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Instant Asset Write Off Extension

The Federal Government recently announced that the Instant Asset Write-Off has been extended until 31 December 2020.

Australian businesses with less than $500 million annual turnover will be able to take advantage of the write-off and invest in assets to support their business. This government initiative is designed to help the economy re-open and boost economic growth. The instant asset write-off applies on a per asset basis, so eligible businesses can immediately write-off multiple assets provided they each cost less than $150,000.

The instant asset write-off can be used for:

  • multiple assets as long as the cost of each individual asset is less than the relevant threshold
  • new and second-hand assets.

Changes this year

From 12 March 2020 now through to 31 December 2020 the instant asset write-off details are below:

  • threshold amount for each asset is $150,000 (up from $30,000)
  • eligibility has been expanded to cover businesses with an aggregated turnover of less than $500 million (up from $50 million).

Eligibility

Your eligibility for the write-off depends on:

  • your aggregated turnover
  • the date you purchased the asset
  • when it was first used or installed ready for use
  • the cost of the asset being less than the threshold ($150,000)

You can find more information on which assets can you claim as an immediate deduction on the ATO website here. Feel free to contact us so we can discuss how this might apply to your business.

Five Ways to Increase Your Profit

For many small businesses, the best way to improve profitability is to increase turnover, as there's no limit to sales but there is a limit to how much you can reduce your costs.

Let's look at how you can focus on each of the five ways in our profit increase calculator to achieve your goal of improving profits.

1. Increase your leads

By interacting with greater numbers of people, you'll increase your chances of turning more consumers into customers – or at the very least, having them lead you to potential customers.

For example, if you own a convenience store and you can come up with some attractive signage out front to get more people into your store, you'll increase your leads.

So what can you do to increase leads or make more people aware of your business? A few tactics you might consider using to increase your leads include:

  • Advertising – set a budget and increase how much your business is promoted.
  • Direct marketing – work out your target audience and market directly to them via email.
  • Network – attend industry events and conferences to meet potential customers. These may be moved online for the meantime.
  • Create a website – to open online and international opportunities.
  • Develop new distribution channels – think about using agents, licensing your goods, or using new distributors.

2. Convert more of your leads into customers

How many potential customers walk out of your store, leave your website, or inquire about your services without making a purchase?

Just imagine if you could convert 10% of those people into customers. How many extra sales per day would that be?

A few tactics you might consider using to convert more leads into customers include:

  • Arrange training for employees – on sales conversion and sales closing methods.
  • Personally attending a sales training course.
  • Running demonstrations – for potential customers to see what you have to offer and how they could benefit.
  • Highlighting the benefits of your goods or services – through promotional material, your website, blog advice, social media platforms, and free trial offers.
  • Preparing incentives – for your staff to offer to potential customers, hopefully encouraging them to purchase.

3. Increase the number of items you sell per customer

If you can entice your customers to buy just one more item from your business each year, your sales (and hopefully your profits) will increase.

A few tactics you might think about using to increase the number of items you sell to each customer include:

  • Widening your product range – by asking customers what else they would be interested in buying from you.
  • Bundling products and services together – like adding after-sales help to certain products.
  • Increasing capacity and capability – for example, purchasing extra equipment to increase your capacity while hiring additional staff to enhance your capability.
  • Researching your competitors' offerings – to find product or service opportunities.

4. Increase your average sale

Can you come up with some ways of increasing the average value of each sale you make? Rather than hiking up prices, see if you can increase prices by small margins (like 1-3%) or find ways to sell higher-priced items more often.

A few tactics you might think about using to increase your average sale include:

  • Training your staff – so they're confident offering complementary items and upselling more expensive goods.
  • Increasing prices across the board – would your customers notice a small price increase? Consider informing them and trying it, as the extra money will go towards your bottom line.
  • Advertising your higher-valued products or services more often.
  • Developing a premium product or service – and encouraging your regulars to go for it.

5. Increase net profit percentage

An easy way to increase your net profit is by lowering your fixed costs (business overheads). Identify your top five expense items and track any changes before taking steps to reduce them.

A few tactics you might try to increase your net profit percentage include:

  • Identifying and monitoring your top five expenses in your budget reports.
  • Finding out where you can make savings and reduce costs.
  • Concentrating on higher-margin services or products.
  • Looking into alternative suppliers with cheaper supplies.

