Month: May 2021

Using Market Research To Boost Your Business

Posted on by Adam_Admin

Market research is an effective tool that can be used to boost your business in terms of sales, customer engagement and how your competitors may be performing. It allows you to make well-informed decisions that can potentially add value to your business.

When conducting market research, ensure that you are covering all of the potential areas that may affect how your business has been performing. This may include:

  • Customers
  • Competitors
  • Products or services
  • Suppliers
  • Business location and local area
  • Industry

Products & Services

Researching what your customer is looking for when it comes to your business’ products, services and interactions with them can be a simple way to get ahead of your competition. It can also provide you with an understanding of where you fit into the market for your customers, and how you differentiate from what your competitors are offering.

Market research can also assist in figuring out where you are positioned in the market in terms of your products or services being considered as high-end, competitive or a low-cost alternative to what your competition is offering. It can also aid in determining the anticipated demand of products by customers, so that you can adjust accordingly.

Suppliers

Conducting market research on suppliers can assist you in working out pricing of your products, whether or not you are getting the right price from your suppliers with regard to your orders and the overall quality of what suppliers deliver.

Customers

Collecting customer data through feedback, be it online (such as email, surveys) or analog (talking with customers, feedback forms), can be an invaluable insight into what your customers want from you. This style of direct customer research can assist in learning about what their needs are, what they’re willing to pay and the anticipated demand for your products. It can also assist in giving more information that you can use to better target your marketing efforts.

Competitors

Investigating your competitors in business can assist you in understanding your position in the marketplace in comparison to them. This can assist in developing your marketing plan by understanding your strengths and weaknesses, opportunities and threats and planning for how you can better use them. You can obtain this data through observation of your competitors marketing practices, networking with your competitors and through researching their presence on the internet (via websites, blogs or other social media).

Market research, when used effectively, can be a turning point in a business’s marketing plans, and assist them in planning their business’s future direction.

The Shortcut Method: Claiming Your Work From Home Deduction

Posted on by Adam_Admin

There’s a new normal towards how Australians are approaching their work, with remote working now a more viable option for businesses and their employees, and it’s affecting the way that Australians now make claims for tax.

With many businesses affected by city-wide lockdowns during parts of the 2020-21 financial year, and some whose employees preferring to remain as work-from-home or remote workers after theirs had ended, it’s more important than ever for work tax deductions to be correctly claimed and the process duly followed.

Where once the expenses and claims that needed to be made during tax return season could be more clearly defined in terms of business or pleasure, work-related expenses or personal expenditure, remote working and work-from-home employees need to keep careful records of what they can and cannot claim as “home office expenses”.

To simplify the process of claiming these expenses, the ATO introduced a “shortcut method” applicable to the 2020-21 financial year as a result of the impact COVID-19 has had. This method is only applicable from 1 March 2020 through 30 June 2021. Depending on an individual’s circumstances, it may be a better alternative to employ when claiming home office expenses than the fixed rate method or actual cost method.

Essentially, individuals can claim a fixed rate of $0.80 per hour worked from home, with the aforementioned shortcut method covering expenses such as phone, internet, depreciation on furniture & equipment. No other expenses can be claimed for working from home if this shortcut method is employed.

To use this method to their benefit when claiming home office deductions, individuals must keep a diligent record of the actual hours worked at home. This is a simpler process than claiming on the actual expenses incurred. Claiming on the actual expenses incurred requires individuals to comply with the necessary and more complex record-keeping requirements outlined by the ATO.

It is important that Australians are aware of their entitlements and tax deductions when working from home/remotely. Speak with us to ensure that you are in compliance with your tax return obligations when claiming.

Super For Contractors

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Contractors who run their own business and sell their services to others have different obligations to their super than what employees in a business may usually have.

A contractor (also known as an independent contractor, a subcontractor, or a subbie) who is paid wholly or principally for their labour is considered to be an employee for super purposes, and may be entitled to super guarantee contributions under the same rules as other employees.

A contract may be considered ‘wholly or principally for labour’ if:

  • You’re paid wholly or principally for your personal labour and skills
  • You perform the contract work personally
  • You’re paid for hours worked, rather than to achieve a result

If hiring a contractor to perform solely their labor for a fee, the employer may also have to pay super contributions on their behalf.

In this sense, if you are a contractor who is being contracted to an outside business than your own to perform your usual work or labour, your employer must contribute to your super the same way they would any other employee.

This could be seen in an example of an electrician who runs their own small business, or is employed by a small business who has been hired by another business to supplement their workforce and perform a specific role that they can fit to.

Say the electrician who runs their own business has been subcontracted by the larger business.

They are performing labour but also providing materials (ie, themselves plus a toolbox plus a van full of powerpoints and wiring etc), they would be seen as a contractor and not an employee for super purposes. They must pay themselves super, in this case.

However if they are sub-contracted to perform labour only then the company that has sub contracted them may be liable to pay super on the amount that they pay to their contractor.  This would be the case where the electrician just turns up with their tool box and everything else is provided by the “employer”.

If they are in an employment-like relationship with the person that they entered their contract into, they may need to have their super paid to them by their contract employer. In order for super to be applied from what you earn, the contract must be directly between you and your employer. It cannot be through another person or through a company, trust or partnership.

