Xmas gifts for you and your customers

Christmas is nearly here, and it’s a great time to let your customers and team members know how much you appreciate them. But this has been a tough year – it’s not easy to know how much to spend or whether it’s appropriate to throw a party.

Gifts, cards and donations

The traditional professional Christmas gift tends to be food-related: hams; hampers; bottles of wine or spirits. Those can be ordered online and sent out, although it’s best to avoid anything that will spoil considering current delivery delays and people who may not be working in the office.

For customers or clients who you know really well, something tailored to their personal interests can show you’ve been paying attention. And for both customers and staff, a handwritten card is a lovely touch and costs very little.

Another option is a donation on behalf. Many people really appreciate an email or card that lets them know you’ve donated money to a charity on their behalf, particularly if you can include details like, “The local foodbank will use this donation to feed families on Christmas Day.”

If lockdowns allow, a coffee or lunch for higher value clients is an excellent way to build stronger relationships as well as making the most of the Christmas season. You might spend more this way, but for your best clients this can be far more memorable than a gift.

For your team, a hamper is probably a less popular choice. A Christmas bonus might be appreciated, but do run the numbers first. A supermarket voucher retains its full value, while a cash bonus must be taxed. Talk to your team – they may prefer a paid day off rather than any gift.

How much should you spend?

You might like to create categories based on how much your clients spend with you and how valuable they are to you. The top customers might all receive a larger gift, while the smaller customers might get a something more modest.

Christmas budgeting

Wondering how much each client or customer has spent? Not sure what you can afford to budget for Christmas gifts? We can help.

Get in touch and we’ll run the numbers to give you the insights you need.

How are cryptocurrency transactions taxed in Australia?

Whether you’re currently involved in a cryptocurrency like bitcoin, or considering buying a cryptocurrency, it’s vital to explore the tax implications. While these will vary according to your circumstances, and it’s important to seek professional advice, there are some basic tenets you can start with.

Getting started

No matter how you intend to use your cryptocurrency, you must keep accurate records of your buying and selling.

Your records must include:

  • transaction date
  • the value of the cryptocurrency in Australian dollars
  • what the transaction was for and who the other party was, including their cryptocurrency address.

Tax responsibilities

In Australia, cryptocurrency transactions are subject to both income and capital gains taxes. While your digital wallet can contain different types of cryptocurrencies, each one is counted as a separate asset for Capital Gains Tax (CGT).

A Capital Gains Tax event occurs when you ‘dispose’ of your cryptocurrency. Disposal may mean that you:

  • sell or gift cryptocurrency
  • trade or exchange cryptocurrency
  • convert cryptocurrency to fiat currency
  • purchase goods or services with cryptocurrency.

If you have transacted with a foreign cryptocurrency exchange you may have tax responsibilities in another country.

Personal asset use

Personal use assets are not generally subject to tax on transactions. Your cryptocurrency use may be regarded as a personal asset if it is kept or used to purchase personal items. This means that capital gains/losses that arise may be disregarded. For example, buying cryptocurrency specifically to purchase an item that can be paid for using cryptocurrency could be considered personal asset use.

It’s important to know that this does not apply if you are buying cryptocurrency as an investment, as part of a profit-making scheme or as part of a business.

Keeping up to date

Cryptocurrency is a rapidly evolving area. It’s important to stay up to date and understand any developments in tax consequences. The ATO has a guide, including examples and links for additional information to help you.

Get in touch. We can explain the ATO’s rules and regulations for your investments and provide guidance for your situation.

Is your business focused enough on cyber security?

We live in a digital world where our company’s data and (crucially) our customers’ data is under constant attack. Hackers are always looking for new ways to break into your systems and databases – and this has resulted in many significant data breaches in recent years.

When your security is breached, and your data is compromised, this isn’t just an IT issue, however. It’s a breach of trust between you, your customers and your suppliers – one that can be hugely damaging for your brand reputation and consumer’s perception of the company.

So, why are so few companies taking cyber security seriously? And what can you do to enhance your cybersecurity and protect your valuable data?

