Update of JobKeeper changes 2.0

Changes to JobKeeper have recently been announced.

The key changes include:

• Program extended to March 2021, no September cliff! (sigh of relief!)

The fortnightly rate will be reduced from $1,500 to:

• $1,200 from 28 Sep 2020 to 3 Jan 2021

• $1,000 from 4 Jan 2021 to 28 March 2021

This basically represents a 'weaning off support' measure.

For those who work less than 20 hours per week, lower rates will apply:

• $750 from 28 Sep 2020 to 3 Jan 2021

• $650 from 4 Jan 2021 to 28 March 2021

This ends the obvious anomaly of some part timers getting paid more than they were before JobKeeper!

Additional testing of eligibility applies in October 2020 and December 2020:

• To be based on Actual GST Turnover, rather than projected

• From 28 Sep 2020 to 3 Jan 2021, based on actual GST turnover in both the June and Sep quarters 2020

• From 4 Jan 2021 to 28 March 2021, based on actual GST turnover in each of the June, Sep and Dec quarters 2020.

These are tougher tests which will mean some businesses won't qualify all the way through to March. Intended to have them stand on their own.

Further guidance, from Treasury, including fact sheets, is available here:

https://lnkd.in/fPqb3Bj

Let me know if you need a hand

Peter

Get advice before you buy a franchise

Independent advice is vital if you intend to buy franchise. That’s because buying a franchise is a big financial commitment. Therefore it’s important to have a good idea of what you’re getting into before you commit.

Independent advice on the financial and legal aspects of owning a franchise will help you make an informed decision and be fully aware of the commitments you are taking on.

The best person to advise you on the financial aspects of your purchase is an accountant who has specialised knowledge of franchising.

You see, in your excitement to get into your new business, you might overlook some important financial considerations. An independent accountant is experienced in looking at numbers, and is not emotionally involved in this purchase. They are in the best position to help you assess the financial viability of the franchise you’re looking at.

An accountant can help in a number of very important ways as you work through the process of buying a franchise.

1. Review the financial aspects of the franchise before you buy

2. Recommend and set up your business trading structure

3. Organise your business registrations, such as GST, PAYG, BAS, Income Tax and ASIC

4. Set up your accounting software, bank feeds, key creditors and your initial payments

5. Establish systems for your record keeping and admin back end

So, how do you choose an accountant to help you buy a franchise? Here are three things to bear in mind.

1. Are they easy to communicate with and can you relate to them?

2. Do they have experience in working with franchises?

3. Do they have an affordable Pre-purchase Review?

Many people have told us how important it is to deal with advisers who are experienced in working with franchises. That’s because franchising has special characteristics that need to be taken into account. These include the unique franchisor/franchisee relationship, fixed franchise terms and restrictions on who you can buy products from.

Even if you already have an accountant who does your personal tax return, it’s best to get specialist advice when you’re buying a franchise. Look for an accountant who is independent, understands franchising and can assist with your due diligence.

We’re a firm who specialises with franchise businesses and would be happy to help.

Feel free to get in contact to discuss your particular situation and the franchise you are considering.

Peter Knight and Kate Groom

The importance of your Balance Sheet right now.

The importance of your Balance Sheet right now.

“I don’t really understand the balance sheet  - is it that important?”

Yep, it sure is.

It shows you what you own (assets) and what you owe (Liabilities).

You want to OWN more than you OWE.

This will be so important over the next few months, particularly with the economy in such a fragile state.

So, what to look at?

Each month, look closely at your Current Assets and Current Liabilities.

‘Current liabilities’ are those bills you have to pay over the next 12 months.

These are your normal Accounts Payable and finance payments.

But they should also include any amounts you owe the ATO for your BAS and also any Super that’s owed.

Sometimes these are not picked up on your Balance Sheet, which means you don’t actually have a full listing of the amounts you owe. Essentially this means you’re flying blind.

But these expenses are the ones that can bite you! And they can quickly get out of hand!

So, it’s important that you are sure these are included on your Balance Sheet.

Current Assets are assets which you expect will turn into cash in the next 12 months. For example, Stock, Work in Progress, or Accounts Receivable. You expect them to be converted into cash. This is what you’ll use to pay your Current Liabilities.

So, you want to be sure you’ll have more coming in over the next 12 months than going out.

To be sure of this, make sure your figures are up to date so you know what you’re dealing with. You want your current assets to be greater than your current liabilities.

This means you expect to have more coming in over the next 12 months than going out.

If it looks like it’s the other way around - that you OWE more than you have coming in, then drastic moves need to be taken. You need to have some turnaround strategies in place asap. Your business is in a vulnerable position and heading down the wrong track. Look carefully at your figures to be sure of your position, then get the thinking cap on to figure out what to do about it.

This is a tough spot to be in and needs careful guidance. Let me know if you need a hand.

Peter

So how is everything going?

It’s one of the nicest questions you can be asked.

A friend asked me this over the weekend, and was then polite enough to stop talking and actually listen to my reply.

A small gesture but really nice.

Made me feel good. Listened to.

How often do we take the time to ask someone how they’re going?

Then really listen to their reply?

It’s good to reminded of this from time to time.

Let me know if you ever to chat

Peter

Pay your Super before 30th June

Pay your Super before 30th June

Pay your June quarter Super early – for both your employees and yourself.

Even though the quarterly super guarantee payment is not due till 28th July, if you pay it early you can get the tax deduction this year.

But to claim it this year, the super contribution actually has to be RECEIVED by the fund before the 30th June.

