Over 160 reasons to celebrate

By Tina Zawila and Steve Marsten

On 1^st April 1977, two accountants joined in partnership to become Fagg and Cathcart here in Gladstone, and that was the beginning of the firm we now call Sothertons.  40 years later, after a few name changes and a few retired partners, Steve Marsten and Tina Zawila lead a team of nine dedicated professionals.

So how do you celebrate 40 years, when you are accountants and business advisors?  Of course, you throw a party, but you also set some serious goals.

Our team are used to monthly, quarterly and annual goals and targets, but in our 40^th year, we knew we needed to step it up a notch.

So with a “40 theme” in mind, we came up with the following goals for 2017:

•          Identify and implement 40 Office Improvements.  These could be changes to our physical space, systems or processes to improve productivity and efficiency, or just to make us more comfortable in the office.
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•          Undertake 40 Professional or Personal Development activities.   PD is vital to enable us to provide our clients with excellent advice.  However, our own physical and mental well-being is just as important and so we recognised these achievements and activities too.
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•          Help 40 new clients.  We knew we had the capacity to help more people, so we attended networking events, offered obligation-free initial consultations, and provided advice and support to as many people in our community as we could.
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•          Finally, we wanted to give back to the community that has supported our business, so we set out to do 40 Good Deeds.  We have raised money and/or goods for charities, donated blood, taken on volunteer positions, and even put the neighbour’s bins out when they forgot!

As we enter the last working week of2017 we are proud to say we not only achieved, but exceeded the 160 target, and we have had a lot of fun along the way.   Now we look forward to 2018 and to new challenges. 

We wish you a very merry Christmas and a happy and prosperous 2018. 

If we can help you achieve your goals, please call us on 4972 1300.

Why Culture is important to your business

By Steve Marsten

Recently I was involved in a discussion about company values and their importance. The discussion began as a result of a report on Uber by US Attorney General Eric Holder. Uber of course has been a great success however clearly they have had some cultural issues within their business which is why the investigation took place.

As someone who uses taxis and cabs in capital cities a lot, I have been noticed that Taxi’s in particularly have lifted their game. Yes there are more taxi drivers who smile, who look more professional, who engage and who are now recognizing that the hygiene of their car makes a big difference to the customer experience.  Unfortunately it highlighted what many have always known – if you stand still you are going backwards.

 If a competitor offers an improved service – instead of whinging – 

lift your service. Better still – better the competitors service!

Long gone are the old style values of honesty, passion, collaboration, innovation …..zzzzzz. They’re all good and well but they are expected now! We want real values nowadays. The values that express the unique and driving ambition behind the company. Values that embody the spirit of the community and strategic direction. Values that truly connect people with their customers as well as each other. Values that connect everyone to one single minded purpose.

The culture of a business is a serious thing. It must come from the leaders within your business. What you adopt and act out  is what permeates your staff and gets exposed to your customer base. The larger the business grows the more frayed good culture becomes and the less focus is placed on it. Determine crosschecks from time to time is important to making sure things stay on track.

At Sothertons we have invested resources in making sure our culture is reviewed and acted on regularly. We stay in touch with our team daily. 

For more information on improving your culture and getting an edge on your competitors call us on 4972 1300. 

The Amazon Effect

By Tina Zawila

If you haven't heard this expression yet, you will soon become familiar. However, I'm certain you are already familiar with the US business Amazon which celebrates it's 20th birthday this year.

Whilst Amazon has had a presence in Australia for some time via its technology subsidiary Amazon Web Services, there are plans to open local retail operations here in the near future.  In fact Amazon Prime (the company’s fulfillment arm which delivers the goods to customers) could be up and running by mid-2018.

So what does this mean for our economy?  Investment bank UBS estimates “the Amazon effect” will potentially strip 0.25% from the Australian Consumer Price Index.  Citi Research predicts that Amazon could capture about $200m worth of the Australian retail market, with JB Hi Fi, Harvey Norman, Myer, Super Retail Group and footwear seller RCG most exposed.

In the US, Amazon Prime membership costs US$99 a year, which entitles you to free shipping in two days.  The more you buy, the better the deal.  Interestingly, AusPost recently launched Shipster, a membership program offering free shipping on eligible purchases for spends over $25 at participating online stores.

