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Older EntriesTypes of business structures and which is best for you
An important decision to make before you start a business is what structure your business will run under. This will reflect into all facets of your business, so you should spend time understanding the implications of each structure.
Sole Proprietorship
- You have complete control of your business.
- Your business assets and liabilities are not separate from your personal assets and liabilities.
- Personally liable for debts and obligations of the business
- Low-cost structure
Partnership
- Share control and management of business
- Each partner pays tax on the share of net partnership income each receives
- Minimal reporting requirements + Inexpensive to set up
- Requires more documentation
Company
- Separate legal entity from its owners – all profit, tax, and legal liability is directly to the corporation
- Members not liable for company’s debt (only liable if you breach legal obligations)
- Complex business structure + Extensive documentation and record keeping
- Wider access to capital
Trust
- Expensive set-up and operation
- Formal trust deed outlining operation required
- Trustee responsible for yearly administrative tasks
Posted on 24 September '20, under General News. No Comments.
Using your tax return wisely
Getting your tax refund back is exciting, but as tempting as it is to splurge, consider other ways you can put that money to good use. It is easy to get caught treating your return as extra money when you shouldn’t see it any differently than your regular paycheck. Give the money a purpose by thinking about your personal financial situation and determining your needs.
Emergency fund:
An emergency fund can make all the difference if a difficult financial situation comes up, acting as a backup in the case of an emergency such as losing your job or medical costs. Building an emergency fund with enough money to cover at least three months worth of expenses is a good starting point. Make sure the money is added to a high-interest savings account to utilise compound interest. If you are contributing regularly to this fund, adding money from your tax return can boost it above schedule.
Make debt repayments:
With a bit more money at your disposal, now is the time to make repayments on debts you may have. Start with the higher interest debts and work down, your interest repayments will drop when you lower your outstanding balance. These debts can be things like credit cards, personal loans, outstanding bills or mortgage repayments.
Posted on 8 July '19, under General News. No Comments.
Budget 2018: living stronger
The Government is focused on encouraging older Australians to better grow and secure their personal retirement funds.
Retirees exempt from work test
An exemption from the work test will be established to allow retired Australians aged between 65-74 who have total super balances below $300,000 in their first year that they do not meet the work test criteria, to make voluntary payments into their superannuation funds.
Retirement income strategy
Superannuation trustees will now be required to produce a retirement income strategy for their superannuation fund members. This is due to new amendments to the Superannuation Industry (Supervision) Act 1993.
The Government is also set to revise the Corporations Act 2001 to ensure providers of retirement income products will supply standardised and simplified reporting to assist with more informed decision making.
Pension Work Bonus
Increase in funding to the Pension Work Bonus will mean that pensioners can now receive up to $300 per fortnight before their pension payments are affected. The Bonus will also cover self-employed individuals, who will be entitled to receive up to $7,800 per year without reducing their pension payments.
Funding for older workers program
Additional funding will be provided over four years to form the Skills Checkpoint for Older Workers program, starting from 2018-19. This measure will focus on supporting employees aged 45 to 70 to remain working for longer.
Improved skills for mature age Australians
Funding will be provided over the next five years to help mature age individuals to remain up to date with changing and new skills needed to remain relevant in their workplace.
Posted on 9 May '18, under General News. No Comments.
Building a sustainable lifestyle
While there have been no tax cuts for individuals in the Budget, the Government has introduced concessions in several areas addressing the cost of living.
Downsizing retirees
From 1 July 2018, Australians over the age of 65 can contribute the proceeds of downsizing into their superannuation. A non-concessional contribution of up to $300,000 can be paid to their super using proceeds from the sale of a principal residence that has been held for a period of at least 10 years. Contributions will not be subject to any age or work tests.
Affordable housing
To assist Australian households, in particular first home buyers, the Government will support households building deposits by providing access to their superannuation. This will be implemented from 1 July 2017 and will allow access to voluntary concessional contributions and non-concessional contributions to super of up to $15,000 per annum; $30,000 of which will be concessionally taxed. Withdrawals on these contributions can be made from 1 July 2018.
The Budget also imposes a $5000 annual levy that must be paid by foreign owners of Australian residential property that is under-utilised or not available for rent in an effort to contain the cost of rising rent.
Medicare
The establishment of the Medicare Guarantee Fund (MGF) from 1 July 2017 will provide funding to the existing Medicare Benefits Scheme (MBS) and the Pharmaceutical Benefits Scheme to ensure Australians have continued access to affordable health care. The MGF will attain revenue generated from the Medicare levy as well as a small portion of personal income tax.
The Government will provide $1 billion towards the reintroduction of indexation on specific areas of the MBS, including specialist procedures and diagnostic imaging fees.
Bulk billing of under 18-year-olds and concession cardholders will be encouraged through incentives introduced to general practitioners from 1 July 2017.
Higher Education
From 2018, fees for university students will increase by 7.5 per cent. More repayment options through the Higher Education Loan Program will be offered to assist students with this. For 2018 and 2019, universities will pay a 2.5 per cent dividend and will also be subject to measures creating greater accountability and transparency.
National Disability Insurance Scheme (NDIS)
The Medicare levy will be increased by 0.5 per cent from 1 July 2019 with one-fifth of its revenue going towards the NDIS Savings Fund to ensure all Australians with significant and permanent disability have adequate support and lifetime care.
An Independent NDIS Quality and Safeguards Commission has been funded through the budget, allowing for improved quality of safe services for those using the NDIS.
Posted on 10 May '17, under General News. No Comments.
Tips to get out of debt faster
An overwhelming majority of people will face debt at some point in their life.
Uncontrolled debt can easily snowball and severely impact an individual’s lifestyle and financial freedom.
