ATO Payment Plans

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There may be times when cash is tight and paying bills on time difficult

At these times, payment plans with your creditors may be helpful.

But did you know that the Australian Taxation Office (ATO), one of the biggest creditors to small businesses, allows payment of tax debt by instalments as an option?

An ATO Payment Plan is a way for businesses to pay their debt by instalments. Arranging for your business to have an ATO payment plan can provide a legal and convenient way to respond to an overwhelming tax debt.

A payment plan can be set up online via a myGov account, over the phone or by an authorised agent and can help small business owners:

  • Manage cash flow
  • Repay tax debt
  • Avoid unnecessary insolvency action
  • Keep business operating

When setting up a payment plan, you need to consider how much you can pay so you can meet each scheduled instalment, including interest that may accrue on any overdue amounts.

You still need to lodge your activity statements and tax returns on time, even if you can’t pay by the due date. This will show the ATO that you’re aware of your obligations and doing your best to meet them.

The ATO has a payment plan estimator tool that can be used as part of your initial discussions on a payment plan that might work for your business.

If the ATO requests that you demonstrate your businesses viability, they will request additional financial information and explanations regarding the need for the payment plan.

Default of a payment plan

If you miss or are late with a payment on your existing payment plan, this will automatically default a payment plan. Failure to lodge activity statements and tax returns on time and paying them in full by the due date will also automatically default an existing payment plan.

By defaulting a payment plan, it creates bad payment history and should be avoided where possible as it will make it more difficult to put plans in place in the future if needed.

Contact us and we can talk to the Tax Office on your behalf to try to arrange a payment plan for your BAS debt. If you are a Notch Above Bookkeeping client currently supported by us, this service is included in your monthly package.

NewAccess for Small Business Owners

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Program aims to give small business owners, including sole traders, the support they need

NewAccess for Small Business Owners is a free and confidential mental health coaching program, developed by Beyond Blue.

The program uses Low-intensity Cognitive Behavioural Therapy (LiCBT) that allows participants to recognise the way they think, act, and feel and break unhelpful thoughts.

Over six sessions, coaches with a small business background will work with you to overcome difficult issues, providing you with practical skills to manage stress and get you back to feeling like yourself.

At your first appointment your coach will complete an initial assessment with you, and develop a program tailored to your individual needs.

NewAccess for Small Business Owners is available nationally by phone or video call.

Why you’ll love NewAccess for Small Business Owners 

  • A free and confidential mental health coaching program, developed by Beyond Blue.
  • Designed to support small business owners like you, manage life pressures so you can move forward
  • The structured six session program will give you practical tools
  • You’ll work with a coach who will guide you through a tailored, personal program
  • No doctor’s referral or mental health treatment plan required – so you don’t have to visit a doctor first
  • It’s available via phone, video call from Monday to Friday 8am to 8pm AEST.  The program is closed on public holidays

NewAccess for Small Business Owners uses Low-intensity Cognitive Based Therapy (LiCBT) to recognise the way we think, act and feel. You will have a Coach to help you tackle unhelpful thoughts and behaviours, using an individual plan that you develop together.

NewAccess for Small Business Owners is available nationally by phone or video call. To read more about NewAccess coaches, the program or how to make an enquiry, visit https://www.beyondblue.org.au/get-support/newaccess/newaccess-for-small-business-owners.

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Accounting 101: Cost Of Goods Sold (COGS)

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Why knowing your COGS is important

The Cost Of Goods Sold (COGS) refers to the cost of producing an item or service sold by a business.

Key points

  • Knowing how to calculate COGS can help determine if your business is profitable
  • Calculating COGS correctly can inform a proper price point for an item or service
  • Understanding COGS can help you better manage stock, tax and your business.

Correctly calculating the Cost Of Goods Sold

Calculate the COGS by adding the cost of stock at the start of the financial year to purchases made throughout that year. Then, subtract the cost of stock remaining at the financial year-end. The final number will be the yearly COGS for your business.

By subtracting the annual COGS from your annual revenue, you can determine gross profit. Remember, to arrive at an accurate COGS figure, you’ll need to value your stock.

The COGS may include:

  • Materials used to create a product or perform a service
  • Labour needed to make a product or perform a service
  • Overhead costs directly related to production (for example, the cost of electricity to run an assembly line).

