Author: Adam_Admin

Do you need to lodge a transfer balance account report?

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Self-managed super funds (SMSF) may be required to lodge a transfer balance account (TBA) report by 28 July 2020 in the case of a TBA event.

A TBA report will need to be lodged with the ATO in the event that both of the following apply:

  • A TBA event occurred in a member’s SMSF between 1 April and 30 June 2020,
  • Any member of the SMSF has a total super balance greater than $1 million.

SMSFs will also need to complete this report when a member needs to correct information about a TBA event that they have previously reported to the ATO or are responding to a commutation authority.

According to the ATO, an event is classified as a TBA event if they result in credit or debit in a member’s transfer balance account. Such events include:

  • Super income streams in existence just before 1 July 2017 that both continue to be paid on or after 1 July 2017, or were in retirement phase on or after 1 July 2017,
  • Super income streams that stop being in retirement phase,
  • Limited recourse borrowing arrangements (LRBA) payments entered into on or after 1 July 2017,
  • LRBA payments resulting in an increase in the value of the member’s superannuation interest supporting their retirement phase income stream,
  • Personal injury (structured settlement) contributions that occurred post 1 July 2017,
  • Voluntary member commutations.

There are a number of ways you can lodge your TBA report with the ATO:

  • Lodge online by completing an interactive online form in the Business Portal
  • Lodge online by completing an interactive online form with a tax agent and filing through online services
  • Lodge a paper report (you can report up to four events for the same member on a paper report)
  • Use bulk data exchange (BDE) to submit through file transfer facilities. You will generally need support from a software provider to meet BDE specifications.

How to keep employees safe as they return to the workplace

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Enforcing health precautions is an essential step to creating a safe workplace and giving your employees peace of mind, especially during the current pandemic. Businesses looking to invite their employees back into the office after the easing of lockdown restrictions should implement safeguards to ensure their workplace is a safe one.

Conduct a COVID-19 risk assessment

Before opening your office to employees, conduct a COVID-19 risk assessment with Safe Work Australia. A risk assessment will include an evaluation from Safe Work Australia regarding your business’:

  • responsibilities and leadership,
  • worker engagement, alternative means of communication and participation levels,
  • COVID-19 hygiene principles (such as the 4 metre square requirement),
  • hierarchy of controls, and
  • employee health and safety plan.

The progression of additional business activities will also be assessed. For example, the safety of business trips when travel restrictions are lifted.

Implement cleaning processes

Invest in frequent cleaning services and processes to lower transmission risk and give your employees peace of mind. In addition to hiring a cleaning service, you can also keep your workplace safe by providing employees with disinfectant solutions for door handles, light switches and keyboards.

Other cleaning and hygiene processes to implement include:

  • Distributing hand-sanitizer
  • Reminding employees to wash their hands
  • Providing PPE wherever necessary
  • Minimising physical interaction between your employees (e.g. using disposable condiments, laminating documents for easy cleaning)

Support your employees’ mental health

Supporting your employees’ mental health is just as important as their physical health. To create an environment that your employees feel comfortable and safe to work in, provide aid in the form of workplace flexibility, therapy and counselling services, home-to-business transportation options and financial advice. Additional services such as child-care can also be helpful to supporting your employees’ mental health.

How to recruit the right employee for your business

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As unemployment rates rise and more individuals compete for the same job, businesses with open positions may find themselves flooded with job applications and potential candidates. With so many individuals applying for every open position, how can you find the right employee for you? Here are a few tips to help you with your recruitment selection process.

Keep your job advertisement detailed and concise

With so many job seekers in the market, it is important to filter out who you want to invest time into. To make sure you are only interviewing the best candidates and relevantly skilled individuals are applying for your job, ensure your advertisement lists all the essential requirements for the position.

For example, include your preferred education and qualification levels, required experience, knowledge and skills. It is also a good idea to prescreen potential candidates before inviting them for an interview to make sure you don’t waste time (both for you and the candidate) your selection process is uniform.

Prioritise compatibility

Not only will your new employee have to be compatible (in terms of work ethics and career goals) with you as an employer, they also need to be compatible with other employees in your business. It is always a good idea to check whether the candidate has the social skills to get along with others in their team as well as any potential clients they may be interacting with.

