Simple strategies for your Business………What are you doing this for?
Does every day in your business feel like you are just putting out spot fires? Dealing with the next phone call. Wondering where your next customer is going to come from? Have you got enough stock? May be you have too much stock? What are your staff doing?
With the new financial year now upon us, here are a few things to review to set up your business for the next 12 months and beyond.
Review your Vision:
- Have a think about how you want your business to look in five years time.
- If that vision is substantially different to what you currently have, start taking steps to move in the new direction
- Review your expenses and determine what your overhead costs will be for the next 12 months
- Work out how much you will have to sell to pay for those overhead costs (after allowing for the direct cost of goods sold of course)
- Work out how much more you need to sell to give you an adequate return as the owner of the business
- If you’re a farmer, do you have several sources of income or are you relying on one main activity e.g. cropping. What works best for you? Is this the best/safest option?
- What external factors could affect your plan and what steps are you taking to mitigate those risks? E.g. should you be fixing interest rates? Do you have adequate business insurance? Do you need to find new customers? Where are they now? Do they need your existing product or do you need to adapt to suit them?
- If you are intending to retire in the next few years, you should be taking steps to pass the business on to the next generation now, or setting it up for sale.
Review your loans:
- You should negotiate with your banker to see if they are offering you their best interest rate
- Review your loan repayments to make sure that they align with your cash flow. Loans to purchase long-term assets (e.g. land) should be repaid over the longer term whilst loans to purchase short-term assets (e.g. motor vehicles) should be repaid over the shorter term
- Surplus cash flow should be used to minimise your interest expense, rather than sitting idly in a non-interest bearing account
- Ensure that you are paying off private debt before business/investment debt in order to maximise taxation benefits.
- Sell surplus, idle assets to provide funds to repay loans
Review your motor vehicle expenses:
- Changes introduced last year have meant that the taxation advantages on private vehicles, available to business owners and to employees who have salary packaging options, are no longer as attractive
- The available choices to determine the private use component of a packaged vehicle are now quite limited
- A logbook for 12 weeks, recording business travel, is now highly recommended.
- Motor vehicle claims to inspect rental properties are no longer deductible
Review your superannuation:
- Remember for 2017/18, the amount of superannuation contributions that you can claim as a tax deduction has been reduced to $25,000.
- Personal contributions can now be claimed to in your tax return even if you are receiving contributions from an employer
- Lower contribution caps, means that superannuation now needs to be accumulated over longer periods of time. So start early!
- Tax-free super pensions are still available to retirees. Investment income in superannuation funds is still concessionally taxed. It is a sensible tax strategy to place your savings in super.
- Self-managed super funds still provide significant advantages to those who wish to own business real estate and to those with larger balances who can minimise ongoing fees
At Potts & Schnelle, we are passionate about business. Whilst a large part of our business is focused on tax, we can’t help but get involved in the business strategies and day to day affairs of our clients.
If you would like to talk to us about your business, please give us a call 02 60332233