Post Pandemic Planning: Why Cash Flow Forecasts Are Crucial

Business owners around the world have weathered an incredible storm over the past year – the pandemic has interrupted global supply chains, bankrupted corporations, and changed the way customers behave for the foreseeable future. The gradual rollout of multiple vaccines is currently providing a glimmer of hope for a return to normalcy in the future, but there’s no question that it will be a slow trek back to that point.

This is a perfect time to start business planning for the next phase of the pandemic. Starting to think about recovery, re-scaling operations, and permanent changes to your set-up will leave you well prepared for whatever is coming next. Building an accurate cash-flow forecast is one of the best ways to plan for the future.

We’ve said it before, and it bears repeating. First and foremost: take direct action to safeguard the health of your employees and customers. Without appropriate measures in place to establish trust, business recovery will be difficult. Done? Good!

Building a cash flow forecast can be tricky, and there are more unknowns than usual. It’s difficult to know how the vaccine rollout will impact consumer behaviour and at what speed. Having a 6-month cash flow forecast for more than one scenario will help your business in this situation. Think about:

  1. Worst-case scenario
    If you made it through 2020, you probably already know what this looks like. Assume your lowest revenues will continue, your costs will either maintain or rise, and supplier relationships with increased prices.
  2. Best-case scenario
    Consider what things would look like with pre-pandemic or better revenue, operating costs streamlined for cost-savings, and a boost in sales.

  3. Most likely scenario
    This one is probably going to fall somewhere in-between the best and worst scenarios. Assess your business trends over the past 12 months and be realistic.

This might feel like a painful exercise, but an accurate forecast is a vital tool for smaller businesses that may not have access to cash reserves. Knowing where you stand also builds business continuity and increased security for your employees. A path to recovery, and even growth, is beginning to appear. Having the right tools will set you on that path as fast as possible.

How can Halkin Business Partners help?

Our experienced CFO’s can help you build a realistic forecast, refine existing budgets, and get you on the road to post-pandemic success. Speak to a specialist at Halkin Business Partners to see how you can plan for a still-unknown future.

How Cloud Integration Can Benefit Small Business

If you’re a small business owner, you know the feeling of wearing many hats – owner, customer service, HR, payroll, accounting and more. Whether you’ve recently expanded your team or are still focused on how to do it all, you’re probably on the lookout for ways to save time and streamline operations. Cloud integration is one way to bring time- and cost-saving benefits to your business.

Let’s take a step back, though. First of all, what is cloud integration? It’s very likely you already use several cloud-based services in your personal life. Applications and services like Google Drive, Spotify, and Microsoft 365 all fall into the cloud-based category. Fundamentally, using the cloud is about bringing your most important data together in one location, accessible in real-time, to whoever needs that access – from wherever they are.

Whether or not you had to rapidly shift to an online model when the pandemic hit, it’s become apparent how important it is for businesses to provide access to core systems and services in an integrated, accessible manner. Cloud integration can help you give that access while benefiting your operations. Here are just a few of the perks:

  1. Keep things running from anywhere in the world
    Working from the cloud means your servers, systems, and data are always online and always available – all you need is a laptop and a stable WiFi connection for easy remote work solutions.
  2. Increase efficiency and save on IT costs
    Many cloud services will cover updates, upgrades, patches and user support as part of your membership or subscription fee. In addition, systems integration increases productivity through automation, and leaves room to scale quickly for future needs.
  3. Rely on solid security
    Cloud solutions generally use well-protected, secure servers. The latest high-end security solutions will protect your data at no extra cost to your business.
  4. Scale up or down with agility
    Is your business growing, in-flux, or changing daily based on the pandemic? Cloud-based systems are flexible, and subscriptions can generally be adjusted quickly for changing business needs.
  5. Enjoy the benefits of transparency
    A well-done integration means you have access to real-time information. This level of transparency in your reporting and data access means you’ll have the capacity to identify operational issues immediately. Increased transparency leads to better business decisions.