Australia’s ecommerce industry is about to be turned on its head.  Amazon has always played by different retail rules - rather than being focused on short-term profits, it focuses purely on achieving market leadership and cash flow.  The Amazon model in the US allows it to make US$1.2m in revenue per employee.  In Australia, that figure is currently around $200,000 to $300,000 in revenue per employee.  That is a major cost disadvantage for the average Australian retailer.

When the UBS, CommBank Retail Insights 2017, Euromonitor report states that “70% of consumers say they’re likely to buy from Amazon platform”, it’s time for Australian retailers to pay attention and prepare a strategy to deal with the disruption of their industry.

At Sothertons Gladstone we help business owners plan for the future and develop strategies to ensure business sustainability and growth.  Call us today on 4972 1300.

The Tax Man Takes a Little More!

By Steve Marsten

To all property investors - on Wednesday 15^th November, 2017 Parliament passed the Treasury Laws Amendment (Housing Tax Integrity) Bill. This is the biggest change to property investment rules in 15 years .

So an outline of the legislation is that all contracts entered into for second hand properties (purchased for investment purposes) after 7.30pm on 9^th May, 2017 will not get Depreciation deductions for existing plant and equipment assets and removable and mechanical assets.

Assets like Air conditioners; exhaust fans, garbage bins; smoke alarms; solar paneling and hot water systems; dishwashers and blinds etc. Note that new additional assets can still be claimed as before along with any capital works carried out on the purchased property after the contract has settled. Assets like sheds; carport or garage extensions and fencing etc.

Also what appears interesting is that contracts signed (but perhaps not settled prior to 7.30pm on the 9^th May 2017 do not appear to be affected. Not that there will be many of these.

Commercial property owners and tenants are unaffected by the legislation and should be business as usual. They will continue to claim deductions on building structures (subject to original build dates etc) as well as wear and tear on plant and equipment assets.

Assets affected by the change in legislation may still be useful in reducing future capital gains or increasing capital losses.

And finally the Quantity surveyors will not be out of a job in respect to the need for investors buying new properties or still requiring an assessment on the original build cost for the capital allowance claims. Their property reports are still essential for supporting depreciation and capital allowance claims. Also the cost of getting a Quantity surveyors report on an investment property still remains tax deductible.

So if you have any question on property and tax feel free to ring the experienced team at Sothertons on 4972 1300.

Passion, Persistence and Patience

By Tina Zawila

If you are in business or are a business student, you have probably heard of the “4P’s of Marketing” – Price, Product, Promotion and Place.  It is argued that executing a marketing mix using these 4Ps is crucial to a successful product offering. 

Today, I want to introduce you to another set of P’s that I believe are just as crucial to launching a successful product offering, and in fact, to operate a successful business:

Passion – I know its cliché, but you must be passionate about what you do and what you can offer your customers to be successful in business.  If you don’t believe in yourself, and your product and service, no one else will! 

Your team must also be on board.  I visited a workplace recently, where the team members were demonstrating a new product that they had been working on and they could hardly contain their pride and excitement – they even had their personal mobile phones out to take photos of the demo!  

Persistence –Again there are many quotes and examples of how success is born from preparation, hard work and learning from failure.  Successful entrepreneurs persist even when they make mistakes or encounter challenges.  They keep trying and accept failure as part of the process.

Patience - Things take time.  There is no such thing as a true overnight success story.  Many instant entrepreneurs have in fact spent years researching, developing and honing their ideas, skills and ultimately their product or service offering.   They have often had to wait for the right time in the market, and then be patient while their product or service is adopted, accepted and embraced by their customers.

At Sothertons Gladstone we support entrepreneurs and business owners throughout their business journey.  Call us today on 4972 1300 and share your passion, persistence and patience stories with us. 

The “Uber” for banking has arrived!

By Steve Marsten

Recently a bunch of Gladstone Businesses gathered to hear commentary from one of the big four banks. It was quite sobering as he candidly explained why it was necessary for the banking systems in Australia to change.

Currently 80% of all banking transactions is “preferred to be carried out by customers” on the internet. That’s probably true. Busy people do their banking at night. Most transactions and bill payments are currently being carried out via our phones, iPads and Laptops. 

