Firm Journal

How small business can compete with major corporations

Small businesses should not feel intimidated by their corporate competitors as they have many unique advantages that can help them gain a sizeable market share.

Small business owners should focus on specific areas, so they can go head-to-head with large companies with more resources.

Customer service
Small businesses have the opportunity to build a stronger relationship with their customers through the delivery of friendly and personal customer service. Businesses that provide superior customer service to their corporate competitors will build a loyal customer base and grow their business through word of mouth.

Tap into niche markets
Small business owners are directly involved with their customers, which means they have a greater insight into what their customer base values. Take advantage of this by innovating more quickly than corporations, whose decision-making processes are slower. You may provide a service that corporations cannot feasibly implement.

Build a strong staff
The expansive corporate chain of command is far more likely to have a weak link than a small business. Small businesses have greater quality control over the selection of their staff and the standards and expectations of performance. Build a competent team that outperforms your corporate competitors.

Posted on 7 December '18 by , under business. No Comments.

Employer SuperStream checklist

Employers must make superannuation contributions on behalf of their employees. SuperStream is the ATO’s electronic and standardised solution that streamlines the super payment process.

Using SuperStream for employers means:

  • You can use one online channel to pay multiple funds
  • Less room for error during data entry, due to fewer steps
  • Transactions reach funds faster

Obligations
You must make contributions to a super fund through a SuperStream solution unless you are eligible for the following exemptions:

  • Personal contributions if you are self-employed or a sole trader and make after-tax contributions to a super fund for yourself
  • Contributions to your SMSF where you’re a related party employer. For example, if you are an employee of your family business and your super guarantee contributions go to your SMSF.

Step-by-step guide
Once you have decided that SuperStream is right for you, the following steps will help you stay compliant:

  • Choose an option: you can choose from a payroll system, your super fund’s online system, a super clearing house and a messaging portal
  • Collect information and update your records: refer to the ATO for an exhaustive list of the information you will need from your employees
  • Pay the SuperStream way: pay as soon as possible so you can get used to the system

Posted on 7 December '18 by , under super. No Comments.

Getting to know the ATO Business Portal

The ATO has introduced the Business Portal to allow small business owners to manage their tax affairs online at their convenience.

Connect your ABN to your myGov account or a compatible AUSkey so you can access the business portal. The portal is accessible 24 hours a day, seven days a week.

The portal can be used for the following services:

  • Registering for GST or PAYG withholding
  • Lodging, revising or viewing activity statements
  • Requesting refunds or transfers between accounts
  • Updating your business details
  • Tracking the progress of refunds or transfer requests
  • Communicating with us through a secure mailbox

Refer to the ATO for direct links that will step you through how to use these services successfully. If you still have trouble with technology it may be worth consulting a registered tax agent to help you fulfil the ATO’s compliance requirements.

Posted on 7 December '18 by , under tax. No Comments.

Credit card do’s and don’ts

Credit cards are useful financial tools that can help you manage cash flow but can run you into debt if you are not careful. Before you swipe your first credit card consider the following do’s and don’ts, so you gain all the advantages without the headache of a tarnished credit rating.

Do’s
There are several actions you can take that will help you manage your credit card. Follow these rules:

  • Try to repay the whole amount owing by the due date to avoid interest mounting up
  • Switch up your payment methods with debit cards to keep your credit owing manageable
  • Be selective about the credit card you apply for
  • Arrange your money so you can reap credit card benefits like frequent flyer points by paying on your credit card and then transfer the money across to your credit account

Don’ts
Credit cards can accumulate debt with ramifications for your credit score and loan applications down the track. Avoid these standard blunders, so you do not end up regretting your credit card:

  • Do not pay the minimum repayment amount as you will incur interest which can become unmanageable if it compounds weekly or even daily
  • Do not have multiple credit cards if you are new to credit as managing accounts and deadline dates can be difficult
  • Do not max out your card

Posted on 29 November '18 by , under money. No Comments.

Mental health tips for small business owners

Small business owners are constantly under stress and pressure, which is why it is important they look after their mental health.

The following tips will help you manage your mental health as a small business owner.

Have a reliable support network
Friends and family are vital to anyone’s functioning; however the unique challenges small business owners face means they may benefit from connecting with like-minded thinkers. Consider joining a small business owners groups on Facebook or LinkedIn. These networks are helpful as the members can relate to your problems on a deeper level. Both business groups and your nearest and dearest can provide a sympathetic ear, realistic solutions to your problems and tell you to get help.

Allocate personal time
When you are running a small business, it can feel like your life is consumed by it. An unhealthy work-life balance will harm your mental health and productivity. Schedule time off from work. Taking up a hobby or joining a sports team may be a great way to have structured breaks from your business.

