Are your staff asking to cash out annual leave? There are some important rules to remember before paying out annual leave.
Firstly, you must review the employee’s modern award to check that cashing out leave is explicitly allowed.
Most awards do allow for excess annual leave to be paid out, and we give you the general rules here – but you need to check the relevant award for special regulations before agreeing to cash out leave.
Common Rules for Cashing Out Leave
- The leave must be paid at the same rate as if the employee takes the leave. That means you must pay leave loading if it applies, and super is always payable on cashed out annual leave.
- The employee must have at least four weeks of leave left available after paying out any excess amount.
- You can’t pay out more than two weeks of leave per year.
- While leave accrues as usual when an employee takes leave, you don’t need to accrue leave on cashed out leave.
- You need to have a written agreement with the employee, stating the number of hours being paid, the total amount and when you will pay it.
- Remember to check the employee’s award first and keep all records and calculations!
You Can Direct Employees to Take Excess Leave
You can’t force an employee to cash out leave, but you can ask an employee to take leave in some circumstances. If you have employees accruing a lot of leave, check the award for guidance. For example, some awards allow an employer to direct an employee to take one week or more of leave if they have more than eight weeks accrued, give at least six weeks’ notice, and leave at least six weeks of leave available.
Need Help?
Remember, annual leave is paid out when an employee leaves your business, so it’s good to keep an eye on how much is owing and not let too much accrue. Also, employees should be taking leave regularly for their health and wellbeing.
If you need help, talk to us, and we can review your payroll, leave accruals and modern awards to help manage employees’ annual leave.
Christmas is a great time to acknowledge and reward your employees and other associates by celebrating and giving gifts. But don’t get caught out by entertainment rules! Claiming entertainment and gifts as business expenses is not always straight-forward, as there are implications for GST, income tax and fringe benefits tax (FBT).
Is it Entertainment?
Entertainment is generally not a deductible business expense. Entertainment rules can be tricky, but in general, the more lavish the meal or event, the more costly, the later in the day and if alcohol is involved then it will generally be called entertainment.
Fringe benefits tax may apply to entertainment benefits provided to employees, and if an event or gift is considered to be entertainment then you cannot claim a business deduction or GST.
A Christmas party for employees, spouses, suppliers and customers may or may not be classed as entertainment. Check with us to see if any of the party costs can be claimed.
Keep it Free From FBT
- If you give gifts to your employees keep them under $300 each. Benefits provided which have a value of less than $300 are exempt from FBT.
- Give gifts to employees that they otherwise would have claimed as a tax deduction. For example, you could pay for a professional development course or give new tools.
- Give gift cards or vouchers up to the value of $300. (Vouchers are not considered to be entertainment).
- Avoid giving ‘entertainment’ gifts over $300, such as membership to clubs, tickets to events or travel.
- Pay a Christmas bonus. Process through payroll like any other wage payment and withhold tax. Remember that superannuation applies to bonus wages.
Enjoy the Party
Talk to us when planning your Christmas gifts and events to check how much may be claimed as business expenses. Once you know the costs of throwing a party and giving gifts and bonuses, you can put your feet up and enjoy your own party!
We’re living in a world where remote and hybrid working are now the norm. Driven by lockdowns and the pandemic, businesses have been forced to adopt a ‘working from home’ approach. And this ability to work remotely has driven productivity and efficiency for some companies but can create its own challenges.
So, what can you do to reduce your spend levels? And what impact will this have on your overall margins, profits and ability to fund the next stage in your business journey?
Designing your workflows for remote working
When a whole team, or even a percentage of a team, are no longer sitting in the same office space, there are some very specific considerations to bear in mind. How do they access the systems they need? Where is all the company and customer data stored? How can people collaborate? What’s the best way to communicate?
If you’re going to make it easy to manage a project with a remote or hybrid team, you absolutely need to think through these questions and come up with some practical answers.
For example:
Video-based meetings and project kick-offs
The obvious problem of not being in the same room is that the project team can’t see or hear each other. And over the course of the pandemic, we’ve seen video meetings and platforms like Zoom and Microsoft Teams come into their own. Having your kick-off meeting and regular team catch-ups via video calls helps everyone to feel involved, and helps to create more of a ‘team spirit’ between a group of people who may be hundreds, or even thousands, of miles apart.