Only 15% of customers “want” to walk into a bank. Clearly we can all see what’s coming. Why would a business maintain heaps of real estate and office space to service 15% of their clientele? AND that portion is shrinking.

What was also interesting is the speed in which Chinese banks are growing around the world. One Chinese financial institution that only operates online, has grown to 200 million customers in  just 2 years and is expected to double again in less then 12 months!

The other economic point is that it costs the average Chinese bank (who only operate online) 4c for every $1 of earnings they receive from customers. It costs Australian banks about 40 cents! Many people already think that Australian Banks are the bogeymen of big business however in the scheme of things they will need to compete in Global markets or face ever declining revenues and customer bases. I know many will say that “we would never use a foreign bank” but the fact is many people in this country are already using European and American banks. When foreign banks are established without the cost of real estate, its obvious to see them making very attractive offers to the Australian Market in the not too distant future that will lure many customers away from their traditional financial suppliers.

One Big bank has copped a hiding for saying that they will be laying of several thousand personnel. I think they are just being honest with their shareholders and their customers. This is going to be the case for all big banks in Australia. The future of the financial industry is going to change rapidly only this time their “Uber” is coming from Asia.

Remember for all your financial business advice contact the team at Sothertons on 49721300.

Play Together, Stay Together

By Tina Zawila

What are you doing for the Race that Stops the Nation today?  Most workplaces will at least stop for a few minutes to watch the Melbourne Cup, however, many will take the opportunity to take a long lunch or even take the afternoon off.  

Australians all over the country take annual leave to go the Cup itself, or to attend a function or race day locally.  

So what does this lost time cost business and our economy?  Clearly there is a loss of productivity, and for retailers business is slow at best, or even non-existent after lunch. 

However, for employers who embrace the Cup and take the opportunity to reward their team with some extra time over lunch and/or organise a team event/luncheon, what does this do to boost morale and promote employee loyalty?  Often the value of this flow on effect cannot be accurately estimated or measured.

The benefits of a happy and engaged team are often qualitative rather than quantitative however, there is a mountain of anecdotal evidence which proves that quantitative business results improve when employee turnover is low and moral is high.

People don’t leave roles, they leave people.  Looking after your team, offering them regular (even small) rewards will reap significant benefits.  The cost of recruitment is often much higher than the investment in rewarding and nurturing your team. 

Let us know what you do to reward your team.  Call Sothertons Gladstone on 49721300.

Obstacles to Small Businesses

By Steve Marsten

Small businesses are facing countless obstacles to their success at present - whether it’s performing day-to-day operations or planning long-term growth. From rising office supply costs to the health of the national economy, sometimes prioritising the issues to focus on is a huge challenge by itself.

We should be conscious though that there is no magic bullet in business. What we notice is that most of the things that people worry about are things that they have little or no control over. So, you should prepare for a variety of situations.

Hence the question – Well what situations should business owners be worried about? In a recent 2017 Small Business Survey of over 500 Small Businesses to find out the biggest business challenges they all face.

Here’s a look at those top concerns and how they could help shape your priorities.

Interest rates on funding and access to funding is a major issue. With the four big banks quietly increasing interest rates on many loans during 2017, one wonders what the reserve bank does anymore. Small Business owners are well aware of the banks controlling money rates more then ever and the cost of money is a great concern. Rate hikes have made securing funding for a small business more difficult than it already was. Cash management — and planning it properly — is also a common challenge for small companies and good advisors should be part of your management team to assist you.

Beware the banks offering extraordinarily low interest rates for the sting is in their charges. One of the four big banks appears initially to offer small business owners exceptionally low rates however when you add back the fees they are suddenly on equal par with their competitors. Where you pay more is that the fees do not reduce as you pay down your loan only the interest does hence the banks make more money.

Business owners need to be aware of the terms of any loan, line of credit or business credit card they have and how interest rates could impact monthly payments.

Interestingly, other issues that came up were the health of the National and local economies and the rising cost of health care in this country. That will need to be a discussion for another day.

If you have any questions regarding small business concerns, feel free to phone the team at Sothertons on 4972 1300 for more information.

