If your idea of a good accountant is someone you talk to once a year, who loves wearing a cardigan while writing up cashbook ledgers with pens in their shirt pocket – sorry, don’t bother contacting GNS Group.
You see, there is a difference between having experience and being a dinosaur.
If your current accountant doesn’t embrace technology to deliver you timely and accurate advice to allow you to make informed business decisions – why are you still with them?
We are not bookkeepers, but we certainly work closely with them. We wont be sifting through a shoebox of your receipts or doing your daily data entry – paper shuffling is not productive or cost effective and best left to bookkeepers.
Of course we do tax returns, BASs, Financial Statements & Audits – but that’s the boring stuff.
GNS Accountants are that sounding board, to bounce all those crazy ideas off that business owners think of. Why – because our clients see us as much more than just working for the tax office.
Our interactions with clients are not transactional – they are generational.
Talk to our Accounting team today
Well there are two types of audit services GNS Group assists clients with – Reactive and Proactive.
This is the dealing with the dreaded ATO ,along with other statutory agencies, and their “information requests” sounds much nicer than AUDIT doesn’t it!
Our role is to defend your claims and to prove what you have submitted is true and correct. To do this, we need to make sure we have accurate information from you to start with. Then we need to make sure it has been correctly reported to the ATO and alike, and we are in a position to defend your returns.
Like all ATO audits, they need to be addressed in a timely and considered way, you cannot rush things and make the problem bigger. Similarly, you cannot ignore their request in the hope that it will just go away.
So how do you get selected for audit?
Every year the ATO publish a hit list of occupations that they will be paying close attention to. This is usually because of the prevalence of large levels of deductions and their operation in ‘high risk’ occupation categories (ie those prone to dealing in cash).
For individuals and businesses alike, the ATO compares your return to similar people in similar occupations and geographical locations. This ‘benchmarking’ of returns enables the ATO to quickly identify who may be outside the normal boundaries they would expect – potentially pushing your return into the High Risk category.
You can be also randomly selected as part of a compliance campaign where they may be selecting say 1000 Super funds this year, or 20,000 Business Activity Statements etc for review.
GNS Group also offers clients the opportunity to participate in a group audit shield insurance policy. This peace of mind cover allows for the cost of our fees in defending your claims to be paid for by the insurance provider & you don’t have to worry about an expensive bill from ourselves.
The team at GNS Group provide audit services for a variety of businesses and entities. Both in order to satisfy their professional or statutory requirements, and to provide shareholders with additional comfort that their business is financially secure with an additional level of oversight.
A large part of our audit business involves the compulsory compliance audit of Self Managed Super Funds, which is required on an annual basis. This is ensures that the SMSF is compliant and forms an important prudential oversight for the superannuation system.
All of our SMSF audits are conducted on premise, in Australia. Whilst costing a bit more than some of the outsourced overseas providers, we are able to maintain data security and do not need to be concerned with foreign privacy regulations and security of your personal information.
This review of their practices and trust accounts gives their customers added protection along with meeting professional obligations in most situations.
Many larger businesses will also require an audit. Often this is the case either because of their high revenue, staff numbers, or net asset position.
The GNS team also has experience in these types of audits and would be willing to discuss your audit needs further.
Often as business owners, we get so caught up in doing the job, that we lose focus on the key drivers, and that is where the GNS team can help to get your business humming along.
Are you tracking above average, below, or are you somewhere middle of the road?
These key numbers are often called Key Performance Indicators, or KPIs.
Some common ones are:
Benchmarking your business to similar businesses, across similar geographical position and of comparable size is a great way to see how you are travelling. And depending on what business you are in, there will be different key numbers that you need to focus on.
There might also be some specific ones depending on your business, whether it be how much you spend on advertising compared to sales, stock turnover, debtor lock up days, or the amount of wastage compared to material purchases. Some non financial KPIs include: Turnaround time, workplace injuries, re-work or errors, staff retention etc.
There is almost a measure for every aspect of a business, but its important to focus on the important ones – the Key Performance Indicators.
If you know the right KPIs to track, and you are performing above the average of your competitors, then everything else will flow from there.