The Cost Of Goods Sold excludes:

  • Indirect expenses (for example, distribution or marketing)
  • Overhead costs associated with general business operations
  • The cost of creating unsold stock or services.

There are other stock costing factors that may influence your overall COGS. The Australian Taxation Office refers to these methods as First In First Out (FIFO), Last In First Out (LIFO) and Average Cost.

Significance of COGS in Profit and Loss reporting

The Profit And Loss Statement or ‘P&L’ is a summary of business income and expenses over a specific period. Ideally it should be prepared at regular intervals (usually monthly and at financial year-end) to show the results of operations for a given period.

Profit or loss is calculated in the following way:

Sales — Discounts and Commissions = Net Sales — Cost Of Goods Sold = Gross Profit — Expenses = Net Profit

Calculating the COGS varies depending on whether a business is retail, wholesale, manufacturing or a service business:

  • In retailing and wholesaling, computing for COGS during the reporting period involves opening and closing stock. This includes purchases made during the reporting period.
  • In manufacturing, it involves finished-goods stock, plus raw materials stock, goods-in-process stock, direct labour and direct factory overhead costs.
  • In the case of a service business, the revenue is derived from the activities of individuals rather than the sale of a product so therefore calculating COGS is a smaller task due to the low-level use of materials required to earn the income. Opening and closing work-in-progress, valued as time spent on jobs yet not billed, forms part of the COGS calculation in a service business.

Having accurate COGS data can help show you how your business is performing. Besides being a driver of business profit, it can help you set prices for your products.

To delve further into the concept of the COGS in your business, how to calculate it and how to apply it, contact the cloud business bookkeeping team at Notch Above Bookkeeping, Australia-wide, on 1300 015 130.

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Minimum Wage Rate 2.5% increase

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Queensland Minimum Wage Rate will increase by 2.5%

Minimum wages in the Retail Award increase from 1 September.

The FWC’s Pay Calculator and Pay guides now have updated rates.

For the list of awards that will increase later in the year, see When does the increase start?

Following the Annual Wage Review 2021, the Fair Work Commission (FWC) announced a 2.5% increase to the national minimum wage and all award wages. The increase to award wages is happening in 3 stages. The FWC has also issued decisions to change some terms and conditions in several awards.

What do you need to do?

You can find the new minimum pay rates in the FWC’s Pay Calculator and Pay guides, for all awards that increased from 1 July and 1 September 2021. The Pay Calculator and pay guides will be updated for the awards increasing in November closer to their start date. For the list of awards that increase in November, see When does the increase start?

You can also use Find my award if you’re not sure which award applies to you.

Who does the increase apply to?

The increase applies to anyone who is paid minimum award wages or the national minimum wage.

Most employees are covered by an award. If you’re not sure which award applies, use Find my award.

If you’re covered by a registered agreement, you should check it to see whether this increase affects you.

For anyone not covered by an award or an agreement, the new national minimum wage is $772.60 per week or $20.33 per hour.

When does the increase start?

The new national minimum wage applies from your first full pay period on or after 1 July 2021.

There was also an increase to the Super guarantee for all eligible employees from 1 July 2021.

The increase to minimum award pay rates is happening in 3 stages.

The increase doesn’t affect employees who already get paid more than their new minimum wage.

1 July 2021 award increase

Most awards increased from the first full pay period on or after 1 July 2021.

1 September 2021 award increase

The increase for the Retail Award applies from the first full pay period on or after 1 September 2021. This means if you have a weekly pay period that starts on Mondays, the new rates apply from Monday 6 September 2021.

You can find the new minimum rates in our Pay Calculator and Pay guides.

1 November 2021 award increase

21 awards increase from the first full pay period on or after 1 November 2021. Read more »

Please note, wage rate changes will need to be done manually which we do in consultation with our payroll clients. We strongly recommend that you make time to check your settings.

For assistance, contact our Xero Platinum Certified business bookkeepers at Notch Above Bookkeeping, Australia-wide, on 1300 015 130.

Source: Fair Work Ombudsman

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Australian SMBs record strongest sales growth in June

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Xero Study

Study reveals that Australian small businesses enjoyed their best sales in June 2021.

This was ahead of the latest COVID-19 restrictions in New South Wales, Victoria, and South Australia. 

