Benefits Of Hiring An Accountant When You’re Self-Employed

Hiring an accountant is a great idea if you’re self-employed, or thinking about becoming self-employed. They can help you along the road every step of the way, from offering you fantastic financial advice when you’re getting started to managing your ongoing jobs.

I personally work with the team at Koustas chartered accountants. For years I resisted the idea of paying someone to sort out my finances thinking I was saving money by doing it myself. However, one of the first lessons you should always learn when running your own business is: your time = money. If I’m spending time doing something when I could be doing work for clients, I am losing money.

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3 Startup Loans Options For Emerging Entrepreneurs

Whenever we discuss Startup funding, the primary sources of funding that comes to our mind are Startup Accelerators, Angel Investors, Venture Capital Firms, Incubators, etc. However, we often undervalue or dismiss the idea of common option where you can opt for startup loans from a bank and fund your startup.

There are more than 5,00,000 small businesses launched in the United States every month. Not all of these enterprises run smoothly. At some point in time, most of these companies face financial issues and need the help of a third-party source for raising funds.

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How VolP Phones Can Save Your Business Money

The internet has triggered a rapid change in the communication industry and the trend has gained momentum and, there is no pointer that this inclination is going to slow down anytime soon. The inception of Voice over Internet Protocol (VolP) has left many businesses to stem from their former telephone methodology. This new framework is offering business with lucre features besides having financial savings that come with VolP.

How VolP Works

Diverse from habitual telephone companies, with VolP you’ll not rely on telephone lines to make a link and disseminate. A broadband internet tie-in such as DSL, cable or satellite is used as an avenue to channel calls electronically over the internet. The recipient of the call is not a must should have a VolP connection simply because calls placed in this modus can reach any cell phone or telephone. This has made it easier to make calls around the globe for at a customary rate instead of extra amount. This also gives an opportunity for service providers to offer a linear rate monthly rate fee regardless of the service that is actually used (local or long-distance).

Although many businesses are now using VolP, there are some which still have the big question of whether VolP will save money or increase cost? The answer is yes, VolP help saves money and, there are sundry ways that this happens. Take a look

No International Calling Fee

Call cost is a prime consideration for many businesses especially if you make calls overseas to speak to manufacturers and distributors. With traditional phone lines, it is easier to accrue expensive cost but with VolP, you will reduce the cost because you will be wielding an internet connection to make calls. The best part is that many providers offer video conference and conferencing allowing you to communicate to a number of blocs at the same time. This can help you save some serious dollars besides enjoying a streamlined communication.

Call Stalking and Monitoring

VolP has features such as call tracking and calls recording which will help you increase your business coherence. With these features, you will be able to track he output of your sales team, inclusive of the metrics like a number of calls made each day and time spent on each call, assure quality control with regular reviews and improve staff tuition using good or bad call examples. You will able to keep your sales team on track and hit their targets each month.

Aerodynamic Employee Communication

A VolP system comes with workflow features such as Company-focused instant messaging, instant see where you can view colleagues and staff that is online and when, and peer to peer chat for an efficient and easier conference calls. With all these, your teams will communicate in time thus helping everyone gets work done in less time.

Operating a business is an extortionate affair; therefore, cutting back expenses is important. Getting your business setup with a business VolP phone system and plan is not only a business asset but it will reduce your communication costs substantially. You will have everything you need at the same time; you’d have reduced your overhead costs.

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How To Keep A Positive Cash Flow

Placing other business goals ahead of your company cash flow is a big blunder as a business owner, and for many start-up businesses, this is a common norm. It is critical that you spend the time to establish your trademark and sales leads, at the same time, it is vital to develop a ceaseless cash flow (amount of cash coming into your business). Cash flow is the lifeblood of every business and if you can retain 10% or 20% of your monthly revenue, you will be able to pump the cash back into your business.