In the 21st century, your data = your business

It’s the customer information in your CRM system, the supplier details in your invoicing system and the financial data in your accounting software. It’s your bank account details, your confidential client information and your company’s secret intellectual property or hard-won R&D findings.

If you lose your data, you damage the business too. So protecting the safety and security of your data and systems has to be a top priority for any business owner.

To boost your cyber security:

  • Make cyber security a company-wide concern – if a data breach occurs, there’s no use blaming the IT department after the fact. Cyber security has to be a concern for the whole business and something where you have clear advice, processes and training in place for. The better your people are prepared for protecting the company’s valuable data, the less chance there will be of a security error or accidental data breach.
  • Keep devices and computing hardware secure – where your employees are using laptops and work mobile devices, it’s vital that they keep this hardware safe. Don’t leave computers unattended in laptop bags in a coffee shop or bar, and don’t leave your phone unsupervised on a hot desk. Offer secure lockers and desk drawers where laptops and devices can be secured and always think about the security implications of leaving your hardware anywhere other than in the office.
  • Use a secure network connection – when connecting to work applications, databases and shared folders, always use the company network or an approved virtual private network (VPN). By using a secure network connection, you greatly reduce the chances of your data being intercepted and stolen, with VPNs allowing employees to log in securely when off-site or working at a client’s premises.
  • Save important data in the right place – you should have clear protocols regarding what kinds of data can be saved, and where this information should be stored. If employees are storing spreadsheets full of confidential client information on their laptop hard drives, you are only one lost laptop away from a security breach. Set up clear guidelines on which drives and folders to use, and make sure only the right people have access to any confidential folders and content.
  • Use proper authentication and encryption – use two-factor authentication or even multi-factor authentication for access to all your cloud and SaaS tools. And make sure you have proper data encryption of any confidential information that’s shared. By putting the best possible security steps in place, you greatly reduce the risk of a slip-up.
  • Factor in the added security threat of WFH – with so many employees now working from home (WFH), there are extra threats to factor in. Good cyber security at home means using a secure VPN, keeping laptops safely stored, always using the latest versions of applications and not sharing passwords with family or flatmates etc.
  • Log all security breaches – if the worst-case scenario does happen, make sure to log every single security or data breach – and be transparent about what’s happened when communicating with customers, suppliers or employees who may have been affected. The sooner all your stakeholders are aware of the issue, the sooner you can work to resolve the problem and limit the potential damage.

Speak to IT security experts and protect your data

Keeping your data safe and secure is now a foundational need for any business. If you want to reduce your security worries, it’s sensible to speak to a cyber security expert. They will be able to review your current systems, networks and security practices and advise you on the key actions that are needed to tighten up your security.

Streamline your business administration with digital record keeping

Good record keeping is the mainstay of accounts management. It assists you to both meet your compliance obligations and provide verification for all your business transactions.

The Government requires that relevant records exist to support all business transactions – purchases, sales, payroll, and other business matters such as loans or foreign currency dealings. It is a business owner’s responsibility to maintain and store accurate records for all financial transactions.

Did you know that you are allowed to store all business records digitally? This is both more efficient and sustainable than having to keep years’ worth of paper records at your office.

The most important thing to take care of if you are moving to electronic record keeping is the security of your information.

Using systematic electronic record keeping makes it so much easier to run your business, as you will not waste time trying to find documents when you need them — whether that’s for yourself, your bookkeeper or your tax agent.

Most government departments allow business records to be either in paper or digital format. The legal requirements for record keeping are the same, regardless of format.

All records must be:

  • True and correct
  • Unaltered once stored
  • In English and legible
  • Stored in a secure system, whether physical or digital
  • Easily accessible if required
  • Held securely for the statutory five to seven years, depending on the type of record.

For best protection, store records both locally on your business computers and secure external online storage. This makes the records easily accessible from anywhere at any time. Always take care of who has what level of access to your documents and manage user access accordingly.

If you need help setting up digital business systems, we’d love to hear from you. We can also get you set up with encrypted digital signature technology to streamline your business admin even further.

7 financial habits to help make you smarter with your money

Habits that might help increase your financial smarts.

Being smart with your money is about knowing yourself and your strengths and weaknesses, and then setting things up accordingly.

