What's in a signature

Ever wondered who can sign the PAYG Withholding Summaries?  Or Group Certificates for those preparing them before the 2001 financial year?  Unfortunately it's not necessarily the person responsible for preparing them.  According to Regulation 32 of the Taxation Administration Regulations 1976 it can be any of the following;

• if the entity is an individual - by the individual; and
• if the entity is a trustee - by the trustee; and
• if the entity is a board of trustees:
• by the senior active trustee resident in Australia; or
• if there is no active trustee resident in Australia, by the agent in Australia of the board of trustees; and
• if the entity is a company - by the public officer of the company.

There is a provision in the Regulation that allows for the delegation of this responsibility to someone else.  The relevant document to be filled can be found here.

The Espresso Shot: Even though there is less need for physical signatures with the acceptance of digital documents, be sure you have the right person's name printed.  Especially when it comes to employee documents.

Standard Business Reporting - Saviour or Time Killer?

Just when you thought Mr Henry was too busy with his tax review, he pulls another one out of the hat. All in the name of making Australia a more streamlined and efficient economy. Standard Business Reporting (SBR) is the government's attempt to minimise the time it takes to submit government reports such as the Business Activity Statement (Tax Office) and the Annual Statement (ASIC). It proposes this by enabling the submission of these reports straight from the accounting software used. The government intends to implement SBR from the 1 July 2010. Of course none of these good intentions will materialise if software developers do not jump on board. MYOB was contacted today as there is minimal information on their website. They advised (after holding the call for 5 minutes and then quoting an internal email) that MYOB will be aiming to include the SBR capability in the next software update for the AccountRight product range. Unfortunately a date could not be given.

The Espresso Shot: Yes SBR is a welcomed initiative but with most things today, the caveat is that SBR will save time as long as the data used is accurate and timely.

Time or Money?

Is $1,000 a lot of money? Is $100,000 a lot of money? What about $1,000,000? Would Kerry Stokes, owner of Channel 7, really watch a show like 'Deal or No Deal'? The highest possible prize is what he earns in less than a week? Would you watch a show where the highest possible prize was what you earned in a week?

My point is, for most financial information, talking in absolute dollar terms is pointless as there is no relativity. The figures need to be related to some other measure. What I have discovered is that using time instead of absolute dollars is the best measure when gauging an issue. From, how much should I pay for this business?, to, how much cash should my business retain?

The reason why time is such a powerful measure is because everyone has 24 hours in a day. And you know how long it takes to generate your level of income in any given time frame.

The Espresso Shot: Instead of saying you have $x dollars in the bank, express it in terms of how many months of expenses the cash covers. I can assure you, your idea of money will evolve for the better.

What have I done to deserve this?

I had an amazing day yesterday wrapping up a client's 2009 accounts. Amazing in the fact that I completed a fairly complex set of accounts. Unfortunately it wasn't good news for my client. 2009 was not the best year for the business. When presented with the final figures, he asked, "Sam, I truly believe in Karma but what have I done to deserve this?

Instinctively I said, "It's not what you did, its what you didn't do."

Luckily he took it in the spirit I intended it and he agreed. Soon after I realised it goes for everything in business. So you want turnover to increase by 20% or you want profitability to double in 12 months. Be sure that you brainstorm all the necessary actions required to achieve it. Then tick them off one buy one while always asking, "Is there anything I'm not doing that I should be?"

The tortoise OR the hare

Had an interesting conversation with a client last week regarding how to purchase a van for transporting equipment for the business. They wanted to wait until there was enough cash in the bank to buy the van outright. I said that was definitely one option if they wanted to crawl like a tortoise. Nothing wrong with the tortoise. We all know who wins... On the other hand though, why crawl when you can run like the hare! How? DEBT!

Used in the the right way, debt in this example would get the van 12 months quicker. A few things to watch out for if you want to beat the tortoise;

1. Don't borrow more than what the business can support in the current business environment

2. If using the cash basis for GST purposes, use a chattel mortgage or finance loan to fund the acquisition. This means you can claim the GST as soon as the motor vehicle papers are signed.

Some people use a hire purchase which means under the GST cash basis, they can only claim 1/11 of the monthly hire payment. This is because the hire purchase payment is seen as a HIRE payment and not a LOAN repayment.

If the business is using the non-cash basis for GST, then either way, you can claim the GST once the papers are signed. But be sure debtors are in check as the business is paying the government GST on sales that cash has not been received for.

With this in mind, the hare always wins!

Registered Bookkeeper? Just another regulation land mine.

It's taken almost 10 years for the Australian government to realise that WHO prepares your business' BAS is actually a risk to THEIR revenue. So from the 1 March, they will bring in changes via the Tax Practitioners Board to ensure lodged BAS forms are completed by registered bookkeepers and in turn, hopefully see an increase in government revenue.

Will it work? This is the criteria for becoming a registered bookkeeper;

• Person must be over 17 years of age
• Person must be a 'fit and proper person'
• Relevant accounting qualifications with at least a Certificate IV Financial Services (accounting).

The above sounds reasonable, although the issue the government faces is how to promote the new rules to users and to enforce it. There are still many businesses today that don't realise if they use a supplier without an ABN, they are legally obligated to withhold 46.5%.

Unfortunately all the the government has achieved is to add one more regulation land mine for business to trip over.

Action: Ask your bookkeeper if they will be a registered bookkeeper with the Tax Agents Board.

Where to start when starting a business?

This year I made a promise that I would develop at least one product that I know my clients would use and hopefully turn into a positive income stream.

Based on my training at Startup School last November, I developed this form to help me start. I have prepared it and will be meeting with Steve Sammartino to discuss strategy and tactics. I have chosen Steve for 2 main reasons;

1. He is willing to provide feedback
2. He has actually done what I'm trying to do

Let's see how we go...