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How To Reinvent Your Business

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Small businesses should always be open to the idea of reinventing themselves to stay relevant to today’s customers and marketplace.

Business owners who resist change and leave it too late to reinvent risk stumbling behind and at worst failing. Instead, businesses should focus on a proactive approach to growth for optimal business performance and success.

Making a commitment to reinvention before the need does not come naturally; it requires planning. Here are three ways to make sure your business does not get left behind:

Continually forecast

Industries are continually shifting – competitors are introducing new products, customer needs are ever-changing and technology is transforming the way business was traditionally performed. Forecasting change is essential to be a competitive leader in your industry.

High performing businesses exploit existing businesses that have not yet peaked and recognise untapped markets. High performers also understand that remaining competitive means some form of risk taking is necessary.

Focus on strategy

Strategic planning is imperative to make reinvention possible. Businesses need to detect shifts in their industry ideally before they happen.  The best way to predict these shifts is to involve line managers, frontline employees, store managers etc into the strategic process, as they often pick up on insights business owners can easily miss.

For a business to reinvent itself, it needs a permanent strategy which continually scans the market for unsolved problems and untapped customer needs.

Invest in top talent

Successful businesses need teams of talent to run and grow the business effectively.  Business owners need not only hire the right type of candidate but they must strengthen and prepare individuals for the challenges that will arise when reinventing. Businesses need to invest time into developing their employees to enable them to succeed in their work.

By first looking at what their employees are required to do day to day, business owners can assess what factors are fuelling (or limiting) their success.

Considered Value – ALP Tax Policies (Special Edition)

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The table below outlines some of the key ALP tax policies of interest.

 Income Tax Reforms
 Key ALP Tax Policies  Comparable Coalition Tax Policies
1.  Personal Tax-Related ExpensesRestrict deductions on personal tax-related expenses to a $3,000 cap per individual, per year. No cap on personal tax-related expenses is proposed, although the ATO has made adjustments   to Item D10-Managing Tax Affairs to obtain a more detailed breakdown of what is being claimed   by taxpayers at this label from the 2018 Individual returns.
2.  General CGT Discount

Reduce the maximum general CGT discount from 50% to 25%, with exceptions for:

  • grandfathered investments;
  • investments made by superannuation funds (which are effectively taxed at 10% after the CGT discount; and
  • Assets of small business owners.
 The Coalition has not indicated a desire to change the maximum general CGT discount from   50% for eligible taxpayers.
3.  Limit Negative GearingLimit negative gearing to investments in new housing, with grandfathering for pre-existing   investments.

Labor has proposed any losses from new investments in shares and existing properties (which   we assume includes commercial property) will still be permitted to be used to offset investment   income tax liabilities (but not against salary and wages).

Any deferred losses can then be carried forward to offset the final capital gain on the   investment.

 The Coalition has not indicated a desire to change the current negative gearing rules.
4.  Excess Imputation CreditsRemove the ability for certain taxpayers to claim excess imputation credits as cash refunds. The Coalition has not indicated a desire to change the current ability for eligible taxpayers   (including individuals and SMSFs) to receive cash refunds   for excess imputation credits.
5.  Distributions From Discretionary TrustApply a minimum tax rate of 30% to all distributions from discretionary trusts (non-fixed trusts)   to mature individual beneficiaries (i.e., those over 18). The Coalition has not indicated a desire to change the current rules in relation to the taxation of   discretionary trust beneficiaries at their applicable marginal rate.
6. Australian Investment GuaranteeIntroduction of an Australian Investment Guarantee from 1 July 2020.

This accelerated depreciation for business proposes to immediately allow a 20% write-off for   eligible depreciating assets.

 The Coalition has announced that from 29 January 2019, the instant asset write-off threshold for   SBE taxpayers will increase to $25,000 and this will apply until 30 June 2020 at which time the   immediate write-off threshold presumably goes back to less than $1,000).

