Archive

This is where you can find archives from our previous news articles. Have a browse and feel free to chat to us about any of them.

 

Your Accountant is More Than Just a Preparer of Tax Returns and Financial Statements
Today I quit my real job
Zen and the Art of Good Record-Keeping
Don’t Forget Your Old Friend Inflation
Why it’s Important to Have a Good Website
Using the Right Tools for Recruitment
Goal-setting for business
Why Getting Feedback from your Customers is Important
Should I pay off my HECS Debt Early?
Tax Time Approaching
Getting your Capital Gains (or losses) in order


Your Accountant is More Than Just a Preparer of Tax Returns and Financial Statements

1 December 2014

How often do most businesses talk to their accountant? Once a year? 5 times a year? Normally it’s one of these; once a year for the tax return and maybe 4 times a year for the BAS, depending on who does the BAS. Sure, accountants are great at these tasks and can help a business put in place a tax effective structure, which is where they’re adding value. But there’s more that your accountant can do for you, as mentioned in a good article that MYOB posted a while back: 6 Things Your Accountant Can do for you Beyond Compliance. In this article a few items are discussed that your accountant can do for you outside the usual compliance.

In a nutshell, they’re saying your accountant can do the following:

1. Benchmarking – comparing your business to others in the industry. I once had a client who almost purchased a supermarket. The figures looked great, excellent profit after add-backs, good price, good margin, the lot. However once we tested these numbers against industry averages the picture was very different. Basically we found that the business was performing far, far better than pretty well every supermarket in Australia based on margin. Why was it doing so well? Well, it wasn’t, the figures were inflated, so the client walked from the deal, potentially saving himself from bankruptcy in the process. Just an example of where benchmarking can help.

2. Risk Management – Accountants have seen most things go wrong in a business so are well placed to recognise risk factors particular to industries and business types.

3. Review costs – most businesses don’t have time to test the market for what they’re getting from their suppliers. It’s always a good time to check if your suppliers are giving you the best possible price and quality so you can in turn offer this to your customers

4. Pricing review – a lot of businesses leave their prices static for fear of losing customers. In truth most customers will pay the extra if they feel they’re getting value for money; if you don’t adjust your pricing to reflect the value you’re providing you’re de-valuing your own product.

5. Budgeting – not much fun and not an area of expertise for a lot of business owners. An extra set of eyes can assist with adding perspective for contingent costs and how realistic the budget is

6. Succession planning – another one that’s not fun, but it has to be planned for. The common phrase is ‘Go in with an exit strategy’. If you don’t have one then your accountant can help with the practicalities as well as making sure you get out in the most beneficial fashion.

Sure, if you’re lucky enough to have an internal accountant you can get these things done in-house, however if you don’t then your trusty accountant can do it. However this brings an additional issue. Your accountant is often too busy to perform this sort of work. This is exactly the line of work I’m in. I don’t do compliance work, but I can do everything above. It’s my area of expertise, I’ve done it for years and I’m not too bad at it!

Today I quit my real job

17 November 2014

I quit my job today. I didn’t dislike my employer or my boss but I sat down with her and told her that I was resigning to work on my business full-time.

It was a pretty nervous moment for me because, up until today, I have been gainfully employed, either full or part-time pretty much all the time since I was 15 years old. So that’s 18 years of working, which means two things: 1. I’m getting older and 2. I’ve been working for someone else for more than half my life. Barring a period when I worked at Lions Australia in one of the most fulfilling roles of my life, I’ve been working so other people can make money.

Now, the only thing that will be changing is that I’ll be working for more of them!

This business started out a few years ago as a side project to make some additional income in my spare time. I’ve seen the potential in it and it’s grown slowly through no efforts of my own, other than doing a good job for my clients. Now I’ve decided to make the leap into running my own business; I don’t see myself as unemployed, but self employed.

The main reason a client gets me in is so they can make money while I do the boring stuff, the bookkeeping or the accounting. I don’t mind that because, believe it or not, I like that stuff. I like seeing a set of accounts that’s correct and meaningful. That means my client can make better business decisions and has a clearer picture of how their business is performing.