Fortunately, debt is manageable and is often contingent upon an individual’s motivation to get rid of debt fast. Tackling debt is often a process of managing expenses against income and formulating a plan of attack. Here are three ways to get out of debt faster:
Stick to a budget
If you are looking to get out of debt quickly, it is critical to stick to a budget. A budget can help you achieve your financial goals and ensure you do not spend more money than you earn. Budgeting is a great way to review your current expenses and see where you can realistically cut costs. It is also a good way of allocating money for an emergency fund i.e savings for a medical emergency etc.
Don’t borrow more money
Although it seems glaringly obvious, it can be tempting to continue down the borrowing spiral. Avoid getting into any further debt by holding off financing more items, signing up for credit cards etc. Instead, focus on paying off your current debts and necessary living expenses and try to eliminate any unnecessary expenses, such as TV subscriptions, daily takeaway coffee and so forth.
Make extra repayments (if possible)
Any excess cash you receive, i.e tax return, ideally should go towards making extra repayments. Making extra repayments not only shortens the length of time to pay off your debt but saves you paying more money on interest. Be sure to check with your credit provider if extra fees will be incurred for extra repayments.
Posted on 9 February '17, under General News. No Comments.
Thinking about your cash flow
If the three most important things in real estate are “location, location, location,” the first three rules of business are “cash, cash, cash.” It is necessary to be profitable, but “profit” is a number that shows up on your accounts at the end of the year; cash is the money you have in the bank. In a small business, it is cash that determines whether you can pay your bills.
Businesses can’t get money in unless they get their invoices out. However, many business people delay sending out their bills. This may be because they feel uncomfortable asking someone for money, afraid of being challenged on how much they’ve billed, or just too busy working to bill for it. The longer you wait to send out your invoices, the greater the chance you won’t get paid.
No matter what business you’re in, you’re going to have a lag between outgo and income. If you’re a consultant, you have to pay for your phone, stationery, marketing materials, and rent before you get your first client. Once you’ve got them, you’re not going to see complete payment for at least 30-60 days after you finish a project. Things are much worse if you’re a manufacturer. You’ve got to pay for raw materials and equipment many months before you’ll see final payment.
Draw up a cash flow projection. Even if you don’t write up a budget or income statement, it is a good idea to sketch out when you expect money to come in and when you need money to go out. In your projection, be sure to include:
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Cash receipts, including income from sales and income from financingCash disbursements, including all expenses (cost of goods, operating expenses, loan payments, income tax payments, etc.)
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Net cash flow — opening cash balance plus receipts, minus disbursements
- Ending cash balance
Posted on 16 October '15, under General News. No Comments.
Utilise your small team for success
Small teams provide many benefits to both employees and employers. In comparison to larger teams, small teams are shown to have higher levels of productivity and effective communication. However, a vital component to the success of these teams relates to the support and coordination provided by management. Ways to maximise your small team’s efforts can include:
Cross-functional communication
If your employees understand how the other functions of your business work and how their work will directly impact all aspects of the business, it can provide them with more responsibility. It allows for all staff to work towards a common goal. The key is to provide staff with holistic training and education that fosters greater understanding.
Delegate with descriptive job roles
Delegation can provide employees with guidance on what needs to be achieved to reach the end goal. It can provide clear direction for staff while employers can oversee budget and timing schedules. It also allows the employer to focus on other opportunities such as business growth.
Break down large goals into small, achievable tasks
It is important to keep in mind the overall strategic goals when completing daily tasks. The daily tasks set should directly correspond with the larger goals. Reframe the way your employees can view large goals by sticking to the SMART principle that includes specific, measurable, achievable, realistic and timely objectives.
Posted on 16 October '15, under General News. No Comments.
What is a transition to retirement strategy?
A transition to retirement (TTR) strategy is ideal for those Australians looking to ease into retirement by slowly reducing their working hours.
It is the kind of pre-retirement strategy that allows individuals to continue working while drawing down some of their superannuation benefits at the same time.
TTR uses a portion of an individual’s super to create an additional income stream (a retirement income account) while they are still working. The super account continues to receive contributions from the individual’s employer and any before-tax (salary sacrifice) contributions. The retirement income account uses some of the super savings to provide regular payments that top up the individual’s income.
Prior to the government introducing the TTR strategy, an individual could only access their super fund once they turned 65 or retired. Under the new TTR rules, an individual must be over the age of 55 and under the age of 65 to access the strategy.
The benefit of a TTR strategy is the fact that an individual can boost their superannuation savings while easing into retirement and pay less tax at the same time.
The investments in the super fund are free of CGT and earnings tax while an individual draws on their super, so a transition to retirement income stream provides some benefits beyond saving income tax.
Read more.Posted on 16 October '15, under General News. No Comments.
SMSF’s under scrutiny for ‘loose’ loans
The ATO has reiterated it will be investigating self-managed super fund members who have an estimated $600 million in related-party loans for shares and property in their funds.
Some members are taking out loans with a related party, which refers to friends, associates or family, on terms more favourable than what might have been attained from a bank. The tax office is concerned that these loans are not being made and maintained on a strict commercial basis and so, are breaching regulations. The ATO is willing to assist members who are caught up in such arrangements and resolve any issues.
There are certain characteristics that can help lenders identify these inappropriate loans:
– no compensation.
– no repayments.
– a single lump sum when the loan term ends.
– the loan amount provided for 100 per cent of the value of the assets purchased.
– the lender has not sought personal guarantees from the members of the fund.
Read more.Posted on 22 June '15, under General News. No Comments.
newsletter
Posted on 1 October '13, under General News. No Comments.
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