A Different Perspective

By Tina Zawila

Steve and I were both out of the office in early October attending our annual Centrepoint Alliance Partner Summit for Financial Planners and Accountants.  This conference is held overseas in a different location each year.  Every year the quality of the speakers and technical content is outstanding, enabling us to continually improve our professional skills and knowledge to best serve our clients.

I’ve often been asked “Why is an Australian conference held overseas and why do you invest the time and money to go?”  Aside from the technical content, there are a number of other invaluable learning’s gained from these conferences that may not be obvious at first.

• ·         A different time zone – minimises distractions during the conference.  Delegates are often less likely to have to take phone calls or answer emails and messages allowing them to focus on the content and network with other delegates.  

• ·         A different economy/political landscape – as Financial Advisors learning about the strengths and weaknesses of different economies and political environments enhances our ability to analyse and assess our own economy and government policies.

• ·         A different currency – aside from sharpening our ability to do conversions in our heads, the value of currency and the cost of living provides an insight into another financial system.

• ·         A different culture – witnessing different ways of life, living standards and the attitudes of the people to their governments/rulers provides us with perspective on the Australian lifestyle.

Another important associated benefit is the ability to review and assess our own professional and personal development, and our business’ performance and position, with the benefit of distance and a different perspective. 

We often talk to our clients about Working IN versus Working ON your business.  These conferences are our opportunity to work ON our own business and take our own advice.

Finally, travel teaches you patience and to acknowledge what you can and can’t control! 

If you are looking for a different perspective on your business or career, take some time out to talk to our professional team at Sothertons on 4972 1300. 

Are you an abrogator or a delegator?

By Steve Marsten

Recently I came across a situation where some business owners discussed the fact that good “management” could be defined briefly as “getting things done through others.” Such an expression succinctly captures the complexity of delegation of responsibility within an organisation.

In general, winning businesses tend to have a system of delegating responsibility that works effectively. It is a combination of art and science. It’s the system of delegating responsibility without losing control of the business for which business owners, CEO’s or Directors are ultimately responsible.

One particular business owner receives regular reports and measures performance within each department or cost centre. He seems to have a sixth-sense for when things are going well and when a department is floundering. It is more than pouring over reports and data though. It has a lot to do with the tone and tenor of the human interactions between him and the mangers, supervisors or leading hands.

It is not complicated. When you ask a manager a series of questions and clear crisp and enlightened answers snap back, you develop a confidence that the manager has effective control over their area of responsibility. Indeed, it is within these organizations we normally find success by most any measure.

Unfortunately, we occasionally find a manager or CEO who substitutes “abrogation” for “delegation.” One definition of abrogation is, . . . .” to treat as non-existent.” In these circumstances there is a detachment between the “executive” and the “department head”.

Sometimes business owners shirk their basic responsibilities by, in their eyes, allowing their people to do their jobs unhindered but without appropriate follow-up and check-ups. Hence it’s not until there is a major issue or break in the system that the manager can subsequently blame someone for the issue without first looking in the mirror.

In summary, business owners need to understand that their team expects them to lead. They’ll expect them to take responsibility and they will expect them to solve problems. Most importantly, they also expect them to converse with them and listen as much as they advise. They are not necessarily expecting you to be their friends however an empathetic approach while taking an interest in people will gain respect far more easily such that your team will want to work for you.

For more information on better leadership and culture settings, contact our team at Sothertons on 4972 1300.

Business Grants are available to growing businesses

By Steve Marsten

There is not a better time then now to be a small business! Right now the Queensland Government has several funding programs available to assist small business to grow and accelerate. The State Government is providing $3 million in grant funding over 3 years to established small businesses to engage business mentors, coaches, specialist consultants or an advisory board, for a 6 to 12 month period. This is a great opportunity for sole traders and partners to take the loneliness out of small business. It helps build ideas or put them into practice with professional guidance. It helps with continuity and sustainability.

The Program allows for targeted assistance to small businesses that demonstrate high-growth and employment aspirations, to enable them to engage high-level experts and strategic advisors and thinkers to work closely with them in their business.

Funding of up to $10,000 (excluding GST) may be provided to eligible businesses to engage business professionals. The funding must be matched by a cash contribution from the participating business. So its $1 for $1 or a 50% discount for such services.