If you want to give your small business an easy boost, cloud integration and the subsequent automation that comes hand-in-hand might be a quick win to benefit your business.

How can Halkin Business Partners help?

It’s essential to do thorough due diligence on any business change, so make sure you choose the best combination of solutions to fit your business in terms of security, ease of use, cost-effectiveness, and scalability. The cloud integration specialists at Halkin Business Partners can take a big picture look at your business to help you choose the right application. We’ll help you compare, plan, and implement the right cloud solution for increased efficiency, transparency and productivity – in real-time.

Insolvency reforms in place for small business as of January 1, 2021

If you’re a small business owner, you should be aware that the Australian Government has changed its insolvency framework, effective as of January 1, 2021. These reforms were brought in as a response to COVID-19 and the economic effects of the pandemic.

In order to assist small businesses in their survival through this challenging economic time, the changes allow small business owners to restructure more effectively. If a restructure is not possible, the reformed framework also allows the business to ‘wind up’ their operations quickly, which, in turn, means better returns are possible for staff and suppliers owed by the company.

The newly updated insolvency framework includes two new processes, which the ATO defines as a “simplified liquidation framework” and a “small business restructuring plan.” Both of these new processes are available to any incorporated Australian business with liabilities of under $1 million. Also important to note is the business’s requirement to pay all due entitlements to staff, including superannuation. Tax filings must also be current and updated with the ATO.

There’s no denying the profound impact that COVID-19 has inflicted on the economic landscape, and small business owners have borne a large portion of this weight through 2020. If your business is facing insolvency, these new reforms may prove beneficial for your financial resolution.

Of course, insolvency proceedings are both a complex and emotionally charged situation for any business owner. It may be advantageous to consult a professional for advice or guidance through this transition.

How can Halkin Business Partners help?

Our business consultants work closely with third party practitioners who can manage the process from start to end. At Halkin Business Partners we stand with you throughout the process and help guide you with the necessary support. Reach out for a consultation on how best to approach this process.

Cryptocurrency and your taxes: what you need to know

Cryptocurrency used to be part of the wild west – a far-off gold rush on the internet’s frontier. Those days are long gone. Cryptocurrency is well known, and so is mining for crypto. It’s become so well known that regulatory authorities are starting to catch-up in a big way; here in Australia, that’s certainly true.

For many investors, cryptocurrency still feels different -forward-thinking, cutting edge, and the future of finance. But even the future of finance is subject to tax law. Did you know that disposing of your cryptocurrency (whether you’re gifting it, selling it, or using it to buy new, different cryptocurrency) is subject to a Capital Gains Tax? The Australian Tax Office (ATO) specifically states:

“A capital gains tax (CGT) event occurs when you dispose of your cryptocurrency. A disposal can occur when you:

  • sell or gift cryptocurrency
  • trade or exchange cryptocurrency (including the disposal of one cryptocurrency for another cryptocurrency)
  • convert cryptocurrency to fiat currency (a currency established by government regulation or law), such as Australian dollars, or
  • use cryptocurrency to obtain goods or services.”

In April 2019, the ATO launched an initiative aimed at better understanding cryptocurrency transactions and the activity of Australians. Earlier this year, many Australians may have received a letter advising them of their obligations under Australian Tax law. Now, if you’re new to the crypto game, hey, no worries – but make sure you understand your obligations from this point forward. If you’re a seasoned cryptocurrency user, you may need to assess whether your past tax returns now require amendment.

In most circumstances, cryptocurrency is subject to Capital Gains Tax. However, there are limited circumstances where this does not apply. One such situation falls under the Personal Use Asset designation, where an individual may buy or hold cryptocurrency for a short period in order to purchase other goods or services with the currency. However, if the individual is using only a small portion of their held cryptocurrency, this is no longer considered personal use.

The regulations are complex, and each circumstance is likely to have a degree of subjectivity baked in – so it’s worth it to consult a professional to ensure you’re on the right side of tax law as cryptocurrency evolves in legislation worldwide.

 How can Halkin Business Partners help?