Know the warning signs
Knowledge is key to prevention. Get educated on mental health and know the warning signs and symptoms. If you catch your problem early, you can avoid jeopardising your health and your business by taking a hiatus, relinquishing some responsibility or seeking help.

Posted on 29 November '18 by , under business. No Comments.

ATO warns of illegal early super release

The ATO has issued a warning to the public regarding illegal early release of super schemes, which are subject to severe penalties.

There are strict rules around when you can access your super so your current decisions do not jeopardise your quality of life in retirement. The ATO has reminded the public you may only access your super early if you have experienced severe financial hardship or you have reached the preservation age and have stopped working.

How these schemes work
The promoters of these schemes:

  • Encourage you to transfer or rollover your super from your existing super fund to an SMSF to access your super before you are legally entitled to
  • Target people under financial pressure or those who do not understand super laws
  • Claim you can access your super and put the money towards anything you want which is not true
  • Charge high fees and commissions, presenting the risk of losing some or all of your super to them
  • May request your identification documents which can result in identity theft

Penalties:
Penalties apply to promoters and individuals who illegally access their super early. If you illegally obtain your super early, it is included in your assessable income even if you return the super to the fund later. If you are an SMSF trustee, you may be fined up to $420,000 and liable for jail terms of up to five years. Civil and criminal penalties apply to promoters.

Posted on 29 November '18 by , under super. No Comments.

ATO update: Tax deduction rules on travel to rental properties

The ATO has enforced strict guidelines on tax deductions for rental property owner’s travel expenses.

As a rental property owner you are not able to claim deductions for travel expenses relating to inspecting, maintaining or collecting rent. If you have already claimed a tax deduction for the cost of travel to and from your property in your 2018 return, you will need to request an amendment. The law change came into effect on 1 July 2017 and affects tax returns from 2017-18 onwards.

Exclusions
You may claim these travel expenses on your tax return if you are carrying on a rental property business or are an excluded entity.

An excluded entity is a:

  • Corporate tax entity
  • Superannuation plan that is not an SMSF
  • Public unit trust
  • Managed investment trust
  • A unit trust or a partnership, all of the members of which are entities of a type listed above

Posted on 29 November '18 by , under tax. No Comments.

Benefits and problems of niche marketing

Business owners thinking about specialising their products and services to target a niche market should know the benefits and risks of this business strategy. Niche marketing is the business strategy of targeting a specific subset of a market.

Here are some benefits and problems of niche marketing that will help you build a business strategy right for you.

Benefits
Niche marketing can provide the following benefits:

  • Less competition as the base of interested customers is narrowed
  • Increase brand loyalty as you are providing goods or services difficult to find and customers are more likely to return to invest
  • Gain a higher profile among the interested customer base as the target market and competition is small, more people are likely to know your business name

Problems
However, niche marketing has its pitfalls you should know before you specialise:

  • The smaller market makes growth difficult as there is not a large customer demand
  • You increase the risk of your business failing if there is a disruption to your niche market, for example, if a larger company joins the competition or the good or service you provide becomes obsolete due to innovation

Posted on 26 November '18 by , under business. No Comments.

Paying super to contractors

The ATO classifies contractors paid for their labour as employees for superannuation guarantee purposes. This is the case even if the contractor quotes an Australian Business Number (ABN).

Eligibility requirements
Super contributions must be made for these individuals if you pay them:

  • Under a verbal or written contract that is wholly or principally for their labour- that is, more than half the dollar value of the contract is for their labour
  • For their personal labour and skills- which may include physical labour, mental effort or artistic effort and not to achieve a result
  • To perform the contract work personally – they must not delegate.

You do not pay super to a person when you make a contract with someone other than the person who will actually provide the labour, like a company, trust or partnership.

How much to pay
The minimum super amount you have to pay is 9.5 per cent of each worker’s ordinary time earnings. For contractors, employees calculate the minimum super amount on the labour component of the contract. The ATO will accept their market values of the labour if the values of the various parts of the contract are not detailed in the contract.

Posted on 26 November '18 by , under super. No Comments.

ATO updates Taxpayer’s Charter

The ATO has updated the Taxpayer’s Charter which prioritises a relationship with the public built on mutual trust, courtesy and respect in all interactions.

Your rights regarding review of ATO decisions are clearly outlined by the Charter if you feel you have been mistreated. The Charter has also committed the ATO to use easy to understand language, so their information is accessible to the public.

Some of the changes include:

  • Simplified information about what to expect if your business goes through a review and audit process
  • More details on the ATO’s digital interactions with small businesses
  • Moving away from complex language to make things easier to understand
  • Including a one-page overview of your rights and obligations

Refer to the ATO to review the updated Taxpayer’s Charter for yourself.

Posted on 26 November '18 by , under tax. No Comments.