To be eligible for this grant, the business must:

• have a minimum trading history of 3 years at the time of application

• have a minimum turnover of $500,000 in the previous 12 months

• have a maximum headcount of 20 employees at the time of application

• have an Australian Business Number (ABN) and be registered for GST

• have competitive opportunities in domestic or international markets

• have growth opportunities

Growth is important to your business plan and businesses with a goal to have a 20% increase in turnover or employment are best placed to be successful for this grant.

Only 1 application per year is accepted from an individual ABN or business address. Note - this is not the only funding available either. Business owners should check out the Small Business Digital Grants Program as well. This grant provides small businesses with access to digital technologies and services to enable them to work smarter and engage with the global economy while making the most of online business opportunities arising from digital disruption.

At Sothertons we have assisted many businesses to obtain government grants. For any assistance or questions feel free to call us on 0749 721300.

Persistence and Planning Pays Off

By Tina Zawila

Over the last few months I have had the privilege of working closely with two new entrepreneurs on their new business ventures, watching the idea grow, develop, and come to life, culminating in the doors opening and the first sale being made.  For both entrepreneurs (and for me) it was incredibly exciting to reach the end of one stage of business and to start a new one. 

Having been on the journey from the start, I have watched both entrepreneurs overcome many different obstacles and challenges and spend many, many hours researching, learning, planning and re-working their business model until they were ready to launch. 

For both of them, their start date was pushed back a few times due to the unexpected.  However, coping with those unexpected challenges in the planning stage and overcoming them with persistence and passion will set them up well to cope with the future challenges of being in business.

They have sought and taken professional advice and have done all things possible to successfully launch their business, and now the real fun begins!

As a local community we should admire, support and encourage entrepreneurship.  While Gladstone may have been built on the back of big industry, it is small business that keeps our economy rich and vibrant and provides many locals with employment.  It is often the small business owner that brings something unique, different and personal.

I heard a quote recently in response to a question – What is a city?  Dave Troy said “Some might say a city is a geographical area, a collection of streets and buildings, but I believe a city is the sum of the relationships of the people who live there.” 

So let’s nurture our community by supporting each other, and in particular, our local small business owners who are putting their heart and soul into their business to enrich and sustain our city and our economy. 

If you need support and advice on your business journey, call our professional team at Sothertons Gladstone on 49721300.

Company Directors need to face up to the ASIC DIN!

By Steve Marsten

Well the Government plans to finally crack down on illegal phoenix companies. The legislation has been passed on Wednesday last week. It includes a surprise move to introduce “director identification numbers”.

Phoenix companies have long been a problem for the economy, and many SMEs have lost out due to the questionable practice of avoiding debts and liabilities by transferring assets to a new company. Government figures put the annual loss at up to $3.2 billion.

Under the newly unveiled plans, all company directors will be issued director identification numbers or DINs. Interestingly, the DIN will interface with other government agencies and databases to allow regulators to map the relationships between individuals and entities and individuals and associated people.

In addition to the new ID numbers, the government is proposing a raft of measures it hopes will reign in the practice and reduce the burden on businesses and employees. These include:

• Establishing specific phoenixing offences
• Create a special ‘phoenix hotline’ as a single point of contact for businesses, employees and consumers to report such activity
• Powers to enable the ATO to recoup tax liabilities by recovering a security deposit
• Making directors personally liable for GST liabilities
• Banning related entities of a phoenix operator from appointing liquidators

This is great provided the action to stamp out illegal activity does not inadvertently discourage legitimate entrepreneurship.

You see it happens to be a fact of life that some legitimate businesses fail; people need to be able to pick themselves up and start again. We need our laws to deter illegal behaviour while encouraging healthy risk taking and innovation.

The new laws are welcome however they don’t address a bugbear that we see regularly - unfair preference laws where good businesses that are paid for goods and services are asked for their hard earned money back during liquidation. This issue is still to be addressed.

For more information feel free to ring our team at Sothertons on 4972 1300.

Profit is Positive, but Cash is King!

By Tina Zawila

I know you have heard us talk about this many times before, but unfortunately, we do come across profitable businesses that are at real risk of going broke.  The good news is that if this risk is identified early enough, the situation can often be addressed and the cash crisis avoided.

