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COVID-19 Stimulus Package – Boosting Cash Flow Employer Payments

The Government is providing up to $100,000 to eligible small and medium sizes business, and not-for-profits that employ people, with a minimum payment of $20,000.

On 12 March 2020, the government announced the Boosting Cash Flow for Employer's measure. The measure initially provided up to $25,000 to business, with a minimum payment of $2,000 for eligible businesses.

The government has now enhanced this measure as of the 22nd of March 2020 as part of the second economic response package. Under the enhanced scheme, employers will receive a payment equal to their PAYG withheld on employees' wages, with the maximum payment being increased from $25,000 to $50,000. In addition, the minimum payment is being increased from $2,000 to $10,000.

Above all this, an additional payment is also being introduced in the July to October 2020 period. Eligible entities will receive an addition payment equal to the total of all the boosting cash flow for employer payments they have received.

Eligibility – Boosting Cash Flow for Employer payments

Small and medium sized business entities and not for profit organisations with aggregated annual turnover under $50 million and that employ workers will be eligible.

  • The payment will be delivered by the ATO as an automatic credit in the activity statement system from 28 April 2020
  • Eligible employers that withhold tax to the ATO on their employees salary and wages will receive a payment equal to the amount withheld, up to a maximum payment of $50,000
  • Eligible employers that pay salary and wages will receive a minimum payment of $10,000, even if they are not required to withhold tax
  • The payments will only be available to active eligible employers established prior to 12 March 2020.

Quarterly lodgers will be eligible to receive the payment for the quarters ending March 2020 and June 2020. Monthly lodgers will be eligible to receive the payment for the March 2020, April 2020, May 2020 and June 2020 lodgements.

To provide a similar treatment to quarterly lodgers, the payment for monthly lodgers will be calculated at three times the rate (300 per cent) in the March 2020 activity statement. The minimum payment will be applied to the entities' first lodgement.

Eligibility – Additional payment

To qualify for the additional payment, the entity must continue to be active.

For monthly activity statement lodgers, the payment will be delivered as an automatic credit in the activity statement system. This will be equal to a quarter of their total initial Boosting Cash Flow for Employers payment following the lodgement of their June 2020 , July 2020, August 2020 and September 2020 activity statements (up to a total of $50,000)

For quarterly activity statement lodgers, the payment will be delivered as an automatic credit in the activity statement system. This will be equal to half of their total initial Boosting Cash Flow for Employers payment following the lodgement of their June 2020 and September 2020 activity statements (up to a total of $50,000)

If you require further information on any of the above, wish to check if your eligible or need assistance lodging your activity statements to ensure you receive the credits, please call our office on (03) 5032 9422. As the situation changes we will continue to relay the information to our clients and community.

For more general information please follow the link to the Treasury Fact Sheet

COVID-19 Stimulus Package - What it means for you?

 

We have already seen how COVID-19 has impacted our everyday living from our daily grocery shop, all the way through to our local community, sporting events & tourism industry.

We have seen supply chain disruptions making it difficult for businesses to provide the usual goods and services, as the flow of imported and exported goods from China and other countries are being delayed or halted.

That means our local building and supplies store might not have the materials we need for the weekend DIY job, or bigger yet, the materials we need for building homes & commercial properties.

In addition, our local farmers are having difficulty sourcing chemicals for their upcoming cropping season with some of these chemicals being on order since December.

It also means your local café or restaurant might not have access to the same everyday products, as the demand for food continues to grow.

Ultimately, COVID-19 is having a domino effect not only on our individual health but on our small business economy.

So, what's out there to help small businesses?

On 12 March 2020, the government announced a package of measures to help the economy withstand and recover from the economic impact of coronavirus.

The following measures may be introduced to government legislation in the coming weeks.

-          Increasing the instant asset write-off threshold from $30,000 to $150,000 for eligible businesses with an aggregated annual turnover of less than $500 million.

-          A time limited 15-month investment incentive to support business investment and economic growth over the short-term, by accelerating depreciation deductions. An instant deduction of 50% of the cost of an eligible asset on installation will apply.

-          Boosting Cash Flow for Employers by providing up to $25,000 to assist with staff wages. The payment will be delivered by the ATO offsetting the amount of your PAYG Withholding tax payable for the first 6 months of the calendar year.

Facebook is also offering $100 Million in cash grants and advertising credits. The grants will be available for up to 30,000 eligible small businesses in over 30 countries.

