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Managing a Business

3 Numbers Every Small Business Owner Must Know

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When running a small business, there are three number you need to know and fully understand. Financial statements contain a lot of information. They tell a story about how the business is performing and if it has the potential to see long term success. It’s important to dive into all the numbers on your financial statements, but when we look at the big picture, it’s important for you to know these 3 numbers: REVENUE + GROSS PROFIT + NET INCOME (PROFIT) Revenue: the amount of money your business received income for a period of time (different than the term sales which refers to the quantity in which you sold) Gross Profit: the amount of money left when you subtract cost of goods sold (labor & materials) from revenue This number shows the efficiency of the production of the product or service you sell Net Income (Profit): the amount of money left when you subtract ALL expenses (cost of goods sold + fixed expenses like rent & marketing) from Revenue This is how much money your business made over a period of time You should have absolute clarity over what these numbers look like in your business. It’s important to compare these to your past & industry standards to understand what changes you want to make. >>>If you realize your gross profit is far below industry standard or that your revenue is decreasing month over month, you can make changes in your business to improve these numbers. Give us a call, or book in a free consult. 

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Managing a Business

Setting Up Financial Processes for Your New Business

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Starting a business is an exciting journey, but ensuring your financial processes are robust from day one is essential for long-term success. Here’s a comprehensive guide tailored to female entrepreneurs in service-based industries to help you navigate the financial landscape effectively. Step 1: Choose the Right Business Structure Your financial setup begins with selecting the correct business structure—sole trader, partnership, company, or trust. Each has unique tax implications and reporting requirements. Sole Trader: Simple setup, lower costs, but personal liability for business debts. Partnership: Shared responsibility and profits, with individual tax on shares. Company: Limited liability, but more complex reporting and higher costs. Trust: Tax-efficient but requires a trustee and detailed management. Useful Link: ATO Business Structures Guide Step 2: Open a Business Bank Account Keep personal and business finances separate. A dedicated business bank account simplifies expense tracking, tax reporting, and cash flow management. Compare Features: Look for low fees, online banking, and integration with accounting software. Use Overdrafts Carefully: Only as a backup to manage temporary cash flow gaps. Step 3: Register for an ABN and Relevant Taxes An Australian Business Number (ABN) is mandatory for invoicing and claiming GST credits. Depending on your projected turnover, you may also need to: Register for GST if your turnover exceeds $75,000. Pay PAYG Withholding for employees. Manage Fringe Benefits Tax (FBT) if applicable. Useful Link: ABR Register for an ABN Step 4: Invest in Accounting Software Cloud-based accounting software streamlines invoicing, expense tracking, and compliance. Popular Tools: MYOB, Xero, QuickBooks. Automation: Automate recurring invoices and superannuation payments. Integration: Sync with your bank account for real-time updates. Step 5: Develop a Record-Keeping System Accurate records are essential for audits, tax reporting, and financial planning. Digital or Manual: Choose a system that suits your workflow. Document Everything: Include receipts, invoices, and contracts. Retention Period: Keep records for at least five years. Useful Link: ATO Record-Keeping Guidelines Step 6: Create a Budget and Forecast Budgets and cash flow forecasts provide a roadmap for your financial decisions. Categorize Expenses: Fixed (rent) vs. variable (marketing). Plan for Growth: Allocate funds for expansion or new services. Update Regularly: Adjust based on actual performance and market trends. Step 7: Understand Compliance Deadlines Stay ahead by noting critical dates: BAS Lodgments: Monthly, quarterly, or annual reporting. Superannuation Contributions: Quarterly deadlines. Income Tax: Annual returns based on your structure. Step 8: Build a Financial Support Network Seek professional guidance to strengthen your financial processes. Bookkeepers: For day-to-day financial management. Accountants: For tax planning and compliance. Mentors: Experienced business owners who can offer practical advice. Final Thoughts Building strong financial processes from the outset sets the foundation for sustainable growth. Take proactive steps, seek expert help when needed, and adapt to changes in regulations to keep your business thriving. Useful Link: ASIC MoneySmart Starting a Business