Involving current employees in the interviewing process may also help in testing for compatibility. While you can always offer to train employees in effective communication, with so many fish in the sea, consider whether or not social skills training is worth your time when there could be more socially adept candidates.

Test the waters

In addition to having a probation period for any new employees, don’t be afraid to offer a position through an internship first. Not only does an internship allow employers to assess whether or not a new employee is capable for the job, it also allows the employee to assess whether or not the position or the business is right for them. Under the correct legal terms, internships may also be unpaid. However, in the event that your open position is a mid-senior level position, internships will not be effective as candidates will feel their skills and experience are undermined.

What to consider before opening another business location

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Expanding your business to open in multiple locations can offer more opportunities and profitability. However, managing one location can be challenging enough, so it is crucial to examine and prepare for the implications of opening up a second store. Here are some considerations that business owners need to keep in mind before deciding to open up a new branch.

How successful is your current business?

Your current business should be stable and successful before you open up multiple stores. If your business is struggling in key areas such as cash flow, sales, employee skill sets, and customer retention, then it’s a good idea to address these needs first, otherwise, your new locations are likely to face the same issues. Assess your current store’s shortcomings and consider whether they will also put your new locations at risk.

What are the characteristics of the new locations?

Choosing the right business location plays a key role in the success of your business. Before branching out, research potential locations and consider how areas could affect your business due to factors such as popularity, business competition, demographics, transport accessibility, rent prices, and attractiveness to employees. Assess whether the differences between your current and potential new locations will require you to make any changes to your business – perhaps you will have to adjust your marketing strategy, prices, or products/services depending on your new demographic.

Do you have the resources to expand?

Expanding your business will require extra financial commitments for rent, utility bills, more inventory and equipment, employees, insurance, and extra advertising. While your income may increase with your new location, remember that it may take months to make the returns required for expansion. It is therefore important that you are already financially secure before opening up a new store to avoid overextending your funds and putting your business at risk. If you don’t have the assets required, a business loan is an option provided that you can prove your financial ability to repay the loan.

Opening up a new location also means that you will have to manage your time between the two branches. This may require delegating business responsibilities, hiring managers, or promoting current employees to management positions. To keep your new business on track and identify early risks, you may also have to initially spend more time at your new location.

Modified provisions for virtual business meetings you need to be aware of

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Businesses moving towards online operations (temporarily or permanently) need to be aware of the Government’s modified provisions concerning virtual meetings and the electronic signing of company documents. These modified provisions in the Corporations Act 2001 (Cth) became active on 5 May 2020 and will automatically be repealed on 5 September 2020.

Company meetings

The new temporary provisions outline how a virtual company meeting should be held and procedures they must follow. Under the Determination, meetings may be held using one or more technologies so that members do not have to be at the same physical location to satisfy business requirements such as a quorum.

Additionally, members must be able to speak at the virtual meeting and voting must be done through an online poll rather than a usual show of hands. Proxies may participate in a meeting in the event that businesses are unsure of the necessary virtual procedures.

Notice of meetings

Notices for meetings, along with any material related to the meeting, must be issued to participating members before a virtual meeting is held. Such notices can be sent digitally through email, or posted on an online location where the notice and other material may be viewed by participating members. Under the new provisions, the notice must also include how involved members can speak and vote on polls during the meeting.

Electronic signing of company documents

It is understandably difficult to sign and execute documents online. However, the new provisions allow for electronic signing in place of signing a physical copy if necessary, as long as the electronic signature reliably identifies the person and indicates the person’s intention about the contents of the document. Physical signings with electronic communication (such as fax) are also permitted.

Although there are many virtual meeting and electronic signing technologies available to businesses, not all are easy to operate and free. Consider investing into a paid service if you are considering moving more of your business operations online and test a number of platforms first before committing to one in particular.

Carrying on a business in an SMSF

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Self-managed super funds can carry on a business providing the business is allowed under the trust deed and operated for the sole purpose of providing retirement benefits for fund members.

Carrying on a business through an SMSF does have restrictions that other businesses do not have, such as entering into credit arrangements or having overdrafts.

SMSF trustees that carry on a business through their fund must adhere to the sole purpose test. The ATO looks for cases where:

  • The trustee employs a family member.
  • The ‘business’ is an activity commonly carried out as a hobby or pastime.
  • The business carried on by the fund has links to associated trading entities.
  • There are indications the fund’s business assets are available for the private use and benefit of the trustee or related parties.

