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1. You can’t do it all yourself no matter how good your time management is!
2. Learn from your mistakes!
3. If you go into Business ensure everything is done legally.
4. Cash is king!
5. Being good in your profession doesn’t guarantee a successful Business.
1. You can’t do it all yourself no matter how good your time management is!
A trap for solo Business owners is thinking that you should always be doing more and more, but that is a path to burn-out.
Tip: Identify between important tasks that can help move your Business forward, rather than wasting energy on ones that simply keep you busy.
2. Learn from your mistakes
Most of us make mistakes! The lesson is to learn from them. Treat it as a lesson in what not to do and how to do it differently next time.
Tip: Remember there are professional Business advisors you can turn to when making key decisions.
3. If you go into partnership ensure everything is done legally,
regardless of partnering with family, friends or others. The same checks apply if entering working arrangements. Formalise a legal partnership Agreement.
Tip: Evaluate potential Business partners to see if you share goals or compliment what each brings.
4. Cash is king!
Aim to get paid on time and also pay on time! It is critical to that you get paid for the work you do if you are to be a viable Business. Paying your own suppliers on time positively builds your Business reputation and your credit record.
Tip: Staying on top of your cash-flow is essential even if it means having that awkward conversation, sending a ‘demand letter’ or tightening up your terms of trade with your customers.
5. Being good at your profession doesn’t guarantee a successful Business.
Just as you gained skills in your profession so to as a Business owner you need a range of specific skills. Business planning, sales, and marketing, financial literacy are some skills needed to run a successful Business. These are the Business accruements beyond the skill set of your ‘tools of trade’
Tip: Seek professional training/ Courses and engage experts if needed.
Take the first step by reading this article on the 5 Steps to Creating a Basic Business Budget, your Business Budget!
Step 1: Identify and tally all your Income sources.
This step is critical to determine exactly how much your Business is bringing in each month and the source of that income. For example, start by reviewing your Sales figures. Your sources of course will depend on your Business model.
Step 2: Establish all Costs (expenses)
Begin with ‘fixed’ expenses items. Examples are rent, payroll website/internet and phones. These are usually fixed monthly accounts that can be gathered from records (contract /lease or other similar arrangements).
Step 3: Record Variable Expenses
These are costs that vary each month such as usage charged utilities (gas, electricity); travel costs or sales commissions. At the end of each month tally these expenses and if you monitor over time you will be able to see fluctuations and trends that will help with your financials and budgetary planning.
Step 4: Forecasting One-Off Spends
Predicting One-Time spends provides a buffer for both one-off and unplanned expenses. For example, a new laptop or unexpected like hiring an IT expert to deal with a security issue. Remember, it is important to factor these less frequent items into your planning as they do happen!
Step 5: Bringing It All Together
Now is the time to bring it all together to create a complete picture of your financial affairs for the month.
Firstly, list and tally-up all Expenses and do the same for Income. This exercise includes adding your total fixed costs, variable expenses and one-off spends; then compare cash flow in (Income) to cash flow out (Expenses) to determine your overall financial position.
Next, to summarise; Total Income minus Total Expenses = Total Net Income.
This calculation provides a snapshot of your profitability (or otherwise) to guide your financial decisions going forward.
Business
Immediate Deduction of Capital Purchases Extension
Temporary full expensing will be extended by 12 months to allow eligible businesses* to deduct the full cost of eligible depreciable assets of any value, acquired from 7:30pm AEDT on 6 October 2020 and first used or installed ready for use by 30 June 2023.
Temporary loss carry-back extension
The loss carry-back measure will be extended to allow eligible companies* to carry back (utilise) tax losses from the 2023 income year to offset previously taxed profits as far back as the 2019 income year when they lodge their tax return for the 2023 income year
* aggregated turnover of less than $5 billion
Digital economy strategy
The Government will provide $1.2 billion over six years from 2022 for the Digital Economy Strategy, to support Australia to be a leading digital economy and society by 2030.
From an income tax, investment incentive perspective, please contact us for more information
Superannuation
Removing the work test for voluntary will allow individuals aged 67 to 74 years (inclusive) to make or receive non-concessional contributions (including under the bring-forward rule) and salary sacrifice contributions without meeting the work test, subject to existing contribution caps.
Individuals aged 67 to 74 years (inclusive) will still have to meet the work test to make personal deductible contributions.
Removing the $450 per month threshold for Superannuation Guarantee (‘SG’) eligibility
The Government will remove the current $450 per month minimum income threshold, under which employees do not have to be paid SG contributions by their employer. The measure will commence from 1 July 2022.
