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NEWSLETTER – QUARTER ENDED 31 DECEMBER 2013

 

A word from Kurt

You are all probably wondering why we are releasing our newsletter in March in relation to the December quarter. 

Well, it's our 1st Birthday
(1st March 2014).

I always believe in remembering where I come from and getting to our first birthday would not have been possible if it weren't for the initial support and encouragement by two people (client and close professional contact) of an idea to establish a SERVICE focussed accounting firm that is not just compliance driven.  I owe these two people a lot and will never forget what they have helped us achieved to date.  Thank you to everybody that has supported us in our first year, including clients and family!!! 

Hey Tom – Thanks for coming on board and being so proactive with clients and development of your technical and commercial knowledge.  Can't wait for all our clients to meet this very talented young person that has already contributed so much in the past 5 months to this business.  Thanks!!!!!

Personally, I believe success and longevity of businesses are built on having the support of all those around you.  To achieve that you need to surround yourself with the right people.  Therefore, this newsletter focuses on surrounding your business with the right people. 

Importance of surrounding yourself with the right people 

I always remember being taken out to lunch by a client (current), and at the table was the lawyer, the financial controller and myself (the accountant).  This is not the start of a joke either!!!  There was also another person there too – this person asked my client at the time why he was invited to lunch as well.  The client replied "you introduced the lawyer, CFO and the accountant to me".  This makes up his immediate advisory board to the client to both the business and his family.  

The importance of having a group of advisors that all talk to each other and compliment each other is so important.  Something that became evident to me from this experience.  Lunch was also great and has now become an annual tradition. 

Does your accountant, lawyer, financial planner etc talk to each other? Do they know what each other trying to achieve?  They may be able to assist each other in getting a better outcome for you; your business and your family.

Recent Experience - New Bathroom for Jodi!

I enjoy looking at other businesses and see what I can learn from them.  Therefore, I thought I would share a recent experience with another business we used personally.

Recently, we undertook to redo our bathroom.  It was old, didn't even have a power point, tiles missing etc – what a disaster.  We also moved a couple of doors too.

I didn't look forward to engaging a builder, as I have heard all the issues and pressure within families that go with either building or renovations.  I am happy to say – this was not our experience at all.  In fact, it was the complete opposite.

The builder (Peter Harnisch of House Group www.housegroup.com.au – not a client of mine, nor is it the intention to promote his business) was direct and honest with his practical advice in relation to what would work and not work in the small bathroom, including getting us an extra 600mm of bathroom to allow a separate shower and bath.  Just for you Jodi!

Following on from the above, what was most impressive, was Peter's ability to surround himself with a very capable young team that knew exactly what his expectations were – let's just say they very high.  His electrician, plumber and tiler were all under 30 years old.  I like the idea of giving young ones ago and mentoring them into their own businesses etc.  They all knew Peter's expectations were beyond most people, but all had so much respect for him and didn't let him down.

I was talking to one of the young builders (co owner with Peter) and he was saying how hard the plumbers worked – I can't disagree there.  What was strange about this was that I was chatting with the young plumber at the end of the job, and he said he just tries to keep up with the builders as they work so hard.  What a great compliment and a tribute to the culture that Peter has brought through all the tradies he uses.

Peter's communication with us was unbelievable.  You would send him an email or SMS etc and he would reply almost immediately by ringing you and providing us with his opinion or other options – not just a "yes" or "no".  Good old fashion service on a timely basis.

Quality control is critical to the longevity of any business, and House Group was a great example of this.  The quality control was so high, that Peter even got his wife to do the once over after the job to ensure his tradesman had cleaned the house and left it even better than the way they found it was left, including getting them to redo the floors – we were on holidays at the time and came back to pleasant surprise.

A massive thank you to Peter, Nathan, Greg, Adam, Perry and Danny for a positive experience.

Take away from this experience

·         People don't always see all the hard work you put in.  They just see the final result.  Quality
          control critical at end of a job.  Checking over your job at the end is so important in terms of
          presentation.

·         Communication with your customer/client and team is important at all times.

·         If you are old enough, then you are good enough.  They just need to know what your
          expectations are and then you need to give young ones a go with the right tools,
          including mentoring you.

·         Direct practical advice is not dead yet – people are still willing to give honest opinions.

·         Good old fashion service still wins at the end of the day – communication with your customer or
          client.

·         Important to put the right team around you.

Tax in Focus – Employee v Contractor

Are you and your business at risk when determining whether you are engaging the services of an employee v contractor?

Having an ABN - Business attempt to disguise the employment  arrangement and make it look like their contracting to avoid their PAYG and super obligations.  If the working arrangement is employment, whether the worker has or quotes an ABN make no difference and will not make the worker a contractor.

80% ruleThe 80% rule, or 80/20 rule as it is sometimes called, relates to personal services income (PSI) and how a contractor:

·         Reports their income in their own tax return

·         Determines if they can claim some business-like deductions.

It is not a factor that a business should consider when determining whether a worker is an employee or contractor.

Paying Super – If you pay an individual contractor under a contract that is wholly or principally for the person's labour, you have to pay super contributions for them.

Worker wants to be a contractorJust because a worker has a preference to work as a contractor doesn't mean your business should engage them as a contractor.

