Issue 124 - August 2018
When running a small business that requires bricks and mortar, the big question is - do you buy or rent? There is no single right or wrong answer to this question, but we have summarised here the advantages and disadvantages of buying.
Advantages to Buying
Fixed Costs – Knowing your long term commercial mortgage repayments can be reassuring when budgeting (subject to any interest rate changes, fixing rates can mitigate risk).
Tax Benefits – As an owner, there are tax deductions available for costs associated with the property. Capital gains concession may be available for profits on sales of business premises.
Access to equity – You may be able to use the property as security for other business/property finance.
Additional income - In some cases, the property may be too big, allowing the opportunity of renting out a portion of it to a tenant. If your business outgrows your premises, you have the option of renting out the entire space or selling it.
Capital growth - If you have purchased your property within an area of appreciating land values, the prospect of selling for a profit is a positive one.
Control – The security and freedom gained by owning is an advantage. If any improvements are required, you can add value to your investment.
Disadvantages to Buying
Lack of flexibility – You do not know what the future may hold – for example if your business grows rapidly, your owned space may be inadequate, forcing a premature sale of the property.
Upfront costs – You will usually need a deposit even if you are borrowing funds. The initial upfront costs of purchasing a property can be high, such as appraisals, associated fees such as stamp duty (if applicable), property improvement and transfer costs. Note that no stamp duty is payable in SA on the purchase of commercial property under current laws.
Agility – Be aware of the risks associated with selling (especially if it becomes urgent) and the vacancy rate in your area. Make sure to do your homework, understand your risks and keep abreast of the current market.
Capital loss – Sale of the property could result in a loss if it is sold for less than the amount for which is was purchased.
Maintenance and improvements – as an owner you are solely responsible for maintaining the property and making any improvements.
If you are considering buying premises for your business, please contact your Brentnalls SA advisor to discuss further.
Although small businesses do not have corporate social responsibility (CSR) programs in place as large companies do, they do have just as much opportunity to contribute to sustainable business.
Businesses that adopt socially responsible practices can benefit by saving money on costs, attracting better quality candidates, improving their image in the community, increasing sales from customers with similar values, and most importantly, contributing to good causes and a more sustainable environment.
Building a socially responsible business helps to set your business apart from competitors, improves your reputation and, ultimately, ensures your business is acting in an ethical and moral manner.
Here are three tips for improving your business' social responsibility:
1. Start small
You don't have to be a multi-million dollar company to give back. All businesses, regardless of their size, can support a local community or environmental initiative, whether that be sponsoring a local school sporting team, volunteering or contributing to local arts and culture. Socially responsible businesses start by considering their neighbourhoods, communities, supply chains and the environment in their business mission and overall business conduct.
Environmentally harmful products and production and manufacturing methods not only damage the environment but they also harm your reputation. Adopt eco-friendly practices such as reducing your business' energy consumption, by switching to enviro-friendly fixtures and appliances, switching off equipment at the end of the working day and so forth. Look to sourcing ethical and sustainable materials and products and implementing strict recycling and reusing programs in the workplace to reduce your business' carbon footprint.
Help solve community issues - whether it's a local or global cause. Align your business' values to a cause or variety of causes and create a program. For example, you may hold an annual fundraiser for a women's shelter, create a volunteering program with a nursing home or partner with a global charity. Look for creative ways of solving community issues and team up with other community groups and local businesses for more impact. If you get stuck for ideas, utilise your community to garner suggestions.
The legislation to enact the Government's seven-year personal income tax reform plan, as announced in the 2018 Federal Budged, passed Parliament on 21 June 2018. The new rates for adult resident individuals are as follows with changes highlighted.
If you have any questions in relation to the personal income tax reform plan, contact your Brentnalls SA team member today.
When an employee is dismissed or they quit; there is a chance they are owed money, otherwise known as employment termination payments.
If an employee leaves the business, they may be entitled to several lump sum payments, some of which are taxed differently to normal income. Understanding what is owed and making these payments promptly will help ensure the ex-employee moves on quickly and harmoniously.
Employment termination payments include lump sum payments that cover the following:
- Payment owing for any of the employee's unused rostered days off;
- An employee's invalidity payment, often relating to payments for permanent disability, other than compensation for personal injury;
- Specific payments after the death of an employee;
- Gratuity payments (or 'golden handshake' payments); and
- Payments in lieu of notice.