To have a consistent cash flow in your business, here are ways how to

Be Familiar with your Expenses

Several businesses offer discounts to attract and possibly retain a customer, right? We’ve have seen before haven’t we? Some have harnessed the use of a site like Scoopon and Groupon while others have done this on their own. Despite all this, you should offer a discount if you know the cost and the hit of hat you are offering, if not, prepare yourself for reverberations.  As a business person who would like to see your merchandise grow, you should be aware of your comprehensive cost basis, how much you’d theoretically charge, the cost of what you’re offering and the profit gap on your products and services.

Pay bills when You have to

In regards to bills, the idea is that you try and get your outgoing invoices paid as soon as possible and pay your bills when you have to. However, it has to be said that there is an effect of paying your bills on time that builds a positive relationship with your suppliers. If you’re having trouble recouping bad debts then it’s always wise to get a debt collector to help, I always recommend Network Debt Collection.

Combat the Urge to Offer Immense Discount

There are 2 buttons that many business owners seem to battle with “panic and discount”. When discount overwhelms panic, the next step is to drop prices which are the biggest mistake you can ever do. Although it’s good to offer discounts once in a while, make sure you’re still being profitable when you offer discounts. Say after every three months you have a big sale, customers are not fools, they’ll just wait until that time you have a big sale and then will show up.

Encourage Repeat Business

If you can be able to land and retain customers (continuous) and especially if you’re in a volume-driven business like retail, you’d have cemented your cash flow, profit, and growth. In this case, what you need to do is consecrate yourself to see your customers coming back again and again.

Think about how you can make good use of loyalty programs, VIP offers and other frequent shopper programs. They are some of the best tools to systematize continual business.

What else are you waiting for? You have the tips, go for it!

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Save time, save money

When it comes to matters of tax, most people don’t know what they don’t know! That’s why seeking out expert help is important.

The key to running a good business is finding experts, such as an accountant, business coach, bank manager or lawyer, who can add value.

When the end of the financial year approaches, the focus for most businesses is on how they can minimise their tax. But you should work with your accountant several times during the year not just at the end of the financial year. Quite often cashflow issues at this time can reduce your options for reducing your tax.

A trustworthy accountant who can work with you on developing strategies to take your business forward, is not easy to find. Many accountants are either busy tending to compliance or don’t have the skills to be a business adviser. Still, you shouldn’t give up the search.

The key thing to remember is to see your accountant well before 30 June – after that date there’s nothing that can be done to improve your tax situation for the previous year.

How to find an accountant
The best way to choose a trustworthy accountant is to ensure they are a member of professional association and/or come with a personal recommendation.
o Ask your friends, family and other contacts (but remember, what works for someone else isn’t necessarily going to be right for you)
o Tap into the referral networks of your lawyer, financial planner or bank manager
o Call or visit the websites of professional associations, such as CPA Australia or the National Institute of Accountants (NIA). The CPA Australia website has a ‘Find a CPA’ quick link (www.cpaaustralia.com.au)

Here are some general answers to accounting questions frequently asked by small business owners:

What payroll methods can I use to reduce my employees’ tax bill?
A salary sacrifice arrangement is also commonly referred to as salary packaging or total remuneration packaging. It’s an arrangement between an employer and an employee, where the employee agrees to give up part of their future entitlement to salary or wages in return for the employer providing them with benefits of a similar total value.

Many of my staff require vehicle for their work. What is a novated lease?
A novated lease is a three-way arrangement between the employee, the financier and the employer, where a vehicle is leased under a finance lease in the employee’s name and assigned to the employer by way of a novation agreement. The employer recovers this amount from the employee’s salary package. The lease, the FBT and the operating costs associated with running the vehicle are deducted from the employee’s gross salary, therefore reducing their income tax.

Can I reward my staff without increasing their tax bill through cash bonuses?
Yes, use other methods such as hampers or tickets to sporting or cultural events. If the benefits are less than $300 and are irregular, then generally they’re not subject to fringe benefits tax (FBT).

What tax deductions can be made for the home and serviced office? Can I claim part of my mortgage repayment?
It’s not recommended to claim part of your mortgage repayment, as it could become partially liable for capital gains tax (CGT) if you sell your home (your residential property is usually exempt from CGT). This may also apply to council rates and water bills.

