Jeff Banks Blog 17 February
Quote of the Week
Moving away from the movies for a week we go to my favourite song writer – Harry Chapin and his song “All My Life’s a Circle” where he juxtaposes that rather than beware the light at the end of the tunnel as it may be a freight train he suggests
“No straight lines make up my life;
And all my roads have bends;
There’s no clear-cut beginnings;
And so far no dead-ends.”
Certainly business life is made up of lots of bends and what’s around the next corner is the something we would all like to know before we turn the corner and unfortunately Harry did not see what was around a particular corner and died in a car accident some time ago.
I have said that in my opinion small business needs to remain lean and mean as another financial crisis such as the “GFC” although not a certainty seems to be looming. In any event we should all remain vigilant in keeping our business lines taut.
For many of us though, we may think there are bends in the road rather than ignoring the light at the end of a very straight tunnel which is the freight train of disaster screaming towards us..
The big banks, Qantas and the like, although their work force reduction decisions may be unpopular, are making them to ensure the continued success of their companies. I would suggest that some of the decisions we have to make in business may be unpopular as well – not to employees but to us as owners. The hard decisions are never easy but in the face of the alternative a decision to cut some of the luxuries of life may in turn secure our future.
Living in the manner I want to or have become accustomed is an adage which can bring a small business to its knees very quickly. “But I need $x to survive” is something I hear a lot from clients who have gotten themselves into cash flow difficulties. If your business is not generating the profit levels to sustain your present lifestyle it is up to you to either adjust the business to generate the income or change your lifestyle accordingly. That means making tough decisions – perhaps unpopular decisions at home – to survive, or become one of the growing number of business failures and of social security recipients.
The buck stops with the owner and it is our collective responsibilities to ensure our businesses generate the income we need to not only survive but to prosper. In the face of adversity, when the going gets tough, the tough get going. If you feel your business is struggling to generate the cash flow to keep you in the manner you wish to remain accustomed perhaps a consultation with me at Banks Consultancy may be a start on another journey or at least around a bend with a pleasant destination.
There endeth the sermon
Jeff Banks Blog 10 February
Quote of the Week
This week I go back to a classic from 1980 – Xanadu – we all remember it, Olivia Newton-John…, fantasy girl… but a quote I remember from it:
“No questions, no lies. No truth either”
I suppose when they were putting these lines together they were thinking more along the lines of “ask no questions and get told no lies”.
The taxation side of the business compliance is complex – there is no denial of that fact. So how do we handle the issues – stick our head in the sand and play ostrich?
You can, but in tax, ignorance is no defence!
So where do you go for advice. You can ask your peers (or someone you meet at the pub) and they will, I suggest, be more than happy to tell you how they “bend the rules” to suit their particular situation, remembering that is based on their personal experience and their personal taxation structure and strategy. The advice is free but what is it worth.
In this country there is almost sport in playing the “hide the money from the taxman” game and certainly we at Banks Consultancy assist our clients in this endeavour in every possible legal way. Simply ignoring or flouting the law is never an answer. Neither should entering into a transaction without the right advice. The adage “if we fail to plan we plan to fail” applies much more in tax.
A simple instance – you are going to buy a commercial vehicle and going to use some sort of commercial financing arrangement – are you aware there are at least three different ways in which the GST is treated on that purchase and if you are intending to have the GST refunded at the time of the purchase, two methods may in fact see the GST deferred significantly and not just as 1/11th of the repayment. Further getting it wrong in your BAS and then getting the error found by the ATO in an audit will mean you incur a fine for recklessness. You may have very well got the transaction right but did you tell your bookkeeper the intricate details of the transaction as they will need to know to ensure they correctly record repayments as well so that subsequent GST claims are correct. We have seen a number of bookkeepers claim GST on the gross repayments where they were either wrong as they needed to be split between the capital and interest portions of the repayment (as in the case of a commercial hire purchase arrangement for those accounting for GST on a cash basis) or the GST had been claimed up front and the claim in the repayments and were in fact a double claim of GST input.
