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Thinking about your cash flow

2015-10-15 23:08:00 editor

If the three most important things in real estate are “location, location, location,” the first three rules of business are “cash, cash, cash.” It is necessary to be profitable, but “profit” is a number that shows up on your accounts at the end of the year; cash is the money you have in the bank. In a small business, it is cash that determines whether you can pay your bills.

Businesses can’t get money in unless they get their invoices out. However, many business people delay sending out their bills. This may be because they feel uncomfortable asking someone for money, afraid of being challenged on how much they’ve billed, or just too busy working to bill for it. The longer you wait to send out your invoices, the greater the chance you won’t get paid.

No matter what business you’re in, you’re going to have a lag between outgo and income. If you’re a consultant, you have to pay for your phone, stationery, marketing materials, and rent before you get your first client. Once you’ve got them, you’re not going to see complete payment for at least 30-60 days after you finish a project. Things are much worse if you’re a manufacturer. You’ve got to pay for raw materials and equipment many months before you’ll see final payment.

Draw up a cash flow projection. Even if you don’t write up a budget or income statement, it is a good idea to sketch out when you expect money to come in and when you need money to go out. In your projection, be sure to include:

  • Cash receipts, including income from sales and income from financingCash disbursements, including all expenses (cost of goods, operating expenses, loan payments, income tax payments, etc.)

  • Net cash flow — opening cash balance plus receipts, minus disbursements

  • Ending cash balance
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Utilise your small team for success

2015-10-15 23:07:00 editor

Small teams provide many benefits to both employees and employers. In comparison to larger teams, small teams are shown to have higher levels of productivity and effective communication. However, a vital component to the success of these teams relates to the support and coordination provided by management. Ways to maximise your small team’s efforts can include:

Cross-functional communication
If your employees understand how the other functions of your business work and how their work will directly impact all aspects of the business, it can provide them with more responsibility. It allows for all staff to work towards a common goal. The key is to provide staff with holistic training and education that fosters greater understanding.

Delegate with descriptive job roles
Delegation can provide employees with guidance on what needs to be achieved to reach the end goal. It can provide clear direction for staff while employers can oversee budget and timing schedules. It also allows the employer to focus on other opportunities such as business growth.

Break down large goals into small, achievable tasks
It is important to keep in mind the overall strategic goals when completing daily tasks. The daily tasks set should directly correspond with the larger goals. Reframe the way your employees can view large goals by sticking to the SMART principle that includes specific, measurable, achievable, realistic and timely objectives.

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Saving money on your energy bil

2015-03-05 05:01:00 editor

Energy bills are a significant expense for small businesses, so cutting back on your usage can be great for your bottom line. Improving your energy efficiency is also great for the environment, which presents an opportunity to connect with customers on an issue that is increasingly important to the public.

Here are our top tips for saving on your energy bills

– Buy energy efficient appliances
-Turn your appliances off at the wall (an estimated 10% of electricity bills is due to appliances that are in standby mode)
-Investigate solar panels and rainwater systems (there may be some government subsidies available to you)
-Discuss the need to reduce energy costs with your employees, encouraging them to be more mindful of their actions

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Private Health Insurance & Medicare Levy Surcharge Changes 2013 - Oohh The Pain, The Pain!

2013-07-16 10:29:11 editor

The changes to the Private Health Insurance system impact on your 2013 year income tax return. It will be necessary to have the annual statement issued by your insurer. The amount of rebate to which you are entitled is now means tested which may result in an adjustment (unfavourable of course) when your tax return is lodged. Unfortunately, these changes add a great deal of complexity to your tax return for the 2013 and future years.

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Depreciation Changes - Small Business

2013-07-07 20:07:53 editor

A favourable change for small business that is applicable for the 2013 year is that an immediate deduction can be claimed for assets with a cost under $6,500. An immediate deduction of $5,000 is also allowed for the purchase of new or used motor vehicles. The balance of the cost (if more than $5,000) is allocated to the general pool for depreciation.

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Reportable Super Contributions

2013-07-07 20:01:18 editor

Remains a common source of errors in the preparation of annual payment summaries (group certificates). The reportable super contribution amount on your payment summary should not include the compulsory 9% super guarantee contributions. Alternatively, another error occurs when salary sacrifice contributions are not reported.

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Construction Industry - Taxable Payments

2013-07-07 19:55:35 editor

From 1 July 2012 business in the building and construction industry need to report the total payments made to each contractor in a year. These payments must be reported annually to the ATO. Importantly, the first annual report is due for lodgment this month, July 2013.

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Change to Dependant Tax Offset 2013

2013-07-07 19:47:41 editor

Significant changes apply for the 2013 year which will limit the number of taxpayers able to claim the dependant tax offset. Generally to qualify a dependant must have a carer obligation or a disability.

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Key SMSF Changes for 2013

2013-06-16 15:48:57 editor

There are a number of key changes for SMSF trustees for the 2013 year.

Investment Strategy – trustees must consider insurance cover for the member as part of the fund’s investment strategy. The trustee must also review the investment strategy regularly.

Separation of Fund Assets – this is now an operating standard that the ATO can enforce. The trustees must ensure that fund assets are clearly recorded that identifies them as fund assets and not personal or business assets. For property and other unlisted assets this will often require a caveat, legal instrument or declaration of trust to be in place.

Market Value – fund assets must be recorded at market value for any calculation required under the SIS Act.

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Proposed Super Changes from 1 July 2014

2013-06-16 13:27:28 editor

Amongst a number of proposals announced in April 2013 it is intended that super fund earnings relating to a super fund member’s pension account (member’s superannuation pension interest) in excess of $100,000 will be taxed at 15%.

Capital gains arising from the disposal of an asset held before 5 April 2013 will be “grandfathered” (exempt) from the proposed rules up to 1 July 2014.

Also, it is proposed that the normal deeming rules (for Aged pension entitlements) will apply to super fund pensions established on or after 1 January 2015. Pensions established prior to this date will continue to be assessed under the existing rules.

Note that these proposed changes are not yet in force.

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