Month: March 2022

The Federal Treasurer, Mr Josh Frydenberg, handed down the 2022–23 Federal Budget at 7:30pm (AEDT) on 29 March 2022.

In an economy emerging from the pandemic, the Treasurer has confirmed an unemployment rate of 4% and an expected budget deficit of $78 billion for 2022–23. As international uncertainties add pressure on the cost of living, key measures in the Budget provide cost of living relief in the form of an increased Low and Middle Income Tax Offset, a one off $250 payment for welfare recipients and pensioners and a 6-month fuel excise relief.

Other measures for business seek to promote innovation, with expanded “patent box” tax concessions proposed, and provide tax incentives for small business to invest in the skills of their employees. A lower GDP uplift rate for PAYG and GST instalments has also been proposed to support cash flows of small and medium businesses.

Please check the following link for our report on the Budget:

Federal Budget Update Glance Consultants 2022-23

 

 

 

The Treasurer, Josh Frydenburg, announced that the government had secured some 80 million Rapid Antigen Tests (RATs) that will be distributed among high-risk settings in the coming months. He went on to confirm that the government is actively looking into removing the uncertainty around the tax expenses of these.

It has now been confirmed that COVID-19 testing expenses will be tax-deductible, providing a lot of clarity and relief for many businesses who were faced with an additional expense to shoulder, alongside continued strain.

The tax-deductibility was only eligible for tests that need to be taken to attend a place of work.

In addition to this, fringe-benefit tax will not be included for those employers who provide COVID-19 tests for their employees.

We do have a stark warning to issue alongside this however, just to ensure that our clients are not caught out by some assumptions that could be made.

This is by no means an open invitation to horde RAT tests on the government’s dollar. This will be strictly controlled and you will need to jump through a few hoops in order to receive the tax relief. Should you be caught out in any way, do not expect the ATO to look kindly upon your situation.

Business use does not equate to private use and you will need to clearly show that RATs are being used for the purpose of employees returning to work. A disproportionate number of required tests compared to the size and nature of a business will be a red flag that you will not be able to ignore.

If you have any questions regarding these changes we would be more than happy to talk you through the latest updates. Call Glance Consultants on 03 98859793 or email us at enquiries@glanceconsultants.com.au

Hiring at the right time is the difference between creating a cash-generating machine and struggling with an unprofitable business. If you are the owner of a service-based company, then you will know all too well the growing pains of business. 

Mastering that balance between supply and demand is tricky, but recognising the cues and triggers is a skill that is greatly needed. Ideally you would want to forecast future growth and hire a new employee at a time where they can be trained up and ready for a surge in demand.

In this article, we look at the important area of knowing when you can afford a new employee. 

Is there ever a ‘right’ time?

Many business owners just go with their gut feel and decide that it’s time to hire someone new. But this mindset is fraught with emotion and a successful business is always run with the numbers in mind.

When you shift your decision making processes to a more systemic framework, you’re going to make better decisions. 

Hiring is a cost

New employees take time to get up to speed. They are a drain on resources and therefore place constraints on your business. Staff needed to support a new employee aren’t adding revenue for a period of time. 

So do make sure that you have factored in enough revenue to cover both the direct and indirect expenses of hiring someone new. 

The two rules for profitable hiring

It is recommended to use the rule of thumb of having at least 2 times the new employee’s monthly salary as committed revenue and 2 times the new employee’s monthly salary in cash. 

This way, you should have the ability to justify the new hire and significantly reduce the risk of eroding your profit.

You do not want to fall into the trap of increasing headcount without increasing your profits. As you expect losses from the unavoidable drain on resources that your new hire creates, you want to have backup revenue and cash to ensure you can maintain a profitable business.

To put it another way, if your new employee expects a salary of $5000 a month, then you will want to ensure you have $10,000 of committed sales and $10,000 in spare cash available.

Using your business’s financials to guide your decision making processes means that emotion and ‘gut feelings’ are left out of the equation or minimised. So next time you’re wondering if you can afford to hire that new employee, go back to the two golden rules of hiring economics. Doing this will ensure you will grow profitably, not grow broke.