Capturing actions and briefs
During meetings, you need good ways of taking down notes, capturing actions or summarising what’s been discussed with the client or the team. Using a cloud-based document system, like Microsoft 365 or Google Docs allows you to capture these ideas as rough notes.
Job management and tracking tools
Once the project is underway, it’s important to monitor progress, record which tasks have been completed and stay in control of a disparate group of people all working in different places. Project management solutions like Asana can be great tools for tracking the progress of a project and keeping everyone on top of things. When these tools are cloud-based, everyone has access 24/7 from any internet-enabled location, so that makes it far easier for everyone to be kept in the loop – and for people managers to see how each person is tracking.
Collaborating together as a team
Working together from a distance is another hurdle for a dispersed team to overcome. But with cloud-based collaboration tools, like Slack or Teams, you can quickly create an online space for the team to share documents, have online chats, upload different document versions and generally boost the collaborative process. The easier you make it to communicate and share files/info, the fewer challenges you’ll face as the project develops.
Integrating project finances with your accounts
Whatever the project, there are going to be certain costs, expenses and budgetary considerations to cope with. And staying in control of that with a team of remote workers can be a challenge – both for the project manager and the company’s finance team. The answer is to use a project management tool that integrates with your main cloud accounting software. Many of the top project management and invoicing solutions can connect directly to platforms such as Xero, QuickBooks or MYOB also provide ways to manage your remote team expenses when employees are making ad hoc payments, racking up project expenses or have control over their own budgets etc.
As the benefits and flexibility of remote working become more widely felt, we’re likely to see even more projects being run remotely – with employees no longer clustered in the same office 5 days per week. So, if you want to keep your competitive advantage, you need to be ready.
Are you planning to expand remote working and carry out more projects online? Not sure where to start? We are here to work with you.
Running a business will always mean incurring certain expenses, or ‘spend’.
There are always costs, overheads and supplier bills that mount up – and these expenses will gradually chip away at your cash position, making it more difficult to grow and make a profit.
So, what can you do to reduce your spend levels? And what impact will this have on your overall margins, profits and ability to fund the next stage in your business journey?
Getting proactive with your spend management
Spend management is all about getting in control of your expenses – and, where possible, aiming to reduce the level of costs and overheads that you incur as a company.
Why does this matter? Well, excessive spending eats into your cashflow, reduces your profit margins and stops you from achieving the profits that you’re capable of as a business. So if you can get proactive with your spend management, you can actually make your company a far more financially productive enterprise – and that’s great for your overall business health.
So, what can you do to reduce spend and slim down your company expenses?
Here are some key ways to reduce expenses:
Reduce your overheads
Your overheads are the unavoidable costs of running your business, producing your products or supplying your services. If you have bricks and mortar premises, these overheads will include rental payments, utility bills and even the cost of paying your staff. Drill down into the numbers and see where there are opportunities to reduce these overhead costs. That could mean moving to smaller premises, or reducing the size of your workforce, to reduce payroll expenditure.
Put limits on staff expenses
If your employees can claim expenses, or buy raw materials and equipment with the company’s money, these costs can soon start to rack up. It’s a good idea to put a spending limit in place, so each staff member can only spend up to an agreed amount. Having a clear expenses policy helps, as will training up your staff in good spend management techniques. Expenses cards allow you to quickly set spend limits, track expenses and pull your expenses data through to your cloud accounting platform for processing.
Look for cheaper suppliers
If you can reduce your supplier costs, this will go a long way to bringing down your overall spend. If you’ve been with certain key suppliers for years, look around for new quotes, look at current market prices and see if you can negotiate better deals. And if your old suppliers aren’t flexible enough, try swapping to newer, more eager suppliers who will be willing to meet you in the middle on price.