As it takes a few days for the funds to process the contributions make sure you don’t leave it to the last minute. And certainly not the 30th June or the day before.

To be safe, pay the super on the 20th or 21st of June. Next week.

That way you’ll be sure it gets there and you’ll be able to claim the tax deduction.

What about your own Super?

If you’re a business owner, be sure to pay super for yourself, up to the limit of $25,000.

This limit includes super from all sources in the financial year. So be careful to allow for any SGC of 9.5% which has been paid on your wages already this year. You can then ‘top up’ the difference, between what has already been paid and the upper limit of $25,000.

Superannuation can be a great way to get tax relief and still build your personal wealth.

Let me know if you need a hand

Peter

Cost of Wages in a post COVID world.

Cost of Wages in a post COVID world.

With Australian labour costs amongst the highest in the world, particularly in hospitality, (per the Australian Financial Review) it’s critical you keep a keen focus on your Wages bill and roster.

With Jobkeeper support ending in 99 days, this MUST be one of your priorities!

Best practice for managing Wages includes:

• Record Wages expense each week, in a separate register or spreadsheet

• Don’t just leave it in your payroll system - you simply won’t look at it closely enough

• The physical act of writing it down brings to your attention how much you are spending

• Also show Wages as % of Sales Revenue (Wages/Sales x 100)

• Keep track of Wages each week, both in dollars and %

• Create a graph so you get the visual impact

• Update the graph each week so you can see trends

• Ensure most cost effective roster is in place (without sacrificing customer experience)

• Closely watch the productivity of your staff

• Involve your team in your thought process

• Explain what you are doing and why

• They are likely to be just as concerned as you are, Well, not exactly the same, but in their own way

Wages is one of your largest expenses. As such it warrants your full attention. Don’t leave it alone because it’s too hard. This requires business discipline.

Let me know if you need a hand

Peter

Pay your June quarter Super early – for both your employees and yourself.

Top Tax Tip for franchises

Pay your June quarter Super early – for both your employees and yourself.

Even though the quarterly super guarantee payment is not due till 28th July, if you pay it early you can get the tax deduction this year.

But to claim it this year, the super contribution actually has to be RECEIVED by the fund before the 30th June.

As it takes a few days for the funds to process the contributions make sure you don’t leave it to the last minute. And certainly not the 30th June or the day before.

To be safe, pay the super on the 20th or 21st of June. Next week.

That way you’ll be sure it gets there and you’ll be able to claim the tax deduction.

What about your own Super?

If you’re a business owner, be sure to pay super for yourself, up to the limit of $25,000.

This limit includes super from all sources in the financial year. So be careful to allow for any SGC of 9.5% which has been paid on your wages already this year. You can then ‘top up’ the difference, between what has already been paid and the upper limit of $25,000.

Superannuation can be a great way to get tax relief and still build your personal wealth.

Let me know if you need a hand

Peter

Checklist for COVID assistance

Work your way through this checklist to be sure you have accessed all of the assistance available:

• Cash Boost. Have you lodged your March BAS and accessed the Cash Boost?

• Jobkeeper. Have you correctly Enrolled for the Jobkeeper wage subsidy, checked the number of eligible employees and had them complete the Employee Nomination Notice?

• State Government Grants. Have you checked your eligibility and applied for your State Govt grants? (NSW & Vic?)

• Rent Relief. Have you applied for rent relief with your Landlord, in line with the Code of Conduct?

• Loan and Finance Repayment Deferral. Have you assessed the cashflow benefit of a loan repayment deferral versus the cost of the interest being added to the loan? If it’s worth it, have you requested loan repayment deferrals?

• Tax Office. Have you contacted the ATO for assistance paying off your tax debts?

• Local Rates and Utilities. Have you contacted your local council and utility provider (rates, water, electricity & gas) and requested deferral on payments and charges?

As you can see, there is a range of assistance packages available to help you through this COVID period.

Feel free to contact me if you need a hand or to discuss.

Peter

The Heart versus The Head

It’s important to understand what motivates you when it comes to making big purchases.

A client recently went out to buy a very nice car.

Given the tough COVID economy, they were able to negotiate a sensational deal.

But it was interesting to observe the conflict between the heart and head.

The heart was desiring the beautiful car and the great offer seem to be outscoring the downside of the Luxury Car Tax limit and Fringe Benefits Tax, which was what the Head was arguing.

And the sweetener was the Instant Asset Write Off which will help his tax position this year, even though he can’t claim more than the limit.

He asked me if he should buy it (crazy question to ask an accountant!).

I said, “Do you want me to answer to your heart or your head?”  

He said, “Both!”

“Impossible!” I said

He bought the car

(I think he was always going to buy the car…)

Let me know if you need a hand

Peter

Jobkeeper Payments - eligibility

Dear client, yes the Government has started paying out the Jobkeeper payments.

No, I don’t know why you haven’t received yours yet.

Yes, we enrolled you properly in the program.

No, talking to me louder won’t make it appear any faster.

Yes, you have to pay $1,500 per fortnight, per employee.

No, it doesn't matter if they earn less than that now.

Yes, that's what they get under Jobkeeper.

No, you can't make them work harder or longer.

Yes, that's right, even if they're not actually working you have to pay them.

No, you can’t call them that.

Yes, you need to include all of your eligible employees.

No, you can't leave out the lazy ones.

Yes, you need to have actually paid your employees.

No, you can't keep some of the money.

Yes, it's a reimbursement of money you've actually paid.

No, the ATO won't offset the Jobkeeper payment against other tax debts you have.

Yes, you need to withhold PAYG.

Yes, hopefully you’ll get the money soon.