As it stands I have a pretty clear workload so expect to see me undertaking some pretty aggressive marketing in the coming months. I’ll be hitting up my contacts on Linkedin and personally for referrals for bookkeeping and accounting work as I don’t plan on running an insolvent business. This business will be built up, growing and eventually employing so I can hopefully mentor people who have the same professional interests as me.

So if you’re in Newcastle and you’re after a coffee to talk about work or just life in general do feel free to look me up. I’ve got plenty of free time in my calendar at the moment but it’s sure to fill up quickly!

Zen and the Art of Good Record-Keeping

2 July 2012

Just a quick one today. Word on the street is that I have about 5 seconds to get your attention, so the likelihood that anyone is going to read a lengthy article about record-keeping is small indeed.

This is a case study about a friend of mine who is thinking about buying a website. This is a service-based website, quite a solid business actually, where the current proprietor expends very little energy for a decent return. This proprietor has worked hard on a great idea to build this website that my friend is looking to buy. My friend asks me to take a look at it for him so I say sure, show me the financials. No financials. No financials? What sort of a business is this?

Now, if you said to anyone that you’re looking at buying a business with no financials most people would tell you to run a mile. No financials surely means the past history of the business cannot be validated so the vendor could have pulled the stated revenue figures from their you-know-where. A LOT of digging later and we have finally been able to confirm the vendor’s stated figures to determine whether the sale price is valid. This was through the vendor being very helpful, but in truth it was quite a painstaking, laborious process that took far too long. If I charged my friend what an Accountant would charge for the same level of due diligence there would be a very nasty bill in the mail at the end of the day. He’s lucky he’s got good friends and buys good beer, I can tell you.

This is the exact same scenario as another client who was looking at buying a gym. This client was provided management accounts from the gym owner, however they weren’t much better than the website vendor, as revenues didn’t reconcile to member numbers and there were a myriad of questions that needed to be asked. However, having some form of documentation meant my client had some degree of comfort about the viability of the business.

The moral of the story is that it pays to keep good records. You’re in business to build an asset to sell one day, so to give yourself the best chance of selling that asset, make sure it can be valued. Keeping decent records means the net profit is recorded, add-backs can be confirmed and assets are where they are supposed to be. Give the buyer no reason to knock you down on price. Building a great business is worth nothing if you can’t prove that it’s great so keep a nice clean set of books and not only does it keep the tax man happy, but it means all that hard work you’re putting in now will pay off down the track.

Don’t Forget Your Old Friend Inflation

12 March 2012

Bookkeeping Newcastle, Newcastle Bookkeeping, Newcastle Accountant, Accountant Newcastle

Ok, so inflation isn’t exactly anyone’s friend. But that doesn’t mean that you can forget it like you try and forget the fact that you have a list of weekend chores as long as your arm when you’re drinking coffee on Saturday morning.

In university one of my compulsory subjects was Economics, both Micro and Macro, so I guess you could say two of my compulsory subjects were Economics. Grammar aside, our Economics lecturer was a bear of a man who would swear at students who dared to duck out of his lectures early. He was a reformed smoker who used cigarettes as the currency of choice in every one of his examples, made you want one even if you weren’t a smoker. This guy had a saying that forms the fundamentals of every type of investing imaginable, and that has stuck with me for years. He always said “A dollar is worth more today than it is in a year’s time”. This, of course, means that what costs you a dollar today will likely cost you $1.03 in 12 months’ time, due to the rising costs of goods and services, commonly referred to as ‘inflation’. Now I’m not going to get into a discussion about the RBA and their policy of using their enormous stick of setting interest rates to send you broke trying to pay off your house, but it’s in the same vein. High inflation isn’t good for anyone, except maybe the guys that work in the mint printing more money; that’s why Glenn watches how much a loaf of bread costs and adjusts the dial accordingly.