Make your operations leaner
The bigger your operational costs are, the less margin you’ll make on your end products and services. One way to resolve this is to aim for a ‘lean approach’, paring back your staff, resources and operational complexity to the bare minimum. By making the business as lean as possible, whilst still delivering the same output, you keep your revenue stable, but reduce the spend level that’s eating into your cost of goods sold (COGS). The smaller your COGS, the more profit you make on each unit or sale – and that means better cashflow, more working capital and bigger profits.
Explore tax reliefs
You might assume that tax costs are an unavoidable expense when running your business, but it’s worth exploring which tax reliefs, grants or other business benefits you may benefit from. For example, research and development (R&D) tax credits that help cut your corporation tax expenses if you can demonstrate that you’re involved in innovation and groundbreaking R&D within your industry or specialism.
Talk to us about improving your spend management.
If you’d like to get in control of your expenses, we’d love to chat. We’ll review your current costs and will highlight the key areas where expenses can be cut. Then we’ll help you formulate a proactive spend management programme, to reduce your unnecessary spending.
The job market is running hot and it’s tough to attract good new staff. You need to write a job listing that will help your role stand out in the crowd.
Here are three tips for writing a more appealing job ad:
Sell the role up front
Instead of beginning with a job description or a list of requirements, sell the role first. Think about what makes the job most appealing; it might be the industry, location, salary or perks.
Spell out the advantages as clearly as you can, with the numbers if possible, early on in the listing. That will grab people’s attention and encourage them to read on.
Keep it short and simple
Longer job ads, packed with jargon, can feel like they’re making your business seem more impressive. But if candidates have hundreds of jobs to choose from, they might simply look at a dense wall of text and move to the next advertisements.
Aim for straightforward, readable language without unnecessary words or repetition. Keep your job listing at a maximum of 700 words – any longer and it starts to look like an off-putting wall of text.
Avoid meaningless clichés
Almost all companies think they have an ‘amazing team’ and a ‘fast-paced environment’. All jobs call for a ‘self-starter’ or a ‘superstar’ with ‘excellent communication skills’. Everyone says they’re offering a ‘competitive salary’.
Instead of using these meaningless phrases, be more specific – provide the actual salary, for instance. Describe the job, the team and the environment clearly and accurately. This helps the candidate get a genuine understanding of what the role is all about.
Good luck with hiring!
Hiring can be challenging, but the right team can really support the growth of your business. For other ideas on business growth, we’re here to help! We always love to hear from our clients, so get in touch.
Understanding your finances is a vital part of running your business. But getting down into the nitty gritty of the company accounts isn’t every entrepreneur’s top skill. If you are new to company accounting, or simply want to expand your knowledge, we can help explain the foundational reports.
The profit and loss report and the balance sheet are both key reports when it comes to getting in control of your company’s financial health.
What’s the profit and loss statement?
Your profit and loss statement is commonly called your P&L, but is also referred to as your income statement or statement of earnings. It’s a full breakdown of your company’s revenue (money coming into the company as sales and other business income) and your expenditure (direct costs, overheads, expenses and other costs).
As a business, you obviously want to turn a profit and make money from your venture. Careful observation of your P&L allows you to track your revenues and expenses over a set period of time. You can then look back over the period and see exactly where you’re making money, and where you’re losing money. The more you make, and the less you lose, the greater your profits will be at year-end – and your P&L is your barometer for measuring these metrics.
The P&L statement is good for:
- Giving you a breakdown of all revenues and relevant costs and expenses
- Showing the profit and loss figures over a set period of time
- Summing up your profit and loss for the period to gauge if you’re profitable.
What’s the balance sheet statement?
The balance sheet gives you a snapshot of your company’s financial health at a given point in time, based on the following accounting equation: ‘Equity = Assets – Liabilities’
The balance sheet shows you the company’s:
- Assets (the things the company owns, including cash)
- Liabilities (the things the company owes other people)
- Equity (retained earnings plus the funds you originally invested as shareholders)
Unlike the P&L – which shows you the revenues and expenditure over the course of a given historic period – the balance sheet is best seen as a ‘screenshot’ of your current finances. In a nutshell, it shows you what the company is worth on paper right now, based on the current numbers in your accounts. So it’s a vital tool in your accounting toolbox.
