Tag Archive: strategy

Tax Planning – Strategies & Opportunities for Business Owners

Posted on November 12, 2019
by Tim O’Brien

4 min 30 sec read

Contents

  • Taking Time for Your Bottom Line – Why Tax Planning is Important
  • What does Tax Planning involve?
  • How to get Started – Questions to Ask Yourself
  • Questions to Ask Your Accountant or Business Adviser
  • When Should You See Your Accountant or Business Adviser?
  • Little Effort, Big Gain – Next Steps

As a business owner you probably have some goals you want to reach for your business. Do you know what strategies to put in place to get there or have a trusted adviser guiding you?

One strategy that all businesses should have set up is tax planning. As a business owner tax planning can be an exciting process – as it’s a real opportunity to stop, reflect and take charge of your business by planning ahead and focusing on the numbers of the future rather than of the past.

Achieving your business goals is much simpler with tax planning, but it’s equally important even if you don’t have goals and just want to make sure the business is running smoothly. It’s not until someone delves into the business that you realise there are improvements you can make.

Unfortunately, not all accountants offer tax planning or business advice, so if you work with an accountant it’s worth asking them about it. If they do then it’s a great opportunity for you to move forward, but if they don’t then we suggest seeing a business adviser to guide you through the process.

Taking Time for Your Bottom Line – Why Tax Planning is Important

Why does our team at BLG believe tax planning is one of the most important annual events for all our clients?

For business owners, it’s a great opportunity to down tools for 5 minutes and take stock of where they are at. It’s also as good a time as any to take a moment to be proud of what you have achieved, critical of what you haven’t, and envisage where you want your business to be in 3 months-time, in a years-time, in 5 years-time depending on your goals.

As business advisers, tax planning is an opportunity for us to help business owners be proactive with their business, provide valuable input around their projected earnings and tax position and show you how the business is performing as opposed to how you think it’s performing. This planning is extremely important for the long term success of any business.

Make tax planning that one time of the year where you actually do set aside a day to step back from your otherwise hectic schedule to assess the health of your business (and yourself for that matter). There’s a good chance your customers, employees, family and friends, and business bottom line will thank you for it!

What does Tax Planning involve?

In more detail, tax planning means reviewing your current business, asset, and liability position before the end of the financial year, and will give you an understanding of where the money you are making is going. It also involves identifying any opportunities or areas of concern in your business so you can make financial decisions in the short to medium-term that are well-informed. Through tax planning, business owners have the option to implement strategies before 30 June that manage your tax position.

How to get Started – Questions to Ask Yourself

If you are unsure about seeing an accountant or business adviser it’s a great idea for you, as the business owner, to review your business by asking some key questions. Answering these questions will help create a picture of how your business is tracking:

  • Are your sales in line with your expectations? If not are there opportunities to reach out to new customer bases? Are less profitable customers impeding your ability to service your better ones?
  • Do you have issues with collection of debtors? If not do you need to address your payment terms? Are you chasing your debtors promptly and regularly?
  • Are you incurring unnecessary expenses? Are you getting an adequate return on any advertising spend?
  • Are there expansion opportunities within your current business? If so what do you need to put in place to explore these?
  • Are your investments providing the returns you were hoping for?
  • How does this year’s performance compare to last year?
  • Are there any opportunities you should be taking advantage of?
  • Have you provided for any potential tax liability?
  • Are there any strategies you should be implementing prior to 30 June to manage your tax liability?

Once you’ve answered these questions it is our hope that you will feel comfortable with your business position and ready to forge ahead. Or maybe the results were not crash hot like you were expecting and you need some direction. Whatever your review turned up, setting up tax planning is the recommended next step.

Whether you decide to see an accountant or business adviser following your business review, just make sure they offer ‘Tax Planning’, not just Tax Advice, as they require different approaches. We give you a hand with this below.