Other payments leaving employees may be eligible to receive include payments for unused annual or long service leave, or the tax-free portion of a genuine redundancy or early retirement scheme. These payments are not included in ETP; but they can be taxed concessionally.
It is important to be aware of the special tax treatment and differing caps on concessional treatment of ETPs.
ETPs require a special payment summary, separate to those used for an employee's usual income.
If you have any questions regarding ETP, please contact your Brentnalls SA team member.
FBT Exemption: For Minor Private Use Of Eligible Vehicles
The ATO has now finalised its guidelines on "minor, infrequent and irregular" use of Fringe Benefit Tax (FBT) exempt motor vehicles (such as utes and vans).
A fringe benefit occurs when an employer makes a vehicle they hold available for the private use of its employee. In the case of an exempt benefit, where the private use of eligible vehicles is within the "minor, infrequent and irregular" use it will be tax-free.
You can download our Fact Sheet here or alternatively contact our office for further clarification around these new changes that may affect your business.
The guidance applies to the current FBT year, so policies should be reviewed as soon as possible to minimise the impact.
If you have any questions regarding ETP, please contact your Brentnalls SA team member.
What is it?
RecWise is a web based balance sheet software tool. Ideal for finance teams that handle the reconciliation of accounts at month close in excel. RecWise meets compliance needs and improves transparency over the process.
RecWise ensures segregation of duties against each reconciliation as well as allowing the implementation of KPIs for the finance team. Automatically complete reconciliations that meet specific rules thereby reducing workloads and freeing up valuable resources to help in other areas of your business.
Improve continuity by adding hints and purposes to each reconciliation meaning that if you have staff changes, new staff can get up to speed quickly. Reports also add visibility across the process so ageing items can be managed.
RecWise has been developed and delivered in Adelaide.
Who can it help?
Finance teams where the old paper based reconciliation process, generally done in Microsoft Excel, needs a modern robust framework.
- Auto-complete reconciliations saving time
- Improve the annual compliance process
- Save on storage costs and printing costs
- Know the number and value of outstanding reconciling items
- Visibility over financial close
- Standardise the process
Subscription based at a cost of $500 per user (ex GST) per annum or under $1.40 a day. There is a five user minimum requirement and Installation depends on the size of your business. If you would like to arrange a demonstration, it will take around 60-90 minutes.
Congratulations to Kid Sense Child Development on recently winning the South Australia Small and Succeeding Category at the 2018 Telstra Business Awards.
Congratulations to Emily Raven and Rachel Mead from My Kingdom for a Horse on recently winning Best Café Dining-Adelaide City at the recent 2018 Restaurant and Catering Awards.
We welcome Kayla McLeod who has joined us as a junior administrative assistant.
We welcome Liam Marussi-Marks and Rhys Jones and who have joined us as junior accountants.
We welcome Daniel Kohnke who has joined us as an intermediate accountant and Magda Wilbik who has joined us as a senior accountant.
We farewell Natalie Biller after 7 years and wish her all the best in her future role.
We farewell Madison Hampel and Zoe Anastasiou and wish them well with all their future endeavours.
We congratulate Caitlin Smith on recently completing the Chartered Accountants Program.
We congratulate Nadine Hill, Christina Gulliver, Bradley Barnes and Danny Haydon who have been promoted to Principals of the firm.
Congratulations to Bradley Barnes and his wife Emma on the birth of their baby boy Harry, a little brother to Evie.
We recently held a morning tea to help raise funds for Motor Neurone Disease of SA. We are pleased to announce that we raised over $350.00 towards this great cause.
Hi, my name is Matthew Merrett. I joined the Brentnalls SA team in December 2016 as an intermediate accountant.
I recently graduated from the University of South Australia, and am currently enjoying a study break before I commence the Chartered Accountants program in 2019.
I grew up in the South East near Penola where my parents are potato farmers, a likely explanation for my passion of working with Agri clients. I also enjoy providing clients with the data and tools from our business advisory services to assist them with taking their business to the next level.
Away from work, I am a keen sportsman, focusing on football in the winter and Golf through the summer. I also like to get back to the South East whenever possible with my partner Abbey and our dog Archie.