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Kevin has a successful cleaning Business.
He started up in the mid 1970’s, beginning small then expanding to cover both domestic and industrial cleaning. Dirty windows or floors inside or out call Kevin's Cleaning Service.
He employs a team, and his two children are part of the Business. Kevin is a widower.
His children are keen to inherit and take over when Dad retires.
Scenario 1: Dad, for sentimental reasons and family loyalty, simply says both children will have equal ownership and authority. That's good enough, it's written in his will. Family is family, everything should be fine.
Scenario 2: Kevin loves his children and while they have jobs in the Company, he has reservations about their ability and suitability to manage and run the Business.
The Federal election has heralded some new policy directions that Business operators, SMEs, advisors and high-net-worth families need to note and understand.
Tax reform: this topic, despite much political discourse, seems to be a long-term debate rather than offering any immediate changes. Issues also, such as tackling state taxes, GST, or the complex system, are conversations that remain in the background. For now, it’s Business as usual. Businesses should take advantage of any already scheduled tax cuts and meet compliance with existing obligations.
Superannuation: The re-elected Government is moving ahead with its plan to increase taxes on large super balances. The reform is not yet law, but the proposed legislation will take effect from July 1, 2025. If passed earnings on individual super fund balances above $3mil will attract a higher tax rate. Effectively 30%, up from the standard 15% in accumulation phase. Watch this space!
For most Australians superannuation policies and fundamentals remain the same and continue to provide generous tax benefits.
Support for SMEs (small and medium sized Business) hasn’t been overlooked.
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Energy bill rebates: From July 1, eligible small Businesses are set to receive a $150 rebate as part of a wider cost of living relief package.
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Battery installation subsidy: a 30% subsidy on battery installation systems will be available to help Businesses improve sustainability and manage electricity bills.
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Excise freeze: From August 2025, draft beer excise will be frozen supporting small brewers and hospitality Businesses.
Handing over the reins of a Family Business can be a smooth ride or as painful as falling off a horse!
It takes careful planning, consideration and execution to ensure a smooth transition, protection and continuation of the Business success.
Key to that is having a Succession Plan, one that clearly and comprehensively outlines who, what, when and how and should address any potential conflicts or challenges.
5 Steps for a smooth transition to handover
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Early Planning: succession planning includes choosing a suitable successor, training, and preparing the Business for changeover. It's vital that time is taken and effort invested with preparing your successor/s, whether family members or others, to gain the skills and experience needed. By guiding and mentoring them you are giving them the tools and setting them and the Business up for continued success.
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Choosing the ‘right’ Successor: This needs careful thought and consideration. Handing over the reins to a family member, your children purely for sentimental reasons can be fraught with problems. It's important to evaluate their suitability, experience, skills, and dedication. Are they the best fit? As part of this ‘succession’ changeover process it’s essential that everyone concerned, family and employees, are part of the discussions. This can help make informed decisions, provides different perspectives and with clear communication can help avoid misunderstanding. Get everyone on board to take it forward.
High overheads:
How much does it cost to run your Business?
That is those costs not directly related to selling your goods, products or services. Costs such as utilities, rent and office equipment are some examples. You may have others.
Tips:
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To get on top of this, undertake an audit to establish what you have, what is needed, and what works. Keep, recycle, chuck!
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Assess, determine if there are any cost-saving measures that can be introduced. Paperless systems, utility gas and electric efficiencies can be investigated without compromising Business operations.Look around you might find more!
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Investigate vacant, underused space (floor or outdoor). Can it be leased out to generate revenue to counter expenses!
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Review your telephone systems, digital online phone systems may be more cost-effective.
It's that time of year!
Follow these 7 Tips to take the worry out of your Tax-Time.
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Prepare now. Start gathering all the information you need. Receipts, tabs stored in a shoebox or bottom drawer, it’s time to take action. Sort, file, label and get your records up to date. You will need documents such as Income statements, bank statements, investment records, and private health insurance statements. If you are self-employed or a freelancer, you need Business income and expense records.
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Getting it right the first time saves both you, your accountant and ATO Office valuable time, work and effort. Make sure your end of year Income Statement is complete with all relevant details before submitting. Don’t guess vital facts. Mistakes can be costly, causing delays in processing and attracting potential penalties. It also slows down receiving your refund if you are due.
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Declare all sources of income. This includes all types of employment and occupations, such as ‘side-hustles’, or selling services via an app. Each source of income will have different deductions available, depending on the nature of the income and the occupation.
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