The big 4 banks are providing fee-free redraws on loans, early access to term deposits, deferred payments on business credit cards, waiving merchant fees and deferring home loan repayments.

This is a tough time for everyone but we need to keep in mind that our local businesses still need our support.

If you require further information on any of the above, please call our office on (03) 5032 9422. 

This is a developing situation changing daily and sometimes even hourly as more relevant information come to light we will keep you informed.

Is bad cash flow keeping you awake at night?

It is common to see profitable businesses struggle with cash flow difficulties.  Small Business owners need to understand the ebbs and flows of their business and plan ahead.

The ideal situation for a business owner is to be able to pay all suppliers by due dates.  Fall behind and the grapevine always seems to spread faster with bad news. A bad reputation for paying bills has many repercussions including difficulty in obtaining supplies and can also lead to a downturn in customers.

It's common that many small businesses fail during their infancy.  This is due to new business owners spending cash flow without planning for future liabilities including Tax, GST, PAYG Withholding and Superannuation commitments.

It is often the second year in business that hurts most as you can get through the first year without paying any income tax.  But when it catches up, it catches up two fold as you will be required to pay your prior years tax in full, and start paying instalments toward the year you are currently in.

The key is to understand and manage your cash flow, and budget!

For assistance in the area of cash flow – get in touch with your accountant!  Many see accounting fees as an additional cost of operating their business, rather than seeing it as an investment in your business reaching its full potential

 

Fact – 88% of sales is repeat business. It's at least 10 times easier to get another sale from an existing customer than a new prospect.

I have heard the talk over the past 5 years or so that online businesses are to blame for a decline in business profits. Change is here and has been for some time and will not stop. Change is now apart of everyday life. Technology, Cloud Technology, online shopping and society as a whole continually change & all business sectors need to adapt to continue to remain relevant.

Below are some brief ideas that anyone can adopt to ensure they remain relevant, competitive and profitable:

  1. Treat all your customers will the utmost respect. Greet all customers with a smile and show them that you care. 1st impressions last.
  2. Can't beat them join them. Customers will tend to look up goods & services on the internet. Your business should have a website. You can be open 24 hours a day.
  3. Websites need updating regularly as well. The more updates you do to your website the more google hits you wil receive. A stale website is a negative experience for a customer.
  4. Entice customers into your business. You need to devise sales and marketing strategies.
  5. Problem solve for your customers. If you don't have an immediate product or answer for your client assure them that you will source a result. Create relationships with business partners.
  6. Up sell. Teach your staff to up-sell. Do you want fries with that?
  7. Up sell. Package products together. 6 pack of beer & some chips.
  8. Training, training, training. You need to invest time & attention to all staff. They are a reflection on the business. Continued training, reviews and new challenges are also required.
  9. Praise. Thank customers for their support. And importantly don't forget to thank your staff as well.
  10. Listen more & talk less! 2 ears 1 mouth!
  11. Have devised systems and processes for all aspects of your business.
  12. Bean counting. Review your gross profit & overheads regularly using cloud accounting to identify issues and fix before they become a bigger problem.
  13. Always deliver on your promises. Do what you say and remember to follow up requests.

Change occurs each day and that is why it is important to review your business on a continual basis. We all know how busy owners are working in their business & that is where GMG can help. We can become your business coach to assist you working on your business and to ensure you remain relevant.

The Art of Discipline



I came across this article recently and thought I would share it with whoever is interested.

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Small Business New Year's Review


For small/medium business owners (this includes you, farmers!), the stress of returning to work in the New Year is usually quite overwhelming - so many emails to answer and things to do! It is no surprise that planning for a successful 2016 is far in the back of your mind. However, the most successful business I have worked with taught me one critical lesson for business profitability - "Failing to plan is planning to fail".

Put simply, PLANNING IS THE SINGLE MOST IMPORTANT THING YOU CAN DO FOR THE ONGOING SUCCESS OF YOUR BUSINESS. Furthermore, planning is something that locally owned businesses and farmers are notoriously known not to do – when was the last time you set targets for each category of expenses in your business and checked in to make sure you were on target? Do you know how much other businesses similar to yours spend on the same sorts of things? 

In Swan Hill I have heard many people talk about big business "taking over" - so why do they have a competitive advantage over the small guy? With a few exceptions (Dick Smith!), the fundamental reason is that they are exquisite planners. This involves precise daily, weekly, monthly, quarterly and annual planning and consistent and ruthless follow up.