It’s about building habits to carry you when your willpower stumbles.

Check out our list of seven habits that might help increase your financial smarts.

1. Automate whatever you can

Automate your savings, automate your loan repayments, automate your bills.

The fewer steps you have to actually make to move your money to where it needs to be, the more likely you might be to stick to it.

The great thing about automated savings and repayments? Ideally, once it’s set up, there are zero steps for you to do each month. You can set and forget.

2. Have specific, meaningful goals

It can be hard to stick to your savings budget, especially when you have to give up on yet another thing to make it happen.

But you’ll likely feel less of a twinge when you have to skip that extra drink when you remember the money’s going towards something you really want.

Whether it’s a holiday, a house, retirement, or even a less responsible-sounding purchase such as a flash new tattoo, it’s great to have a goal.

3. Invest

Keeping all your extra money in a savings account isn’t always as savvy as it sounds. Sure, there is little risk, but over time, your purchasing power drops lower and lower.

If you want to be more proactive, look into investing. It’s not as scary as it sounds and you don’t have to be a Warren Buffett-like whiz. Chat to a financial advisor or take a look at some of the apps out there (such as Spaceship Voyager), which make investing more accessible.

4. Don’t spend that unexpected cash

Tax refund? Inheritance? Birthday money?

As tempting as it might be to treat yourself, you might be better off tucking that extra money away in a savings or investment account or putting it towards your debt.

After all, if you weren’t expecting to get that money, you won’t miss it. And your financial goals will thank you!

5. Prioritise high interest debt

If you’ve juggling multiple debts, it can be really frustrating trying to spread out your cash to cover all the repayments.

Sound familiar? If so, you might want to consider the avalanche debt-busting method.

First, you find the debt with the highest interest. For all your other debts, you make the minimum repayments. You then put everything else towards knocking off that high interest debt.

Once you’ve done that, do the same for the debt with the next highest interest.

You’ll end up paying less interest overall, plus you’ll feel great each time you completely finish paying something off.

6. Track your spending

Doesn’t matter how you do it, just do it: use a spreadsheet, a notebook, or one of the countless personal budget apps available.

Seeing exactly where all your money is going can be the wakeup call you need to change your behaviour and get on track.

And hey, if you’re happy spending $87.50 on food delivery services every week, that’s cool! At least you’re making an informed decision.

7. Learn however you can

Finance, investing, and optimising your finances generally? Well, they can seem a bit scary.

Rather than waiting until you need to know something specific — oh God, what’s the best way to set up this investment property so I don’t lose everything to tax? — start consuming information earlier on. Whether it’s books, blogs, podcasts, or videos, find a few you like, and let your brain start absorbing the information.

Over time, you’ll develop a general understanding of how things work, which will make your research and decisions easier when the time comes.

Payroll Updates – Minimum Wage, Super Increase and STP Finalisation Date

Navigating Payroll? We can help keep you up to date on changes this year, including new rules for casuals.

Minimum Wage Increase – 1 July 2021

The national minimum wage increases on 1 July by 2.5% to $20.33 per hour (or $772.60 per week).

The minimum wage increase applies to employees if an award or national minimum wage defines their pay rate.

This year, the Fair Work Ombudsman (FWO) has implemented minimum wage increases to awards in a staggered approach. Most awards increase on 1 July; however, the Retail Award will increase from 1 September, and a few awards will increase on 1 November.

For full details of award increases, visit Fair Work Ombudsman Annual Wage Review 2021.

Changes to Casual Employment

The Fair Work Act has been amended to include a Casual Employment Information Statement (CEIS), a formal definition of casual employment, and a pathway for casual employees to become permanent employees. Employers must now provide the CEIS to all casual workers upon starting with the employer, along with the National Employment Standards and Fair Work Information Statement. Visit the FWO Casual Employment Information Statement webpage for details and to download the form for your employees. For more information about casual employment definition and the options for becoming a permanent employee, visit FWO Changes to Casual Employment to check if you have to offer permanent positions to your employees.

