Float Accounting & Advisory

From everyone at Float, we wish you all a wonderful end-of-year break with your family and loved ones.

Why your business should have an expert contract lawyer: Adam Abela and Senior Lawyer Martin Algie, discuss the importance of having an expert contract lawyer available in your business to help prevent and deal with common legal issues businesses often face.

Some great tips to help your business when times are tough. https://bit.ly/3cSyeof

Are you feeling a level of anxiety about your business at the moment?

Interest rates are rising, which, depending on your industry, may impact your business's demand.

When interest rates rise, there is less disposable income in the economy, and people tend to tighten their belts.

There has also been a minimum wage rise, which may put added stress on small businesses that may be on a knife's edge.

So, if this is causing you anxiety, you are not the only one.

Some businesses are feeling the same thing.

But there is some good news.

Fortunately, we have a heads up on where things are going so we can make some adjustments and hopefully get our small business through some challenging times.

Now, I've put together three things.

They're not rocket science, but the whole idea is to encourage our business owners to think strategically about their businesses.

And what usually happens is, and I've been through it myself when things get tough, the business owner takes on a lot of the work themselves, meaning they have less time for strategic thinking and analysis.

And this could lead to the business being less efficient during a time when the business needs to be running super efficient.

So here are three things that may be able to help you and prepare for small business challenging times ahead.

Number one: prepare for finance before you need it.

I've spoken about this many times, but once you know you need finance or hit hardships, it's generally when your business is struggling. Those struggles will probably be reflected on your interim P&L figures.

Unfortunately, you may be less attractive to the banks when that occurs.

If you're getting finance personally, your business may be struggling to the point where your wages may have to drop, again affecting your finance application.

Act before your business is struggling.

We know that there are hard times ahead.

So, if you think you will need working capital at some stage, get it when you and your business are most attractive to the banks, not when you're least attractive.

And here is a tip: if you're able to get finance and you're getting it just as a fallback and you think you may not need to use it, get a separate offset account.

Keep it topped up.

You'll have access to a cash reserve and won't be paying any interest on it.

It's a win-win.

You may sleep better at night knowing that if things get rough, at least you have a cash reserve there that you can fall back on whenever you need it.

If you're a Float Accounting client and need assistance setting something like this up, give us a call, and we'll help you out.

We'll put you in the right direction with one of our partners.

Number two: know your business and understand your current revenue drivers.

Keep up to date with what is driving your revenue demand for items.

Things change rapidly in economic downturns.

So even when a business is going through good times, and there is a product or certain things in that business that may be really in hot demand, we know that downturns can change that.

So, keep up to date with what is driving your revenue and cut out any unnecessary services or products that may be causing micro-losses in your business.

We do not want micro-losses.

For example, if you're a cafe, you might find that your demand for a particular item has dropped in the colder months or whilst interest rates are high.

For example, larger meals, or pricier items on the menu.

Maybe dropping a certain item off the menu will mean your inventory and logistic costs go down.

Or, let's say you might be able to shave down your trading hours for certain hours, causing micro-losses.

Running super efficient is the key.

And knowing your business is what will allow you to make these decisions.

Dan will be bringing out a video soon about business dashboards, and we are so strong on dashboards because it provides you with live data.

Number three: being adaptable is essential.

So, adapting your product line and making changes in your business to the demand.

If there's a decline in demand due to a reduction of disposable income in the economy, then think about your product line and adapt.

Maybe you're a floor sander or a floor painter, and you traditionally do three to four coats of paint on a floor.

Maybe provide cheaper options to those selling a house or an agent doing a home up to sell.

Maybe providing two coats will make your product much more affordable to these types of people and increase the demand for your product.

Again, today's exercise was just really about helping us think strategically.

These are just three small tips, but there are so many things that we can do to help our business be super efficient, which is the key.

Cloud accounting: what is it and why you should implement it in your business: https://bit.ly/3z0TeBU

More and more businesses are switching to cloud-based accounting software, for good reason.

So what is cloud accounting?

Cloud accounting is a type of accounting software that allows users to access their financial data from any internet-connected device.

This means you can view and update your books from your computer, phone or tablet wherever and whenever you need to.

Cloud accounting has many benefits over the traditional legacy accounting style.

Perhaps the most obvious benefit is that it is much more convenient and accessible.

With cloud accounting, you are no longer tied to your desk to hard copies of documents or spreadsheets full of transactions and financial data to do your bookkeeping.

You can now do it from anywhere.

In addition to being more convenient, cloud accounting is also more collaborative and efficient than legacy accounting software.

Because cloud-based accounting software is accessible via the internet, multiple users like employees, bookkeepers and accountants can access and update the same financial data in real-time.