You can claim utility bills by estimating the percentage of business use (based on the number of rooms utilised). You should make a reasonable estimate of the area used for the business, for example, one third of the property equals 33.33% of the bill.

All of your office furniture and serviced office fees will be tax deductible. For simplified tax system (STS) payers, all assets less than a certain value means a straight deduction. On other hand, for non-STS payers, all items need to be depreciated at a percentage, as per the Australian Tax Office (ATO) guidelines (visit www.ato.gov.au for more exact details).

Therefore, it’s important that you engage a qualified accountant to ensure you receive the maximum tax deductions.

What records should I keep?
Keep all invoices to support a claim (for five years). If you lose receipts/tax invoices, make sure you have secondary evidence such as credit card statements, bank statements, a petty cash book or diary evidence. In the case of flood or fire, make a statutory declaration and keep the insurance claims documentation.

Can I claim entertainment expenses if I have a meeting at a café or restaurant?
If the meeting is arranged to discuss a business proposal and you simply have a cup of coffee and a biscuit, this cost would generally not be seen an entertainment cost, but a legitimate business cost.
It is recommended as a good business practice/policy to keep a diary with some notes from the meeting – for instance minutes of the meeting, who attended, reason for the meeting and so on.

If we travelled overseas for a business conference, can we claim the expenses? What if we included a side trip for personal reasons?
All travel expenses for business purposes are tax deductible. A side trip to Disneyland would be excluded from the calculation, as it’s non-deductible. Again, keep a diary to show what’s business and what’s personal and have a chat with your accountant if you’re not clear on this.

Are any courses we attend tax deductible or just ones related to the business?
Courses, seminars and any professional development (including business coaching) that is designed to bring in more revenue for the business is tax deductible.

Can I claim my dry cleaning?
This is very hard to claim, as the ATO’s view on this strictly classifies what is a uniform (it must have a logo or be registered with the ATO). A uniform is not a suit or shoes that you wear everyday, with the exception of protective shoes. The argument that you need to look presentable is not a valid one. If your income depends on your image eg a TV presenter it would be worth discussing this with your accountant.

What happens if I get audited?
You will be asked to provide all the documents to support your claims in the tax return. Your accountant is not responsible for the expenses that you claim, as the Australian tax system works as a self-assessment and whenever you sign the tax return, you’re signing a declaration that all expenses claimed in your tax return are correct as per your advice.

How can I legally reduce my tax bill?
o Use a qualified accountant who will claim the maximum deduction for you
o Talk to your accountant several times a year
o Keep a good record of all of your expenses (even the ones that you’re not sure about it), such as communication bills and consumables, postage, advertising/promotion, travel, motor vehicle (keep a log book for a minimum period of three months and renew every five years), bank fees, merchant fees, interest on business credit cards and loans and gifts for clients.

This information is provided as a general guide. You should seek your own detailed accounting advice to suit your individual business circumstances. Remember – that advice is tax deductible!

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Help from above

It is one of the oldest cliches in small business, but it is one of the most misunderstood. It says one of the greatest problems with small business people is that they spend too much time working in their business and not enough time on their business.

When it comes to government money or assistance and contracts there are so many business owners out there with their heads down, ‘doing it, doing it, doing it’ as Michael Gerber has said in the past, that they don’t see the opportunities just waiting to be discovered.

Gerber, the author of the E-Myth Revisited, a perennial international best-seller, differentiates the entrepreneur from the technician, who simply does the work in his or her own business. The entrepreneur works on the business.

Working on doesn’t just mean thinking laterally about market opportunities, which searching for government contracts – at federal, state and local government levels – could mean. It also means thinking about government assistance out there that could make you take your business to the next level, to a new overseas market or to network into other groups who could tell you something you don’t know and create opportunities for you at the same time.

Two classic suppliers of government assistance that every creative business owner – oh, let’s call them entrepreneurs – should think about are AusIndustry and Austrade.

AusIndustry has a myriad of money grants that can help bankroll research and development (R&D) and ultimately innovation. Meanwhile, Austrade’s export development grant has become a great encouragement for entrepreneurs who think outside the domestic market square.

