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...