If you are interested in discussing this strategy in further detail, contact our team at Glance Consultants.

Are you a new business owner? Even if you’re a seasoned employer, it’s good to brush up on your obligations as an employer to make sure you’re compliant.

We cover a few key considerations here from tax obligations to the code of conduct. Recent changes are something to keep your eye out for, but rest assured knowing that any major changes to the way you do business will be highlighted for you by your team here at Glance Consultants.

It is our duty to ensure that our clients are operating at the best of their abilities and to provide them with up-to-date resources and support.

Employee Tax

You need to withhold tax from your employees’ wages and pay it to the ATO on their behalf. Single Touch Payroll (STP) has been implemented these past years to make this process as seamless as possible. You can find out everything you need to know about this on the ATO’s website, or get in touch with our team for additional information and support.

Superannuation

You need to process Superannuation Guarantee (SG) contributions at a minimum of 10% of your employees’ ordinary earnings. This is to eligible employees only, who are adults (18 – 69 years old) that are paid more than $450 per week. For those under 18, they need to be working for more than 30 hours each week (this applies till the 30th of June 2022). Contractors are exempt, except for in certain conditions.

Wages and Payslips

You must pay at least the minimum wage dictated by the Fair Work Commission. This is reviewed yearly on the 1st July. A payslip needs to be issued within a day of payment and it must include certain information.

Contracts and Documents

Don’t forget that a contract is designed to protect both the employee and the business! Make sure you take the time to draft a complete and compliant contract. Before commencing employment, every employee should receive the ‘Fair Work Information Statement’ as well as their contract. You also need to provide them with information regarding their health and safety on the job.

Leave

Employees are entitled to leave. This could be for holidays, because they are sick, for maternity, a bereavement or stress. Employees except casual employees are entitled to at least 4 weeks of paid leave each year.

This is by no means an exhaustive list. There are several pieces of regulation that you need to be aware of in regards to the welfare of your employee. Do make sure you familiarise yourself with these, and others, on the relevant governmental websites.

Contact Glance Consultants today on 03 98859793 or at enquiries@glanceconsultants.com.au to get the very best out of your business, for yourself and your employees.

It can be a daunting and overwhelming prospect to decide how to set up the structure of your small business.

Not taking the right approach can lead to stumbling blocks in the future. Conversely choosing the right business structure can set you up for success.

If you’re uncertain which avenue to choose, we do recommend having a chat with an advisor here at Glance Consultants, who can discuss with you the advantages and potential pitfalls of using either a trust or a company for your small business. We take the time to listen to your specific needs and learn about what it is you do to offer a bespoke consultation.

In this article, we will outline the key differences between a trust and a company to give you an overview of what they are to make an initial determination about what you believe might be suitable for you.

What is a trust?

Outlined by a trust deed, trusts are basically an agreement between the trustee and the beneficiaries.

You should be aware of two different types of trusts: discretionary trusts and unit trusts.

A discretionary trust allows the trustee to decide what income and capital can be given out to the beneficiaries. Unit trusts give more power to the beneficiaries, where they purchase ‘units’, similar to how shares are purchased in a company. The advantages of a trust include costs, they are both cheaper to establish and receive the 50% CGT discount in certain instances. There is also an appealing nature for some regarding discretionary trusts, where trustees have a significant amount of control.

However, with this power, comes liability. Be aware that the trustee can be held responsible for all debts of the trust, losses are trapped within the trust and there can be complex paperwork to get through to establish one.

What is a company?

A company is controlled by the directors. It is a separate legal entity.

There are advantages to this. You have the ability to sell and transfer shares, there is a capped tax rate of 25% and it is easier to maintain than a trust. But, it is more costly. You aren’t entitled for a 50% general CGT discount like you are for trusts and there are annual ASIC fees to consider.

So, that’s a quick breakdown of what both a company and a trust is.

Do get in touch with us here at Glance Consultants for more support and advice regarding your small business.