Unfortunately ask no questions, get told no lies might sound like a useful strategy but it can cause a whole heap of trouble for you down the track. Be smart talk to your accountant (hopefully that is Banks Consultancy – if it isn’t then perhaps it should be) and start asking questions, be positive that you know the consequence of your structure and transactions you are contemplating to ensure no nasty surprises. Remember if the ATO deem you to be reckless in recording transactions they will fine you.
There endeth the sermon
Jeff Banks Blog 3 February
Quote of the Week
This week I have been watching a bit of escapism in the form of the 2005 movie – Stealth and the following quote made me think of business issues that may be of interest
“War’s terrible. It’s meant to be terrible, and if it stops being terrible, what’s going to stop us?”
Substitute the “rules of business” for the word “war” from this quote and think to all the external pressures associated with being in business.
What really stops us from getting to our goals, which in most cases it’s the most possible money with the least amount of effort. So what are they really those barriers.
In a perfect world everyone plays by the “rules”. The marketing mirrors the product, the invoices we send are paid with our terms of trade and the bills are paid on time and all the compliance issues are dealt with in a timely manner where everyone pays the tax they should and the government has enough for those services we as individuals cannot provide and we are left with enough to remain in the manner we would like to become accustomed. Sadly for most of us not everyone plays by the rules and the more unscrupulous of us bend and break them to suit ourselves. This then manifests itself into a “keeping up with the Jones” mentality of – if they can do it why can’t I.
In one word “integrity”. I know most of us have it and want to comply within the ambit of the “rules”. Unfortunately for most of us there is a storm coming and we will need to button down the hatches and avoid as best we can the economic down turn that is predicted. Ensuring the future of the economy is all about small business – the major contributor to employment and GDP in this country – and whilst big business may cut work forces here and ship Australian jobs overseas because the “cost” is reduced, we as business people need to show we are resilient, flexible to the changing needs of our customers and above all valuable to our customers. By providing a value to them the sustainability of our businesses strengthens and the economy as a whole benefits.
Strengthening our resolve to make it right means continued compliance with the rules, and from our point of view that means lodgement of BAS, tax returns, and other statutory returns and payment of debts as required.
We elect politicians to run the country and if we don’t like what they are doing we have the chance at each election to replace them. It is effectively not up to us to belly ache about how hard it is – it is up to us to work within the rules we have and find a solution to any issues that confront us as business people.
At Banks Consultancy we are ready to assist any and all that ask for our assistance
There endeth the sermon
Jeff Banks Blog 27 January
Quote of the Week
After the events of this week I had no option but to go back to the 1995 movie The American President and not because a pollie script writer thought he could plagiarise without acknowledgement and not think anyone would notice but because of the disgraceful events that occurred on Australia Day of all days.
“You want free speech? Let’s see you acknowledge a man whose words make your blood boil, who’s standing centre stage and advocating, at the top of his lungs, that which you would spend a lifetime opposing at the top of yours.”
As many of my many readers know I am a card carrying Liberal Party member and whilst I do not agree with Ms Gillard’s politics I still respect her right to speak her mind. It is irrelevant that the “activists” in this case suggested their actions were aimed at the opposition leader, it’s like most violent acts – there is always an innocent party. Having said that there is a time when you have to agree with the “other side” and although he may have made a meal of it the quotation by Mr Albanese should strike a chord in the hearts of all Australian business people. Using the part of the same movie quote as he did – “we do have serious problems in this country and we do need serious people to deal with them”.
Are we heading to a global recession – probably. Are our politicians doing enough about it – only history will show. You can be sure there will be plenty of Bob Rumsfeldesq talk of what we are scared of and who is responsible.
At a micro economic level I suggest it is time for business to act. Be proactive, button down the hatches and have your survival plans in place. Being ready as we did for the last economic downturn – there is not going to be the magic $900 again to stimulate the economy.
For those of us who got lean and mean, make sure we have not taken our “foot off the pedal”. Do an audit of operations and make sure there are no excesses. 2012 will be tough, perhaps tougher than any of the recent times.
In these tough times don’t be afraid to target appropriate advice. Look at your advisors and ask yourself “am I using them to their fullest”. Banks Consultancy offer much more than just the compliance aspect of taxation. Couple that with a number of other consultants, business coaches, financial planners and the like we can offer you the advice that may just help you save your business or at least ensure a maximisation of profits in the face of the very tough times ahead.
There endeth the sermon
Jeff Banks Blog 13 January
Quote of the Week
I was looking for something topical to deal with a Friday the 13th and whilst I was going through some of those “Jason” movies I noticed this one from 2002 movie Friday After Next
“Don’t be sorry ho, be careful!!”
This quote effectively says it all. In business we are all beset by deadlines and the pressures customers and clients place upon us let alone our statutory obligations to lodge BAS, tax returns and the like.
Making sure it is all done on time can be a nightmare. As part of our commitment to clients we at Banks Consultancy forward a “Critical Dates” sheet at the start of each quarter to remind businesses of their upcoming obligations for lodgement and payment of BAS and other potentially relevant taxes. Does it stop there? The answer in our case is – No. As the dates become a train at the end of the tunnel (as opposed to just the light) our staff will be actively chasing with phone calls and update emails, the delinquent or absent minded clients. We pride ourselves on this and use it as part of our mantra.
There are a number of provisions for extension that can be invoked for those who genuinely cannot meet their reporting obligations but in most cases it’s a failure to plan that is the root cause of the issue.
If you are going to be in business then you have to act like it. Planning to ensure your obligations are satisfied is an integral part of the task of being the business person.
If for any reason you are having trouble meeting your reporting obligations seek out assistance, seek out Banks Consultancy.
There endeth the sermon
Jeff Banks Blog 6 January
Quote of the Week
Whilst on holidays it would seem that much more time is spent on looking to the television and tonight one of the commercial channels has “A Few Good Men” so this week I am taking my quote from that movie and I suspect the most memorable quote there is from that movie is the Jack Nicholson one that is a response to Tom Cruise asking for the truth.
“You can’t handle the truth”
For many small business people this is a way of life. They struggle to make ends meet day in day out but believe they are “living the dream”. Excessive hours, no time off and wickedly difficult cash flow are a way of life but they are their own bosses. The lies we tell ourselves – we can do it better than the boss ever did, we can take time off when we like, we can write everything we spend off and we will make a squillion dollars doing it.
What scares me as an accountant is that you will get a small business person in to Banks Consultancy and prepare their BAS and/or their tax return and after claiming all the legitimate tax deductions the satisfaction that comes with paying no tax at all is amazing. They do not understand that paying no tax generally means you are making no money.
Taxes rightly or wrongly are imposed by the elected government in what is supposed to be a fair ratio such that all people contribute in a fair manner to those things that we collectively require as opposed to those which as individuals we can afford. Taxes in this country are bracketed so that low income earners pay less per dollar earned than those of us that may earn more. So I am sorry of you can’t handle it but if you are not paying any income tax then you are most probably not earning an amount commensurate with the input of your endeavours. The question that then automatically follows is why are you even in business.
I am not advocating paying tax for tax’s sake – we at Banks Consultancy will the full 9 yards to ensure you pay as little as you need but death and taxes are a fact of life and the amount of tax could very well be a good barometer of the success or otherwise of your business.
There endeth the sermon
Jeff Banks Blog 29 December
Quote of the Week
With a bit of time off I am able to watch some more obscure movies and a quote from this one hit home after a less than perfect experience with what could only be termed a bout of being on the end of marginal income. The target was the 2000 movie The 10th Kingdom
“That’s not funny! Maybe it will get funnier if we keep doing it.”
