insurance. There are also avenues to structure Income Protection Insurance within your superannuation so that there is no direct hit on your personal cashflow.

Think you are a contractor? The ATO may disagree!

Why employees who take the day off actually get more work done!

Australian’s love a break from work. And what’s not to love – time off means family, friends, sunshine and an opportunity to recuperate. Whether they’re on annual leave, a public holiday or the great Australian ‘Sickie,’ Australians certainly do enjoy a day off.

However, media discussions on the subject tend to focus on negative aspects such as  ‘How much will any additional time off cost businesses and the economy in lost productivity?’ But this is a rather narrow minded view on the situation.

Yes, there is a cost to the organisation for every day off taken – but there are far more benefits than costs, both for the employee and the employer. In the final analysis, these benefits mean taking the day is a something that every business should encourage!

Benefits to employees

In addition to additional time to spend with family, unwinding and getting some well-deserved rest employees get several crucial benefits from time off.They return to work more enthusiastic and more satisfied with their job, and as a result they promote a more productive working environment. Employees who are tired and frustrated are far less engaged.

Benefits to employers

Employers who actively encourage staff to take regular annual leave are promoting a more productive and engaging working environment and will experience higher staff retention rates on average than employers who discourage time off.

Regular consumption of leave balances is also a cost saving measure for the employer, because annual leave accumulates in terms of hours, not a fixed dollar value. As employees gain pay raises while their leave time accumulates, the value of that leave time increases, often resulting in a much higher payout when it is finally claimed than if it had been taken at regular intervals at lower pay grades.  This is a compelling financial reason for companies to encourage employees to take their scheduled leave.

Additionally, from a tax perspective it is also important to remember that while the annual leave accumulated by your staff is an expense on the profit and loss statement in the year it relates to, it is not tax deductible until the amount is actually paid to the employee.

In Summary

Employers who fail to encourage their staff to take regular days off will experience lower staff engagement and retention, higher cost of employment and delayed tax benefits. On the other hand employers who insist on regular days off are in fact developing a more satisfying and productive working environment as well as saving their business money in the long run. Which type of employer do you want to be?!

Taking control of your Payroll

Employers in need of assistance with managing staff leave entitlements or broader payroll issues can contact Inspire CA for assistance.

 

The 21st Century Benefits of Online Signing Software

It’s become a bit of a joke – “Where are the flying cars?” Science Fiction from decades past always envisioned the 21^st Century with a few key elements of futuristic technology: The laser gun, the spaceship, and the aforementioned flying cars.

Yet here we are well into the 21^st Century and no flying cars yet.

Another promise of the future that hasn’t been kept? The paperless office. We’ve put people on the Moon and yet we’re still pushing paper around.

For the most part. A quiet revolution has begun that’s seeing more and more individuals and businesses take advantage of the benefits of online signing software – benefits that just about anyone who regularly deals with contracts, legal papers, or any other documents that require signatures can take advantage of.

Here at Inspire CA, we wanted to improve efficiency and cut down on paper waste and costs, so we launched a project to identify online signing options. We evaluated our options on the product’s environmental stability, affordability, convenience, security, and enforceability.

Environmentally Healthy

Signing documents online saves paper. Every year literally millions of trees are used to create the paper used in offices around the world, and this puts a lot of stress on the forests. While most paper companies work hard to maintain their trees and ensure a continuing supply, eliminating paper by using Online Signing Software would alleviate much of the demand and allow forests to grow back naturally.

More Affordable

With Online Signature Software, not only do companies save the costs of paper, but they save the costs of postage to send documents around the world for signatures, the costs of messenger services, and other associated costs. Online Signature Software allows people to transmit, sign, and return legally-binding documents without any associated physical costs.

Convenient & Secure

Not only can documents be routed for signature without the costs of postage or messenger services, but the documents can be routed instantly, saving days or even weeks of transmittal time. A document can be prepared in New York and transmitted for signature in Hong Kong at the press of a button.

Not only that, but just about any common digital document format can be used – Microsoft Word, Adobe PDF, and many others, including bespoke templates created in the software itself. The documents can also be transmitted in any way convenient – DropBox or other Cloud server, email – and a log can be maintained that shows everyone who viewed, signed, or otherwise came into contact with the document, a very handy feature for security and legal purposes.

Legal and Enforceable

Online Signature Software complies with international standards for security and chain-of-possession, ensuring that the signatures applied digitally are legal and enforceable around the world. Most world governments, including the European Union and the United States, acknowledge the enforceability of digital signatures.

In the end, we chose DocuSign for our online signing needs, because it ideally combined all of these features with a strong customer service ethic. DocuSign’s online signature software solved the limitations of paper signatures without sacrificing any security, enforceability, or other features. If you’re ready to step into the future, click here for more information!

Sitting Back and Thinking Forward – B1G1: Business for Good

 

The original article was published by B1G1: Business for Good on 3rd February 2014.  Written by Ted Schellenburg.

 

When we met Ben Walker, the CIO of B1G1 Lifetime Partner, Inspire CA in Brisbane the other day we knew we were in for something VERY different. Ben told us “The CIO stands for Chief Inspiration Officer.” An ‘inspiration officer’ at an Accounting Firm??

Then we met Cam Silk, the CEO, or “Chief Espresso Officer” of the Inspire Café.

We’ve never met one of those either at ANY Accounting Firm anywhere.

You see, the Inspire Café is at the very core of INSPIRE CA — the ‘CA’ stands for ‘Chartered Accountant’ — in Brisbane’s Doggett Street. Very quickly, you get the impression that these folks are not your average, every day kind of accountants.

Inspire Café is a brilliantly conceived café, an ideal meeting space and business centre for those in close proximity to the Central Business District and on the way to the Brisbane Airport. The idea was to create a space where business owners and entrepreneurs could unite over great coffee and a bite to eat and share ideas.

The accounting firm (Inspire CA) had already been a part of B1G1, and now so is the café. Inspire Café has four meeting rooms, with that great coffee and a full service, gluten free menu.

“For every coffee or drink we sell, a child receives access to water for a day – for each meal we provide, we feed a child at school in India,” Ben Walker said. “We’re also looking to have milestone contributions in 2014. For example: for every 10,000 coffees, we would look to send a child in Cambodia to university for a year!”

“We’ve had great feedback from our customers,” Cam Silk added. “We’re already getting a strong sense of community, and we just opened the café in December! Most people want to know how to get involved in the giving – it’s great!”

These guys had a dream. A dream of a place you can enjoy a good coffee and something decent to eat with entrepreneurs and business people from different sectors, united by the special pleasure that comes from finding somewhere where you feel you belong.

Men and women who know the codes of business because they’ve been involved in start-ups, seen the rise and fall of big names and small. People who would like to hang out somewhere central with a coffee while they plan their next move. Or even a beer on a Friday night as a way to kick off the weekend. (Ben has already decided to add BDM to his business card, as in Beer Development Manager.)

Brisbane’s new Inspire Café is a place to relax, to kick ideas round in a meeting. To sit back, and think forward.

“We work with people from all kinds of backgrounds,” Ben told us. “People with amazing skills and rich deep knowledge. And all this time we’ve been wondering how to get all these great people together. The simple goal of these meet-ups is to bring passionate, inspiring and aligned people together in the same room to talk about living a life and doing work that matters.”

“And one of the things that really matters to us is B1G1. It gives everyone involved, us, our team, our suppliers and our customers an extra sense of purpose in everything we do. And that’s just a great feeling every day.”