There are a number of ways that a profitable business can encounter a cash crunch:

·         Your customers are on account and take longer to pay you, than the time you have to pay your employees or suppliers,

·         The business is highly leveraged and the repayments on the loans take up a large portion of (or are more than) your net profit,

·         Your cash drawings from the business exceed the profits available (because you don’t know how much you are making).

The key risk is that without good financial monitoring and reporting, this could be happening in your business and you may not even be aware of the situation until it is too late! 

Given the software and technology available these days, and the access to professional advice, there really is no excuse for not being on top of your numbers.

One of the most invaluable, but underutilized success tools in business is a Budget.  Preparing a budget that includes a Profit and Loss, Balance Sheet and Cashflow could save your business from a cash catastrophe. 

By taking the time to project ahead and review the expected results in advance, you can take action now to avoid or mitigate a situation that may or will arise in the future.  It simply gives you a powerful advantage - the time to consider your options and act before a crisis occurs.  You can identify ways to increase income, curb spending, or if necessary re-negotiate your borrowings.

Operating your business with out a budget or without regular financial reporting is like driving your car on a dirt road at night without headlights – how can you see where you are going and how can you avoid the potholes or the tree?  Call our professional team at Sothertons on 4972 1300 and let us help you avoid a cash catastrophe.

Introducing Mr and Mrs Australia

By Steve Marsten

Recently I came across an article about Mr & Mrs Australia. Basically it was saying that Australia remains the lucky country despite us having the second highest housing prices in the world! So much for the great Australian dream!

On average men live until they are 80.4 and women 84.5 years of age.

The statistics though paint an interesting picture of what most of us think average is. Apparently based on the International Monetary Fund data of Australian households, the average Aussie family owns $954,800 worth of assets. These include Houses; car, property and contents. Our total household debt is $245,500 and we save about $100 per week.

The downside is we have on average $4,300 in credit card debt and we earn about $1,500 per week. Also we only work about 32 hours per week on average.

As a Nation, we spend $14.1 billion on alcohol each year; $9.5 billion on gadgets and computers; $8 billion on beauty products and treatments;$20 billion on gambling which by the way the average gambling loss per adult is $1,279 which is the highest in the world!

The average household has about $160,000 in super; while couples aged 55-64 have the most - $488,000 in super. Because of obligatory superannuation, Australians technically become one of the biggest savers in the world and clearly the baby boomers made the most of this when it was introduced by the Keating Labor government and encouraged by the succeeding Howard governments.

In 2015 Australians gave up $229 million dollars to scam artists!

What’s does this all mean? Probably not much other than highlighting where you might stand compared to Mr & Mrs average Australia in statistics. It does highlight that perhaps our debt to assets is not as bad as we may have thought,  however our retail or consumer debt (the credit card) at 2.8 times our weekly take home pay is probably more of a concern. Other key matters might be to make sure you have a plan to atleast cover your retirement for 15-20years on average and to review your personal budgets to determine where you can save while paying down the credit card and reducing the amount you draw on your card while the interest rates remain low.

Call us on 4972 1300 for further information or come and see us.

Building Resilience in Business

Building Resilience in Business

By Tina Zawila

Resilience is a bit of a buzz word at the moment. We talk about building resilience in our kids, and even as adults we must continually deal with the challenges life throws at us. It can be defined as “the capacity to recover quickly from difficulties, toughness and the ability to spring back into shape, elasticity”.

So what about our business?  How resilient is your business and how resilient are you as a business owner?  Can your business adapt quickly to disruptions while still maintaining continuous business operations? 

Most business owners deal with difficult situations, tough times and challenges on a daily basis!  Whether it’s a serious cashflow crisis, or simply a team member’s absence due to the flu, the business owner needs to problem solve and adapt immediately. As a business owner and leader, your decisions are often visible and subject to review and judgement by others – your partner, customers, team, bankers, the ATO and the list goes on.

So how do you build your own resilience to have confidence in your decisions and to bounce back when things don’t go as planned?

