Success tips for all businesses, small or large
Matthew Addison is the Executive Director of the Institute of Certified Bookkeepers and shares his views and experiences with us. Thank you, Matthew, for your insights and excellent tips for all businesses, small or large.
- Many small businesses gain new clients through word of mouth, is that similar for Bookkeepers too?
Professional Services succeed and fail on a number of factors including technical competence but also on the perception held by the client or employer as to the integrity and professionalism (the reputation) of the Service Provider. The reputation leads to positive referrals or leads to a current client indicating to others that they aren’t happy and hence the external vibe about the provider doesn’t engender positive referrals. This same positive vibe due to reputation applies to all types of business: be it service, product, wholesale or retail.
- How are Bookkeepers maintaining their reputations in this very competitive world?
A Bookkeeper maintains their reputation in the first place by performing their work professionally. To be professional includes timeliness, it means meeting deadlines, it means communicating strongly and appropriately, it means being competent.
Competence in Bookkeeping has a number of aspects: it is not just about debits and credits and ledgers, in today’s world it is knowing how the software works or should work. It is knowing how to achieve best practice and efficient processing using the appropriate software solutions. It is about knowing the GST law that applies to each set of business circumstances, it is about knowing the Payroll laws (PAYG Withholding, Payroll Tax, Fairwork, HR etc.) that apply.
A bookkeepers reputation is enhanced when they show extreme competence in performing their own areas of expertise and also when they call on other experts to fill the gaps.
- How does the technical landscape affect Bookkeepers?
Technology is delivering better tools to the bookkeeping process. Bookkeepers must endeavor to stay up to date with the latest features available in the software they use. Software providers report regularly how features they have developed in the last few years are taken up by less than 50% of customers.
Bookkeepers should continually challenge their thinking to adopt new processes and new approaches to bookkeeping based on the improving software. We are in a world where Machine Learning and the connected world of the internet are providing Data to the bookkeeper. In the past, we would spend most of our time creating the data and normally as a record of what has already happened. Today we have the software business tools to create the accounting data at the same time as the business activity occurs, if not as part of the business process. Bookkeepers should be using bank feeds, OCR invoice technology, sending electronic invoices, using electronic timesheets etc. etc.
- In your role as Executive Director of the Institute of Certified Bookkeepers, how do you juggle all the priorities you have on at the moment?
The ICB is involved in many aspects of the Business world, the tax world, the education of bookkeepers, the software. You are correct in observing that it is a juggle of priorities.
We are privileged to have grown to have nearly 4000 members of our ICB bookkeeping community and 20 members of the engaged team able to achieve momentum, influence, and solutions in different areas either on behalf of our community or for our community.
We have committed to regular output on a number of member based services, therefore these take priority. We then assess what other involvements will most impact our community and what we can have a significant influence upon.
It is a juggle and we mostly get it right
- Managing professional relationships is critical to business success and I’m sure you have seen some mistakes made over the years. What in your mind is the best way to manage relationships to ensure everyone gets the best service and outcome?
Unfortunately, it is an easy answer but not always easy to execute. It is about communication. People write emails from their perspective. Emails are black and white and we read them from whatever perspective we are in at the time. We don’t have the same background information, we don’t have the same emotion or perspective that the writer may have had so as a reader we interpret it differently. If the Sender and Receiver don’t spend that extra time checking they have correctly interpreted the message to say what it was meant to say, things can spiral out of control very quickly.
- What is the best piece of advice you have ever been given over the years about business success?
Spending time with the people is important. People being: your own team, your clients, other influencers on your environment.
- If you were given $200, what would you do with it?
$200: team lunch
$2000: maybe some external marketing
$20,000: increase some of the teams hours
$200,000 employ a new person and breathe a little more freely
- What are three characteristics that you have seen work well in business?
Articulating the vision and ensuring it is what you do.
Spend time with your people and ensure you are on the same page and enjoying doing it.
Identify issues and spend the time fixing and communicating the journey to fix it.
Thank you, Matthew. You can check out The Institute of Certified Bookkeepers by clicking here.
Tax news, views and clues October 2017
Bill to increase Medicare levy
The Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017 has been introduced to implement the Government's 2017–2018 Budget announcement to increase the Medicare levy by 0.5% to 2.5% from 1 July 2019 in order to help finance the National Disability Insurance Scheme (NDIS). Nine other Bills have been introduced to increase the following rates that are linked to the top personal tax rate.
TIP: Think you may be affected by personal tax rate changes? Contact us to find out more.
Budget changes to foreign resident CGT: draft legislation
Draft legislation has been released to implement 2017–2018 Federal Budget measures relating to the CGT liability of foreign residents. The measures, which applied from 9 May 2017:
- remove the entitlement to the CGT main residence exemption (MRE) for foreign residents that have dwellings that qualify as their main residence; and
- ensure that, for the purpose of determining whether an entity's underlying value is principally derived from taxable Australian real property (TARP), the principal asset test is applied on an associate inclusive basis.