 Superannuation Reforms
 Key ALP Tax Policies  Comparable Coalition Tax Policies
1.  Lower The Non-concessional Contributions (NCCs)Lower the non-concessional contributions (NCCs) cap to $75,000 (down from the current   $100,000). The Coalition has not indicated a desire to change the current $100,000 NCCs cap (indexed).
2.  Lower The Division 293 Tax Threshold to $200,000Lower the Division 293 tax threshold to $200,000 (down from the current $250,000). The Coalition has not indicated a desire to change the current $250,000 division 293 tax   threshold.
3.  Concessional ContributionsRepeal the newly introduced concessional contributions (CCs) catch-up rule. Retain the new CCs five-year catch-up rules for eligible members if they have a total   superannuation balance of less than $500,000.
4.  Tax Deduction For Personal Superannuation ContributionRepeal the recent reforms allowing all eligible individuals to claim a tax deduction for personal   superannuation contributions. Retain the recently legislated relaxation of the personal superannuation deduction rules (i.e., the   removal of the 10% test from 1 July 2017)
5.  Restore The Prohibition On Direct BorrowingProspectively restore the prohibition on direct borrowing by SMSFs on housing investments via   Limited Resource Borrowing Arrangements (LRBAs). The Coalition has not indicated a desire to change the current LRBAs rules.
6.  End The Freezing Of The Superannuation Guarantee Rate At 9.5%End the freezing of the Superannuation Guarantee rate at 9.5% and fast track the employer   compulsory contribution percentage to 12% – although firm dates have not been provided. The Coalition has not indicated a desire to change the current 9.5% Superannuation Guarantee   rate until the first increase in 2022 (to 10%) begins the gradual progression to 12% by 2026.
 Source: NTAA – Voice Edition No.288 Jan/Feb 2019

This material is for guidance only, any professional advice should be obtained before acting on any information contained herein. Neither the publisher nor the distributors can accept any responsibility for loss occasioned to any person as a result of action taken or refrained from in consequence of the contents of this newsletter. We recommend that you contact your Harris Black team member before making any decision to discuss your particular requirements or circumstances.

Brentnalls Conference – Singapore

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On Wednesday 25 October 2018, Harris Black’s Directors and Practice Manager (Kimberley Schluter) headed off to Singapore for their bi-annual Brentnalls Conference.

The Brentnalls group is a network of affiliated independent Chartered Accounting firms across Australia with members in Brisbane, Sydney, Melbourne, Adelaide, Hamilton VIC, Perth and Auckland NZ. Harris Black is very proud to be a part of this dynamic team of professionals. Each of our firms have a similar passion for helping clients achieve their goals, develop their businesses and ultimately grow their wealth.

Our bi-annual conferences provide us with invaluable opportunity to share our ideas, further develop our capabilities and ultimately improve our ability to better support and provide exceptional service to our clients. Internal benchmarking comparisons and shared practice updates encourage us to continually consider ways to fine-tune and improve our own firm’s practices and procedures.

Each of our conferences has a key focus. For Singapore, we focused on ‘Family Services’ and were fortunate enough to have the following firms attend and share their knowledge:

  • Philadelphia Pte Ltd (Why Singapore? History and Rise of Singapore as a Financial Hub of Asian)
  • Equiom (Wealth Planning Solutions)
  • Lombard Odier (Family Wealth Transitions)
  • Rawlinson & Hunter (International Grouping of Professional Firms, Specialising in Financial and Taxation Advice)
  • Taurus Wealth Advisors (Multi Family Office Services)
  • Crest Capital (Trends and Opportunities in Private Wealth Management)

Whilst there was little downtime across the two days, we did manage to enjoy some of the facilities offered at Marina Bay Sands Hotel including their famous Infinity Pool on the top of the building. Those with a fear of heights might have felt a little uncomfortable to be 57 floors up but it was indeed spectacular!

Preparing Your BAS

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Businesses registered for GST must lodge business activity statements (BAS) every year with the ATO. To assist you, here is a record-keeping and submission checklist you can follow to help you prepare and lodge your BAS accurately and on time.

