The Challenge – are you and your business developing strategies for “future proofing” your business to meet the challenges of the next few years?
Some of the challenges facing businesses include:
For any of these ventures and for any other business planning its future, the business will need a business plan.
These are some of the issues that are important to be considered as part of the strategy relating to the development of “future proofing strategies” for a business.
Property depreciation is the wear and tear of buildings and assets within a property over time. The Federal government allows the owners of income producing properties to claim this depreciation as a tax deduction.
To claim a tax deduction a depreciation schedule is required to be lodged with the entity’s income tax return.
For the owner of a residential/investment property being able to claim legitimate depreciation deductions can make a big difference to the owner’s cashflow.
The Federal government has introduced new rules affecting secondhand residential properties, however owners can still claim on these properties if they have owned the property prior to 9th May 2017.
They can claim on new assets that have been installed into premises which are being rented. If you would like further information on claiming depreciation on rented properties, please contact us.
If you are contemplating starting a business, you will need to avoid the pitfalls by seeking advice from an accountant before signing any contracts, either to buy the business or to enter into the lease of business premises or a financing agreement.
The key items are
You need to remember that, whilst there are many potential rewards in running your own business, owning a business can be very difficult.
Challenges, hard work, anxiety, mistakes, problems long hours and more problems are much more likely to be the story of the average small business person then a lightning path to fame and fortune!
The key challenge for all business people is how you manage the “business of the business”.
Breakeven is the level of sales necessary to cover all variable and fixed expenses i.e. the point of no profit or loss.
The formula for the calculation of breakeven sales is:
Total of Fixed and Variable Costs ÷ Gross Profit Percentage x 100/1.
Do you know what the breakeven amount is for the various operations being conducted in your business?
A fixed expense is an expense that does not vary relative to production or turnover within reasonable production or sales levels.
To calculate the breakeven amount, you also need to know the gross profit percentage for that particular operation within the business, or the overall gross profit percentage for the business.
To determine your breakeven sales figure for a particular operation within your business, you need to prepare a list of the fixed expenses relating to that business or to that activity and then prepare a list of the variable expenses that relate to that activity and add the 2 items together.
|if the fixed costs were||$195,750|
|and the variable costs were||$392,000|
|Total of Fixed and Variable Costs||$587,750|
If the business was achieving a gross profit of 32% then the calculation of breakeven sales would be as follows:
|Total of Fixed and Variable Costs $587,750||x||100||=||$1,836,718|
|Gross Profit Percentage 32%||$ 587,750|
|Less Fixed Costs||$ 195,750|
|Variable Costs||$ 392,000|
|Total Costs||$ 587,750|
Management of individual business units should understand what their breakeven sales figure is for each week/month.
If you would like to have a conversation with us relative to the determination of the breakeven sales figure(s) for your business operation, please do not hesitate to contact us.
These days small businesses can easily become importers. As a small business operator, you could import a container of goods and sell them through your business or by your e-commerce website to customers all over Australia.
Under the Australian Consumer Law, you are deemed to be an “importer”.
The Australian Consumer Law deems importers to be the manufacturer of the goods in some circumstances. Importers may be liable for defects in the goods they import, as if they were the actual manufacturer. This could occur where the manufacturer does not have an office in Australia or the importer applies their own branding to the product.
Under Australian law the importer is responsible for product safety and liability issues and is exposed to potential claims resulting from any defects in the goods it sells.
Every business in Australia that sells goods and services to “consumers” are deemed to be covered by a warranty that the goods are free from defect and fit for their intended purpose. The Australian Consumer Law does not allow you to exclude that warranty in your terms of contract with your customers.
It is possible that claims under this deemed warranty can be passed back up the chain of supply by the importer.
In practice, an importer may encounter difficulties in enforcing those rights where the manufacturer is located overseas or can hurt your business by refusing to supply you with any further goods, if you proceed with a claim.
This highlights that importers should undertake due diligence on the manufacturers and other businesses that you are dealing with overseas to ensure that those businesses will compensate you for any claims that you may encounter relative to products that they have supplied to you.
The Australian Business Number (ABN) was created with a central role for the role out of the Goods and Services Tax.
Since that time, almost 20 years ago, this role has not changed, but the use of an ABN has evolved with the evolution of the economy and the increasing flexibility of the workforce.
Due to the increasing number of ABNs in sham contracting situations, the Federal government has commissioned a review of the ABN and its role in the labour force and the opinion that there may be revenue leakage in this area due to unpaid taxes for GST, income taxes, superannuation, workers’ compensation and payroll taxes.
At the heart of the review is the issue of sham contracting relationships, but the results of this review will affect all ABNs and businesses should be aware of some of the ideas being floated in this review which include:
These deliberations, whilst seeming academic, could have long term repercussions that, if they get implemented, will likely be around for at least another 20 years until the Federal government at the time reviews the role of the ABN again.
The Prime Minister, Malcolm Turnbull, announced that the government was making available emergency “special” payments for eligible farmers, to be made through the Farm Household Allowance (FHA) scheme.
The announcement will provide households with $12,000 in additional lump sum payments for couples. (Payable in two lump sums of $6,000 each) and $7,200 for single farmers without children (payable in two lump sums of $3,600 each).
The first payment will be made on the 1st September 2018 direct to bank accounts for families who are already on the FHA. The second payment will be made on 1st March 2019 direct to bank accounts.
Currently, those on the FHA scheme can access the payment, equivalent to the unemployment benefit, worth about $16,000 a year.
The government says the money can be used for basic household expenses.
The government has already extended the time period to receive the FHA from 3 to 4 years.
The government has also announced that the eligibility criteria for accessing the FHA will also be relaxed so that people with up to $5M net assets will be able to apply. Previously the cut-off was $2.6M.
“This will help farmers who may be notionally asset rich but cash poor, access additional support without having to jeopardise the income producing capacity of their farm by selling farm equipment”.