Our expert tax advisers can help you understand your obligations in reporting cryptocurrency activity on your tax returns and assist in building a solid financial strategy that maximizes your cryptocurrency investments.

Cloud-based systems as a post-pandemic strategy

If 2020 imparted a single lesson, it was the importance of digital connectivity. This past year has made a compelling case for shifting towards cloud-based systems that offer access regardless of user location. It’s no longer enough to provide employee access to video-calling and IM applications with a rickety online file-storage solution. The new digital future requires easy access to real-time data for multiple distributed users. Your accounting and bookkeeping functions should be no different.

There are so many options out there for accounting software, and the variance in function, form, and cost is vast. Your system should be simple to use, even simpler to scale, and flexible in offered functions – including automation.

At Halkin Business Partners, we’re big proponents of Xero’s cloud-based accounting system. We’ve assisted many clients in making a seamless transition to this flexible, digitally accessible platform. Here are just a few of the reasons why we recommend Xero:

  1. Connect and reconcile your bank accounts easily with automated transaction recognition
  2. Generate quotes and invoices with customisable templates and easy-to-use tracking and reminders
  3. Enjoy a free Hubdocs subscription, including a bill management system that stores your supplier’s invoices and publishes them directly into Xero. This keeps your business compliant with requirements for 7-year storage of all purchase invoices
  4. Streamline all bills and supplier management through Hubdoc’s and Xero’s connection
  5. Keep track of expenses with mobile app features and employee-friendly interfaces
  6. Give your employees access to MyPayroll, a user-friendly system where they can easily apply for leave or have access to their payslips
  7. Connect to the ATO through Single-Touch-Payroll (STP) and keep your corporate reporting in great shape for tax season
  8. Manage project costs in real-time, so you know where you stand on new offerings
  9. Relax, knowing your business is using an authentically cloud-based software that you can access from any browser – no need to install any software on your computer

Last month, we shared insights on e-invoicing; this is another massive benefit to a cloud-based accounting system. As Australia increasingly shifts to this form of transaction and payment, it will serve your business well to be an early-adopter.

 Xero is a sophisticated and flexible option that affords users ease-of-use, a welcoming interface, and streamlined processes. It’s no surprise to see this platform’s user numbers climbing by the hour.

 How can Halkin Business Partners help?

Our specialists will help your business transition from an existing accounting set-up to the cloud with the absolute minimum of disruption. We’ll ensure your system is customised to your specific needs, trouble-shoot and tweak as required, and be on hand to support you through the process.

Why Income Protection is more important than ever

Over the past 12 months, 2020 brought a raft of unemployment around the world, threatened global markets, and destroyed many small businesses beyond repair. As we move into the new year and the slow roll-out of a COVID-19 vaccine begins, it seems we are shifting into the post-COVID world. But what might this look like? It’s hard to deny the economic damage that has been done to businesses of all sizes.

 Armed with the knowledge that it may yet be months before healthy, working-age individuals receive the vaccine, and that many companies will need to make drastic changes to stay solvent in a post-COVID world, have you considered how to protect your own economic security? If you, or your family members, are unable to work due to illness, injury, or other factors, it’s more important than ever to have a plan.

Income Protection insurance can play an important role in shoring up a strong contingency plan to keep your family’s finances on track. We’re pleased to share further information from an insurance expert: Clive Levinthal from Experien Insurance Services explains how Income Protection insurance can provide the protection you need and whether you should consider this cover within the next 6 months because of big changes coming in 2021. Click here to read more.

A digital step forward: e-invoicing in Australia

Take a moment and think back to the last invoice you sent out from your business. Whether it was a paper copy or a PDF, mailed or emailed by yourself or your finance department, it came with a price tag. In fact, the average invoice will cost a total of between $27-$30 to process and finalize, considering the time spent entering information and processing payment. This year, something new is on the way. E-invoicing is a system where an invoice can be transferred directly from one financial management system (for example, QuickBooks) to another system (say, Xero) immediately.