The balance sheet is helpful for:
- Assessing the current financial position of the company
- Providing evidence of your financial position to banks, lenders and investors
- Giving potential buyers an idea of the company’s tangible net asset value, if you plan to sell up.
If you don’t know your assets from your equity, we don’t blame you. Accounting can be complicated and it takes time to fully grasp all the different terms and processes.
But if you’d like to know more about the basics of your company accounts, we can help. We’ll be happy to run you through your latest management or statutory accounts and explain exactly what each report means – and how it reflects your current performance as a business.
Get in touch to find out more about your accounts.
All directors of Australian entities will soon need a director ID. Applications open in November 2021.
Why was Director ID introduced?
New rules are now being introduced in Australia to help combat directors using fake identities and crack down on illegal phoenixing. Applications for the unique identifier, which a director applies for once and keeps forever, will open in November with Australian Business Registry Services (ABRS).
Importantly, directors (even foreign directors) will have to apply for the director ID identity themselves. Business advisers, such as their accountants, and admin staff cannot apply on a director’s behalf.
Directors of multiple companies will only have to register once and maintain one director ID record.
Who needs a director ID?
Directors and alternate directors of Australian companies, Aboriginal and Torres Strait Islander corporations, registered Australian bodies and registered foreign companies all require a director ID.
People operating as sole traders or in partnerships, and company secretaries who aren’t directors, don’t need a director ID.
Applicants need myGovID, information the Australian Taxation office (ATO) already holds (such as a tax file number and residential address), plus supporting documents to verify their identity. ABRS recommends applying online, but you can also apply over the phone or with paper forms if required.
Deadlines
- November 2022 deadline Most existing company directors need to have director ID in place by November 2022.
- November 2023 deadline Existing directors of Indigenous or Torres Strait Islander corporations have director ID by November 2023.
- New Directors In a transition period from November 2021 until April 2022, any new director must apply for an ID within 28 days. From 5 April 2022, new directors need to have applied for their ID before being appointed.
If you need further information, please feel free to contact us.
Small and medium-sized businesses are spending on average 120 hours a year on admin tasks, according to recent research.
If your people are spending 120 hours wading through tedious and unproductive admin, that’s bad for the business and for your overall efficiency. Fortunately, technology and software automation can go a long way towards automating the low-level admin tasks.
Better productivity through automation
Automation is an important way to ease your business workload, with a host of different business apps and cloud solutions offering ways to automate your admin.
With ‘smart business tools’ increasing in number and choice, software is utilising automation algorithms, artificial intelligence (AI), machine learning and cognitive solutions to help remove the mundane admin tasks from your workflows.
Core processes that will benefit from automation include:
- Automated bookkeeping – Just take a photo of your receipts, expenses and invoices and ‘optical character recognition’ (OCR) technology will digitise the output and pull it through into your accounts software. No data entry, no human error and no lost receipts! We can do the rest to ensure your records are accurate.
- Automated credit control – chasing up debts and late-paying customers takes time. Automated credit control apps track your debtor numbers and automatically sends out customised chaser emails as soon as an invoice is late. This reduces your credit control time, speeds up cash collection and cuts your aged debtor figure.
- Automated payment collection – the easier it is to pay you, the faster your customers will pay. Automated card payments and cloud-based Direct Debit solutions allow you to automatically take payment from a customer as soon as an invoice is due. Some solutions will even automate the invoice matching and bank reconciliation process.
- Automated reporting and forecasting – the better your reporting and business intelligence, the easier it is to make informed decisions about your company strategy. Accounting platforms and fintech tools now offer automatic, real-time reporting and forecasting, giving you access to the important numbers and metrics, fast.
- Automated digital marketing – digital marketing is key to raising your brand’s profile. Marketing platforms offer important time-saving ways to schedule and post social media content, or email automation that sends a pre-programmed cadence of emails to specific target audiences within your wider customer base.
Talk to us about embracing the power of automation
If your admin is starting to hold you back, come and talk to us about how automation can pick up some of the heavy lifting as well as giving you the metrics you need for decision making. We can review your business processes and identify the automation opportunities, helping you choose the best apps to drive your business efficiently.