You and your accountant can work on your books together without having to send files back and forth or wait for updates.

Modern cloud accounting software and most Australian banks now work seamlessly together to support automatic imports of your business bank account transactions, to allow for automatic transaction categorization, and to speed up and simplify your bookkeeping.

Cloud accounting software also gives you the added benefit of being able to connect other apps to your accounting software, like:

customer proposal software,
receipt scanning software,
billing software,
financial reporting and forecasting software,

and pretty much any other software that uses your business's financial data or interacts with your business's financials.

Finally, cloud accounting is much more secure than traditional accounting software.

Legacy software is installed on a single computer or server in your office, which means that your financial data could be compromised or lost forever if that computer is lost or stolen.

With cloud accounting, however, your data is stored securely online and can only be accessed with a unique username and password protected by bank-level encryption.

One of the most popular cloud accounting software programs today is Xero.

In our opinion, Xero is the best cloud accounting software for Australian businesses, which is why we use it at our firm.

At Float Accounting, we are Xero Certified Partners.

We are proud to offer full Xero transition support and training within our service offering.

We understand that switching to cloud accounting can be daunting.

Still, we'll work with you to ensure a smooth transition for your business.

If you're interested in learning more about cloud accounting or transitioning your business to Xero, please don't hesitate to contact us.

Adrian talks about a recent case study on poor accounting practices by a client’s previous accountant that cost the client $31,500 in overpaid tax!

https://bit.ly/3byTQp6

Is cheap accounting really worth it? Overpaid tax might be the result.

Today, I wanted to share a real-life example of how much a cheap and poorer quality accountant cost one of our new clients in overpaid tax.

It was into the tens of thousands of dollars!

We have permission from the client to share their experience but have changed their name and won’t be mentioning the accounting firm that produced the shoddy work.

“Trevor” runs a business and has a turnover of approximately $160,000.

He joined Float Accounting after deciding it was just time to change accountants.

He told me his previous accounting fees were cheap; there weren’t any alarm bells with his existing accountant.

Still, he just felt the relationship had become stale.

There was minimal communication with his accountant, who was very hard to get hold of when he had to ask essential questions.

As we do with all our new business clients, I looked back at Trevor’s financials and tax returns from the previous financial year to see if there were any errors or tax planning opportunities.

These are the three errors I found by the previous accountant and what extra tax it cost Trevor.

1: Double reporting of a debtor accounts receivable.

A simple oversight on his debtor account meant Trevor was paying twice the tax on his debtor income, which resulted in $20,000 in overpaid tax, which is no exaggeration.

2: No depreciation applied on a new vehicle.

The previous accountant did not apply depreciation on a new vehicle that Trevor purchased and used an ineffective depreciation method for existing assets on the books.

This one resulted in $3,000 in overpaid tax and would have kept continuing in future years.

3: Missed deduction of postgrad university fees.

The previous accountant was unaware that Trevor’s postgrad university fees were tax-deductible.

This one resulted in Trevor overpaying $8,500 tax.

Fortunately, in Trevor’s case, I could amend these tax returns with the ATO within the allowable timeframes.

This resulted in him receiving $31,500 back into his bank accounts.

As you could imagine, Trevor was grateful I’d picked up on all the issues.

In the end, his bargain accountant cost him a lot more, but fortunately, in his case, I could fix the errors in time.

Although this may seem like a unique situation, it isn’t.

I see new clients all the time who are consistently overpaying tax or haven’t been appropriately structured.

This exposes them to enormous risks and potential issues getting finance.

What’s worse, they aren’t even aware.

You want to ensure your accountant is spending the time to collect the right information from you, accurately report all your information to the ATO, and get you the best possible tax result.

You do a tax return once a year and want to ensure you’re getting the best result year in and year out.

I’m happy to advise that we now offer a free review of your previous year’s financials to ensure your accounting work is being done correctly and your tax is being minimised.

It’s obligation-free, and your existing accountant won’t be aware, so there’s no need to feel uncomfortable.

If you feel you need any assistance, click on the link below to book a free review to see if you are overpaying tax or missing out on other opportunities.

Click here to speak to an expert: https://bit.ly/3HZLfHW

Are you at risk of an ATO audit?
>>> www.floataccounting.com.au

You hardly ever speak to your accountant.

Everything you provide them gets claimed, and your taxes are low, so they must be doing a great job, right?

This could be a recipe for disaster.

I often come across this, particularly with small businesses that don't get too involved with what their accountant is doing.

Unfortunately, some accountants spend very little time with their client's accounts and claim whatever their client has provided without checking or reviewing the claim to understand the expense.

From some people's perspective, this seems excellent, as the accountant claims whatever they provide to them.

If you are one of those people, listen to this video because you could be wearing all the risks of an ATO audit.