The data — released by Xero — is based on aggregated and anonymised transactions from hundreds of thousands of small businesses. It examines the health of Australia’s small business economy from the Xero Small Business Index.

Index hit a record high

The Index grew 12 points to 144 points in the months leading up to the restrictions, reaching its highest level since January 2017. It’s also the sixth month in a row that small firms have outperformed the national average.

“Xero’s data reveals Australian small businesses were continuing to show positive signs of recovery at the end of the 2020-21 financial year,” said Joseph Lyons, Managing Director Australia, and Asia, Xero.

“This is despite June’s data capturing the bulk of Victoria’s fourth lockdown.”

The agility and resilience of the small business sector were most evident in the strong growth in sales, hitting a three-month high.

“Recognising the series of significant events that have transpired since June, we will be looking to our July metrics to understand how the return of lockdowns in three states has truly impacted the small business economy’s recovery.”

Lowest payment delays

The rise in June was largely supported by a 2.9-day fall in time to be paid, which is now at a record low of 20.1 days, and strong sales growth despite stay-at-home restrictions being in place in Melbourne for the first 11 days of June and in Greater Sydney.

This is only the second time since tracking began in January 2017 that this metric has dropped below 23 days.

The substantial drop in payment times corresponds to the end of the Australian financial year.

New Zealand and the United Kingdom both saw a similar drop in payment times at the conclusion of their fiscal years in March.

Both countries’ gains were then reversed in subsequent months’ data, so Australia will have to wait until July’s results to see if the pattern continues

Strongest sales growth

Sales in small businesses, after adjusting the annualised two-year growth, increased 10.7 per cent year-on-year. This is a significant increase from May 2021 sales growth of 6.3 per cent on an adjusted basis.

The sales performance came despite stay-at-home restrictions in place in Melbourne for the first 11 days of June and in Greater Sydney from 25 June.

Victoria recorded the slowest sales growth of the states, rising 9.3 per cent year-over-year on an adjusted basis.

News South Wales had not yet been impacted by the Greater Sydney lockdown with sales up around the national average of 10.6 per cent year-over-year.

Using annualised two-year growth, healthcare and social assistance and rental, hiring, and real estate services were the strongest performing industries for June 2021, year-over-year. Meanwhile, hospitality and arts and recreation experienced the lowest sales growth.

Jobs continue to rise

Across Australia, small business jobs rose 4.3 per cent year-over-year on an adjusted basis in June 2021, with the Melbourne lockdown in early June putting the brakes on jobs growth.

However, across the country, there were significant state-based differences with Western Australia recording an increase of 8 per cent year-over-year on an adjusted basis, compared to Melbourne which recorded a rise of 2.8 per cent year-over-year.

Despite a softer national small business jobs increase, this is the fourth month small business jobs were above 4 per cent year-over-year on an adjusted basis, illustrating small business continues to make a strong contribution to Australia’s job recovery in 2021.

Meanwhile, the Australian Bureau of Statistics said that in June 2021, 27 per cent of businesses reported having difficulty finding suitable staff to fill jobs and almost one in five businesses did not have enough staff based on current operations.

SMB wage growth remains steady

As per the study, wages in small businesses, as measured by average employee hourly earnings, rose 3.4 per cent year-over-year.

After adjusting for the effect of the low result in June 2020, the wage increase was 2.7 per cent year-over-year, exactly the same as it was for May and still down on the pre-pandemic pace of growth of around 3 per cent.

Notch Above Bookkeeping has your business up and running with Xero quickly and accurately. We can help you install the software, configure your security settings, import your business data (chart of accounts/suppliers/debtors/employees) as well as set up your invoicing, payroll and taxation requirements. We also provide advice on the best Xero package for your needs.

Contact us to get Xero, the world’s easiest cloud accounting system setup and working for your business on 1300 o15 130 (Australia-wide).

Source: Xero

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QLD COVID-19 Business Support Grants

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2021 COVID-19 Business Support Grants

For lockdown-impacted businesses in Queensland

Program closes 16 November 2021

Your business or not for profit organisation may be eligible for financial support through the 2021 COVID-19 Business Support Grants, if it has been affected by the August 2021 COVID-19 lockdowns in Queensland.