The same regulatory provisions still apply to funds that carry on a business, i.e, SMSF investments must be made on a commercial ‘arm’s length’ basis, business activities must be conducted in accordance with the SMSF’s investment strategy, collectables and personal use assets cannot be displayed at the business premises and so on.

The SMSF cannot be involved in the following business activities:

  • Selling an SMSF asset for less than its market value to a member or relative of a member.
  • Purchasing an asset for greater than its market value from a member or relative of a member.
  • Acquiring services in excess of what the SMSF requires from a member or relative of a member.
  • Paying an inflated price for services acquired from a member or relative of a member.

Cars and taxes for 2020-21 financial year

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New car threshold amounts will be implemented from 1 July 2020. Understanding the new thresholds and how they may affect your small business operations and vehicle usage will be important in preparing you for the financial year ahead.

Income tax:

There is an upper limit on the cost you use to work out the depreciation for the business use of your car or station wagon (including four-wheel drives). The maximum value you can use for calculating your depreciation claim is the car limit (irrespective of any amount you were paid for a trade-in) in the year in which you first used or leased the car.

For the 2020-21 financial year, the upper cost limit is $59,136 including GST.

Goods and services tax (GST):

Businesses registered for GST with motor vehicles used solely for business purposes are entitled to claim a credit for the GST included in the price of the vehicle, provided they have a tax invoice.

In the event that you purchase a car and the price is more than the car threshold, the maximum amount of GST credit you can claim is one-eleventh of your car limit amount. Keep in mind that you cannot claim a GST credit for any luxury car tax you pay when you purchase a luxury car, regardless of how much you use the car in carrying on your business.

Luxury car tax (LCT):

You are required to pay LCT if you’re registered or required to be registered for GST and you sell or import a luxury car.

LCT applies to motor vehicles designed to carry a load of less than two tonnes and fewer than nine passengers. LCT also applies to a car purchased by a person with a disability even if the car is GST-free. However, disability-related modifications are not subject to LCT. The LCT value of a car includes the value of any parts, accessories or attachments supplied or imported at the same time as the car.

Cars with LCT over the LCT threshold attract an LCT rate of 33%. From 1 July 2020, the LCT threshold will increase to $68,740. Additionally, the LCT threshold for fuel efficient cars will increase to $77,565 for the 2020-21 financial year.

Tips to building an engaging website

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A simple yet often overlooked method of improving your business is to build an engaging website. Many business websites act as a product information dump rather than an avenue to attract clients and reinforce business goals. To ensure you fully utilise your website, here are a few website-building tips you can implement.

Get the basics down
First note that a business website needs to:

  • Provide basic information about your business, products and services,
  • Answer typical questions and concerns,
  • Motivate people to buy or use your products.

To make sure your website is able to fulfil its fundamental duties, there are several must-haves to include:

  • Name of company, personalised website domain, tagline hours of operation. Display your business name and website address prominently and on every page you have to ensure potential clients can find through search engines
  • What you sell or do. Make it very clear what your business does and provide an accurate description of your products or services.
  • Photos and graphics. Graphics are a must-have to make sure your website is visually appealing. Examples of graphics include your logo, photos of your products or place of business, a photo of yourself or key employees. In the case that you’re struggling to obtain original images, consider adding stock images that are for free and public use.
  • About Us. Your website needs at least one page with background information on your business and the key people who run your company. This is important to include so that your clients are able to gain a better understanding of your business purposes and goals before supporting you.
  • Contact Us. Provide your potential customers with an email address and phone number and link your social media accounts to your website. Also, provide a physical address so customers can visit if necessary.

Recommended features to add
Three features that are also helpful to add to your website include:

  • FAQ (Frequently Asked Questions). Save yourself some time by answering common inquiries. Also, many people are reluctant to call or email with questions so an FAQ may help clear up some concerns and motivate them to do business with you.
  • Testimonials. Do your current customers love you and tell you so? Testimonials and reviews are powerful selling tools and improve your credibility.
  • Press and awards. Positive reviews from the media and awards similarly add credibility to your brand and reinforce consumer confidence.