So, when considering an investment, it makes good sense to consider the after-inflation rate of return. Say you have a lazy $100k sitting in the piggy bank you’d like to see working a bit harder for you. You worked hard for it, why not make it earn its rent? So you duck on down to the local Newcastle Long-Term Growing Society, where they tell you your cash will be earning a whopping 5% interest in a 12 month term deposit. Great! $100,000 at 5% (ignoring compounding), that’s $5,000 for doing nothing! Now let’s say inflation is 3%. Essentially, this means that your actual return on your hundred large is $2,000. Surely you could have made this much money busking or through some form of Multi-Level-Marketing. And then you would have had the $100,000 to turn into 5c coins and swim in like you were Scrooge McDuck.

So, essentially the lesson is simple. Always consider the implications of inflation on any investment. That 3%, or 500% if you live in Zimbabwe, can make a significant dent on your hard-earned cash, so you need to look for the best return for your dollar.

If you do happen to be looking for a decent place to park your cash, ask me. If I give you advice, dob me in because it’s illegal for me to do so. This is why I will point you straight in the direction of a Financial Planner that can assist you far more practically than I can, with the added benefits of a few little things like product knowledge and experience in the industry.


Why it’s Important to Have a Good Website
15 November 2011

It’s the 21st century (I think) and the web has never been more accessible. Your phone, computer, TV and soon your car can all access the net quickly and easily. Microsoft predicts that in the next 5 years people’s TVs will be the most used tool for accessing the net. Already mobile devices have eclipsed computers as being more widely used. My 8 month old son has more photos online than my wife and I combined, more a factor of my wife’s snap-happy nature than anything else, but the point is made – we use the internet for everything. Heck, Google want to make laptops than run solely on the internet!!!

This makes my next query all the more confusing: why are there so many rubbish websites on the net? It is not difficult to set up a decent looking website. The one you’re looking at right now is the result of an experiment to prove exactly that. It would have been absolutely free, however my technical nous let me down at the last minute and I was forced to pay an Indian web developer $50.00 to transfer the files from WordPress to my hosting (so it doesn’t have the WordPress domain). Oh, there’s another cost, sorry. $30 a year I think it is… Ok, so my site isn’t as functional as Facebook or as pretty as This site but it does the job. I’m sure those out there with the crappy sites say the same thing, or a variation thereof. “I don’t need a good site, all my customers are word-of-mouth” or “My current site is good enough, it’s got our address and phone number. What else do we need???”.

In my mind, if you have a business you should have a website. Gens X and Y now Google pretty well everything before they buy; consumers are more than aware that the internet is not only the best place to buy something, but also to find out what other people think of it. For my money, if the person I’m thinking of dealing with doesn’t have a website they won’t get my business. I’m not saying that’s going to break anyone out there, far from it, but I’ve no doubt that my thinking isn’t all that different to the vast majority out there.

The same thing goes for a rubbish website. If your site isn’t up to scratch, my immediate thought is that you put the same amount of effort into your site as you do your work, so that’s not a thing to do on a first date. Being contactable through a clear website that’s easy to read builds trust and confidence in your consumer, and in a crowded marketplace, that could mean the difference between shutting the doors and expanding. Ok, so maybe that’s a bit drastic, but the message is that a decent site means a higher probability of turning a potential into a sale.

As I’ve mentioned earlier, you don’t need to spend a wad of cash to get a decent looking site. There are millions of templates on WordPress that can be easily turned into a proper website. $50 for mine, and I’m sure a savvy uni student or teenager would have done it more than capably. If you’re having dramas with this drop me a line and I’ll happily point you in the right direction. There really is no excuse for not having a website.

Once you’ve got the site running, spend an hour a week updating it and posting your updates on Twitter, Facebook and Linkedin. Google LOVES it when you do this, and will reward you with free rent on the first page of their search engine machine, if you do it properly. This is a very, very good thing. See my previous tweet about the social media aspect of your web pages. Unfortunately it’s not enough to just have a decent website these days, people want more!

When it comes to updating your site keep it consistent. People want short and punchy, which is why Facebook, Twitter and Hansel are so hot right now. Short articles are great for updating the site, and make for good Google-fodder when udpating your Twitter. See if you can get some followers to re-tweet so Google sees your site being sent around the globe and they’ll give you another gold star for being such a good website owner.