Whilst managing at a national retailer, I recall blunt, non-negotiating calls with head office regarding a 1% overspend in budgeted weekly costs (it was less than $100, and EVERYTHING had a budget). Strict budgeting across all the expense areas improved the profitability of that individual business site by at least 20%-25% per annum.

So how does this affect you? In a break-even business with sales turnover of $500,000, a 1% improvement in expenses adds $5,000 to your bottom line. A 5% improvement (very achievable) could generate $25,000 – and as the owner, this money goes in your pocket. It is small improvements across lots of expense areas that add up very rapidly.

A couple of quick ideas to get you started in 2016:

·         Get a formal, written plan for what you want to achieve this year. Be very specific!

·         Phone around for better rates – on interest, electricity, gas

·         Check-in with your employees

·         Update your technology

·         Most importantly - Ask your accountant for help! Our range of knowledge – including but not limited to industry benchmarks, planning strategies and great ways to improve your profit - are sure to help you plan to succeed. Call us today – (03) 50329422!

 

Tech Talk - Updating your Computer Systems

Being the office tech wizard I often have fellow employees (along with clients, family members, friends, estranged associates and the occasional internet blow-in) come to talk to me about technology. One of the most frequent things that come up is when people need to update their personal computer (aka laptop, Apple Mac, tablet, phone etc.). Most people come to me and they say "What do you think is a good computer to buy?" or "Do you think I should buy that one there?" and the first thing that I think to myself is – How the heck would I know?

The truth is that technology, like most other things in our lives, is dependent on the individual. There isn't a one size fits all computer – they are made up of a lot of different bits and pieces which we can customize to fit exactly to what we need. So that is where I start – I try to target a few key area's and then make a recommendation based off what I feel is important to a person. I've listed a few below…

·         Budget – This is the most important thing – you need to figure out how much you want to spend and more importantly what you can actually afford. There isn't much point in spend over six grand on a computer if its going to take you the next four years to pay it off and you only really use it once a week.

·         What do you use it for? – The easiest way to figure this out is by looking at what you currently use the tech for and what you might want to use it for? Is it an office PC? Do you work from home? Maybe a laptop with a couple of docking stations and sets of screens is a better idea rather than buying 2 separate PC's and needing to setup fancy remote connections and all that other stuff. Then again, maybe if all you use it for is surfing the internet and going on Facebook you might be better off with something like a tablet – the portability makes it easier to use at home on the couch or out and about rather then being confined to a desk. Or maybe you are an avid video game fan like myself and you need to go for the works – something at the very top end with a CPU that could beat the world champion in a game of chess, enough RAM to run a small enterprise and a video card that can process graphics that look so real that you can't actually tell. We've only really tipped the top of the iceberg here but the important thing to note is that there is no point in buying something that you might never need.

·         Longevity – This is something you should take into account with your technology – how often have you had to replace it and how often will you need to? If you are an innovator on the cutting edge of technology then you might need to look at something that is replaceable in 12 to 24 months so you can keep up – I can say that I am guilty of grabbing a new phone when a new model has released and my old phone's contract has just fallen off (even when the old phone was still working OK). If you aren't going to use something very often, you might be better off spending a little bit more so that it will last the test of time – lets upgrade the RAM in your laptop so that when the next version of the Window Operating System comes out, you still have the capacity to run it with ease.

·         Shop around – As is with anything, if you are going to spend a decent wad of cash you should shop around to make sure that you get the best price. I find that going to the larger providers like Dell, HP etc and selecting something with the requirements that you need is a good starting point – from here you can look down the street to the local PC provider or jump onto a computer superstore and get all of your parts sent out and put it together yourself.

·         Take care of what you have once you have it – you don't want to have to replace your brand new piece of technology because you haven't been treating it correctly. It might seem like a great idea to watch a movie in bed on the laptop but you should be careful because if it doesn't get enough airflow then it might get to hot and cause damage to the components inside. Try to keep your technology is a dust and static free environment. Water (unless it's waterproof) is almost always a big no-no. My father is a farmer and I can't remember how many phones have been sent to 3G heaven because they slipped out of his breat pocket and into the spray tank.

 

This is just a quick recap on some of the things that I try to discuss when reviewing new technologies. If you think your business could use a technology retool and are not sure where to start – give us a call at the office.

 

If you want to find out more you can read my bio here.



 
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