Foreign resident CGT withholding: early recognition of tax credit
The Commissioner has made a determination to modify the time at which the vendor is entitled to a tax credit in respect of an amount withheld under the foreign resident CGT withholding rules.
The modification, applicable for transactions entered into on or after 1 July 2016, ensures that, where a settlement period for a transaction covers more than one income year for the vendor, the credit entitlement will be available in the same year as that in which the transaction giving rise to the payment to the ATO is recognised for tax purposes for the vendor.
Further guidance for tax losses via
a new “similar business” test
The ATO has released a draft guideline on how they will apply the new “similar business test” to supplement the existing “same business test” used for testing whether a company can utilise an earlier year tax loss.
The draft guideline says the similar business test will operate in a way that is comparable to the same business test, and that the overall business of a company must satisfy the similar business test to access losses. The focus remains on the identity of a business, as well as continuity of business activities to generate assessable income.
ATO increases its scrutiny on work-related expenses
Despite wide publicity on the issue, the ATO has reminded taxpayers that it is increasing its scrutiny on work-related expenses. Last year over 6.3 million people made a work-related expense claim for clothing and laundry expenses, totalling almost $1.8 billion. Common mistakes the ATO has seen include people claiming ineligible clothing, claiming for something without having spent the money, and not being able to explain the basis for how the claim was calculated.
Tip: Unsure about what you can claim as work-related expenses? Talk to us to avoid making a mistake.
Activity statements can now be lodged in advance
The ATO says nil activity statements can be generated early in some cases. Under normal bulk processes, activity statements generally issue from the ATO by the end of the month.
However, the ATO says there may be a specific reason for a business to access its activity statements early, such as: if you are a short-term visitor (for example, you are an entertainer or sports person and will be leaving during the relevant period); or know that you will be travelling when an activity statement is due.
Tip: Activity statements can be generated for up to six months in advance.
New downsizing cap available
If you are aged 65 or over, your home is your main residence for CGT purposes and you have owned it for a minimum of ten years, you could benefit from new draft legislation. You will be able to make additional non-concessional contributions, up to $300,000, from the proceeds of selling your home from 1 July 2018.
The downsizer contribution cap of $300,000 will be in addition to existing caps; the capital must come from the proceeds of the sale price and application must be made within 90 days after the home changes ownership. There will also be exemption from the contribution rules for people aged 65 and above, and the restrictions on non-concessional contributions for people with total super balances above $1.6 million.
Tip: Thinking of downsizing? Speak to us about what this could mean for you in terms of tax concessions.
GST: simplified accounting for
food retailers
The ATO has released a draft determination on the choice available to you, if you are a food retailer, to use a simplified accounting method (SAM) to help you to work out your net amount by estimating your GST-free sales and GST-free acquisitions of trading stock.
The Draft SAM is substantially the same as the previous determination it replaces. If you were eligible to use a particular SAM specified in the previous determination, you will continue to be eligible to use that SAM under the draft determination.
Tip: Are you a food retailer? We can help you to use the simplified accounting method for your business.
Super system reforms
Australian Prudential Registration Authority (APRA) has written to RSE licensees setting out its approach to the Government’s super system reforms aimed at enhancing APRA's prudential powers to improve member outcomes. Under the proposed reforms, the current “scale test” will be replaced with an “outcomes test” requiring MySuper trustees to attest to outcomes promoting the financial interests of members on a broader range of indicators.
Segregated current pension assets
A warning has been issued from the Actuaries Institute that tens of thousands of self-managed super funds (SMSFs) could be at risk of incorrectly claiming exempt current pension income (ECPI) under the ATO's approach to segregated current pension assets.
First Home Super Saver Scheme – draft legislation
Treasury has released draft legislation to implement the 2017–2018 Federal Budget superannuation measures aimed at improving housing affordability by the establishment of the First Home Super Saver Scheme (FHSSS).
The FHSSS will allow voluntary superannuation contributions made from 1 July 2017 to be withdrawn for a first home deposit starting from 1 July 2018. The scheme provides for up to $15,000 per year (and $30,000 in total) to be withdrawn from superannuation.
Tip: To be eligible to use the FHSSS, a person must be 18 years or over, have not used the scheme before and never have owned property before in Australia.
Super assets total $2.3 trillion at June 2017
APRA has released its Quarterly Superannuation Performance publication and the Quarterly MySuper Statistics report for the June quarter 2017. As at
30 June 2017, superannuation assets totalled $2.324 trillion (up 10% from $2.113 trillion in June 2016).
Total assets in MySuper products amounted to $595 billion (up 25.5% from $474 billion in June 2016).
Self-managed super fund (SMSF) assets totalled $697 billion (up 9.8% from $635 billion in June 2016) held in over 596,000 SMSFs, representing 30% of all super assets.
Clients should not act solely on the basis of the material contained in this article. Items herein are general comments only and do not constitute or convey advice per se. Also changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This article is issued as a helpful guide to clients and for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval.