Honest and reasonable. They're the three words the Australian Tax Office advise all small businesses to live by.
If you run your business honestly, and do your best to have accurate records, you're considered to be toeing the line when it comes to tax time.
All this talk in the Federal Budget about small business and tax made me remember I'm still to file my tax return from last year. Luckily, my record keeping system is fairly organised (one business owner's chaos is another's calm), so it doesn't take me long to pull it all together.
Here are some tips from The Small Business Success Guide that I live by:
* Keep good records: The ATO admits it focuses on small businesses that it thinks haven't taken 'reasonable care' with their record keeping systems. So do it right from the word go.
* Be honest: If you've made an honest error in your books, get on the phone to the ATO and let them know about the discrepencies before they find them.
* Know the norms: The Tax Office offers some benchmarks of what's acceptable when it comes to tax in your industry sector. Stay within these.
Happy sorting.
Margie
Wednesday, May 12, 2010
Tuesday, May 11, 2010
Kickstarting your cashflow with that extra 2%
Great news in last night's Budget that in 2012 small business will benefit from a reduction in their company tax rate.
The hope is that the drop in rate from 30% to 28% will give you some extra funds to throw back in to your business.
After all, cash flow is probably one of the biggest stresses of owning a small business.
So how can you best use that 2% for a cash flow boost?
In The Small Business Success Guide I outline the best ways. Here are a couple of tips:
* First, do a cash flow forecast. Dr Graham Godbee of the Macquarie Graduate School of Management, who I interviewed for this chapter in my book, is a big believer in these forecasts. Simply, they look at how much cash your business has access to (now and in the future) and then how much cash it takes to keep your business operating on a daily or weekly basis (wages, rent, consumables and utilities, both now and in the future). Make your forecasts as accurate as possible, by taking into consideration what would happen if your sales increase, or you buy new equipment, or if your costs rise.
* Once you've done this forecasting, you'll have an accurate picture of how your business sits in terms of its cash flow, both now and in 2012 when you get that extra 2%. Then you'll be able to accurately work out when will be the most effective time in your business cycle to make the most of it.
Don't waste the opportunity that this extra cash will give your business.
You've got time to plan it wisely.
Margie
The hope is that the drop in rate from 30% to 28% will give you some extra funds to throw back in to your business.
After all, cash flow is probably one of the biggest stresses of owning a small business.
So how can you best use that 2% for a cash flow boost?
In The Small Business Success Guide I outline the best ways. Here are a couple of tips:
* First, do a cash flow forecast. Dr Graham Godbee of the Macquarie Graduate School of Management, who I interviewed for this chapter in my book, is a big believer in these forecasts. Simply, they look at how much cash your business has access to (now and in the future) and then how much cash it takes to keep your business operating on a daily or weekly basis (wages, rent, consumables and utilities, both now and in the future). Make your forecasts as accurate as possible, by taking into consideration what would happen if your sales increase, or you buy new equipment, or if your costs rise.
* Once you've done this forecasting, you'll have an accurate picture of how your business sits in terms of its cash flow, both now and in 2012 when you get that extra 2%. Then you'll be able to accurately work out when will be the most effective time in your business cycle to make the most of it.
Don't waste the opportunity that this extra cash will give your business.
You've got time to plan it wisely.
Margie
Monday, May 10, 2010
Who asked for advice?
I had a particularly frustrating discussion with my business advisor/mentor yesterday. Frustrating because I wasn't prepared for the questions he was asking about a new business I'm formulating. Why didn't I have the answers? Because the idea is still so new you virtually can see its umbilical cord, and I'm not sure I'm ready to set it off into the big wide world on its own.
It's something every small business owner feels when they're about to step into a new venture or product line. New business always comes with expectations, worries and dreams. Facing them can be daunting.
So a word of advice about advice: to make it work, you have to be clear from the word go about your expectations. I run through this Question 7 of The Small Business Success Guide ("Where do I look for advice and how much will it cost?"), so you'd think I would know!
Be clear on the outcomes you want, and the time frame you want these to happen in. And go into any discussion about your business armed with all your information.
It'll save you a stack of frustration.
Margie
It's something every small business owner feels when they're about to step into a new venture or product line. New business always comes with expectations, worries and dreams. Facing them can be daunting.
So a word of advice about advice: to make it work, you have to be clear from the word go about your expectations. I run through this Question 7 of The Small Business Success Guide ("Where do I look for advice and how much will it cost?"), so you'd think I would know!
Be clear on the outcomes you want, and the time frame you want these to happen in. And go into any discussion about your business armed with all your information.
It'll save you a stack of frustration.
Margie
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