Using invoicesSubmitting an invoice for work done or being 'paid on invoice' does not automatically make a worker a contractor.

New reporting rules – in certain industries, contractors are being targeted for personal services income splitting.

New year end reporting to Australian Taxation Office on contractors of your business (splitting materials v labour components) will be a major risk for businesses, supposed contractors and their accountants.

Other issues to consider

If you think you have any of the following issues, then please contact us immediately – before the Australian Taxation Office; Office of State Revenue or Work Cover does:

·         Setting up payroll in software

·         Registering for PAYG withholding

·         Payroll tax issues (OSR)

·         FBT

·         Superannuation – ordinary times earnings

·         Workers compensations

·         Year end reporting for contractors and employees

·         What forms should be provided to employees?

·         What forms need to be sent to ATO at beginning of employment

·         What forms need to be sent to ATO at the end of each financial year

Business advisory – Quality Control Using Checklists

How often does it happen – you put hours or weeks into a job there is one little thing that a customer or client sees wrong.  It has undone all your good work.

"A lack of quality control can lose you ongoing clients as quick as you get them".

Humans make mistakes and all businesses have humans involved, so how do we minimise these mistakes made by employees?

Answer = Quality control checklists

In my own personal business, there are more than 30 pages of quality control checklists to prepare year end financial statements and income tax returns.  A checklist is prepared at the end of every job to ensure that nothing is missed (hopefully!).  It is both signed by the preparer and then the reviewer of the task or job.

Some would take the view that the thinking is taken away.  Not at all, it is a protection of the business upon completing and reviewing the job.

Checklists also allow business owners to take comfort when growing a business and leveraging themselves through the use of employees.

Can this work in your business and does it add value?

All businesses should have a checklist that is both signed by the preparer of any job and then signed by someone that reviews the job.

Checklists can also serve as training and education. Take employees through the checklists and get them to contribute to the checklists.

It is very important to review such checklists on a regular basis and update them for either new technology, new procedures or new legislation etc.

Getting consistency between employees is difficult, but having checklists can assist in getting this consistency.

Value add, additional services and products can be promoted at the end of a job, by simply having such a dedicated area at the end of any checklist that an employee follows.  Eg. Would you like fries with

The KFC's, MacDonalds etc have the strongest employee checklists that allow them to employee people with different levels of skills.
Documentation of processes and systems also add to the value of a business, if and when you sell your business.
 

The critical part of the implementation of any checklist is the enforcement of that checklist.

The job is not finished until that checklist is signed by the preparer and reviewer.

Take the time to review the quality control of your business and any inconsistencies, then work with your employees to come up with a checklist that will get consistency across your business and improve the quality control of either the product or services you provide your loyal customers and clients.

Please contact us to get our views on how to set up employee checklists.

All checklists have standard requirements to be successful and meet their objectives.

Superannuation – What are the consequences of not paying super for your employees?

The Australian taxation Office has been targeting through their matching of business activity statements and income tax returns the failure to pay superannuation on behalf of their employees, including directors, bonuses, annual leave etc

This leaves only a small window of opportunity for tax planning in June/July to get payments to directors, shareholders and employees correct.

When do you have to pay super by?

As an employer, you are required to pay super for eligible employees.  This requires employers to pay superannuation guarantee contributions to the correct super fund at least four times a year.

·         September Qtr – 28 October

·         December Qtr – 28 January

·         March Qtr – 28 April

·         June Qtr – 28 July

When a cut-off date or payment falls on a weekend or public holiday, you can make the payment on the next working day.

What is Super paid on?

Employers are required to pay super guarantee on ordinary times earnings.

Ordinary hours worked by an employee is classed as both ordinary times earnings for super purposes and salary and wages.

However, some salary and wages are not included in the definition of ordinary times earnings.

The following link relates to what is considered to be ordinary times earnings:

 http://www.ato.gov.au/Business/Employers-super/How-much-to-pay-and-when-to-pay/Ordinary-time-earnings/Checklist-for-salary-or-wages-and-ordinary-time-earnings/

What to do you do when employing someone?

·         Employment contract

·         TFN declaration

·         Super choice

Employment contract kept on file.

TFN declaration is sent off to the Australian Taxation Office – a copy should be kept on file too.

Super Choice form kept on file and must be available in the event of a review by the Australian Taxation Office.

TIP – Each employee should have their own folder with the above in it and be easily accessible by employer.

What if an Employer pays the super guarantee late?

Both penalties and super guarantee charge (interest) is payable to the employees super fund.

It is best to complete the relevant forms if you are late, rather than the ATO  reviewing or auditing you.

Director penalties - There are now director penalties for failure to pay superannuation that are caught under the Corporations Act – serious consequences.

Remember – Directors and owners receiving a salary should be paying super guarantee.

It is never too late to fix your super issues in your business – Contact us!

Remember, when you grow, we grow!  When you succeed, we succeed too!

We are a referral based business and value referrals from our existing
 clientsIf you know of any associates, friends or family members who
 can benefit from our extensive knowledge and expertise in business
 advisory, taxation and superannuation, then please refer us or
 contact me directly.

 

Contact details:

www.Harriss.com.au

 

Kurt Harriss   ||   0417 427 791   ||   kurt@Harriss.com.au


Tom Summerell   ||   0437 811  877   ||  
tom@Harriss.com.au


 

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