Review these five ways of increasing your profits at least every year. In the meantime, plug some figures into our profit increase calculator to test what you could change and the effects of those changes on your profit.

By using simple, practical steps, you can improve your business's profitability. Chat to us to find out more.

How Cash Flow Forecasts can Help You

Managing cash flow is a vital part of running a successful business. Some business owners think managing cash flow simply means keeping track of how much money enters and leaves their business, but there's actually more that goes into it.

Cash flow forecasting, for example, is an incredibly valuable tool that helps you anticipate cash flow issues, plan for days when your cash flow is limited, and show the bank that you are prepared.

It's an important process that you shouldn't ignore. Here are some ways cash flow forecasts help entrepreneurs.

 
They help identify cash flow issues before they happen

Most businesses go through slow periods. Sometimes, those periods are obvious. A seasonal business, for example, will have decreased income during the off-season than during the on-season. There can be less obvious peaks and valleys in your income, though, that you have to prepare for.

Your cash flow forecast can help you monitor your day-to-day cash flow and anticipate when times will be slow before they hit. By anticipating when cash coming into your business might be light-or when you might have to spend more than you're accustomed to-you can avoid a cash crisis.

By examining your cash flow over the previous years and forecasting your future cash flow, you can better anticipate financial cycles and how they affect your bottom line.


They help plan for tougher times

It's tempting to spend money when you have a lot coming in. Your business may need new equipment or maybe you want to give all your employees a raise or a bonus.

That's a great thing to do, but it's only helpful if it doesn't put your business in jeopardy financially.

Cash flow forecasting is a great reminder about how your bank accounts will look during tougher times, so you can make important decisions about when to spend your money and when to save it.

If you know a slow period is coming up, it might be better to save your money for now and give out smaller bonuses. If you can anticipate your slow period, you can plan major purchases and bill payments around it, to stretch your cash further.

At least by conducting cash flow forecasts you're less likely to be surprised by a sudden cash flow crisis.

They show banks you can plan ahead

Banks prefer to give their money to entrepreneurs who show they are capable of planning ahead. Financial institutions prefer business owners who are realistic with their financial projections and show they have a means of addressing cash flow issues.

Final thoughts
Forecasting your cash flow gives you a clearer picture overall about your business and how the money moves into and out of it. It provides important insight into your company's financial health.

If you haven't conducted cash flow forecasting so far, it's a good idea to get started now so you have a better understanding of your company's finances and so you can prepare for the future.

Want help to improve your cashflow? Contact us today.

We've heard this before: the COVID-19 pandemic is an unprecedented global health and financial crisis that has caught many off guard. While the threats to human life are very real, the damage to the health of businesses is really just starting to show.

 

The seriousness of the disease and the lack of a vaccine (at the time of writing this) have prompted governments around the world to impose strict measures to contain the virus. These restrictions in people's movements and the temporary shutting down of non-essential services have definitely taken a toll on businesses.

 

While there has been a lot of talk on how to avoid contracting the virus and how businesses can operate safely to adapt to the current conditions, this article will focus on helping you manage the financial aspects of your business to survive COVID-19. Read on for our tips on cushioning the impact on your business.

Update your financial records.

The first step in planning your course of action in such a difficult environment is getting a crystal clear understanding of the financial position of your business-- this means updating your financial records and keeping them in order. Knowing things such as your cash position and assets that can be sold quickly will go a long way in helping you make informed business decisions. Good records build a solid foundation for a successful business. They're also really important when applying for government grants.

Examine the financial health of your business.

Following on from the first item, it is important to get a good grasp of your business' current financial health through a careful analysis of your books and statements. By looking at key financial figures, you will get an idea of how your business is doing. You can see fundamental factors such as the liquidity and solvency of your business which will help you decide on the best steps forward as you deal with the crisis and the aftermath. Chat to us for help with these financial pieces.

Improve your cash flow.

A lot of businesses across the world are facing cash flow problems at the moment. You are certainly not alone. However, the key here is not letting the problem worsen.

 

Preparing a cash flow forecast should give you some forewarning before issues even arise and will allow you to address them early on. By quantifying your forward bookings, forward orders, and work in progress, you will get to identify future cash flow and plan accordingly.