• Have strategies to cope with stress, maintain your self esteem and focus on your skills and abilities.  If something goes wrong ask “What did I learn from that?”
•  Know your purpose and have clear values and goals.  Be persistent and constantly develop your problem-solving skills.
•  Develop personal relationships with a support network of people that understand and can help and support you.
• Be adaptable and know what you have the power to change and control, and what you do not.
• Practice self-care by taking time to rest, exercise and eat well.

Business life can be challenging, however, if you are building a business that you are passionate about, you will always find a way to overcome any obstacles that may arise. And remember, you are not alone. Your business advisor is only a phone call away.

Call the professional team at Sothertons on 4972 1300 today. 

Are your tax deductions about to be cut?

By Steven Marsten

It’s important that people raise matters to consider where it improves Australia’s economic outcomes, however this week I couldn’t believe what I was hearing (and reading). A spokesperson for a large National Accounting firm was proposing that we limit Taxpayers work related expense (WRE) deductions to a flat $1,000 per annum! This was suggested as a result of spiralling claims in recent years and in some cases - false claims. No one doubts there are always going to be some bad eggs.

You don’t usually hear us say this but thank goodness the ATO replied with a “common sense” approach – suggesting that a cap on WRE would not be productive to the nation.

Everyone in Business has the ability to claim costs in earning assessable income. That should not be different to a salary and wage earner. The ATO spokesman acknowledged that the House of Representatives standing committee on economics handed down a report - “Report on the inquiry into tax deductibility” (House Report) that made a recommendation to the government “not to alter the current arrangements despite evidence of a substantial increase in WRE costs”.

“Ultimately the report said it didn't want to tinker with the system too much, it was going to go ask the tax office to raise compliance, raise education and it was going to ask Treasury to come back with more concrete numbers about the tax gap,” said Mr Ram Pandey of the ATO.

For heaven’s sake am I missing something here? Taxpayers pay Income Tax on their wages as well as a Medicare levy and GST on most things together with a bunch of hidden taxes at the local government and state government level that most people aren’t even aware of. Quite frankly, denying a taxpayer legitimate tax deductions incurred in the earning of one’s wages does not sound fair or equitable and should not be up for consideration.

There is enough tinkering of the tax system including everyone’s superannuation seemingly on an annual basis and I know many would like to see the Governments live within their means for a change instead of devising ways to tax the average worker more! If we all thought Governments were spending our taxes efficiently, perhaps we would give more positive consideration to the various changes.

How much is your business worth?

By Tina Zawila

Often the first time a business owner seriously asks this question is when they are ready to sell their business (and they usually want it sold ASAP!).   And unfortunately, the answer often isn’t anywhere near the figure they want or need.   In fact, most of them have no idea how to calculate the value of their business, or how a potential purchaser would calculate it, and instead are just going on their own “gut feel of what it’s worth”.

Why is it that most business owners don’t know, or monitor, the value of one of their largest assets?  Most will tell you that their business is their “superannuation” – and yet they don’t receive an annual statement to tell them what it’s worth, and maybe they don’t understand their financial reports enough to be able to calculate their annual return on investment.

At Sothertons, we believe you should be tracking the value and growth of your business throughout your business journey, not just when it’s time to sell.

I’m not suggesting that you need to have a full business valuation prepared, but you should at least be having a discussion as to the potential value of your business with your advisor at least annually.  You should have an understanding of how a business in your industry is valued and therefore how you can maximise the value of yours.   Business value is also a good measure of the success of your business strategies and operations.

If you plan to sell you business in the foreseeable future (in the next 3 to 5 years) then you definitely should be having this conversation with your business advisor NOW.  The sale of your business should be well-planned to maximise the return on your investment.

Ultimately, the value of a business is determined by a willing buyer and a willing seller, however, if you are the seller, you should be confident that your asking price is appropriate and well-supported. 

If you need advice on the value of your business contact our professional team today on 49721300.

Is The Taxman Coming For You?

By Joe Smith

At Sothertons we normally like to focus on the positives and things that can be done to improve your individual or business position in our articles.  However, we have recently seen changes in the approach of the Taxman that we believe every taxpayer needs to be aware of to minimise the risk of the Taxman coming after you, your business or both!

In the current economic climate there may be some businesses that are struggling to keep up with their tax obligations.  And it would appear that the Taxman is acting faster and penalising taxpayers to the full extent of their powers.