Not only that, but the ATO can audit back many, many years.

A few years ago, I was speaking to a friend about tax.

I asked him about his current accountant, and he gave me the line,

"I hardly pay any tax, mate. My accountant claims everything".

He told me he was earning well over $100k per year.

I told him it just didn't pass the smell test.

I said he should be really careful, as his accountant is not the one that signs off on the tax return; he does.

The ATO will hold him liable if his tax deductions are not justifiable.

Two years later, the ATO audited this person, asking him to justify all the claims he had made for prior years.

Now he obviously couldn't, and his accountant didn't really assist at all, as audits take time and cost money.

This person found himself in a massive tax debt problem and had to pay it off with interest due to the unpaid debt.

Now he soon realized he needed some serious help, and that's when he became one of our clients.

I was able to help him recover from a difficult situation.

Fortunately, at the time, I was working for a firm that specialized in this area.

Still, the impact on him was significant and affected his personal life.

Good accounting is smart accounting, and smart accounting is structuring in a way that gets you to your goals quicker, with fewer risks and better financial results.

If your goal is to minimize tax, there are smart, legal, low-risk ways to do it.

Good accountants will always make sure your deductions are justifiable.

Through knowledge, experience and forward planning, the results are better than just claiming disallowable deductions.

Remember, you never know when the ATO will come knocking, and it always comes at the worst time.

If you think we can help you or want a second opinion to look over your books, please book a free, no-obligation consultation.

Have you been sent a demand letter or a DPN Notice or warning from the ATO?

>>> www.floataccounting.com.au

Recently, the ATO seems to be more aggressive with businesses falling behind in their company and quarterly tax obligations.

The COVID concession period now seems to be over, and the ATO appears to be currently focusing on recouping any unpaid taxes.

So, what should you do if you know that you’re falling behind in your tax debt or you’ve been sent a demand letter from the ATO?

1. Make sure all your quarterly BAS’ are up to date.

Did you know that if you had to close the company and liquidate and your quarterly BAS’ are not up to date, the ATO may forfeit your right to have your company serve as your asset protection?

In other words, the ATO will hold the Director personally liable for the debt and come after your personal assets to recoup the money you owe them.

In most cases, if your BAS’ are up to date, it provides you with an opportunity to appoint a liquidator and go through the process with a lot less risk of your personal
assets being attacked.

Something as simple as your accountant not lodging your BAS’ on time could be a nightmare of an issue for you.

So, make sure you’re on top of your lodgements.

2. Get on the front foot with any DPN Notice or overdue debt.

The ATO will not simply forget the debt.

So don’t ignore it.

And if you haven’t seen or been sent a letter of demand yet, don’t wait for it.

Act now because outstanding debts will incur interest, and they’ll cost you more in the long run.

The ATO is process-driven, so although you might have a good reason for falling behind in your debt to the ATO, we know things happen in business; once debt recovery is initiated from the ATO, it’s a very impersonal process, and negotiation becomes very difficult.

So, your accountant should negotiate and communicate with you and the ATO ahead of time before it becomes a problem.

Ideally, an interest-free payment plan with the ATO would be great to pay back that debt, or provide you with transparent and ethical advice on what to do if you simply can’t pay your debts.

A sluggish or inadequate response will give you fewer options and poorer results in the end.

Your accountant won’t be paying for it; you will.

3. Try not to make yourself sick from stress.

You know, many businesses are in a similar boat, so working with a good, experienced accountant who isn’t time poor and can spend time with you to assist you will help you keep or get your business back on track.

If liquidation is necessary, a good accountant will be able to assist you with sound advice and should have partners in the business to help guide you through this process.

So, everybody, I hope that’s helped.

I know it can be stressful if you are going through some tax debt issues but be assured that if you handle it correctly and have the proper support around you, you will get through it, and it’s not the end of the world.

If you need any assistance from Float Accounting, we’ll be happy to have a quick chat and give you some sound advice.

www.floataccounting.com.au to speak to our experts.

Dan our CTO gives his software recommendations to improve your business's cash flow. www.floataccounting.com.au

Adam Abela, CEO of Float Accounting, gives 5 cashflow management tips to help improve your business' cash flow.

Read more: https://bit.ly/3IYuBYr

Adrian discusses 4 reasons why a company structure is better than a sole trader. If you're running a sole trader business, consider the advantages of moving over to a company structure.

Are you looking for ways to systemise your business? If so, you’re in luck! In this video, Dan our CTO talks about three apps that are guaranteed to help you take your business systemisation and process automation to the next level. https://bit.ly/35Z5vuw

Adam, CEO of Float Accounting, discusses the importance of business systemisation, and building and documenting processes in your business. https://bit.ly/3tgQlZr