You’ll have an extra step to take if you have new employees who start from 1 November 2021 and they don’t choose a super fund.
You may now need to request their ‘stapled super fund’ details from the Australian Taxation Office(ATO). This change aims to stop your new employees paying extra account fees for unintended super accounts set up when they start a new job.
What you need to know
You may need to request stapled super fund details when:
- your new employee starts on or after 1 November 2021
- you need to make super guarantee payments for that employee, and
- your employee is eligible to choose a super fund but doesn’t
You may still need to request stapled super fund details for some employees even though you don’t need to offer them a choice of super fund. This includes if your employees are temporary residents or they’re covered by an Enterprise Agreement or Workplace Determination made before 1 January 2021.
You can request stapled super fund details for your employees if you have full access to Online services for business. You need to review and update these accesses to protect the privacy and safety of your employees’ personal information.
You must meet your choice of super fund requirements and any stapled super fund obligations by the quarterly due date or you may face penalties.
What you need to do from 1 November 2021
Step 1: Offer your eligible employees a choice of super fund
You need to give your eligible new employees a super standard choice form and pay their super into the account they tell you on the form. Most employees are eligible to choose what fund their super goes into.
There is no change to this step of your super obligations.
Step 2: Request stapled super fund details
If your employee doesn’t choose a super fund, you may need to log into the ATO Online services and go to ‘Employee Super Accounts’ to request their stapled super fund details. We can do this for you.
The ATO will provide your employee’s stapled super fund details after the ATO have confirmed that you are their employer.
If the ATO provide a stapled super fund result for your employee, you must pay your employee’s super using the stapled super fund details the ATO provide you.
Step 3: Pay super into a default fund
You can pay into a default fund, or another fund that meets the choice of fund obligations if:
- your employee doesn’t choose a super fund, and
- The ATO have advised you that they don’t have a stapled super fund.
Talk to us if you’d like assistance with stapled super fund.
Are you employing casuals? You may want to read this article further as there are new rules from March 2021.
Casual Employment New Rules from March 2021
The Fair Work Act 2009 has been amended to enforce several new rules for employing casual workers.
The Act includes a statutory definition of casual employment, a pathway for casual employees to become permanent, and a Casual Employment Information Statement (CEIS).
Definition of Casual Employee
A casual worker does not have an agreed pattern of work or an advance commitment to ongoing work from the employer. Therefore, there is no consistent or guaranteed work schedule, and the employee is paid an hourly rate plus casual loading according to the relevant modern award. If you require employees to agree to a regular roster well in advance of scheduled work and rely on them as an integral member of your team, talk to us about whether the employee should be considered a permanent employee. True casuals can choose whether or not to work when you offer them shifts.
Permanent part-time and full-time employees have a set roster of work and a commitment from the employer to ongoing work. For full details of casual employees, visit the Fair Work Ombudsman Casual Employees webpage.
Casual Conversion Pathway to Permanent Employment
Employers of casuals are now obliged to offer casual workers the option to convert to permanent employment after 12 months of employment if the pattern of work has been regular and systematic during the last six months.
Some modern awards already have clauses that allow employees to request permanent work. The Act overrides individual award provisions and means that employers must now actively offer conversion to casual workers who meet the criteria for converting to a permanent position.
If there are reasonable business grounds for not making an offer of permanent employment, the employer must notify casual employees.
Casual Employment Information Statement (CEIS)
Employers must now provide the CEIS to all casual workers upon starting work. You must also continue to provide the National Employment Standards and Fair Work Information Statement. Visit the FWO Casual Employment Information Statement webpage for details and to download the form for your employees.
The CEIS outlines the rights of casual workers to become permanent employees in certain circumstances.
Review Your Casual Workforce
The rules around reasonable business grounds, when employees can refuse an offer, time constraints, and transitional provisions are complex.
- First, check your employment contracts to make sure they meet the new definition of casual employment.
- Then, put in place a process for assessing casual roles at the 12 month anniversary of the employee start date.
- You’ll need to keep detailed records for casual employees to ensure you are complying with the changes.
Talk to us if you’d like assistance with managing your casual workforce.
