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Showing posts from October, 2018

What is Business Insolvency?

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Business Insolvency is when the business cannot pay its debts. The market forces and the skills of the owner cannot create a change, or that the owner has no other resources (or has no desire to find other resources) to put into the business to change the circumstances. The business cannot make money, or cannot make money fast enough to pay its debts, and the end result is that the taxes are not paid so the taxman comes looking for money. The suppliers and subcontractors stop getting paid, and they stop working, and the employees are missing out and will report the business. You can google and find of course a lot of definitions but for a business owner the situation must be acknowledged and a course of action must be taken. Here are some thoughts about trading when you can’t pay your bills. Don’t borrow money if you haven’t got a real turnaround plan. Especially sign over your ledger to a factoring company, borrowing money against your family home or selling a kidney. If you have a re…

Survival In Business Predicting the economic future and making sure your economic future has a chance

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There is always editorials in papers, commentators in the media and occasionally an intelligent conversation over social media as to where we are going economically (big picture stuff) that usually comes down to, who is paying the taxes and who is getting the taxes. (I love starting these arguments). I read last week that a majority of Australians receive more from the government than they pay in taxes. Those who are in business or have a reasonable income will be paying the taxes. I also read another interesting quote on the financial future – “The world is exhausted by crushing taxes, the financial ruin of large segments of the population, and dangerous decline in moral”. It could be argued that this is our situation, but it was written by Ammianus Marcellinus in the 4th century AD about 20 years before the Goths sacked Rome. It appears that financial ruin is part of most state downfalls with the rise of something more extreme. These things are really for the “Oh great ones” in Canb…

When things get a lot more serious with the Australian Taxation Office - we can help. You are human – things go wrong, let us use our skills to help you.

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We know, you stuck your head in the sand, had no idea where to start, it all became too much, you are scared to go to jail and thought it was being looked after. Then comes the pressure from the Australian Taxation Office and the pressure builds up. You ignore their case and then it gets worse. You are not alone, and we certainly don’t blame you – life has so many pressures. So, when the going with the Australian Taxation Office gets too hard, here are some of the things that could happen that we can help you with: You received a Creditors Statutory Demand If you owe the ATO money, they can issue a statutory demand. A statutory demand is a formal written request that a debt must be paid. An individual or business that receives a statutory demand has 21 days to settle the debt. This is court action, but it is less dramatic. Basically, you receive a creditors statutory demand and it’s a challenge to go to court and prove it’s wrong or pay it. If you don’t do either of these things, then …

Non-lodgement Getting the accounts up to date

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Getting the accounts completed means the pressure is gone from the ATO. We can lodge and negotiate a deal, and you get to see how the business is going, which will allow you to make improvements and start thinking about new goals. Non – lodgement fees – ouch! There are several risks in not lodging BAS or Tax Returns. There is an urban myth that if you don’t lodge then the tax office can’t see your debt. There are 2 things that can happen that can be rather nasty for you if you don’t lodge tax, and that is that you can be summoned for non-lodgement (which is a criminal offence) and the tax office can do their own calculations and come up with a figure that’s hard to challenge. You will normally get a lot of warnings that the tax office wants lodgements. You may get letters and phone calls, and this is the stage we need to get on and complete your accounts. In getting your accounts up to date we: See how much work needs to be done and will give you a fixed fee that includes dealing with …

Being chased for a tax debt Negotiating the tax debt

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Managing tax debt is a skill. Here is a list of the most important things I can tell you about negotiating a tax debt: The client needs to get on with business, so we manage all the communication with the tax office.Even when there is a lot of pressure from the tax office, they do respond to a decent plan, even after there has been an agreement that has fallen by the wayside.There is a difference between pressure from the tax office and pressure from their legal department. Knowing what each of them need to hear and what action needs to be taken is important in negotiating.A tax debt can only be paid if our clients can manage it. There are other plans available when the debt has got out of hand.The interest that the ATO charge is a killer – 9% compounded. This is an interest rate that is much higher than credit cards. Late lodgement fees are a killer as well.Deals that dissipate the interest and late lodgement fees can be negotiated, but only after all accounts are up to date and there…

A warning about ambulance chasing

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When the Australian Taxation Office sends you anything court related, the action will appear on a court list. For many companies these are their marketing lists and start to email, phone call and chase the directors or individuals that have received the wind-up notice court summons or whatever. There is a standard formula that is used. They encourage the business to immediately go into administration and use personal assets to borrow a lot of money at high interest. At Your Business Angels – yes we do use administration, and yes we do advise clients to borrow money, but only after we have looked for the best solution. We ensure that clients understand the strategy and that it follows what is best and what the client wants. We don’t ambulance chase. We do work quickly to find a solution, while being aware of the time frames. We seek more time (like through adjournments) and work in a professional way that won’t burden our clients with debts they can never afford. If you want a solution…

Problems with the Australian Taxation Department We stand in front of you – so you don’t have to front the ATO

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There are 2 main problems that exist with businesses and the tax department. The first is that you owe them money, or they think you owe them money. That is, you have lodged but been unable to pay them. The second is that you have (through self-assessment) had your tax lodged and they don’t believe you – or politely want to ask you some questions. If you don’t want to deal with the Australian Taxation Office, you have an accounting or tax problem you want attended to, then call us and we will help by fronting for you.