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Managing a Business

A Beginner’s Guide to Financial Processes for Startups

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Embarking on a new business venture? Establishing robust financial systems is crucial for turning your vision into a profitable enterprise. Here’s how you can lay a solid financial foundation tailored to the needs of female entrepreneurs in service-based industries. Step 1: Understand Financial Basics Before diving into processes, familiarize yourself with key financial concepts: Cash Flow: The movement of money in and out of your business. Profit and Loss Statement: Tracks income versus expenses. Balance Sheet: A snapshot of your assets, liabilities, and equity. Step 2: Set Up Financial Accounts Separating personal and business finances is non-negotiable. Business Bank Account: Simplifies tax and cash flow tracking. Petty Cash: For minor business expenses. Step 3: Plan for Taxes Early Tax obligations are part of running a business. Start planning from the beginning: GST Registration: Required if turnover exceeds $75,000 or from your first dollar if you are operating a taxi or limousine services business. Registered charities targeting turnover over $150,000 must also register. PAYG Withholding: For employee salaries. Quarterly BAS: Stay on top of GST and PAYG reporting. Useful Link: ATO Tax Basics for Small Business Step 4: Choose Your Accounting Software The right software can save you hours of manual effort: Features to Look For: Invoice generation and automated reminders, plugins and integrations necessary to your business, expense tracking, and BAS preparation. Consider payroll options available and what your business may need a year from now. Scalability: Choose a solution that grows with your business. Free Trials: Test tools like Xero or MYOB before committing. Step 5: Develop a Budget Budgeting is a proactive way to manage finances and prevent overspending. If you think you are ready for more sophisticated budgeting, please don’t hesitate to reach out to our team. Start Simple: List expected income and expenses. Include Contingencies: Plan for unexpected costs. Review Weekly: Update to reflect actual performance. Set up dashboards within your accounting software to suit your goals and track your financial movements weekly at a minimum with KPIs. Step 6: Track Every Dollar Accurate tracking minimizes errors and enhances decision-making. You need to be making decisions based on current finances. Bank Reconciliation: Match transactions to bank statements. Expense Categorisation: Separate personal and business expenses. Create categories for key expenses within your chart of accounts and re-assess as needed to identify areas of improvement within your expense expenditure. Mileage Tracking: Record vehicle use for tax deductions. Is your vehicle used for both personal and work purposes? Keep a logbook and track the percentage of time in a year that you used it for work purposes. We can help you keep track. Step 7: Establish Payment Policies Clearly defined payment policies ensure smooth operations. Payment Terms: Specify due dates and penalties for late payments from your customers. Providing Credit to Customers: Develop strict credit application criteria and guidelines. Define what your business can stand to offer, what debt collections practices look like and what client requirements there are to ensure you are providing credit where there is an extremely high probability of payment. Invoice Templates: Include all necessary details for compliance; ABN, your address, ‘Tax Invoice’ labels, date of transaction etc. Follow-Ups: Send reminders for overdue invoices using Xero automation tools. Step 8: Prepare for Growth Scalable systems help you handle increased complexity as your business expands. Outsource When Needed: Engage professionals for bookkeeping, admin, payroll and BAS. Monitor Metrics: Use financial KPIs like net profit margin and ROI. Invest in Learning: Attend workshops to sharpen financial skills. Final Thoughts Starting strong with well-defined financial processes sets you up for long-term success. Combine discipline, the right tools, and professional advice to navigate challenges and capitalize on opportunities. Useful Link: ATO Starting Your Business Checklist

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Mental Health For the Entrepreneur

Prioritising Mental Wellness in Business

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As an entrepreneur, balancing the demands of running a service-based business with personal well-being can be challenging. In 2025, mental health continues to be a focal point for sustainable entrepreneurship. Changes from July 1, 2025 The government will introduce incentives for businesses promoting employee wellness, including subsidies for mental health training and resources. Implementing these practices can also benefit you as an owner. Wellness Tips for Business Owners Set Boundaries: Define your work hours and personal time to avoid burnout. Delegate: Trust your team or outsource tasks like bookkeeping and admin to maintain your focus on priorities and sustainable business growth. Do what you do best and delegate elsewhere. Invest in Self-Care: Schedule regular breaks, exercise, and mindfulness practices. Build Support Networks: Connect with other business owners for encouragement and shared experiences. Networking with the right circle can provide a sounding board when you need it most. Recognizing Warning Signs Persistent fatigue or irritability. Difficulty concentrating or feeling overwhelmed. Useful Link: Beyond Blue Business Resources

