The start up phase of an enterprise can be a very exciting time – I love seeing clients turn their skills, passions and interests into a business scenario – the enthusiasm is infectious!

Of course there are risks associated with doing so and it is important to take the time needed to perform good quality planning and budgeting before entering into any business arrangement.

I consider start up enterprises to fall into one of two categories:

1. A new business being established or;
2. Purchasing an existing business

Each of these categories has different needs and requirements – we will take at look at some of these today:

1. A new business being established should consider the following in their planning and budget preparation:

• Product development and research or details of services to be provided
• Franchise fees if applicable
• Initial registrations and licences
• Sourcing property if required and entering into a lease arrangement (including security deposit)
• Plant and equipment requirements including software
• Marketing, logo and collateral

2. Purchasing an existing business requires attention to these items in their planning and budget preparation:

• Purchase price including adjustments for rent and staff entitlements
• Plant and equipment – retain or replace?
• Transfer of registrations and licences including assignment of property lease (and security deposit)
• Restraint of trade from Vendor

The above is not intended to be an exhaustive list, each situation should be considered on its own merits and you should seek professional advice before entering into either arrangement.

Keep an eye out for Part 2 where we will take a look at the general principles of budgeting that cover both categories.

Regards

FACT – everyone in business wants to be successful.

One way of measuring success is of course by looking at financial outcomes – but how can you determine if the outcomes are successful, unless you have a yardstick against which to measure?

In accounting, we use budgets as a tool to measure the financial performance of a business – but even within the concept of finance, there are different types of budgets which can be used by businesses.

For small business, the most common types of budgets I use are:

• profitability budgets
• cash flow budgets
• start up/establishment budgets

Over the next while, I’ll be taking a look at these budgets and some of the information you’ll need in order to prepare your own – or to have handy when you call me!!

The important thing to remember with budgets, is that they are a guide only – but they are invaluable in assisting with decision making in both the financial and operating areas of your business.

If you have a budget for your business, now is a great time to get it out of the filing cabinet and review it – and if you don’t have a budget for your business, stay tuned…

PS Household budgets are equally important, I’ll be discussing those a little later

Regards

When I was younger, I remember my Mum becoming frustrated at the way names were shortened to an acronym and then shortened again, ie: the Melbourne Cricket Ground being shortened to the MCG and then again to the G!  While we teased her at the time, little did I know how much of an impact the use of acronyms would have on my daily working life!

On the days I teach First Aid, I joke at how many acronyms are used to remember the terms – DRSABCD, COWS, SAMPLE, PQRST – to name a few…

And in tax and accounting there are acronyms for just about everything!  Here are a few I come across on a daily basis:

GST – Goods and Services tax

BAS – Business Activity Statement

ABN – Australian Business Number

TFN – Tax File Number

PAYG – Pay As You Go

CGT – Capital Gains Tax

FBT – Fringe Benefits Tax

P&L – Profit and Loss Statement

BS – Balance Sheet

TB – Trial Balance

…I promise you I could keep going with this list, at times I think I need an acronym dictionary to keep up with everything.

If you’re keen to know more about any of these acronyms, or you’ve come across one that you don’t understand, drop me a line and I’ll let you know!

Regards

The 31st March each year signals the end of the Fringe Benefits Tax (FBT) year – and with it comes a range of reporting requirements and sometimes rate changes too.

Fringe Benefits are defined as benefits received as the result of an employment relationship that do not take the usual form of salary, wages or cash remuneration.

Common examples include the provision of cars for private use, low interest loans, payment of expenses and superannuation.

The FBT regime is designed to ensure that taxpayers still pay their “fair-share” of tax on these amounts, as they constitute reward for effort but are not taxed under the Pay As You Go Withholding (PAYGW) rules.

From 1st April 2015, the rate of FBT increased to 49% – this has the impact of adjusting the “gross up rate” as well as the amount employees of eligible employers (such as public Benevolent Institutions and Non-profit organisations), may be able to salary sacrifice so they do not exceed the FBT concessional cap amounts for the FBT year.

If you have entered into a salary sacrifice arrangement with your employer – now is an opportune time to review the details of the arrangement to ensure you are receiving the most benefit.  Your accountant or salary packaging provider will also be able to help.

Regards