I recently saw a guy who has patented an invention, all on his own time and it cost him tens of thousands of dollars to develop the concept and patent it. Luckily for him, while he was too busy working in his business to see the opportunities, his accountant did his thinking on the business for him and put him in touch with an expert adviser who took him to AusIndustry.

The advice he received helped him add protection to his patent for overseas opportunities and showed him how to access government grants. This guy was lucky to have a lateral thinking accountant – most business people don’t and miss out.
For inventive business owners committed to R&D, looking for money to make their dream come true, be aware that AusIndustry has helped thousands of businesses and many have received hundreds of thousands of dollars. AusIndustry has opened the doors for many exporters and its Export Market Development Grant offers assistance in defraying the costs of the promotion of a product or service overseas.

The bottom line is if you are making money overseas, whether it is via transporting products by plane, ship or eBay, there are many monetary reasons to contact Austrade.

If you are too time poor to work on your business, use a search engine – contact government bodies or industry groups to find expert consultants who know how to help small operators tap into government assistance.

Finally, if you are afraid of the expense of using experts to position yourself for government contracts or assistance, then start putting on your networking thinking caps.

Many businesses have targeted various government departments by putting their hand up to serve on various government-related committees. Some offer their time and expertise to be judges for awards or offer to help in business community groups such as Business Enterprise Centres.

By being on the boards of these groups they have worked their way into the favour of government departments and public servants, winding up with lucrative contracts.

Where there is a will and a damn smart plan, you can put yourself in the right place at the right time to pick up a plum public prize.

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Wealth creation

Edward de Bono said great business owners think outside the square; they are lateral thinkers.

Over the years, I’ve pondered what really holds people back and I reckon the greatest hurdle to success is old habits. You see it with athletes when they change coaches, or even get a coach for the first time. They excel. Deep down, anyone who wants to build a business is also in the wealth building game.

You need to be inspired
Building wealth is like building a great business – it not only rests on getting the fundamentals right, it also requires commitment to doing things right.

Of course, business owners hopefully use their operation to create a platform for wealth building. And putting more effort into building a great business makes more money sense.

Unfortunately, like eating junk food, it always seems easier to do the wrong or easy thing instead of the right or hard task.
That’s where inspiration comes in, and that’s why so many high achievers I’ve dealt with never underestimate the importance of being inspired.

Anyone cynical towards the importance of inspiration and motivation has never owned a small business. Business owners know that at times when deadlines, suppliers, customers, staff and even yourself are all piling the pressure on, recalling words of wisdom, experience or success can simply lift you.

Mingling with magic
Not too long ago I did a ‘talkfest’ road show, which meant I worked as a master of ceremonies with some absolutely inspirational people.

They included Lauren Burns, who won a gold medal in taekwondo at the Sydney Olympics, and Ben Darwin, the Wallaby rugby union player whose career ended prematurely with a terrible neck injury in the semi-final of the 2003 World Cup against the Kiwis.

Then there was that great cricketer, Bruce Yardley, who was named international cricketer of the year in the 1980s and who played with great Aussies like Thommo, Lillee and the Chappells.
Another was a guy called Tony Mowbray, who not only battled the seas of that tragic Sydney to Hobart Yacht race in 1998, when many lives were lost, but he also broke the record for sailing solo around the world.

Mimic the magic
Individuals who have taken on the odds and pulled off big results should always be studied. The best way to build a great business is to copy the best.

I once observed young artists copying the masters in the British Museum, and that’s what would-be master business people should be doing to – mimicking the magic.

Follow the success trail
Some champions can give you small yet enduring hints for success, while others can give you a virtual blueprint.

One unforgettable line that Lauren Burns uses is: “I think success leaves clues.” She told her audiences that successful people leave clues on how to win. Working hard was important, but she said when she was young she did too much and overtrained. When she accessed experts at the Australian Institute of Sport, she worked smarter.

Divine inspiration!
One short story before I finish. This is not about a well-known star, but a local hero who turned around a potential poverty problem.

This fella left the priesthood in his 50s and when you cut out of God’s service, there is no superannuation or divine pension.
He had ‘diddly squat’ and there’s not many jobs for out-of-work priests.

After talking to a money expert, he decided the only way he could catch up in the money stakes was to buy ramshackled homes – he didn’t have much money – and he simply did them up and sold them.

He had somewhere to live while he did them up and, as it was his principal residence, he was able to sell the homes with no capital gains tax.

He pulled off the triple play. First, he built up his wealth, so he is set to retire with a lump sum better than most Australians. Second, he gave himself a job, which was really a development business in doing up the properties, and, third, he had somewhere to live.

Part of the inspiration was the knowledge that there is no capital gains tax on your principal residence, while the other part of the boost was the money expert who convinced him he could do it.

Spend a penny to make a pound
We all can do it, but we need education, commitment and inspiration. Often experts or coaches can show small business owners how to do it better.

Too many business owners are not willing to face what is wrong with them and therefore what is holding back their business. That’s where a pair of independent eyes can work wonders.

By the way, the advice and the recommendations will generally cost money, but it will often be the best money ever spent.

Tips:
o Look to others to inspire you if you feel yourself getting flat.
o Mingle with magical people by going to seminars and reading books or this column!
o Make a determined commitment to write a success plan and mimic what successful people do.
o Follow your success plan – if you go off the trail, get more inspiration to get back on it.
o Spend a penny to make a pound.

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Cash Forecasts

What is it about cash?
There’s one thing for certain and anyone in business knows it. If you don’t understand the impact of a cash flow gap (the time between cash going out and cash coming in) you can turn a profitable job or project into a financial mess.

Nearly every business experiences this: the money flows out before it starts to flow in.

Make it easy
What most people don’t always know is how to find a solution to this pressing problem. One way to reduce the cash flow gap is give your customers easier ways to pay you on time.

Let’s get real here. If a customer’s only option is to write a cheque, address an envelope, find a stamp and post the letter – you’re really are putting a lot of obstacles in the way of getting the money you so badly want. Offer customers a range of payment options. These include BPAY, Credit Card and Postbillpay.

Electronic payment methods can streamline your banking. Giving your customers access to these payment methods means payments can credited directly to your bank account. In many cases these payments will be credited as cleared funds, which enhance your cash flow and removes the uncertainty of whether or not a cheque payment will be honoured.

What else can you do?
A sensible business does cash flow forecasts which make it easy to see when expenses occur and when income can be expected. This help to plan your need for cash.

The next thing to do is to keep updating your cash flow forecast to see whether you need to access additional cash – through sources such as a line of credit or a bank overdraft.

Why do cash gaps occur?
Well there are lots of reasons, but try these for starters:
o You buy stock before you sell any goods
o If you’re a manufacturer, you pay many of the costs of manufacturing a product before you can sell it
o If you’re just a one-man band, you still need pay the costs of your own labour (that is, pay yourself a wage) until you complete a job and get payment. If you have employees, then they won’t stay with you for long if you don’t have the money to pay them!

When you do your cash flow forecast include:
o Rent
o Gas, electricity and phone
o Insurance
o Office consumables (such as stationery, photocopying and postage costs)
o Couriers
o Advertising and printing
o Tax office payments (BAS, GST etc, when they fall due)
o Superannuation
o Credit card payments etc

Control the flow
Learning to control factors that affect your cash flow is the first step in reducing the potential cash shortage.

When developing a cash flow management strategy for your business, you need to take into account how your customers pay you. For example, are you paid in advance; when the sale occurs; or do you offer credit?

If you’re lucky enough to receive payment in advance, your cash flow gap should be minimal. However, if you regularly invoice for goods or services after you have provided them, you’ll have a greater cashflow gap.

The longer your customers take to pay you, the greater the impact on your cash flow.

Worst case scenario is that these debts that are taking too long to be paid turn into bad debts and become extremely hard to receive without employing a debt collection agency, this is why you need to stay on top of your debtors and keep your cash flowing making it easier to run your business and grow.

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