How to Reduce Bookkeeping Costs

The obvious aim of every business is to make money and the key is to maximise the income while minimising the costs. In the wake of the 2020 pandemic, this has become so much harder for many businesses to achieve.

Bookkeeping is an essential area of all businesses as they are required by law to provide details of their financial status to the ATO each year. The good news is that there are ways to reduce those bookkeeping costs. Continue reading

The Role of a Virtual CFO and the benefits to Your Business

Today’s market is constantly changing and evolving, and competition is fierce. Start-ups and small businesses have to work hard to gain and keep their competitive advantage. To know if your business is doing this effectively, you must keep on top of your finances.

When you start your small business, having a bookkeeper or accountant to manage your tax may be enough. However, as your business becomes established and grows, your finances become more complicated. You can find yourself in a situation where your sales seem to be good but you are struggling to maintain profitability and you don’t really understand why. This is where a CFO come in. Continue reading

How to Get Customers to Pay on Time – Solve Your Cash Flow Problems

One of the difficulties of running your own business is getting the just rewards for work from your own customers. Often the problem is that some customers do not pay or if they do, they do not pay on time. The good news is all is not lost and there are strategies that can be employed to ensure prompt payment for the mutual benefit of both you and your customers. Here are ways to ensure you are paid on time. Continue reading

Key Points to Consider when Hiring Employees

In light of the revised Australian Tax Budget of 2015, which is dedicated to stimulating the economy by improving the overall state of the small business sector, it is the perfect time for people with entrepreneurial inclinations to make their first jump into the world of business.

One of the first few hurdles a first-time entrepreneur would face is the whole process of employment, which can be costly, time-consuming, and stressful when done incorrectly regardless whether you’re in Brisbane, Sunshine Coast, or Gold Coast.

Here are 6 questions you should ponder on to improve the probability of getting good employees: Continue reading

Contractor Or Employee – What’s The Difference?

Hiring an employee can be a time consuming and expensive process as such businesses now are also considering the option where plausible to engage a contractor to perform the same work an employee would. However, a business wanting to engage a contractor instead of an employee must know the differences between the two and what the Australian Taxation Offices definition of a contractor and employee are in order to avoid hefty penalties and protect the business from potential legal claims against it. By understanding the distinctions between a contractor or employee, you will know what is best for your business from the outset to maximize return from the business’s investment in human capital and minimize the cost of the investment.

In general terms, employers need to in addition to paying the wage of an employee need to at a minimum for a casual employee pay Superannuation and insure employees through Workcover or a Workcover equivalent depending upon which state you employee in. If you choose to hire a permanent employee, than as an employer you will need to also consider holiday and personal leave entitlements, long service leave, pay for public holidays and the cost of processing and keeping the required payroll records for the employee.

If you choose to engage the services of an independent contractor on the other hand and the contractor successfully passes as a contractor using the decision tool listed on the Australian Taxation Office’s website at http://www.ato.gov.au/content/00095062.htm?alias=employeecontractor these same employer expenses and benefits do not apply. You must be certain when engaging the services of a contractor that the individual is actually a contractor because if you fail to classify the individual as an employee when they are an employee and not a contractor, you may have to pay the individual for missing wages, entitlements and superannuation that as an employer you were supposed to pay under government legislation.

Unfortunately there is no single indicator that will help you identify whether the individual is an employee or a contractor, generally it depends on the amount of control you exercise over the individual’s job role, if the individual provides their own tools and equipment, if the individual has more than one client and if the individual sets their own work hours. Some key rules that determine whether the individual is an employee or contractor are:

– Does the worker have an Australian business number (ABN)?

– Is the agreement made with a company, partnership or trust (other than a labour hire firm) and payments made to that company, partnership or trust for the services of the worker?

– Does the agreement you have, give the worker the right to pay another person to do the work instead of them?

– On what basis do you make the payment to the worker?

– Do you or the worker provide any equipment, tools of trade, plant or vehicles to perform the work (excluding incidental use)?

– Is the worker liable for the cost of rectifying any defect in the work performed?

Contractors are paid to deliver a result for the business which contracts them. Contractors may also have control over their own workers which gives them the ability to delegate or sub-contract workers in order to deliver the sought after outcome. A contractor will generally have tools, equipment and any other assets of their own that are necessary for completion of the work. Commercial risks are taken by contractors as they are primarily responsibility for their own work and are liable for the cost for rectifying any type of defect. There will generally also be a written contract between the contractor and the business which contacts them which will generally define a set period for the work to be performed, the cost for the work performed, material to be used, key milestones which may dictate payment and other terms and conditions.

Meanwhile, employees are primarily part of a business and work in it. The business has the authority to direct the worker as they see fit. An employee cannot delegate or sub-contract their work and cannot pay just anyone to execute the work. Employees are paid based on the activity or item, commission and or time they have worked by submitting a time sheet for the payroll period. Employees are provided with most or all of the necessary tools, equipment, and any other assets that is required in order to complete their jobs successfully. Employees generally receive a reimbursement or allowance for any out of pocket expenses in the course of their employment. Lastly, it is the business’s responsibility for the work undertaken by employees as well as any liability or defect that may arise from the employee working on behalf of the business.