Questions to Ask Your Accountant or Business Adviser

So what about us? What should accountants or business advisers be able to offer to create an effective tax planning strategy for your business?

To determine whether the accountant or business adviser you are meeting with can help you in the right way, you should really only need to ask two questions to receive the necessary feedback. But make sure that any advice they do offer is tailored for your business. Following are the questions and the types of responses you should be getting back.

  1. How does your tax planning process work?

The accountant or business adviser should offer the following:

  • A review of your year-to-date performance in comparison to previous financial years
  • Feedback on your business performance compared to industry standards
  • Commentary on any trends or areas of concern in your year-to-date figures
  • A review of your financial structuring
  • Business profit and income tax projections which in turn assist in all important cash-flow planning
  • A projection of your year end results based on our knowledge of your business
  • The ability to implement any changes that need to be made before the end of the financial year
  1. What are some of the tax planning strategies you suggest?

On the back of the above business analysis they should then suggest some strategies to help manage your tax liabilities and strengthen your balance sheet. Some of these include:

  • Taking advantage of any government incentives like the $30,000 instant asset write-off
  • Reviewing the remuneration packages of related employees
  • Maximising your superannuation contributions following past reforms, and detail any impact the reforms may have on you and your family group
  • Advising the minimum pensions to be paid from your superfund for the fund to maintain its tax exempt status
  • Assessing the viability of any salary-sacrifice options
  • Reviewing your current business structure
  • Review of the groups assets and liabilities
  • Ensuring compliance with Division 7A in relation to Director’s loan accounts and unpaid present entitlements (unpaid trust distributions)
  • Reviewing your ledger for potential unrecoverable debts or obsolete items of stock or equipment to be written off
  • Reviewing your Estate Planning and Succession Planning
  • Managing and advising you of your estimated tax position

At the end of a tax planning process with your accountant, you should expect to walk away with more insight into your own business, a greater level of surety to make short to medium-term financial decisions, and therefore be in a better position to take advantage of any opportunities available to you.

If you are ready for the next step to make sure your business future is strong and secure, feel free to take our team through the tax planning hoops and get the answers you deserve here.

When Should You See Your Accountant or Business Adviser?

When it comes to tax planning there are specific items that need to be performed ahead of the end of financial year. So it’s important to decide on an accountant or business adviser you are happy with now and meet with them in the last quarter of the financial year to ensure your strategies are set up in the right way.

Making sure you have covered all your bases ahead of financial year end will put you in good stead and may save you thousands or even tens of thousands off your tax bill. Like many other aspects of your financial life, through knowledge and understanding comes clarity and improvement.

Little Effort, Big Gain – Next Steps

No matter how big or small your business is, tax planning is worth considering.

Remember, it’s not just about tax, it’s about gaining a better understanding of your business as a whole and putting goals in motion. With the right advice you can achieve more than what you expect.

Although the process may involve an extra trip to the accountant, I believe it is an area of our work where we provide further value for money.

Your business is your livelihood so make sure you meet with a trusted accountant or business adviser for your tax planning.

If you are investigating a number of business advisers before making your decision, our team at BLG are available to delve into your business and show you a clear direction. There is no cost involved in an initial discussion with us about your business, and if you feel we aren’t the right fit for you then there’s no obligation to work with us, so why wait? We encourage you to get in touch today and get things moving!

Keep in mind your tax planning will need to be done prior to 30 June, ideally early in the last quarter of the financial year, so that any necessary action can be taken before year end.

Wishing you every success!

Read more

Dealing with Change

Posted on June 4, 2019
by Clayton Childs

Over the last few weeks we have seen Bill Shorten lose the ‘un-losable’ election and Scott Morrison win the ‘un-winnable’ election… ‘losers’ & ‘winners’ out of the same situation. The difference is all a matter of perspective some would say.

It has been interesting to assess the post-election opinions in the media. One fairly constant refrain has been that the promotion of too much change was a contributor to Bill Shorten & Labor’s downfall.

