Category: Accounting Money and Finance

Tax Planning for Trades and Construction Businesses in Australia: A Guide to Maximising Your Tax Benefits

Tax planning is crucial for trades and construction businesses in Australia to minimize tax liabilities and maximize financial benefits. With ever-changing tax laws, having a solid strategy is essential.
Key tips include seeking professional advice to tailor tax planning to specific business needs and staying compliant with Australian tax laws. Optimizing the mix of salary and dividends can be tax-efficient for company directors.
Utilizing prepayments for expenses like rent and equipment leases can provide immediate deductions34. Understanding business structures, such as sole traders, partnerships, companies, and trusts, is vital as each has different tax implications.
Leveraging the Instant Asset Write-Off allows immediate deductions for eligible assets, leading to substantial tax savings7. Effective tax planning not only reduces tax burdens but also helps reinvest in the business for long-term growth and success.

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Mastering Your Breakeven Volume: A Game-Changer for Business Owners

Breakeven Volume is the number of units you need to sell to cover all your costs. Calculating this on an annual, monthly, weekly, and daily basis is crucial for effective financial management.

Many business owners think they understand breakeven, but often they don’t. For instance, some don’t differentiate between fixed and variable costs, focusing only on a positive bottom line. Others assume they’re breaking even if their bank account balance doesn’t decrease monthly. Some don’t use breakeven analysis strategically to address issues like seasonality, adjusting their operating model to lower fixed costs, or increasing revenues to cover costs more easily.

To calculate Breakeven Volume, you need three key numbers:

Unit Sale Price: The average sale price for your business.
Unit Cost: The direct or variable cost per unit sold.
Total Fixed Costs: All recurring business costs.
Breakeven Calculation Steps:

Calculate Unit Contribution: Unit Sale Price minus Unit Cost.
Divide Fixed Costs by Unit Contribution to get the historical Breakeven Volume.
Example Calculation:

Revenue per Unit: $5.00
Cost per Unit: $2.00
Unit Contribution: $3.00
Fixed Costs: $100,000
Breakeven per Year: 33,333 units
Breakeven per Month: 2,778 units
Breakeven per Week: 641 units

Once you have the Breakeven Volume, consider these questions:

– How does Breakeven Volume compare with current volume?
– What is the distribution of volume over time?
– When are you not breaking even, and why?

Consider innovative ways to run your business that can significantly improve breakeven.
By understanding and applying breakeven analysis, you can make more informed decisions, optimise your business model and ultimately drive your business towards greater profitability and sustainability.

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Tis the Season for Smart Financial Planning: How to make it work for you, not against you.

Navigating the world of finance can be daunting, especially for busy business owners. In this article, I will explore how to approach borrowing with confidence, by understanding key concepts, and making informed decisions. We will look at the importance of understanding your borrowing capacity, how interest rates work and how to structure loans to your benefit. We will also look at how to cultivate good financial habits and why this is important when you are building wealth.

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Your best month ever?

Have you ever heard the saying, “revenue for vanity, profit for sanity”? This means while revenue may make a company look successful, it’s profit that really matters for financial health. Matt, who runs a growing commercial truck repair business in Melbourne, learned this the hard way. Despite having his best month ever in terms of revenue, his business faced constant cashflow issues. Common and constant cashflow surprises caused financial anxiety.

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Holiday Cash Flow Warning

A recent CreditorWatch survey shows only 66% of small business owners are satisfied with their current level of working capital with many having to lay off staff to deal with cash flow and credit challenges.

OptiPay has seen an 18% increase in requests for invoice financing as SMEs prepare for extra orders and demand heading into Christmas.

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Save Tax with a Bucket Company – here’s how

Using a bucket company can save you tax.
It is a legal way of distributing income to a company taxed at either 25% or 30% as opposed to an individual beneficiary that could be taxed at 45% plus 2% medicare levy.
These funds can then be used in another investment or business opportunity to further grow your wealth.
It is suitable for individuals who would otherwise find themselves in the top two tax brackets.

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What is Insurance Premium Financing, and Why is it Important?

The article explains insurance premium financing, a solution that allows businesses to spread their annual insurance premiums into manageable monthly payments. It helps ease cash flow pressures by consolidating multiple premiums under one loan, making repayment simpler. The article outlines how the process works, the eligibility criteria, and the application steps. It also highlights the benefits of partnering with a lender or broker to access flexible, customised funding solutions.

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Growing Your Small Business: A Guide to Funding, Forecasting, and Managing Growth

Growing your small business is exciting but challenging. This article breaks down easy-to-understand funding options, from traditional business loans to flexible lines of credit, government grants, and private investors. It also covers forecasting growth through expense management, revenue projections, and cash flow planning. As you expand, key steps include hiring the right team, upgrading infrastructure, and focusing on customer retention.

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