Applications for the 2021 COVID-19 Business Support Grants opened at 12pm (midday), 16 August and will close on 16 November 2021. All eligible businesses who apply for a grant during the 3-month application period will receive funding.

A joint Queensland and Australian Government support package for Queensland businesses has been announced. The package includes support for non-employing sole traders and expands on support for eligible small and medium businesses, and large tourism and hospitality businesses.

Successful applicants will receive the total value of the boosted grants ranging from $1,000 to $30,000 depending on your business or not-for-profit organisation.

Non-employing sole traders update

The online application form will be available in September. Check the eligibility criteria, and register your interest. For queries about the grant for non-employing sole traders, phone the Office of State Revenue on 1300 300 734 and choose option 5.

Available funding

You may be eligible to receive a grant, based on the payroll size of your eligible business or not-for-profit organisation in Queensland. This grant may be used for business expenses.

Business type Payroll size Available funding
Employing Queensland small businesses and not-for-profit organisations less than $1.3 million $10,000
Employing Queensland medium-sized businesses and not-for-profit organisations between $1.3 million and $10 million $15,000
Employing Queensland large-sized tourism and hospitality-focused businesses and not-for-profit organisations more than $10 million $30,000
Non-employing sole traders based in Queensland n/a $1,000

For specific information on who can apply and access to the eligibility checker, visit the Business Queensland website.

Timeframes

Employing businesses: Applications opened at 12pm (midday), 16 August 2021. Completed applications will be processed in the order we receive them.

Non-employing sole traders: Applications are not currently open. The online application form will be available in September 2021.

Don’t miss out

If you have any queries or need any additional support around applying for a 2021 COVID-19 Business Support Grant, please contact the team at Notch Above Bookkeeping on 1300 015 130 before the closing date on 16 November 2021.

Source: Business Queensland

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The Evolving Role of Leadership

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How The Tough Get Going

It’s a challenging time to be leading an organisation… but some leaders have stepped up admirably and are running thriving enterprises.

How are the leaders in your business doing? Perhaps they are thriving in these business conditions or maybe a different approach is required.

In this article, we look at some leadership skills which are proving to be really valuable as businesses find a path forward this year and beyond.

It’s lonely at the top

In ANY environment, being a business leader can be exhausting, lonely, and stressful. Many leaders will not succeed or meet the expectations of the board, shareholders, customers, or employees. And leadership is one of those roles which you ‘learn by doing’; no business school can fully prepare a leader, especially since each business is different.

When successful leaders are asked to explain their success, many will give standard replies like, “be clear on goals”, “set the strategy” or “build the right team”. Others will mention their own traits like drive, resilience and risk tolerance. These can help explain success… but unraveling the mysteries of great leadership remains challenging. Still, let’s give it a try!

Leaders organise themselves first

Successful leaders tend to clear their heads of distractions so they can focus on business challenges and opportunities. They are (or at least appear to be) organised, calm and reliable. Thus they can lead by example, concentrate on the job at hand and get buy-in from their teams.

Clarity on required talent

The team is a critical resource in any business and the best leaders will have a clear view on what talent the business needs. This will vary by business. A manufacturer may require exceptional production management skills, while a consulting firm may need strong interpersonal skills to interact with clients. Needs will change over time as the business matures and as it’s impacted by the economy, market, and other factors. Business priorities such as the need for speed, agility, resilience, or stability will influence what team should be in place.

Building the Team

Successful leaders help people play to their strengths. That requires a clear definition of roles and putting the right people in those roles… while still encouraging teamwork.

It also means acting decisively to move lesser performers out of important roles, or out of the organisation altogether. Poor performance cannot be tolerated because it will impact the entire organisation.  Reviewing performance (by tracking important metrics) and attracting new talent is an ongoing leadership responsibility that requires finesse.

Culture

Culture is important and it starts with employee engagement. This is achieved by setting ambitious goals, offering incentives, reinforcing the vision (partly through storytelling), and investing in training. Effective leaders set an example by constantly appraising their own performance and that of the management team

Asking for help

Managers, consultants, and the board offer support to leaders. Successful leaders remain humble and reach out knowing WHO to ask and HOW to get the most from colleagues on subjects such as legal, regulatory, audit, compliance, M&A, technology, risk, reporting, strategy, culture, talent, resilience, and external communications. The best leaders are self-confident and appreciate being challenged by people on certain topics. A leader surrounded by people telling them what they want to hear will not be effective.