I tend to think it is human nature to not like change, especially when we perceive nothing is ‘wrong’ with the current situation we find ourselves in. Some would say however that change is inevitable and thus one of the few knowns in a world of unknowns.

In many years of business consulting I have found clients are faced with change constantly, and in recent years it has come faster and in higher volume due to technology. The clients who have embraced the change and tried to make it work on their terms, through well thought out strategies and early planning, have generally been positive and content at the end of the process.

Next time you are faced with a situation where the only option is change, try to see it for the opportunities it presents, not just the potential annoyance it may also bring.

Read more

Post-Election Results Overview

Posted on May 20, 2019
by Tammy Tieu

In the lead up to the federal election over the last few months, it was predicted that by this time we would have a new Labor government. Labor promised that by being elected into office, they would bring in a plethora of changes that would greatly shift the strategies of many businesses and individuals.

But in this day and age, whilst we have more knowledge to substantiate our predictions, it can still come as a shock when things don’t go as we expect. The 2019 federal election was no different as it resulted in a Liberal Coalition win despite the opinion polls.

While change can be good, the best thing to come out of the federal election is the removal of speculation and uncertainty. With the uncertainty, there was no ability to implement strategies right away, but now businesses and individuals alike can continue to plan ahead and implement strategies as before.

Will the Scott Morrison government stick to the pre-election proposed budget changes or shake things up? BLG Manager, Luke Bland, will go into detail on this topic next week, but for now here are links to our Federal Budget write-ups that you can refer to:

To ensure you have your planning set up to account for the Federal Budget updates our team can help you prior to the end of financial year. Get in touch with BLG Business Advisers online or by calling 02 4229 2211.

 

Read more

Superannuation Reforms – Key Questions To Consider Now

Posted on May 25, 2017
by Glen Bower

The most extensive changes to Australia’s superannuation system in 10 years will come into effect from 1 July 2017.

As highlighted within our previous online articles, a majority of the superannuation reforms initially announced within the 2016/17 Federal Budget have now become law and will impact on most areas of superannuation including, but not limited to, contributions, pensions/income streams, taxation and estate planning.

Whilst these reforms will not apply until 1 July 2017, it is critical that all individuals review their personal superannuation position now and reassess their retirement plans, as the impact of the upcoming changes can be substantial (depending on each individual’s personal circumstances). For example, individuals with greater than $1.6 million within superannuation will be restricted from making further non-concessional superannuation contributions from 1 July 2017 (subject to limited exceptions).

Below are some key questions that should be carefully considered in advance of 30 June 2017 to ensure that there is sufficient time to address any necessary changes and / or implement any appropriate strategies in light of the reforms:

  • Do you have in excess of $1.6 million within superannuation (including accumulation and pension accounts)?
  • Are you planning to make large non-concessional (after-tax) superannuation contributions within the future?
  • Do you have a defined benefit pension (i.e. lifetime, fixed term / life expectancy, market linked) with pension payments in excess of $100,000 per annum?
  • Do you expect your personal adjusted taxable income to be in excess of $250,000 per annum in the future?
  • Do you have a salary sacrifice arrangement in place with your employer for additional concessional (pre-tax) superannuation contributions?
  • Do you have a Transition to Retirement pension?
  • Will the transitional capital gains tax relief measures apply to your superannuation fund (CGT cost base reset rules)?
  • Are you planning to utilise limited recourse borrowing arrangements within the future?

If you answered YES to any of the above questions, you are likely to be impacted by the upcoming changes to superannuation and it would be prudent to review your personal superannuation and retirement plans as soon as possible.

Further, if you are unable to answer any of the above questions, it is important that you source up-to-date information on your current superannuation position to assess the impact (if any) of the upcoming changes to superannuation.

You do not have to navigate the superannuation changes on your own.