Superannuation Increase from 1 July 2021

The superannuation guarantee statutory rate increases to 10% from 1 July. Your payroll software should automatically capture the changes, but check the rate is correct when you do your first pay runs in July. Review any agreements or annualised salary arrangements you have with employees that may be inclusive of superannuation.

Single Touch Payroll Finalisation

Remember that this year you need to finalise all STP data by 14 July.

Employers with a mixture of employees and closely held payees have until 30 September 2021 to make the declaration.

Small employers (fewer than 19 employees) that only pay closely held payees have until the payee’s income tax return due date.

Need help?

The start of the financial year is the best time to review your payroll setup, policies and costs. Talk to us if you need to implement payroll policies, review payroll costs or update your casual worker details.

Should I focus on profits or cashflow?

Turning a profit is at the heart of running any successful company. But should profits be the only financial focus if you’re looking to create a stable, long-term business?

Cashflow is the beating heart of your business. Without an even and predictable flow of cash into the company, you can’t cover your overheads, you can’t pay your employees and you can’t run your day-to-day operations – let alone think about expanding and growing the business.

So, what’s needed is a healthy cashflow position AND a good focus on driving profits.

Keeping on top of the financial management of your business can be hard work, especially if you’re new to accounting and the technical terms that are used to talk about money.

But if you’re going to be in control of your financial destiny, it’s important to get your head around the important process of cashflow management. This is especially true in the current business landscape, where sales revenue may be less buoyant, cash can be tight and the market is going through a challenging time.

Let’s look at some of the key things to understand about your finances:

  • Profit is a by-product of a successful business – as the owner, you want to make profits, but profitability isn’t the only goal. A business can easily be profitable, but also be highly unstable in the longer term. What you want is stability and consistent revenues.
  • Cashflow is the blood that keeps your business alive – good revenues (income) serve to bring cash into the business. Without cash to cover your operating expenses, you have no means to keep the lights on in the business. So cash really is king!
  • Know your cost base and overheads – the flipside of your cashflow position is your costs. In an ideal world, you want more cash inflows than cash outflows, so it’s important to know your expenses and costs and to manage them carefully.
  • Be proactive about spend management and easing expenditure – if you can take action that reduces your spending, that is hugely positive for your cashflow position. Choose cheaper suppliers, negotiate better deals and bring that cost base down.
  • Drive more revenue, through increased sales and marketing activity – if you can increase your revenues, you also boost your cashflow. So it’s important to be proactive about running targeted sales and marketing campaigns to increase your sales.
  • Keep the cash flowing and the profits take care of themselves – if you achieve the ideal cashflow position, the company sits on solid financial foundations, the cash is there for investment and the business can grow. It’s that simple.

Talk to us about improving your cashflow management

Whether you’re new to running a business, or a seasoned owner who needs some financial support, we can give you the cashflow advice you need.

 

We’ll review your finances, delve down into your cashflow and will come up with key ways for you to increase your cash income and reduce your cash expenses. It only takes a few small changes to achieve a far better cashflow position for your business – helping you maintain positive cashflow AND generate meaningful profits.

 

Get in touch to talk through your cashflow concerns.

Super for beginners: How superannuation is taxed

Superannuation in Australia has its critics for, among other things, its fees, complexity, and constant government tinkering with the rules. But even the critics would agree that super remains the most tax-effective investment vehicle for your retirement savings.

The system is designed to:

  • Have lower (concessional) tax rates for contributions you and your employer make into your super fund and earnings on investments inside your fund.
  • Generally, provide you with tax-free withdrawals in retirement (once you reach your preservation age and meet a condition of release).
  • Super can only be accessed early (i.e., prior to your preservation age) in specific circumstances (such as if you face severe financial hardship, become permanently disabled, or are diagnosed with a terminal illness).

While the taxation of super is attractive, it is also complex. That is why it is generally worthwhile seeking independent professional advice based on your individual superannuation circumstances. However, it is still important to have a general understanding of how super is taxed in Australia to guide your decision-making.

There are three stages when super can be taxed:

1. On the way in when your contributions enter your fund.

Super contributions are generally taxed at the concessional rate of 15%. However, the tax payable depends on the type of contribution you make and the amount you earn.