It is important that both parties in the process are aware of their super obligations during the contracted period. There can be significant penalties for employers who use contractors if they fail to correctly pay super. Each case regarding contractors and super needs to be assessed independently to ensure that you are doing the right thing. There is no definitive black and white line between a contractor and a contactor in an employment-like relationship that can be obviously seen after all.

If you’re unsure about whether or not you’re meeting your obligations as an employer, or are a contractor looking to make sure their super is being correctly paid into, speak with us.

Consequences Of Improperly Lodged Tax Returns

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With tax return season approaching quickly this year, you may have already started looking into lodging your income tax return. Ensuring that your details are correct and that any information about your earned income from the year is lodged is the responsibility of the taxpayer and their tax agent. However, if during this income tax return process the tax obligations of the taxpayer fail to be complied with, the Australian Taxation Office has severe penalties that they can enforce.

Australian taxation laws authorise the ATO with the ability to impose administrative penalties for failing to comply with the tax obligations that taxpayers inherently possess.

As an example, taxpayers may be liable to penalties for making false or misleading statements, failing to lodge tax returns or taking a tax position that is not reasonably arguable. False or misleading statements have different consequences if the statement given results in a shortfall amount or not. In both cases, the penalty will not be imposed if the taxpayer took reasonable care in making the statement (though they may still be subject to another penalty provision) or the statement of the taxpayer is in accordance with the ATO’s advice, published statements or general administrative practices in relation to a tax law.

The penalty base rate for statements that resulted in a shortfall amount is calculated as a percentage of the tax shortfall, or in the case of no shortfall amount, as a multiple of a penalty unit. This percentage is determined by the behaviour that led to the shortfall amount or as a multiple of a penalty unit, which are as follows:

Failure to take reasonable care – 25% of the shortfall amount or 20 penalty units
Reasonable care is not taken if the taxpayer failed to do what a reasonable person in the same situation would have done.
Recklessness – 50% of the shortfall amount or 40 penalty units
Recklessness is determined as disregarding or showing indifference to a real risk of a shortfall amount arising that a reasonable person would have been aware of.
Intentional Disregard – 75% of the shortfall amount or 60 penalty units
Intentionally disregarding the law occurs if there is full awareness of a clear tax obligation, and the obligation is disregarded with the intention of bringing about certain results (underpaying tax or over-claiming an entitlement).

If a statement fails to be lodged at the appropriate time, you may be liable for a penalty of 75% of the tax-related liability if:

A document that is necessary to establish tax-related liability fails to be lodged
In the absence of that document, the tax-related liability is determined by the ATO.

To ensure that the statements, returns and lodgements are done correctly, and avoid the risk of potential penalties, contact us today. We’re here to help.

Achieving Your Strategic Goals While Keeping Business Costs Down

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If a business cuts costs, it’s usually to save on the money that is being spent. However, cutting costs too deeply may actually impact employee and customer satisfaction, and overall harm the success of the business that has been built thus far. In saying that, if cost-cutting measures aren’t employed enough, that can also be a threat to the business’s very viability.

There are a number of ways through which businesses can attempt to optimise and achieve a balance in their cost-cutting strategies, without sacrificing or reducing their overall success.

When beginning the cost-cutting process, align with what the business strategy actually needs to be cut. Rather than approaching the budget with a hacksaw method of reducing the most expensive items, consider optimising the cost against what the business strategy requires from it, and consider the inherent value of what could be cut. Is it something that adds value to the business, despite the cost? Will this cost return on investment against what the strategy purports?

Similarly, do not simply approach cost-cutting with a reduction in staff as a solution to the issue. Reducing staff is merely a short-term approach to cost-cutting that may have a long-term impact on the resources that the business will have available for use.

Instead, aim to optimise the staff available in the business. Consider the expertise that the business will require in moving forward, and plan accordingly. Retain the talent from the existing pool of staff, fill any existing vacancies and consolidate roles where people may be being underutilised. If people involved in the business are underperforming, consider culling these specifically.

Ensuring that employee satisfaction is being fulfilled by the business can assist in cost-cutting, as higher employee satisfaction leads to lower turnover for employees. This measure should cost businesses far less in the long run.

Similarly, in this constantly changing business environment, the impact of COVID-19 has furthered the question of whether or not the way that businesses can operate should remain the common practice. If housed in an office (and it is practical to do so), consider employing remote work as an option or alternative for employees. It can bring down the rent, energy, and other office expenses significantly, while also potentially give you better access to talent.

The overall finances of the business should be looked into as well, to ensure that the costs of financing are not severely impacting the business. Simple measures that can be employed include changing banks to a more cost-effective facility, consolidating credit cards into one with a lower rate, or other changes that may reduce fees and improve access to capital. Similarly, paying bills early or switching to a monthly fee can also improve financial performance, as it can assist in getting the cash flow of the business under control.

Removing non-essential expenses (such as gifts and entertainment) can also be a cost-cutting measure to employ in business. Going paperless, becoming more energy efficient in the office or negotiating with suppliers for more cost-effective alternatives are other similar, simple measures that can be made use of in the cost-cutting approach to business.

Cost-cutting for your business does not have to be a particularly painful process. By looking at your business with a critical, and strategically aligned eye, you can optimise the cost-cutting process to suit what your business needs. For assistance with business planning, cost-cutting, or other business-related advice, speak with us today.