Special Note for Construction and Contracting Businesses and Manufacturers that turn between $2 million and $10 million – you may be paying too much GST

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No one seemed to notice the changes in reporting from accrual to cash for businesses up to $2 million dollars. That means that business that have been paying GST on debtor’s ledger and retentions may not have to do this saving in some of our experiences up to $100k a year and dramatically helping with cash flow and cash available to the business owner. We can run the Precis program over your business and show you the changes that can be made. You can road test this for little cost and may find that we can show you how we can make massive changes with a full implementation of our system. We have the experience of a transport business in Queensland being sold for $200k more than was expected, because the buyer could really see how the business was performing and was happy to pay the extra money for the business. Once a business gets beyond $2 million in turnover, it becomes complicated with more staff and subcontractors to manage, more red tape, more of everything. The use of the Precis…

Our Services Accounting

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Your Business Angels has been operating accounting businesses and tax services from our accounting business for over 15 years. It seemed logical, that once we helped a client with a business turnaround, then we stayed to help their business move forward aand survive in what is always a difficult business environment. Over this time, we have realised that the needs of business owners are not met by the accounting packages. They don’t have the time. Accounting packages have become more and more complicated over the years as they have become expensive in time and money to maintain. You either put a lot of time into operating them or have a bookkeeper or an administrator process your accounts. We have developed an accounting system that simplifies the accounting process for most Australian Businesses. Our Precis accounting system presents a vastly more limited workflow, a client does business, and we produce results. It may sound simplistic but our experience, after nearly 25 years, is tha…

A questions and answers session on mortgages for business people after the Royal Commission

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Are only high interest rates offered when you are borrowing your way out of a business problem? High interest rate loans are usually a short-term solution which enable you to move on with your life.  They may have enabled you to buy your first home or consolidate debt. They should not be a long-term solution and need to be evaluated 1 to 2 years after taking out the loan, once your defaults have been extinguished and your credit score has improved by adhering to your repayment schedule. By showing a good repayment history you can often refinance your mortgage to a standard loan with a lower interest rate. How does the Royal Banking Commission affect me? Lending has tightened since the Royal Banking Commission commenced.  Lenders appetites have changed, and they have imposed stricter hurdles to overcome.   Banks will assess several key areas before approving your loan: What is the purpose of the loan?How much do you want to borrow?When will the funds be required?How long do you need to bo…

Tax audits What’s our real experience

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I have been talking with our team of accountants – and most of them are telling me that they can’t remember when they last saw an audit – apart from a superannuation audit. In the latest budget the ATO has $133.7 million extra funding to target those who aren’t paying their fair share of tax. You may or may not hear anything from the ATO, especially if you are up to date with lodgements, but they have more money to chase people who aren’t paying their fair share. In running an accounting business and dealing with the Australian Taxation Office for so many years there are a couple of simple words of advice: It’s actually easier to put everything on the table, plan tax through structures, use super and other devices to save on tax and create wealth than it is to be too clever and hide transactionsThere is less stress and pressure in being honestThere is more money to be made focusing on “making money” through your business than trying to hide a bit from the taxman You are probably like …

Now, those drawings are really going to king hit you And it will be tax hell.

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There is always changes and new legislation buried down inside a federal budget. The changes the press don’t see or report. But there is a real change in regard to drawings from a company and it’s dramatic. So many business owners just draw from their company and they will leave it to their accountant to “fix it up”. That means a wage that looked reasonable may have been created for the Business Owner to pay personal tax on. However, Business Owners continue to draw money which creates Directors Loans that just keep building up, as the accountant is not sure what to do with this extra money taken. The legislation and procedures surrounding this have been muddy and unpatrolled by the ATO to say the least. Business owners – many, many professional people have got away with it. That is – draw money and pay no tax. That simple – and unless there was a solvency issue, where an administrator or liquidator looked at the balance sheet nothing happened. “Currently we’ve got some really complex r…

All I want is direction and solutions That’s why I am sitting in front of you

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So, I’m sitting in front of a business owner who has the perfect business model for a café. I know, there are thousands of café and franchise cafes in our city, but I felt that what he had was truly unique. He and his partner had arrived at their new business model through trial and error – the error part being about $300,000 in loans they now had. But With their accounts being a mess and with the confusion regarding what might also be a tax debt he felt he needed direction and to find a solution to the financial mess. OK – there are a couple of years of accounts to clean up, and these will add to the tax debt, especially with GST (I think there will be a tax loss) and some PAYG. We will get this cleaned up. But what The real solution is, is the Precis accounting system. Our client doesn’t need to do anything to have their accounts completed because they are all completed using the Precis system. Due to the fact that the system orks so efficiently, he will have a plan every week for …

One letter saved the ATO millions – great example of a feedback loop Relating something the ATO did, to something we do.

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The tax office and a specialist behavioural economical research unit within the federal government used a randomised trial to target 2000 tax agents, specifically naming individuals lodging higher than expected work-related expenses claimed in a letter. Alongside a control group of tax agents who didn’t receive letters, the trial found individual clients identified by correspondence reduced their work place claims by $191 compared to the $2 increase in the group who received no letters. The premise of a feedback loop is simple: Provide people with information about their actions in real time, then give them a chance to change those actions and push them towards better behaviours. You can do this with your business in working with debtors, suppliers and staff. But off of course keep it simple. Without the development of our Precis accounting service we never would have been believed the power of the Cruncher. We present clients with information that can easily explain their cashflow, w…