All of this adds up to a better online presence, a better image and, hopefully, more customers. You never know, if you already have enough customers there’s nothing wrong with turning away the less valuable ones once you can afford to.


Using the Right Tools for Recruitment
1 November 2011

As we roll into the latter part of the year it seems most businesses really come off the boil when it comes to recruitment. Historically, 14 January is the date the most people look for another job, the reasons for which seem pretty obvious. After 2 weeks getting sunburnt, playing cricket, eating prawns and generally kicking back, the thoughts of seeing your desk at work, eating cheese sandwiches and sitting in traffic are enough to prompt a change. And why not, a change is as good as a holiday, apparently (personally I would prefer the holiday).

So, your staff member quits and you need another one. Either that or your business is in a growth phase and you’re looking to put on some new staff to take up the extra work. This is great news if you fall into the latter category!

With a huge proportion of people looking to generalist online job boards, most candidates use these as their first port of call when seeking out that dream job. I know I found my last job on a generalist online job board and didn’t even consult the local rag. However, as the popularity of these job boards reaches epic proportions (there are over 152,000 jobs on one of Australia’s leading online job boards at time of writing) it seems that the candidates they are attracting can vary from great to rubbish. There are several issues at play here, including amongst other things:

– Using a well-written advert
– Specifying key criteria, skills and attributes required to be held by any applicant
– Selecting the correct area to lodge the job (categories, salary etc)
– Targeting advertising tools (online, paper etc)

There is much more to recruitment than just advertising online on a generalist job board. It is definitely worth considering niche job boards, alternative papers, or a recruitment firm. One strategy that has worked recently for a contact of mine was the use of a pointer advert in the newspaper, directing candidates to the advertisement online. This is a cost-effective method of advertising to a wider audience of candidates and increases your chances of gaining the right person for the job.

All the best in your next recruitment campaign!

Goal-setting for Business
21 October 2011

Ask any entrepreneur or successful business owner what their goals are in life and I’ll bet the smartphone I can’t live without they’ll be able to rattle a list off, and will likely tell you how close they are to, or how far they’ve exceeded, each one. A friend of mine once told me about a 20 year school reunion he went to. The question was asked by the MC of the classmates: “Who here wrote down their goals, and reviewed them regularly?”. Only the hands of the most successful people went up. The same people were also the ones who had paper rounds when they were at school, but that’s another story…

The point is that asking “what do I want in life” makes you automatically create a list of goals, dreams and ambitions – a second home, a good education for your kids, nice car, holidays, an extension to your house to make the neighbours you don’t like jealous. Goals like these make you consider the next question – “how do I get these nice things?”. The next logical step is acting on the “how” to get to the “what”. Simple cause and effect.

Since we’ve established that having goals in life is good, the practical extension is that this should be the same for your business. Of course everyone wants their business to do well, however “doing well” isn’t targeted enough – you need to have something that you, and your employees, can focus on. Something more specific. Goals are best broken down into timeframes; this gives everyone more incentive to achieve them. Remember – these goals don’t have to be all about making more money – you might see your business being more successful through less hands-on hours, giving you more time away from it and doing whatever it is you do to kick back.

Some examples of goals include:

– Less hands-on time in the business, for example moving from 6 days in the business to 4, with no reduction in opening hours within 3 months
– Increasing sales revenue by 25% within 3 months
– Increasing customer volume by 10% within 1 month
– Adding 5 new, profitable product lines to the business within 6 months
– Setting up a second store/office within 12 months

Whatever the goal, remember to abide by the SMART principles of goal-setting – they need to be:

S – Specific
M – Measurable
A – Attainable
R – Relevant
T – Time-based

I won’t bother explaining the above acronym because it’s pretty self-explanatory, just try and have some parameters around your goal-setting otherwise you may as well not have any goals at all.

Remember – here at Luks Consulting Bookkeeping isn’t all we do. We would be happy to help you set realistic business goals and help you achieve them too. This is what sets us apart from other businesses – we work with you to create wealth in your business.