Downsizing Contributions
The downsizer contribution allows eligible individuals to make a one-off, after-tax contribution to their superannuation fund, of up to $300,000 per person, following the disposal of an eligible dwelling, where certain conditions are satisfied. Under the current requirements, an individual must be at least 65 years of age at the time of making the relevant contribution, for the contribution to qualify as a downsizer contribution. From 1 July 2022, the age limit will decrease to 60 years of age.
Retaining the Low and Middle Income Tax Offset (‘LMITO’) for the 2022 income year
The Government has announced that it will retain the LMITO for one more income year so that it will still be available for the 2022 income year. Under current legislation, the LMITO was due to be removed from 1 July 2021.
Increasing the Medicare levy low-income thresholds The Government will increase the Medicare levy low-income thresholds for singles, families and seniors and pensioners for the 2021 income year, as follows:
• The threshold for singles will be increased from $22,801 to $23,226.
• The family threshold will be increased from $38,474 to $39,167.
Reducing compliance costs for individuals claiming self-education expense deductions
The Government will remove the exclusion of the first $250 of deductions for prescribed courses of education. Currently, the first $250 of a prescribed course of education expense is not tax deductible. Removing this $250 exclusion is expected to reduce compliance costs for individuals claiming self-education expense deductions. This will commence from July 2022.
Getting back on your feet can daunting but help is available.
Don’t wait before you Take the Steps to Recovery, to Turn your Setback into a Comeback.
Contact us, Blackburn Accounting, Your Family Business Specialists.
We offer professional services and can help you with;
• Assessing your situation
• Checking for any additional income sources, support measures or similar schemes
• Managing your expenses and repayments
We understand and encourage you not to put it off.
By contacting us today, you are taking the first steps to recovery.
Taking the Steps to Recovery
Let Blackburn Accounting help you to get back on your feet and smile again!
We are your Family Business Specialists, ready to support and guide you.
Step 1:
Blackburn Accounting will work with you to assess and determine your true position.
• We will closely examine all Business activities so we know exactly what we are dealing with
• Review the Budget and tighten as needed
• Explore small and big-ticket cost savings
Step 2:
Checking for any additional income sources, support measures or similar schemes
• Are there any Government incentive or support measures
• Discount offers or bonuses
• Check what resources are available to you, both from your own accounts as well as insurance.
Step 3:
Managing your expenses and repayments
• Negotiate with Creditors for extra time
• Pursue Debtors payments (collect sooner than later)
• Consider customer deposits or pre-paid options
• Create a Financial Plan and set priorities
With you we will develop Recovery Strategies to deal with the now and
help you implement the Steps to Recovery to Turn a Setback into a Comeback.
Take the first step to your Business Recovery, contact Blackburn Accounting today.
1. Determine your break-even
2. Focus on Cashflow Management, not profits
3. Maintain cash reserves
4. Use a Cashflow Worksheet
5. Collect receivables as soon as possible
6. Encourage Customers to pay faster
7. Extend payables as long as possible
8. Boost sales with creative incentives
9. Monitor Cashflow
10. Contact Blackburn Accounting for your financial & accounting advice. Blackburn Accounting your family business specialists.
If you are experiencing Cashflow problems or simply want to better manage the financial flow of your Business these 10 Top Tips are a lifeline!
Grab hold and follow the steps to help you from sinking!
1. Determine your breakeven point.
This is the point at which total revenue equals total costs or expenses. At this point there is no profit or loss.
2. Focus on Cashflow Management, not profit.
Strategies include;
• Keep your books accurate and up to date
• Adopt simple accounting practices
• Separate Business and personal finances (and expenses)
• Engage a professional Accountant for professional advice
3. Maintain cash reserves
Access to cash will make or break your Business. Always maintain a cash reserve to provide the cushion you need to manage unexpected situations. Even a small amount can help in a time of crisis.
4. Use a Cashflow Worksheet
In a nutshell, Cashflow is the net amount of cash that a company receives and spends during a given period of time. It therefore makes sound business sense to maintain a Cashflow Worksheet to capture the associated Business activities to better manage your financial affairs, including meeting compliance requirements. The Worksheet can be used to monitor and gauge inflows, income fluxes and help to avoid financial mishaps! Think of it as a lifeline for Cashflow Survival!
5. Collect receivables as soon as possible
The sooner your customers pays you, the sooner that money is working for your Business.
Consider adopting a range of payment methods including Online systems.
With the click of a button and issuing of an invoice, the money (payment) can be easily deposited directly into your account. Quick turnaround and easy as, and no waiting for a payment later.
Above are 5 Top Tips to help you survive.
We encourage, follow all 10 Tops Tips to survive your Cashflow challenges!