Additional industry tips
eCommerce websites making sales directly from their website can include information about:

  • Product details. You’ll need in-depth information about the products you sell online, including photos wherever possible.
  • Security practices. Let your customers know that you are keeping their information secure
  • Shipping. Indicate how quickly you’ll fill orders, shipping prices and options. Keep your clients updated with delivery information.
  • Return policies/guarantees. Make these very clear.
  • Customer service hours.

For businesses with a physical location where customers come to you, include:

  • Hours you are open.
  • Location and directions. You can add a map from an online map service and provide helpful directions for your customers.
  • Photo of your place of business or interior.

How to prevent bad debts from your clients

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Running a business is challenging enough, and having to deal with bad debts can add an unneeded layer of stress for you and your team. The easiest way to handle bad debts is to avoid them in the first place – here’s how.

Do a background check:
Before you enter into an agreement with a client or other businesses, make sure that you know who you’re dealing with and do some research. Make sure they are legitimate, still in operation and look for any bad reviews and feedback concerning other people’s experiences with them. Take into consideration whether they ask you for discounts or complain that your fees are too high. If you get the idea that the client may not pay, it might be safer to avoid the job instead.

Have clear payment terms:
Include payment terms in your client agreement or contract that clearly state payment dates penalties for late payments. Both parties should agree on these payment terms prior to entering into a contract. Conditions for late payments could include interest fees, fines, or the cessation of supplying your goods and services to them within a specified time period.

Ask for a deposit:
When you ask for a deposit and the client does not want to pay, it shows that they are probably not trustworthy and may not be willing to make a full payment. If the client does pay you a deposit or but does not make a final payment, then at the very least you will not have lost as much money as you would have without an initial payment.

Automate payments:
Setting up an automatic payment system for your clients eliminates the chances of them forgetting to pay or refusing to pay unless they actively cancel their payments. Automatic payments can work well if you have instalment fees or a subscription-based service that requires periodic payments.

Follow up quickly:
Making contact with clients soon after a missed payment will demonstrate your expectations to be paid in a timely manner. Often, this means that clients managing cash flow problems are more likely to prioritise payments to your business rather than their other creditors who have more relaxed payment systems.

Why businesses should consider flexible workplace arrangements

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Businesses working from home due to social distancing restrictions can take the opportunity to learn from the experience and consider new work structures coming out of COVID-19. This could mean increased flexibility for employees when it comes to working remotely and adaptable hours. Here’s why flexible work arrangements with your employees may be beneficial for your business in the long term.

Increased productivity
Flexible work arrangements can increase the productivity of employees by allowing them to work when they feel most motivated. Some people may naturally be more productive at night time and do their work then, which would not be possible with regular office hour restrictions. Remote work also saves time on excessive staff chatter and workplace distractions, such as ringing telephones and colleague drop-ins. Offering flexible work arrangements can show your employees that their lives are valued, which can lead to higher levels of performance and hard work to justify the flexible arrangements.

Reduced expenses
When employees are working from home more frequently, it means that your office doesn’t have to sustain as many people and you can reduce rent and utility expenses. This doesn’t mean that your employees have to pay too much more; the ATO has introduced an easier way of deducting work from home costs during the COVID-19 period called the ‘shortcut method.’ This allows employees to deduct 80c per hour they work from home to compensate for running expenses.

Attract talent
Businesses that exclusively depend on employees being physically present may be missing out on ideal workers who live too far or require more flexible arrangements. Modern job seekers are often on the lookout for positions that offer greater flexibility, rather than the regular 9 to 5 in the office. Highlighting workplace flexibility in your job advertisements can attract more prospective talent as physical barriers are eliminated.

Improved wellbeing
Remote work can improve the overall physical and mental wellbeing of your employees. One perk is that they may be able to be better rested and eat a proper breakfast in replacement of the morning commute. Work flexibility will also enable them to work around family commitments, which can boost their quality of life and happiness. This can raise morale and improve their quality of work by reducing the risks of fatigue and burnout.

Employee retention
Workplaces that allow employees to maintain a healthy work-life balance are more likely to retain their employees for long terms. This can benefit businesses by reducing the frequency of hiring and training periods, which can save a lot of money and productivity while continuing to grow corporate knowledge in existing employees.