And its not just our clients that take note of the important financial indicators of a business, and how that compares to your industry benchmark, but the ATO as well. For the past few years, the ATO have been focusing their audit activity on businesses which fall outside the average or benchmark results of similar businesses.
The ATO’s belief is that if a business is operating well above or below the average, there may be something fishy going on. And I am sure that on some occasions, this is correct. On other occasions, there are justifiable reasons for a departure from the benchmark averages. But its only when armed with the vital information about your business, that you can adequately protect yourself.
And this is where the team at GNS Group can help. With many years of experience across a variety of industries and differing sized businesses, from a $20,000 part time business, all the way through to a $75 million business, we’ve seen most things.
Our advisers have all of the resources to help you understand the numbers and more importantly, can help you focus on the important KPIs of your business to drive better profits. Ask us today how we can help.
The lifeblood of any business is only as good as its cashflow. Being able to pay your suppliers, staff and bank commitments, is all dependent on having reliable cashflow.
And the same applies to investors. Many of whom get caught up in the tax benefits of negative gearing, but it ultimately doesn’t make sense to continue throwing money out the window, there has got to be some positive income for you at some point or why bother.
Unfortunately we have seen many good and profitable business owners say – “I’ve made a profit, but where is it?”
The answer often can be found on the Balance Sheet.
Lots of attention is rightly spent looking over a Profit and Loss Statement, but understanding where that money has gone is where a Balance Sheet comes into its own. A cashflow statement also works well, but many small business owners do not usually prepare a reconciled cashflow statement.
Cash at Bank – ok, lets start with an obvious one – do you have more or less money in the bank than 12 months ago
Debtors – this is money that your customers still have to pay to you, has it increased.
Stock – are you holding more stock than last year
WIP – do you have a large amount of Work In Progress which has not been finished yet, but will be invoiced shortly
Fixed Assets – have you replaced your equipment or cars or purchased new assets such as property or shares
Creditors – how much you owe to other people for materials etc, has it decreased
Bank Loans – have you made some repayments off your outstanding balances above just the interest costs
Provisions – have your obligations for Annual or Long Service Leave reduced this year
Shareholder Loans – this is you, have you pulled out extra money this year or funded private expenses through the business
Dividends – again this is about you, did you withdraw extra money this year from your retained profits
These are the 10 main sources of cashflow problems in any business, or a combination of several of them.
Once you understand where the cash has gone, then you can use some targeted strategies to address them. The team at GNS Group have some proven strategies and can work with you to unlock the cash from your business and to help you see the rewards of your hard work.
Unless there is some final windfall at the time of sale, don’t go kissing away your hard earned cash just to get a tax deduction.
If you are new to negative gearing, this is how it works:
No one wants to lose money indefinitely, so the annual return and payback period is very important to know and understand. So too are the risks associated with the investment.
It’s one thing to risk your own money, but it’s another thing when the bank still wants its money back even if you suffer a loss.
Bill earns $80,000 p.a. and has $100,000 saved up. He has decided to by some shares and would like to borrow a further $100,000.
His $200,000 Investment is spread across 20 different shares to get some diversification.
The $200,000 of shares will pay dividends of approximately $8,000 p.a. His interest cost is $7,000 p.a. and he pays his Financial Advisor $1,500 p.a. for advice on which shares to purchase. So his cash flow is negative $500 p.a.
In this scenario, Bill would be $2,280 p.a. cash flow positive, and will pay tax on any realise Capital Gain once sold.
Kelly earns $80,000 p.a. and has saved up $150,000. She has decided to buy a property worth $650,000 and will borrow $530,000 to cover Stamp Duty as well.
Her property generates rent of $500 per week or $26,000 p.a. The outgoings are $6,000 p.a. and the interest cost is $29,000 p.a. So Kelly has net cash flow of negative $9,000 p.a.
In this scenario, Kelly would get a tax refund of $2,800 p.a. so she would still be over $6,000 p.a. out of pocket. Kelly is relying on a final Capital Gain to recover her losses now.
Property: You would usually look at a normal Home Loan Product. Generally you would do an Interest only loan to maximise your tax deductions and to keep your cash flow costs to a minimum.