You must lodge and pay your BAS on time to avoid incurring any charges or penalties. Most businesses lodge their BAS by the quarterly due date. Although how often you lodge will depend upon your situation, for instance, a business may make a prepayment for an expected bill or lodge and pay monthly when it helps them manage their tax more efficiently.

The due date for your monthly BAS is usually on the 21st of every month and your BAS quarterly due dates are:

  • Q1 (July, August and September) is due 28 October
  • Q2 (October, November and December) is due 28 February
  • Q3 (January, February and March) is due 28 April
  • Q4 (April, May and June) is due 28 July

You must always maintain accurate and detailed record-keeping by:

  • Keeping all sales, fees, expenses, wages and other business costs records.
  • Avoiding claiming credits for purchases that did not include GST, such as water bills.
  • Holding onto tax invoices and other GST records for five years.
  • Putting your GST in a separate bank account.
  • Only claiming GST credits from GST-registered suppliers.
  • Only claiming business expenses and the business portion of things you purchase (when they are also used for personal use).

Before submitting your BAS, always check:

  • You have entered each invoice only.
  • You have entered whole dollar amounts.
  • Your expenses and sales are from the same period you are lodging for.
  • You have completed the fields that apply to you.

Remember, should you have nothing to report, the ATO still requires you to lodge a nil statement.

Please note that the ATO may provide extended due dates if you lodge electronically or via Harris Black’s tax agent licence – if you don’t think you can meet the above due dates please contact your Harris Black team member to determine if an extension is available.

12 Month Extension Of $20,000 Instant Asset Write-Off

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The Treasury Laws Amendment (Accelerated Depreciation for Small Business Entities) Bill 2018 has now passed through Parliament without amendment.

The Bill makes changes to the tax law to extend by 12 months the period during which small businesses can access expanded accelerated depreciation rules for assets that cost less than $20,000. The threshold amount was due to revert to $1,000 on 1 July 2018, but will now remain at $20,000 until 30 June 2019.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed the extension, but reminded small businesses and family enterprises that the instant asset write-off is a tax deduction, not a rebate – your small business needs to make a profit to be eligible to claim the benefit.

Seasonal Pricing Strategy

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A seasonal pricing strategy will help you minimise loss of cash flow in low periods and maximise profitability in peak seasons.

Changing your pricing will help you capitalise on your target market’s spending habits. Keep in mind that creating a supporting marketing campaign to bring awareness to your price change or seasonal deals will be critical in meeting your business objectives. Consider the following steps to get the most out of your seasonal pricing strategy.

Know your customers

Previous buying patterns should influence campaigns so you can tailor your pricing to the needs of your target market. Segment your market and develop a range of pricing strategies to maximise customer engagement.

Pricing for low and peak periods

Your pricing strategy should accommodate fluctuations in customer demand. Break your year into low, mid and peak seasons. Offering an off-peak discount may boost your profits by incentivising your customers. Increasing your premiums in peak season will help you capitalise on high customer demand. Experiment with pricing so that your discount does not encourage customers to wait until your peak period is over and so your premiums do not drive away customers looking for better value. Look to the market to help you strike the right balance to maximise the benefits of seasonal pricing.

Holiday based strategies

The customer influx in Christmas and the New Year is an opportunity for you to tap into the spending season with your pricing strategies. Advertising seasonal deals well in advance are essential to reaping the benefits from your price change and gaining an edge on your competitors. Offer incentives like a gift wrapping service, loyalty credits or special deals on your most popular products. In the post-Christmas sales look to your competitors to see how far you should discount your prices to capture the largest target market while keeping your profit margins high.

Reuse and recycle

Seasonal pricing strategies and their accompanying marketing campaigns can be costly. Reuse past marketing campaigns that were successful. Recycle them only if they are still relevant or need a few minor amendments. Assessment of pricing strategies should be ongoing to ensure your business is up to date with your customers’ spending habits.

How can we help you?

Today’s financial environment demands a regular review of strategy and a focus on execution.

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