If you are unsure of how the upcoming superannuation reforms will impact on your personal circumstances, please make sure you contact BLG Business Advisers on (02) 4229 2211 or online so one of our experienced advisers can assist yo

Read more

The Value of Your Business

Posted on May 5, 2017
by Angela Bernardi

Do you know what your business is worth? It’s a very important question but one that many business owners can’t answer. Business owners tend to only consider the value of their business when they decide to put their businesses up for sale. Having an understanding of what your business is worth will allow you to maximise investment opportunities, achieve financial security in retirement, make informed strategic decisions in your business and ensure a favourable outcome if you decide to sell.

 Why understanding the value of your business is important:

  1. Putting Your Business Up For Sale

If you are planning to sell your business at some point, knowing what it’s worth is obviously vital, as is knowing how to increase earnings before interest and tax (EBIT). Your current market value is a key component of a business valuation, however you are also assessed on how the key areas of your business are performing. You can use this information to implement strategies that enhance areas needing improvement, promote growth and in turn boost EBIT and business value so your business is at strength when you plan to sell. If you are looking to sell your business you should forward plan, by possibly two years, to allow yourself time to prepare for the sale.

  1. Investment Opportunities

When opportunities for investment, private equity injection or strategic partnerships arise, decisions need to be made quickly. A business owner who understands the true value of their business is able to take full advantage of these opportunities and make informed decisions. Factors that would need to be considered include business history, legal structure, financial information, industry information and a range of other factors specific to your business. Investment opportunities should be seamless and undisruptive to your customers.

  1. Business Expansion

Understanding the value of your business will assist with funding from lenders if required, strategic planning and industry comparisons.

  1. Planning For Retirement

Many business owners put their heart and soul (not to mention their life savings) into their business with a hope that one day it will provide them with a retirement nest egg. If you are basing your retirement on the eventual sale of your business, you need to be prepared. By understanding how much your business is worth now, you can then identify how much you need to generate from the sale of your business to be able to retire comfortably. Once you know what the gap is, you can put in place a strategy to increase your business value and ultimately achieve financial freedom.

  1. Exit Strategy In Place

Every exit plan should align with the owner’s business and personal goals. The most successful exits from business require considerable planning. Regardless of your chosen exit strategy (e.g IPO, MBO, merger/acquisition) you need to have accurate insight into the value of your share of the business.

  1. Prepared For The Unplanned

Personal loss, divorce and legal disputes can sometimes be difficult topics to discuss but it’s important to have planning and asset protection in place for the future. If something happened to you, would your family be able to keep running the business? If they had to get your estate in order, would they know the value of your business?

  1. Insuring Your Business

Having appropriate insurance for your business is critical and many require details of a valuation. Please speak to your insurer or broker in relation to the information they require.

After working through the business valuation process, we often receive feedback from BLG clients saying how much more understanding they’ve gained in their business operations. We can identify the key growth factors and help business owners implement some simple but effective strategies that focus on increasing business value.

For personalised advice based on your individual situation, please get in touch with BLG Business Advisers online or call (02) 4229 2211.

Read more

Act fast, Plan early – 2017 Tax Planning

Posted on March 20, 2017
by Luke Bland

Tax planning is critical to the long term success of any business. It provides you with the opportunity to assess your current business performance and current financial position, as opposed to the preparation of year end financial statements that are based on historic information.

As we approach the last quarter of the 2017 financial year, it is important to take stock of how your business and investments are performing. Some questions you might like to ask yourself are:

  • Is your turnover in line with your expectations?
  • Are your profit margins as high as you were hoping?
  • Are your investments providing the returns you were hoping for?
  • How does this year’s performance compare to last year?
  • What is your current financial position?
  • Are there any opportunities you should be taking advantage of?
  • Have you provided for any potential tax liability?
  • Are there any strategies you should be implementing prior to 30 June to manage your tax liability?

