In Part 1 we looked at the scary, but meaningless, statistics around cashflow and business failure and answered the question how much cash is enough cash. In Part 2 we are going to take a more detailed look at the specific actions that result in cashflow shortfalls with businesses and what actions you can take to avoid becoming part of this atrocious statistic.

Over the years I have been asked to talk or write about cashflow. I have found it incredibly hard to do so and do my best to avoid it. Until recently I found the concept of cashflow rather abstract (a bit of a worry seeing as I'm an accountant). It sounds simple enough. Money in versus money out, but what does that really mean?

It has been a common practice of business owners, operating through companies, to transfer surplus cash into personal mortgage offset accounts. Then at the end of a financial year transferring the cash back into the business to avoid the consequences of Division 7A (i.e. the funds being treated as an unfranked dividend in the hands of the recipient), before transferring it all back to the offset account in July.

The number one tax strategy to minimise tax, whether you are an individual or business is by making super contributions by 30 June. However, it is easy to miss out on a tax deduction if you don’t know the rules. Here is what you need to know to make sure you don’t miss out:

Coming into the end of a financial year is always a reminder to take a look at what is recent and needs consideration for the current year and what is on the horizon for the next year. Here is a snapshot of what’s new in 2022 and what’s coming for 2023 for individuals, companies, superannuation and trusts:

I was recently asked to speak at a mortgage brokers conference about the top 5 trends that accountants are seeing in the property market.

Financial literacy should be taught as part of growing up, as much as learning to drive a car is. It’s the knowledge that ensures a family is thriving within its financial means, or that keeps an individual financially savvy and secure. When it comes to managing a business, especially a micro-business, financial literacy is as essential as the product/service knowledge within your area of expertise.

It's Sunday afternoon when I write this and the guidelines have just been released for the Covid-19 Business Grant, for which applications open tomorrow. I am feeling like next week is going to be a big week. To help as many businesses as possible, as quick as possible and as cost effectively as possible I have put together this guide for you to gain an understanding.

As we approach 2.5 weeks into lockdown the NSW and Commonwealth governments have recently made a joint announcement on business support packages. Here is a summary of what’s on offer, when and how to access.

Starting a new financial year often signifies the start of new things. This year is no different with a number of things set to change in the tax landscape from 1 July. Here is a summary of what you need to know coming into the new financial year:

Starting a business? Many people slip from being employed into being an independent contractor, keeping it unofficial until the concept gains traction and there’s scope for a legitimate business to take shape. At this point, you can start looking at the direction you’d like to take. Would you like to see your one-man band become a team of capable professionals? Are you keen to share the risks and responsibilities with another trusted ally? Or do you want to be an independent professional? Here is a summary of the common business structures and how they can work for your business goals.

30 May 2021 marks Accounting Heart’s fifth birthday Woo hoo! Have we achieved everything we wanted to achieve? No. Have we achieved things that we never thought were possible? Yes! Are we proud of what we have achieved? ABSOLUTELY.

"I love paying tax" said no one, EVER! With the end of the 2021 financial year less than two months away, here are nine things every business owner needs to look at before the new year begins:

Owning a company comes with its own set of rules to get money out, once it starts making a profit. It is essential to have a plan on how to pay yourself to avoid the Problem with leaving profits in your company. Not having a plan can also lead to surprise tax bills (and not in a good way). Here are five ways to pay yourself from your company.

After navigating your way through our FAQ: What is personal services income and do I earn any? blog the next step is to determine if your business is a personal services business (or a PSB). The good news is the restrictions around a PSB are not as tight as personal services income (PSI). But first, what is a PSB?

I have lost count of the times someone has set themselves up with a company or trust, as a contractor or as an individual, only to be bitterly disappointed when I tell them that all of the benefits of having a company or trust don’t apply to them. The tax act is full of exceptions and conditions, and the rules around personal services income and personal services businesses are just two of them.

One of the really attractive things about companies is that profits are taxed at 26% if they meet certain conditions (if the company is trading and aggregated earnings are less than $50m per year they will qualify). It gets better still on 1 July 2021 where the rate drops to 25%. That’s a massive 22% saving in tax (and Medicare Levy) if you are in the highest marginal tax bracket. Once you earn more than $45,000 a year, where the marginal tax rate changes to 32.5%, there’s a real incentive to keep your money tucked up in your company so you don’t lose a big chunk to the taxman.

There is a degree of flexibility around how payments out of a company are made when you are the one responsible for making the decisions (ie the director). Three common forms of payments from a company are dividends, bonuses and directors’ fees. But first, what's the difference between them?

Both companies and trusts have attractive features when it comes to asset protection, wealth creation and managing taxes. Which type of entity you choose to trade your business through will depend on your vision for your business, your appetite for risk and your long term wealth creation goals. For some people a simple company or discretionary trust will suffice, however where your business plans and wealth creation plans are more ambitious it would be great to be able to combine the benefits of both companies and trust. I am going to use Liam and Adele as a case study to demonstrate how we helped a client achieve just this. But first, let’s revisit what makes companies and trusts individually so appealing.

I’m not usually a fan of making loans from companies. The most frequent use of them is purely reactionary, to delay paying tax. These loans often arise when a shareholder or one of their associates pays for personal expenses or simply withdraws cash from the company bank account without processing these transactions through payroll (and therefore paying PAYG withholding and super). If left unchecked, what usually results is a large sum of money being owed to the company at the end of the financial year. The ATO requires the loan to be repaid in full at the time the company’s tax return is lodged or a complying loan agreement is put in place otherwise they will deem an unfranked dividend. The unfranked dividend most often results in the shareholder (or associate) with a large and unexpected tax bill.