There are times when expanding businesses look for new customers or look to clear stock. The income generated could be termed marginal income, in technical terms the next bit of income over and above present levels. Some sellers look to massive advertising, gift vouchers, sales and discounting to entice marginal income whilst others look to other ways to entice new customers ie the “trade” industry and by this I mean Bartercard, BBX and the like.
Faith in people and the system brings people to do some silly things, but one thing that will kill any experience is a poor episode. My case in point (and given we have been in the “trade” industry for in excess of 20 years you might wonder why as this is not the first time we have been on the receiving end here) a seller wanting to clear an unwanted item advertised on BBX and seeking a similar item for a Christmas present we purchased and all things being equal a new client relationship between the seller and I had been created – that’s where it went down hill. Here it is 29 December and the item still has not arrived. Phone calls not answered, and when they are calls not returned as promised and a very sour taste has begun to accumulate in the mouth of the customer.
This seller had looked for marginal income but what has he ended up with – a customer willing to tell the world of the poor service and the broken heart of the recipient to whom the gift was meant. Is this what we are looking for in marginal income – I suggest not!!
The experience should (not matter if the item is sold at a discount, was a voucher, on sale or on “trade”) be the same as at the end of the day as what every customer wants is to be able to trust a supplier and the supplier would love to be able to sell to that customer again and again.
Time and again discounters and “trade” suppliers look to rush the sale through as it does not seem to be as valued as a “normal” sale. Sorry boys but a lost sale is just that – lost – and although you may have completed this sale the potential for further sales from a disgruntled customer may be far greater than the initial “quick sale”. You had your chance and blew it. Perhaps for you the market is potentially big enough to discard potential customers in that manner but let me tell you the only ones laughing are those laughing at you – not with you
There endeth the sermon.
Jeff Banks Blog 23 December
Quote of the Week
This week I was looking at Christmas quotes but and rather than a movie I heard one of my favourite Christmas songs on the radio. The Royal Guardsman’s Snoopy Christmas
“Christmas bells those Christmas bells – ringing through the land
Bringing peace to all the world and goodwill to man”
At this time of the year I know with our firm we look to a closing period and like most years we will not be in our office from Christmas to New Year. Sitting here looking at the rain tumbling down outside I am planning what I might be doing over this next period and it makes me spare a thought for those retailers and other workers who will plying their trades in my holiday period. Not only them but for those who are struggling we most especially should spare a thought at this time of year.
Last night my fellow Belrose Rotarians and I (as they do for most of the Christmas period) collected funds for Bear Cottage (a hospice for terminally ill children) at Borgnis Street Christmas Lights on Sydney’s northern beaches and whilst as a Rotarian I know that 100% of the funds collected goes to that charity I also know that even the smallest of donations help. It’s almost in the “many hands make light work” adage, many coins accumulate and amass into something special. I am sure the Bear Cottage people appreciate every cent donated.
Its humbling experiences like these that make us all realise we are far better off than others and that even though we are enjoying ourselves at this time of the year some of us are working. My request to you bring peace to the world in your own little way, bring a smile with you as you interact with everyone, family, friends, and the workers you interact with during your holidays and the like and if you can spare a thought for those less well off than yourself – perhaps donate some time and/or money to any of the charities bringing a little ease to those struggling at this time of year I am sure it will be greatly appreciated and if you want to see some spectacular Christmas lights Borgnis Street in Davidson and maybe throw some coins in the bucket – the people at Bear Cottage will love you for it.
http://www.rotarydownunder.com.au/magazine/articles/06Oct/20.pdf
There endeth the sermon and from all of mine to all of yours have a merry and safe Christmas and a huge 2012
Jeff Banks Blog 16 December
Quote of the Week
This week I was looking at Christmas quotes but I will save that for next week – whilst looking for Christmas movies however I stumbled onto this quote from the 2004 movie The Chronicles of Riddick (which I thoroughly enjoyed)
“There will be one speed . . . mine. If you can’t keep up or don’t step up you’ll just die”
Sometimes we all feel like we get left or we feel like we leave people behind. Is it that bad? Leaving a customer behind can obviously be dangerous.