If you’re wondering why you would adopt this practice – especially if your current invoicing system is working well – here are a few things to consider:

  1. E-invoicing is becoming mandatory in Australia.
    Propelled by the goal of preventing tax evasion, mandatory e-invoicing legislation is on the rise globally, driving the transition from paper to electronic invoicing and archiving. Many countries around the globe are considering, or have already determined, that e-invoicing is crucial. In Australia, moving to e-invoicing is no longer an option for businesses, it is becoming an obligation.
  2. By using e-invoicing, you save time and money for your business.
    As mentioned earlier, there is a measurable cost to processing invoices and dealing with additional paperwork at tax time. E-invoicing can mean cost savings – and time savings – for your business.
  3. Adopting e-invoicing allows you to cut down on paper or server storage.
    The ATO has confirmed that an e-invoice is all you’ll be required to retain for tax purposes. Switching over to e-invoicing means you can stop stacking paperwork in boxes, scanning invoices, and e-filing endless folders on your server.
  4. E-invoicing gets you paid faster.
    With an instantaneous transfer, your clients are likely to pay their invoices much faster when it’s so convenient. Also, as part of an incentive to switch to e-invoicing, the Australian Government is now paying any e-invoices within 5 business days, including interest on any late payments.
  1. Security and reliability go through the roof.
    The networks used for e-invoicing are more secure than traditional email channels, meaning safety is assured. In addition, the visibility of the invoice is limited to the issuer and the client, reducing any chance of fraudulent invoices.

 Looking at e-invoicing holistically, the big picture indicates that switching to this system might be the cost-saving, time-saving, streamlined change your business needs for 2021.

 How can Halkin Business Partners help?

With the rollout of E-Invoicing in Australia, our expert tax and financial advisers will guide and assist you with making the switch to e-invoicing smoothly and seamlessly. We are following the legislation closely and will be updating our clients on the necessary information.

Why Single Touch Payroll (STP) means more Superannuation scrutiny

You’re probably well aware of what Single Touch Payroll is, and how it works by now. In summary, using STP means you will electronically report all employee payroll information to the ATO. The reporting is based on your payroll cycle, so whether you pay on a weekly, fortnightly, or monthly basis will dictate how often you report. STP provides greater efficiency to business owners, and to the ATO. Reporting employee salaries or wages, Pay as You Go withholdings, and superannuation is streamlined. If you’re in need of a quick refresher, check out our earlier article here.

The important thing to know today is that STP has now become mandatory for all businesses that have employees being paid wages. This shift means that the ATO is now able to accurately collect real-time data on wages across Australia, and keep track of superannuation payments at the same time.

As a business owner, it’s crucial for your payroll, superannuation, and other accounting paperwork to be in better shape than ever before. Each time your payroll is completed using STP, the ATO also receives details on how much superannuation should be paid to each of your employees at that point in time. If there are any discrepancies between superannuation payments, expect extra scrutiny from the tax office. In 2021 and beyond, we expect to see the ATO targeting late payments of superannuation, including accrued interest.

In addition, you should be aware that any late superannuation payments will require submission of a Superannuation Guarantee Charge (SGC) form to the ATO – whether the payment was 100 days late, or 1 day late. If a business fails to lodge this form, interest will accrue.

A final note to take into consideration: as the ATO continues to collect more information in real-time, the level of business scrutiny is likely to increase. Late superannuation payments may trigger additional interest and an investigation into previous history on superannuation payments. The end result for a business in breach of superannuation legislation may be an investigation or audit, or long-term interest charged on historically unreported late payments, among other consequences.

How can Halkin Business Partners help?

Make sure you have all your ducks in a row. Halkin Business Partners can help you keep your record-keeping, payroll, and tax practices watertight. Speak to one of our advisers today to see how we can streamline your operations.

Why a Business Valuation is important for growth

As a business owner, it’s highly likely that you’re consistently focused on operations and growth; your drivers of strategic success are based on maintaining your market position and leveraging available opportunities for expansion. This is a common, effective, and logical. However, do you currently know what the true value of your business is? Staying aware of this important information may help you in your operational decisions in the near future, and for long-term, blue sky planning.