Staying in touch

Successful leaders are aware of how work gets done in the organisation and spend time with employees.

A long-term view

In the frenetic busyness of day-to-day work, successful leaders remain focused on (and remind people of) the ‘Why?’ – the vision and values which should influence decision making and daily behaviours. In addition to financial success, this probably involves a social purpose. Leaders listen intently to stakeholders so they can prioritise actions.

Being prepared

Business is unpredictable and affected by many extraneous factors out of our control. Effective leaders recognise that there will probably be adverse events at some point and they manage this risk wisely.

Self-Awareness

Good leaders play to their strengths and understand their limitations. They limit their involvement in tasks that can be dealt with by others and reserve time to deal with unexpected developments. This helps them to honestly appraise their own performance and look for ways to improve.

Setting the Strategy

The effective leader will also set the direction and have a plan in the face of uncertainty, something that is being tested in the current environment. Taking a long-term view while getting things done in the short-term is a delicate balance which successful leaders navigate. A strong understanding of the market, competitive advantage, management team, and other factors allows leaders to act boldly in their decision-making. They won’t get everything right… but they can quickly pivot where necessary.

Sound easy?

It’s no surprise that many people will not lead organisations and even fewer will be successful as leaders. Interestingly, challenging conditions provide new opportunities for leaders to shine and for others to step up into leadership roles. Opportunities abound in the coming years for leaders and the businesses they run.

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Cocooning

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Helping your customers build a sanctuary allows them to feel right at home.

Where we have regained freedom and are bound by fewer restrictions, families are again eagerly exploring their local neighbourhoods and revisiting their favourite beaches, playgrounds and cafes.

For those now working from home, where once it felt like we spent much of our day stuck in traffic, we now have more time to spend close to where we love.

This shift has brought a new-found appreciation of the home and the rise of cocooning – the practice of spending leisure time at home in preference to going out. It came from the natural desire to shield ourselves from the health risks out in public areas as the pandemic unfolded. During all of the troubling developments, home was and still feels like a place that is safe.

Some workers relished the opportunity to ditch the commute to work from their ‘safe space’ and will want to keep doing so. This means the trend of spending more time at home is only likely to grow.

In turn, the rise of cocooning will shift how your customers buy your products, and could drive exciting new opportunities for your business.

Embracing the cocooning trend

The cocooning trend is visible in the growing popularity of self-sufficiency at home – everything from baking your own sourdough bread to starting a vegetable patch has entered the local lexicon. Households are storing higher quantities of staple foods, medical supplies, cleaning and personal hygiene products, all to ensure their cosy cocoon is safe and well-stocked.

If you have a business offering products for the home, this highlights the chance to help your customers set up their sanctuary, whether that’s home renovation products and advice, household staples, or even modern home office equipment.

Changing how we use our homes

Over the longer horizon, cocooning could see the physical fabric of Australian houses change. Larger residences with more generous office spaces and home gyms could be in high demand, while having lots of room to move in a country house might trump the location benefits of small inner-city pads.

If you’re a business supplying home goods, it’s a long-term trend to watch. Enabling customers to be more productive, safe and comfortable at the place they love best is an emerging avenue where small businesses can help.

Consider your customer

Can you enable your customers to be more self-sufficient by preparing meals from your ingredients, assembling your products, or teaching themselves via your courses from the comfort of home?

How can you help your customers make their home offices ergonomic and safe?

As customer expectations for home delivery grow, can you impress them with smaller, more precise delivery windows and faster turnaround?

Consider your business

What are the benefits to local foot traffic if more of your customers work from home?

How can you make your premises a sanctuary away from home and help your customers feel safe and comfortable?

Can you design new outreach or in-home services to bring your products and services to your customer?

Tips

  • Promote existing services that might help customers to cocoon and be more self-sufficient.
  • Trial new ways for customers to access your products at home.
  • Keep an eye on changes to foot traffic and consider what opening hours suit the changing times.
  • Consider adapting existing products so that customers can DIY if they wish.

Specialising in Xero bookkeeping, Notch Above are bookkeepers that offer Xero setup, as well as training and ongoing support. Call us Australia-wide on 1300 015 130.

Source: Xero

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