We at Banks Consultancy try to speak in your language about issues which can be very complex. Taxation and its myriad of laws, forms and regulations is a mine field as everyone knows. In its simplest form we make money, we pay tax, but with the advent of GST, the impost of employee requirements and the expenses that may go with the employment of staff, PAYG, superannuation, workers compensation, payroll tax and the like, the mere act of making a transaction may result in the need for many other regulatory requirements and payments. And that is a “simple” example.
For many employees the impost of preparing and lodging an income tax return is the only brush they have each year with the “fiscal fiend” but for those of us in business it’s a constant battle of forms, lodgement deadlines and cash flow issues. In many ways the Tom Cruise quip from Top Gun “if you think up there, you are dead” can catch those who attempt to buck the system, string out payments etc, because cash flow has not met lifestyle needs. Compliance as much as it may irk many business people is a fact of life. The government we elected at the time introduced GST and made us an unpaid tax collector, meaning the requirement to prepare, lodge and pay a quarterly BAS.
The speed of business must be harnessed to incorporate all the requirements of being in business. Cash flows must be budgeted to ensure all relevant statutory payments are made. If they (cash flows) don’t one should ask if you should be business at all. There are safety nets but they should be the last resort not at the forefront of decision making so that should there be real trouble access will not be denied.
There endeth the sermon
Jeff Banks Blog 9 December
Quote of the Week
We recently sat down and watched the 2000 movie Chocolat and a quote reminded me of an adage of small town (and I am from a small town) which can relate to business.
“If you lived in this village, you understood what was expected of you. You knew your place in the scheme of things, and if you happened to forget, someone would help remind you”
There are plenty of people around offering advice and direction. Accountants, business coaches even bankers and financial planners not to mention your mates in the pub. But who is the right one to listen to and when is the right time to seek advice? For many of us we are in our niche dealing with our circumstances, quite nicely thank you, but there are times when circumstances drag you so far out of the circle
I recently was speaking to a new client and she was contemplating giving some money to her son but was worried because someone had suggested to her that there would be a gift tax pertinent to the transaction. I asked where she got this idea – it was from a friend at a social engagement she had attended. The source had been quite convincing in their advice and had disturbed my client who was wanting to look after her son who was struggling and she had recently come into a quite large inheritance and was in a position to do something about it. Gift tax in Australia – news to me but the client was convinced
The moral to the story – get specific advice from a person who should know the answer – taxes, talk to an accountant, future financial plans, an accountant and/or a financial planner, straightening out my business, an accountant or business coach etc etc.
Advice at times may not be cheap but as any readers to this blog will know, we postulate “failing to plan, is planning to fail” and with any plan the appropriate research is required to ensure the right outcome.
Back to the story – the client is receiving a significant inheritance and wanted to divest herself of some of the money (and help her son) so there were tax implications but they were more along the lines of capital gains tax, revenue tax from extra income that would be generated from the assets being transferred and a social security issue from the change in circumstances. Further to that there was the issue of security of the inheritance from outside creditors – so we sought some advice as to securing debts, trusts and prolonging control through the conditions that could be imposed in her will. On top of that there was a nagging reminder that most of Australia’s Lotto/lottery winners of major sums are broke within three years. The change in circumstance tends to negate the control that may have been there prior to the windfall. Again with the assistance of a financial planner we took advice based on her “real risk aversion” (as opposed to the freedom apparently created by the inheritance) and set up a structure that would continue to do what was required and the plan included some of the luxuries that perhaps were not available prior but we set into a plan to ensure ultimate survival.
The good ending to the story was that after she had gotten over the shock of inheriting such a large sum she took the time to ask herself can I do this myself – answered no, and sought appropriate advice and that advice started with friend suggesting a call to Banks Consultancy.
There endeth the sermon