Shares: Many people redraw any available equity on their home loan facility and use that. This generally works well as the interest rate is low and there are no margin calls – which make it easy to understand and operate.
An alternative approach for share would be to take out a Margin Loan. Under these types of loans, the share investments are used as security. You will have to contribute a margin towards the purchase which is not too different to paying a deposit towards a house.
If the share portfolio was to fall in value significantly, you may be required to kick in some more cash or sell down some of the shares to restore the margin. This means constant monitoring and advice is pretty important.
Managed Fund Investments: You can do both Margin Loans or Equity within your home. But you may also be able to contemplate an internally geared managed fund. Under this style of investment, you are not a direct borrower (helpful if you have no available equity) but the fund manager will borrow and invest in the background giving you a leveraged position without the risk of a margin call.
As with all financial products, paper advice should be obtained to assess your capacity to absorb risks/debts and the income to make repayments.
A GNS Group Financial Planner can work with you to grow your wealth.
If you don’t know, be concerned, but not distraught. You should be concerned enough to care if you will be profitable, whether you need extra resources (staff and facilities) or things might be looking shaky and you may need to pull the belt in.
The reason why you shouldn’t be distraught – you are in the same boat as many small business owners.
Budgets are almost like 101 financial management, something that we often are taught or learn from a young age, but tend to take for granted when we look towards your business and its prospects.
From the Federal Government, all the way through to a child counting their pocket money, its important to understand what income you think will be coming in, and what you want to spend it on. This is budgeting.
Sometimes it is relatively easy to budget, perhaps if you are an employee with a stable income, you can fairly easily predict what is going to be coming in. And in terms of expenses, starting with what you spent money on last year is a good indication, then its just a matter of adding on some known expenses for this year, and removing the same from last year’s starting point. And of course, adding on a bit more to cover inflation (annual cost increases).
To assist with doing a personal budget, we often assist clients to identify just where the money goes. A great starting point is using an on-line calculator. We like the Count Financial Budget Calculator www.gnsgroup.com.au. We also like to track our clients progress towards their budgeted outcomes, and to do this, either an excel spreadsheet is handy, or you can let a program such as Xero take care of large parts of it for you.
When it comes to a business, there can be a lot of variables which don’t always exist when trying to balance the household budget.
Income can fluctuate wildly for many businesses both on an annual basis, and also week to week. Whilst some businesses can have stable income, for many, their income fluctuations often fall into 5 main categories:
Being able to anticipate the outcome with accuracy, may be a real challenge in some cases, but its better to have a plan that may miss the mark, than carry on with your head in the sand ostrich style.
When it comes to expenses, there are often two types – Fixed and Variable.
Its not the same for every business, but as a general rule, Fixed Costs that you will incur regardless of how busy you are would include: Rent, Cleaning, some Wages, Phone & Internet, Loan Payments etc
Variable Costs, which fluctuate in line with how busy you are would include: Materials and Stock, perhaps some Wages, Delivery Fees, Repairs & Maintenance, Advertising, Equipment Hire etc.
The team at GNS Group can assist you in identifying the key drivers of your business, understand what your fixed/variable costs are, work with you to develop a budget (or perhaps 3 – a likely scenario, and a best/worst case scenario) and then help to track your business performance to these budgets.
For more information on setting a budget, or to get started, give the GNS team a call.
Many, but not all, employers will offer their staff the ability to reduce their wage and take part of their income in the form of another benefit.
There is no real limit on what you can package as part of your Salary, but it often come down to what your employer will allow you to do and if there are any tax advantages.
The 5 most common things you could consider salary sacrifice for include:
So why would you even consider salary sacrifice? TO SAVE TAX!
How much tax you save depends on 3 things:
1. How much you earn – Being able to get your taxable income down on the face of it sounds like a good thing. But this only really helps if you are able to get a concession or can eliminate having to pay Fringe Benefits Tax. It is this where the distinction between salary Sacrifice and Fringe Benefits Tax makes a difference. You see, the actual Tax in Fringe Benefits Tax is levied at the highest marginal tax rate.
So unless you are on the top tax rate (above $180k) you really don’t want to forgo you lower taxed wages in order to cop FBT at a higher rate.