An example of this would be if a business got behind in paying GST and PAYG Withholding from wages.  The Taxman is entitled to issue Directors Penalty Notices (DPN’s) to the directors of a company with the penalty up to the amount of the PAYG Withholding and superannuation outstanding plus interest. 

Then if the amounts due are not paid within 21 days the penalties can be applied as being payable by each director of the company personally.  So if PAYG Withholding of $100,000 was outstanding and a company had 4 directors, a total of $100,000 plus $400,000 in penalties would be due to the ATO!  

We are seeing reports of this happening which is resulting in taxpayers being made bankrupt personally due to a company debt.

On a more positive note, there are ‘Safe Harbour Rules’ that may be legislated in the coming months where if the directors of a company put appropriate measures in place to turnaround their business as well as other measures including seeking professional advice, the exposure personally may be reduced significantly.

If you own a business and would like to know more or are interested in possible turnaround strategies for your business we can help with this in a number of ways.  Or if you need assistance with paying your tax obligations please contact Sothertons Gladstone on 4972 1300 and we can negotiate with the Taxman to possibly pay the amounts due over a period of up to 24 months.

8 Keys to Longevity in Business

By Steve Marsten

This week we hosted the Gladstone Startup Social group with the support of the Gladstone Regional Council. This is a group of micro-businesses that have either commenced business or are seriously considering how they may go about establishing themselves.

Small business can be a lonely place in the early stages and Tina and I considered the basis on which businesses stay in place for the long term. As many know at Sothertons we are celebrating our 40^th Year.

Hence we identified our 8 keys to longevity.

1. Have a plan. We work to a concise business plan. It changes regularly especially if something doesn’t work. Tweaking the plan is a natural sign of a good, flexible plan.
2. Make sure you have an experienced and trusted team of advisors and be prepared to keep your ego in a box. The most successful business owners listen, learn and action their strategies in a logical process. Accept criticism especially from customers. It’s called feedback. We should never get too precious to receive good feedback.
3. Be aware of your key strengths and delegate the rest. This is difficult to do early on however the sooner it happens the faster the business will ramp up.
4. One thing we bang on about is you can’t manage what you don’t measure – so make sure you know your key performance indicators and track their progress.
5. Know the difference between sales and marketing, otherwise you can waste a lot of money paying slick marketers that don’t actually create customers. Make sure you have a sales process in place. Understand the value of your product or service.
6. Technology – understand how it works for your industry and your business. This can be another cash pit and you must get the right balance early on.
7. The most important thing in business – know the difference between cashflow and profit. Cashflow is critical to business success.
8. And finally, the strength of relationships with your customers, clients, staff and community are what will set your business up for the long term.

At Sothertons we work at establishing these keys with new and existing businesses. Call us on 4972 1300 for more information.

Your Business Scorecard

By Tina Zawila

If you are a Queenslander and follow rugby league, you may still be on a high from last week’s State of Origin Series win. What a game! What a team! What a convincing score!

If you are also passionate about business like I am, you might also wonder what lessons we can learn from sport that we can apply to business. After many years of participating in both business and sport, I know the answer is “plenty”!

The Queensland team demonstrates so many indicators of success:

• They clearly know why they are there, who they are playing for, what their purpose is, and they have a clear mission and vision. 
• They know what teamwork means, they support each other to individually perform at their best and to combine their talents to be unstoppable. 
• They understand the tactics of the game and clearly execute set moves (systems) and strategies. 
• They can read the scoreboard to know exactly where they are in respect to their performance and how much time is left in the game. 

It is this ability to read the scoreboard that I want to focus on when it comes to business. Your financial statements are the scoreboard of your business – they can tell you whether you are winning or losing. However, many business owners cannot access and read their scoreboard, or they are reading a scoreboard from last season!

It is important that you have access to an up to date scoreboard via real-time accounting software that is kept up to date regularly. You must be able to generate financial reports easily and accurately. And you should know how to read and interpret the reports so that you can make necessary changes now to improve your chances of winning.

If you need help implementing, using or reading your business scoreboard (financial reports) call the professionals at Sothertons today on 49721300 and together we will give you the best chance of success in your game of business.