If you are unsure of any of the above questions, we encourage you to speak to an experienced Chartered Accountant. BLG Business Advisers can assist you and provide:

  • Feedback on your business performance compared to industry standards
  • A review of your year-to-date performance
  • A projection of your year end results based on our knowledge of your business
  • A projection of your net tax position

BLG will discuss with you potential strategies to manage your tax liability, such as:

  • Restructuring the remuneration packages of directors and related parties to be tax effective
  • Distributing income across your family group in the most tax effective manner
  • Maximising dividend payments to utilise available tax free thresholds and low marginal rates
  • Ensuring compliance with Division 7A in relation to directors loan accounts and unpaid present entitlements (unpaid trust distributions)
  • Reviewing your ledger for potential unrecoverable debts or obsolete items of stock or equipment to be written off
  • Maximising superannuation contributions following the recent reforms, and detailing any impact the reforms may have on you and your family group
  • Advising minimum pensions to be paid from your superfund for the fund to maintain its tax exempt status

BLG Business Advisers can assist you with the implementation of any relevant strategies and help you plan for the cashflow impact of any upcoming tax liabilities. Make sure you meet with a trusted business adviser prior to 30 June so that any necessary action can be taken before year end.

Act fast and plan early – get in touch with BLG Business Advisers online or call (02) 4229 2211 to discuss your requirements and one of our experienced team will set up a tailored tax planning solution for you.

Read more

Strategies for business growth

Posted on March 13, 2017
by Scott Brodie

New business owners have numerous goals when they’re starting out, including rapid growth and brand or service recognition. Every business owner wants to see an improvement in their bottom line, but what’s the best strategy to achieve growth? At BLG, we consider each client’s specific circumstances and industry, and assist in formulating a plan for growth.

Here are some general key points to help get your business growth underway:

  • Focus on your customer experience

Ensure your customer service standards are high, from first contact to service delivery, so customers consistently have a positive overall experience. Deliver quality experiences and products, and they’ll happily provide positive reviews online; make it unpleasant, and they’ll spread the negative feedback even faster. Customers’ perceptions can really make or break a business, so fast business growth depends on making your current and potential customers happy with their experience.

  • Concentrate on established revenue sources

Direct your attention to the core customers you already have and find ways to encourage their loyalty and build brand advocacy. Investigate referral or customer loyalty programs and test marketing strategies that leverage off their past purchase behaviours to encourage repeat business. Also important is developing ways to keep the lines of communication open with useful updates so they feel important, your business remains top of mind and they want to keep coming back.

  • Expand your customer base

Understand exactly who your target customers are, work out how to best reach them, and use these avenues to communicate with them. The possibilities are endless but start small; ask new customers how they heard about you on first contact, then expand on what methods are working. One of the most effective, and cost-efficient, ways to generate business is via word-of-mouth and the online world makes this easier to achieve. Get people engaging with you online; set up a social media page for your business, write posts regularly and even link them to interesting blogs or promotions on your website. Make sure your current customers are aware of your online resources and get them engaging with your content so this is then spiralled out to their contacts.

  • Be adaptable

One trait that successful start-ups often have in common is the ability to switch directions quickly in response to changes in the market. Whether you are required to make an internal, product or service change, by allowing yourself to adapt quickly, you can test different approaches to business and find out what works best.

  • Invest in yourself

Investing in ways to maximise areas of your business, such as improving technology or service delivery methods, will help accelerate growth. In the early years of a business, it’s critical to make sure that you’re redirecting any revenues back into the company. It’s vital to set up a growth strategy and invest early and heavily in order to grow quickly.

  • Always think ahead

Plan your next step and anticipate all possible scenarios. This can mean the successful implementation of all the above business growth points. Long-term strategies are the best way to stay grounded and secure as your business evolves.

If you are starting a business, or starting to experience growth and need some advice and direction, get in touch with one of our experienced advisers at BLG Business Advisers online or by calling (02) 4229 2211.

Read more