 

 You can also take the following measures to boost your cash flow:

  • Identifying the demand for your products or services, so you'll know where to focus on and where you can reduce stock orders
  • Cutting back on unnecessary expenses
  • Urging your debtors to pay you, negotiating on a payment scheme that will work for both of you
  • Seeking payment extensions or debt re-structuring
  • Invoicing as soon as you deliver the product or service
  • Seeking external investors or lenders
  • Taking advantage of financial support from your government

Increase online sales where possible.

With the government implementing stricter restrictions to prevent the further spread of the virus, you should find ways to move your products and services online - if you can - and continue to serve existing and new clients. The situation that we are in is forcing business owners to re-imagine their business and re-evaluate their business models. You've got to adapt and be resilient. It's those businesses that will survive.

Survive 2020 by Managing Your Financials

It's safe to say not many of us factored a global pandemic into our 2020 business plans. Although there is no foolproof strategy to get through what's proving to be a turbulent 2020, the finance tips shared here should be able to give you some guidance on minimising the risks on your small business.

 

Want some more help? Our team love to help businesses. We'll help you develop a plan to weather the headwinds of the coming months, while saving you time and money along the way. Contact us today and we'll work through it together.

Sometimes We Have to Say No

A little note from us

Our role as advisors is to support small businesses, but we cannot compromise our standards along the way, particularly as the effects of COVID-19 continue to rage on for our clients.

 

The Tax Practitioners Board (TPB) together with the ATO recently released a statement as a reminder of the ethical responsibilities of accountants and bookkeepers. The core of their message was that the ATO will not look favourably on businesses who seek to become eligible for grants, loans, benefits or other assistance that they would not ordinarily be entitled to.

 

They are reinforcing that you will not be eligible for schemes like the Cash Flow Boost if you are found to become entitled to them when you would not ordinarily be. The statement says "any sudden changes to characterisation of payments may cause us to investigate."

 

It's good to remember that the ATO has your information from your activity statements, so it's best to let things happen as they normally would, and seek only the benefits you're entitled to. We can help you on that front.

 

So, if you come to us asking to change your payroll, increase the amounts you're paying, register you for PAYG-W have another request, we're going to ask some questions.

 

There's nothing to worry about if you have a genuine business case for these requests, and we will always talk to you to find out what is best. We just ask you to work with us.

 

We are here to support you and want to see you get through this next stage stronger than ever.

 

Thank you.

$10,000 Grants for Struggling NSW Businesses

$10,000 grants for NSW businesses

On Friday 3rd April the NSW state government announced $10,000 grants as fast relief for NSW businesses that need it most. The new assistance scheme is for businesses struggling to cope with the COVID-19 shutdown, and is based on a similar scheme rolled out during the bushfires.

 

Premier Gladys Berejiklian said the "grants will provide a big boost, and we will make the application process easy to ensure small businesses can receive some cash-flow as soon as possible to meet pressing needs." To be eligible for the grant, businesses need to have fewer than 20 employees and meet other requirements detailed here.

 

Eligible businesses can apply for a grant of up to $10,000. These businesses must:

 

  • Have between 1-19 employees and a turnover of more than $75,000;
  • Have a payroll below the NSW Government 2019-20 payroll tax threshold of $900,000;
  • Have an Australian Business Number as at 1 March 2020, be based in NSW and employ staff as at 1 March 2020;
  • Be highly impacted by the Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 issued on 30 March 2020;
  • Use the funding for unavoidable business costs such as utilities, overheads, legal costs and financial advice;
  • Provide appropriate documentation upon application.

 

Read more here.

 

Please get in touch with us if you would like to discuss this grant, or any other business queries.

Superannuation Guarantee Scheme

 

In March the government introduced a Superannuation Guarantee Amnesty. The amnesty allows employers to disclose and pay previously unpaid Super Guarantee Charge, including nominal interest, that they owe to their employees for past quarters (1 July 1992 to 31 March 2018).

The benefits:

  • Tax deductions for payments of the Superannuation Guarantee Charge
  • No administrative penalty of $20 per employee
  • No Part 7 penalties (which could otherwise be 200% of the SG Charge owing).

You can find more details on the ATO's website.

Important: Employers participating in the amnesty need to apply online by 7 September 2020.

Paying superannuation is a key part of being an employer. It is much easier for the ATO to detect non-payment of super, so non-complying employers should wisely consider their options, and apply to the ATO to take advantage of the amnesty.

Please ask us if you have a question.