Why You Should Get Feedback From Your Customers
22 September 2011

In any competitive market margins get squeezed to the point where volumes need to be maximised in order to turn any decent profit. Every customer counts and if a customer isn’t happy with their experience with your business, they’re not going to be that most valued of customers – a repeat one. Repeat customers cost nothing so are the highest ROI you can get and should be treated like royalty.

So, how do you get repeat customers? In marketing they say there are the four ‘P’s of marketing – product, price, promotion and place. In my mind, it really comes down to 2 of them – product and promotion. Of these, the product is the most important. You can have the best marketing in the world but if your product is rubbish nobody’s going to come back for more. So, if you have the right product, the right promotion should pay dividends. How do you know if you have the right product? The easy answer is – you don’t. Chances are you are not your target demographic; I run a website selling cufflinks and ties and I am constantly dumbfounded by what sells and what doesn’t. What I proudly wear to work each day is the same pair that sits in my stock, contributing nothing to my bottom line. A quick Google Keyword search lead me to see that customers wanted Cufflinks with diamonds in them, so I have put a few of these on the site and they are by far the most popular. It comes back to that fact – you are not your target demographic, so you need to find out from your target demographic what they want.

Finding out a customer’s satisfaction with your product and experience can identify holes in your processes and can pay huge dividends. By changing something you never thought was broken you can increase your sales with minimal effort. Chances are you will hear things you don’t particularly want to hear, but listening to, and acting upon, customer comments is so much more effective than putting your head in the sand.

Listening to what your customers want means you can tailor your product or service to better suit their needs. It’s akin to market research and big companies pay millions for it. Whether it be focus groups for large businesses, feedback forms on a website, follow-up emails or even a quick phone call with a customer, the important thing is you’ve gained some valuable insights into how the people that pay your bills perceive your business. Your customers will feel valued that you have taken the time to ask them for feedback. And remember – negative feedback is more important than positive – it opens up new markets for your business.

Most important of all is that you act on this feedback. Ignoring it is worse than not collecting it in the first place.

Should I Pay Off my HECS Debt Early? 8 August 2011

So you’ve done the degree, you’re in the job and your career is in front of you. However there’s that big debt that got a bit bigger every time you ticked the box in uni that said you wanted the government to spot you for the lectures and tutorials you attended. You know the ones, the ones where you went to the bar instead of the lecture theatre. The debt got bigger again when CPI got thrown in each year, especially when it was getting out of the RBA’s ‘comfort zone’.

So with this big debt sitting there, getting eaten up very slowly by your wage contributions, the obvious thought is to take advantage of the government’s kind offer to waive 5% of the debt for paying it off in a lump sum. Previously this discount was 10% but Mr Swan put paid to that and knocked it down; this should make your decision that little bit easier.

Of course, your decision relies on whether you’re intending on borrowing the funds to pay off the debt. In this case, the borrowing costs on the loan would likely wipe out your 5% discount pretty quickly, so this is worth bearing in mind.

As all the commentators say, you’re not going to find a cheaper loan than one that’s only adjusted to CPI each year, so if you do have the cash ready to pay the debt, it might be worth throwing it into a term deposit and getting a bit more income from it than going for the discount. There is a loan product out there from the Bank of Mum and Dad that has been known to have a 0% interest rate for students, however these loans might not be available in all families.

Then there’s the issue of seeing a nice, big, fat refund due to you come tax return time, only to have it snatched back by the government to pay some of your debt. I’ve seen this happen a few times and it’s a good lesson in not counting your chickens before they have hatched, a lesson you don’t need to have incurred a HELP debt to learn!

However, there is a potential solution here. If your compulsory repayment from your return will clear your HELP debt, it is worth paying the debt before you lodge your tax return. This way you get the benefit of the reduction and you get to keep some of your refund. As an added bonus, if you do this prior to 1 January 2012 (subject to passing of legislation), you get the old 10% reduction rather than the new 5%.

Tax Time Approaching
31 May 2011

Hit 2011 with Luks Consulting
Image courtesy of Danilo Rizzuti

As always, 30 June sits just around the corner, waiting to pounce. “It’s May”, you think. “30 June is a long way away, I don’t need to get out the shoebox and get the receipts from the glovebox for a long time” you think. Then, all of a sudden, it’s there, on top of you. A brand new financial year and your accountant is sitting in their office, waiting for the documents.