2. so if you want avoid actually paying FBT, but are still open to the idea of Salary Sacrifice then you need to consider what types of expenses you package up:
These 4 key areas often give employees the most advantages but it really does depend on individual circumstances. Talking to a GNS Accountant will help to maximise your benefits.
3. The final piece of the FBT puzzle is who you work for. Most private companies don’t really want the paperwork headache of allowing their employees to package any expenses. It’s for these reasons that extra Super and cars may be all they are prepared to offer.
But besides private companies, special rules apply if you work for a charity or a public hospital (public benevolent institutions). The Government allows very generous FBT concessions and exemptions to workers in these types of organisations, which can save thousands of dollars in tax each year.
These benefits will often see employees package up rent/mortgage payments, credit cards, private health insurance, private school fees, holidays, meals/restaurants etc.
As you can imagine, being able to get those types of expenses paid before tax is a big advantage and it’s vital that you get professional advice from a GNS Group Accountant to make sure you maximise your FBT Concessions.
Individual Names – obviously nothing to set up, as you already exist, so it’s a low cost option. But the negatives are a lack of separation from your personal life, big asset protection issues, no flexibility on taxation and succession planning issues.
Joint Names – a variation on the above, but at least there are 2 or more people to split things with, but it will be in fixed percentages according to ownership. Can also be automatic ownership transfer upon death to the surviving owner.
Partnership – a common approach for many investors or small businesses when starting out as there are not a lot of costs involved. Some larger businesses deliberately operate as a partnership to allow for easy entry/exit of partners over time (Law firms etc). The disadvantages are usually around liability, all of the partners are jointly and individually liable for the business debts. Income is split according to the share of the partnership ownership percentage and access to Capital Gains Tax concessions are available.
Company – a very common operating structure for a business, less so for investors. The advantages are being able to access a relatively low flat tax rate, your liability is generally limited to the capital that you have invested into the company therefore offering a degree of asset protection. The biggest drawback is the inability to access all of the Capital Gains Tax concessions, it is for this reason many investors into property or shares, will be advised against a company structure. There are also initial set up costs and on-going annual fees.
Unit Trusts – a great option for multiple owner situations, where ownership can be split according to a Unitholder percentage. There is separation of ownership from personal affairs and the individual unitholders are not jointly liable like in a partnership scenario. Unit Trusts may also be able to access the Capital Gains Tax concessions. When it comes to the negatives, there are lengthy and complex documents at the initial set up stage, which will cost a bit of money, and often annual on-going costs.
Family Discretionary Trusts – a favourite amongst small business owners and also investors alike. There is no fixed ownership percentages, meaning that every year you have discretion over who to allocate the income or profits to, potentially saving massive amounts of tax. There is separation of ownership from personal affairs which gives a great degree of asset protection. Family Discretionary Trusts can also access all of the Capital Gains Tax concessions. When it comes to the negatives, there are lengthy and complex documents at the initial set up stage, which will cost a bit of money, and often annual on-going costs. They are rarely a suitable structure for unrelated owners to operate together.
The team at GNS Group are across all of these different structures, and can help guide you to the right one for your circumstances. In some instances, the best option is a combination of several of these.
We are happy to review existing structures and also advise on the set up of new ones for investors and businesses. Its often better and in the long run, cheaper, to get things right from the start than to have to change things later on. Talk to us today to see how we can help.
Perhaps it’s the flexibility of being your own boss, you have a great idea that you don’t want to share, you might have taken over a family business, think you are smarter than your boss – so you will try it yourself, or the lure of a big payday appeals.
Whatever the initial reason of getting into business, life often takes a very different course and challenges are a plenty.
Each business is unique, and for some, the income over the life of a business could be appealing. For others which might be very capital intensive or you are building up from scratch, it’s the payout at the end where you finally see some monetary benefit.
For this reason, its really vital to always have one eye on the future and how you will exit the business. Because if there is no one ready to buy your business at the end, you don’t actually have a business, you have a job. You cant sell a job.
Some of these can be addressed in an orderly fashion, others are forced upon us. But one thing is for sure, they all need to be planned for. Its only through proper planning that things can run as smoothly as possible when situations change.