2. Inside the fund, on earnings from your investments.

Your super fund investment earnings (such as interest, dividends, and rental income) are generally taxed at 15% in the accumulation phase while you are making contributions to your fund, less any allowable tax deductions or credits, such as franking credits from Australian shares under the dividend imputation system.

Franking credits are for tax a company has already paid. Super funds (including self-managed super funds) can use these credits as an offset against their taxable income.

In addition, all Australian super funds are liable to pay capital gains tax on any capital gains made on the sale of capital assets such as shares or property. The capital gain is the difference between the selling price of the asset and its cost base. This gain is taxed at 10% if the asset is held for longer than 12 months. Capital gains made on the sale of assets held for less than 12 months are taxed at 15%.

However, if your super is in the retirement phase, there is no tax on your investment earnings. There are limits to the government’s generosity though, in the form of a transfer balance cap, which limits the amount of your funds that can be transferred from the accumulation phase to the retirement phase. This cap is currently $1.6 million.

3. On the way out, when you withdraw benefits (though these are generally tax-free if you’re over 60).

When the time comes to start drawing down your super, benefits can be paid as a lump sum, an income stream, or a combination of both. As mentioned earlier in this article, this generally only happens once you have reached your preservation age and met a condition of release. If you’re aged over 60 when you access your super, withdrawals will usually be tax-free.

The bottom line

This article has explained in broad terms how super is taxed in Australia, but it’s worth keeping in mind that superannuation tax legislation is complex. You should seek independent professional advice based on your individual superannuation circumstances.

The information contained in this article is general in nature.

Single Touch Payroll will change the way you report your tax and super

What is Single Touch Payroll

Single Touch Payroll (STP) is a new way for employers to report tax and super information to the ATO. It starts from 1 July 2019 for employers with 19 or less employees.

You’ll report the following information through an STP ready solution – such as payroll software:

  • payments to employees such as salaries and wages
  • pay as you go (PAYG) withholding
  • super information.

The way you pay your employees won’t change, however you will be sending us this information each time you pay them.

Start reporting any time from 1 July to 30 September 2019. If you can’t start reporting by this time, you’ll need to apply for a later start date. An online tool to help you do this will be available on the ATO website in April.

How to get started

  • If you already use payroll software – check to see if it offers STP reporting by talking to your software provider or viewing their website.
  • If you don’t use payroll software – you can choose an STP ready solution or talk to our office for advice on the best solution for your business.
  • If you use a registered tax or BAS agent – you can ask them to report through an STP ready payroll solution on your behalf.
  • If you have 1-4 employees – you can choose a low-cost STP solution. Find out more at ato.gov.au/STPsolutions.

How to Save on Small Business Taxes

Organising expenses receipts can save you money on business income taxes. Sounds too simple, but the truth is most people are not very organised when it comes to filing receipts and keeping records updated for tax purposes.  Here are four reasons you should start organising information for next years’ tax returns, and how organising receipts can save you money:

  1. You Will Do Your Taxes Sooner
    Filing taxes on time can save you money because you will not have to pay penalties for filing late. You are more likely to keep putting off preparing your taxes if you do not have everything right in front of you. No one likes digging for receipts. Then there is always that nagging feeling that some receipts are missing and the temptation to put off filing to give yourself more time to find missing receipts. Here are some tips to getting better organised: file receipts as they come in; set aside time each day or week to enter receipts, and; mark them as they are recorded/entered.
  2. You Will Save Money
    For every expense receipt you cannot find, you will pay more in tax dollars. Many business expenses are tax deductible – for every one you miss, you pay more on income. If you ever get audited you must have the receipt to prove the expense. Give us a call, or book an appointment to see if you are taking all the deductions allowed.
  3. You Have More Time To Budget For Taxes You Owe
    If you owe taxes, and wait until the last minute when taxes are due, you have less time to set aside money to pay them. Many business owners are surprised at the end of the year when they discover they have to pay a lot more taxes than anticipated.
  4. You May Get A Refund Sooner
    Yes, it does happen sometimes. If you overpaid and are due a refund, the sooner you file your return, the sooner you will get your refund.