Having an up-to-date business valuation allows you to better understand your assets, your resale value, and can even provide you with better leverage or negotiating power when entering into any sort of mergers and acquisition talks. The Australian Tax Office (ATO) also requires accurate business valuation information for a number of discrete tax situations, including:

  • changes in capital structure
  • changes of ownership
  • capital gains tax rollovers
  • company divestments
  • company acquisitions
  • formation of, entry to, or exit from a consolidated group

So, it’s clear that business valuation is important, but many business owners don’t know where to start. A valuation can be based on multiple methods, including market-based, income-based, asset-based, or costs-based. If that wasn’t enough, there’s further complexity; once an appropriate method is chosen, you need to then look at factors like comparable transactions and trading, capitalisation of earnings, discounted cash-flow, and net asset calculation.

If you’re thinking about selling your business, seeking further investment for growth, or entering into a merger or acquisition, make sure your business is appropriately and accurately valued. If you’re dealing with personal issues such as a divorce, the death or disability of a business partner, or even just starting to think about retirement and succession planning, a valuation is also an important piece of information to inform your decisions.

Having a financial specialist facilitate your valuation is recommended to ensure your business’s specific individualities are accounted for correctly. At Halkin Business Partners, we understand that each of our clients is unique, with their own financial circumstances, individual needs and goals. Understanding your business in this way allows us to tailor appropriate wealth strategies and services.

How can Halkin Business Partners help?

Talk to our financial specialists to see how we can assist in valuing your business, and grow your wealth. Our expertise in managing wealth creation and transfer, retirement, debt and risk management/mitigation services allows us to optimise your circumstances for financial success.

NSW Budget Announcement

The NSW Government will continue to support local businesses impacted by COVID-19 with policies to make business management easier. This will allow impacted businesses the opportunity to re-build, attract investment and create jobs for the future. The Government has endeavored to turn around a historic $16b budget deficit bought on by the COVID-19 pandemic by undertaking a major reform of its tax system.

We have directed our attention to the following updates:

  • Payroll Tax
  • Land Tax
  • Stamp Duty
  • Out and About Scheme

Payroll tax further cuts

In May 2020, the NSW Government brought forward by one year, the increase in payroll tax threshold to $1 million.

This Budget announces:

  • a further permanent increase in the payroll tax-free threshold from $1 million to $1.2 million from 1 July 2020.
  • A cut to the payroll tax rate from 5.45% to 4.85% from 1 July 2020 for two years.

 Land tax relief extension

The Budget extends the land tax COVID-19 relief for landowners to 28 March 2021 in modified form. To be eligible for relief from 1 January 2021 to 28 March 2021:

  • the lease must be a retail lease;
  • the annual turnover of the tenant must be less than $5 million;
  • the tenant needs to re-establish eligibility by demonstrating a 30%  decline in turnover (15% for non-profits) for the December quarter 2020.

 Stamp Duty for future homebuyers

Home buyers in the lower price range could be big winners under a major overhaul of the state’s stamp duty tax. The new take on stamp duty will give house hunters the choice of paying stamp duty upfront or opting for a smaller annual property tax.

The Government will seek community feedback on the proposed model, which it says will inject more than $11 billion into the NSW economy in the first four years.

Out and About program

The NSW Government will inject up to half a billion in the Out and About program to stimulate spending in the local economy, including restaurants, visitor sites and cultural attractions.

Every adult in NSW will get four $25 digital vouchers to spend separately on dining and entertainment. Two vouchers can be used for eating in venues and two can be used for entertainment and recreation –cinemas, amusement parks, performing arts and art galleries. The program will be trialed in Sydney’s CBD in December 2020 and rolled out across the rest of the state next year.

As your trusted advisor we understand the necessity to be proactive and channel Government information to all our clients and friends when available. At Halkin Business Partners, our stimulus team is dedicated to assisting you with any queries you may have regarding the State budgets announcement. Please contact us at stimuluspackage@halkinbp.com.au and a consultant will revert back with urgency.