Making sure that your accounting records are up to date, are well understood and you have systems in place to allow the business to operate without you are vital when it comes to selling your business. A potential buyer will always be worried how the business will perform without you, so being able to demonstrate that there are people and systems to allow for a continuity of operations will ease their nervousness and also deliver a better sale price for you and your family.
Being able to see off financial stress is also an important part of running a successful business. Using your own funds is always best as you will be more lenient than the banks – remember the ‘golden rule of banking’ – they have the gold and they make the rules. Don’t expect the bank to be your friend when you need them the most, they are not going to go out on a limb and risk their money if your business cannot demonstrate an ability to repay the debt.
Serious illness or premature death are often things that many business owners completely discount – it’s the Superman Syndrome – business owners who think they are bullet proof and it wont happen to them. Unfortunately we have seen this happen first hand on many occasions, and the statistics also paint a sad picture for business owners who fail to plan for ill health or death. Too often a serious health event for the business owner can also spell the end of many successful businesses.
Whether it be: Life Insurance, Total & Permanent Disability or Trauma insurance, Income Protection or Key Man cover and even business overhead insurance, there are plenty of options available to safeguard you and your business from a health related disaster.
This is where succession planning and a documented buy/sell agreement can be of utmost importance, and its never too late to do one if you don’t already have a plan in place. If you have business partners, having jointly arranged insurance and trigger events in a formal buy/sell agreement avoids any nasty surprises or disappointment. We often make recommendations and work together with business owners and their lawyers to draft up appropriate buy/sell agreements.
Now, when it comes to selecting a buyer, for some – its all about price. Others want to make sure any remaining staff are looked after and may be more interested in ‘cultural fit’. A sale to a family member might make things easy, but what about other family members who are left out, or is the right price obtained or do you offer more attractive terms. Family sales can also be problematic, often parents step back into businesses if things are not working out. Or they vendor finance and can miss out completely if the business falls on tough times.
Is there already someone within your business who you think might be ready and able to step up & buy you out, or is now the time to bring someone into the business so that you can groom them for succession.
Could a long and drawn out public sale cause your business financial difficulty. Your customers may not understand or be reluctant to purchase while there is uncertainty over who they will end up dealing with. Can your business sell on the quiet and still get a good value?
You owe it to your family and yourself to get the best possible price for the sale of your business, so please talk to our team today about documenting and planning your business succession.
For many of us, doing a tax return is a hassle and a chore, and we only do them because we have to, not because we want to.
While you might think your affairs are fairly straight forward, its important that you don’t overlook something. There could be hundreds or thousands of dollars in refunds available to you, just by understanding what you can legitimately claim.
And this is an important consideration, just because your friend or family member can/can’t claim a particular deduction, doesn’t necessarily mean the same rules apply to you. Different occupations or role descriptions make a difference, so too does your age, health, marital and family status – so its important to make sure that your GNS Group accountant fully understands your situation and to best advise you. At our offices based in Ivanhoe, we have some of the best tax accountants Melbourne has; they’re passionate, knowledgeable and can advise you on all your accounting needs.
We find most people fall into one of two categories. The eager beavers who like to do their return as soon as they have all of the required documents in order; or, the tortoises who get around to doing things towards the deadlines.
Either way, it’s important to make sure a few basics are followed to maximise your return:
There are three key areas on a tax return – Income, Deductions, Rebates & Offsets.
This could include things such as your salary, bank interest, capital gains, rent received, dividends or managed funds etc.
This could include things such as your car or travel costs, union or subscription fees, rental property expenses, Interest on investment loans, Income Protection Insurance, home office costs etc.
These are generally things which entitle you to a tax credit, and can include Private Health Insurance, Out of pocket medical expenses, credit for foreign income tax paid etc.
If you would like more information on what you might be able to claim, talk to one of our accountants today – we’d love to be able to help you.
Proatively keeping our customers ahead of the pack.
Establishing Key Performance Indicators to track the critical success factors of our customers businesses
Identifying opportunities for our customers business’ growth and improvement rather than simply ‘crunching’ historical figures.
Assisting to build and manage wealth for our customers whilst complying with statutory requirements.
Charging a yearly, all inclusive fee paid monthly, rather than an hourly rate thus offering you better value and service.