Let’s be honest: tax isn’t at the front of everyone’s mind unless you’re trying to think up a way around it. Even this should be left to your accountant. However, if you keep your records straight throughout the income year you’ll save yourself the headache of going through all your old records trying to find those deductions for your accountant. As you well know, your accountant charges you based on how much work they need to put in. If you minimise that workload for them, you’re minimising the bill that comes with tax time.

Here are a few tips to keeping good records over the income year:

– If you travel a lot, keep a log book and your receipts in an easy-to-find location. Tracking kilometres travelled using an Excel spread sheet is an efficient method of calculating your claim. There are many cloud-based storage services you can use to store an Excel file, so you can access it when you’re away from your home computer. Google Docs are also an excellent way of storing all your information in the cloud. And if you have an Android phone, you can access these documents from your Google Docs app. Other smartphones can access the documents through a web browser.

– If you buy goods online, keep receipts that are automatically emailed to you in a folder in your email client. Mark this “Tax receipts” so you have everything in one spot.

– Keep details of the following:
– Union Fees
– Phone bills if you use your phone for work
– Computer expenses
– Home office expenses if you have worked from home or studied
– Self-study expenses
– All rates, rent received, interest etc incurred and received on any investment properties
– details of any Capital Gains or Losses incurred, including on share purchases and sales

– If you can’t stick to all of the above, keep a master file of your expenses in a document. Every time you pay for a deductible expense, jot a note down in the document so you know what to go looking for at the end of the income year.

Getting your Capital Gains (or losses) in order
16 June 2011

Around this time we’re thinking about that juicy return Julia and Wayne will shortly be sending our way. For our accountants this is when they are battening down the hatches for the barrage of group certificates about to be thrown at them. One of the often glossed over parts of a tax return is the section relating to capital gains and losses. Chances are that if you’ve made a capital gain or loss you’re sending the information to your friendly accountant rather than having a crack at it yourself.

The concept surrounding capital gains was introduced by the Hawke and Keating government on 20 September 1985 and only applies to assets purchased after that date (This isn’t doing Keating any favours in my book, seeing as he today called cyclists “sandal-wearing, muesli-eating pedestrians”).

the formula for calculating capital gains is pretty simple, in theory. And for most folk it’s going to relate to the sale of an investment property or a share portfolio. If you’ve lost money on selling either of these, you can use this loss to offset against any capital gains you make this year or in later years.

Put simply, the gain is the excess, or the ‘fat’ of the sale price (less any direct expenses incurred on the sale) less the purchase price (plus any direct expenses incurred on the purchase). It’s can get a bit more complex than that but we’ll leave it at that for now. this fat needs to be included on your tax return as income, and you’re taxed at your marginal rates. It’s just like earning some additional income, so capital gains ‘tax’ isn’t a ‘tax’ as such, just more of the same umm, tax. But if you’ve held the asset that was subject to the CGT (let’s call it CGT now. In case you didn’t guess, that’s short for Capital Gains Tax) for more than 12 months the tax office let you discount the gain by 50% before you go filling in your return. How nice of them. Again, being the tax office there are a myriad of complexities you can encounter, especially if you have a small business, but we’re looking at the basics here.

So, if you’ve sold those shares and the profit is burning a hole in your profit you might want to put some aside for when those kind folk at the tax office come knocking for their coin. And if you’re like so many others out there and have run from the Share Market with less money than when you walked in, you won’t be able to claim this loss until you’ve got a nice profit to offset it against.

Thanks for reading this article. Don’t forget to check back regularly for more updates and please feel free to contact me if you have any further queries, or suggestions for future articles. Please note – this article is merely the extremely biased opinion of the writer and does not constitute advice at all. If you are looking for advice on any news matter listed on this site please contact me and I would be happy to provide you with details of some very friendly professionals who would be happy to chat with you. Here’s a hint: make them pay for the coffee; it’s included in their hourly charge-out rate so if they don’t buy you a coffee they’re making money for nothing!