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Managing a Business

Financial Literacy for Entrepreneurs

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Financial literacy is a cornerstone of long-term success. For women in service-based industries, understanding your numbers empowers you to make informed decisions and seize opportunities. Changes from July 1, 2025 New financial reporting standards for small businesses will come into effect. Simplified templates will be introduced, making it easier to understand and present financial data. Key Areas of Focus Understand Your Cash Flow: Regularly review inflows and outflows to maintain stability. Separate Personal and Business Finances: Use dedicated business accounts to simplify tracking and reduce errors. Set Clear Goals: Align budgets with both short-term needs and long-term aspirations. Invest in Learning: Attend workshops or consult financial advisors and bookkeepers to build your expertise. Common Financial Missteps Overlooking Tax Obligations: Stay proactive about deadlines and liabilities. Skipping Emergency Funds: Always allocate a portion of earnings to a contingency fund. Speak to your bookkeeper about how much you should realistically be setting aside. Useful Link: ATO Financial Literacy Hub

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Cash Flow Essentials

Cash Flow Management for a Thriving Business

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Healthy cash flow is the lifeblood of any business, and for Australian business ownersin 2025, managing it effectively is more important than ever. With rising costs and economic uncertainties, understanding your cash position can make the difference between thriving and merely surviving. Changes from July 1, 2025 The government will implement a mandatory small business cash flow reporting tool for businesses with turnovers under $10 million. This tool aims to provide real-time insights into cash flow trends and identify potential risks. The Importance of Cash Flow Cash flow reflects the financial health of your business. Positive cash flow ensures you can meet obligations, invest in growth, and handle unexpected expenses. Conversely, negative cash flow can lead to stress, missed opportunities, and even insolvency. Practical Tips for Cash Flow Management Track Receivables: Monitor customer payments closely and follow up on overdue invoices promptly. Manage Payables: Negotiate extended payment terms with suppliers where possible to improve liquidity. Create a Cash Flow Forecast: Predict inflows and outflows for the next 6-12 months to anticipate shortfalls. Adopt the New Tool: Familiarize yourself with the government’s cash flow reporting tool to streamline processes and stay compliant. Build an Emergency Fund: Set aside a portion of profits as a buffer against unexpected costs. Avoiding Common Pitfalls Overestimating Revenue: Base forecasts on historical data and market trends, not overly optimistic projections. Ignoring Small Expenses: Track all expenditures, as minor costs can add up over time. Delaying Action: Address cash flow issues immediately to prevent them from escalating. Strategic Insights Consider diversifying your revenue streams to reduce reliance on a single source of income. Additionally, exploring financing options like invoice factoring or small business loans can provide a safety net during lean periods. Useful Link: ASIC MoneySmart Business Tools

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Payroll

Simplify Payroll with STP Phase 2

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Single Touch Payroll (STP) Phase 2 has been fully rolled out, and compliance is mandatory for Australian businesses in 2025. This enhanced system requires employers to report additional information to the ATO, including income types, tax treatments, and employee details. Staying compliant not only avoids penalties but also ensures accurate and transparent payroll processes. Changes from July 1, 2025 From July 1, 2025, the ATO will require additional reporting on leave balances, including long service leave and personal leave accruals. Employers must ensure these details are correctly recorded and reported. What’s New in STP Phase 2 The latest phase builds on the original STP system by introducing detailed reporting requirements, such as: Disaggregation of Gross Income: Report earnings under specific categories (e.g., allowances, overtime). Expanded Employee Details: Include information like income type, employment basis, and Medicare levy exemptions. Streamlined Tax File Number (TFN) Declarations: Submit TFN details directly through STP-enabled software. Steps for Compliance Upgrade Your Software: Ensure your payroll software is STP Phase 2-compliant and can handle the new leave balance reporting requirements. Review Employee Records: Update employee data to include all required details, such as employment type and income categories. Educate Your Team: Train your payroll staff or bookkeeper on new requirements to minimize errors. Conduct Test Runs: Use your software’s testing features to identify and fix issues before live submissions. Benefits of Compliance STP Phase 2 reduces administrative burdens by automating many reporting tasks. It also enhances transparency with the ATO and improves accuracy in employee tax records. Common Mistakes to Avoid Incomplete Employee Details: Missing or incorrect information can lead to rejections or penalties. Neglecting Transition Deadlines: Ensure your systems are fully compliant by the specified dates. Overlooking Allowances: Properly categorize allowances and deductions in line with ATO guidelines. Future-Proofing Your Payroll Regularly review your payroll processes to stay ahead of legislative changes. Partnering with an experienced bookkeeper or accountant can provide peace of mind and ensure long-term compliance. Useful Link: STP Phase 2 Guide

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GST

Mastering GST Reporting with Ease

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For Australian business owner-operators, managing Goods and Services Tax (GST) is a key aspect of financial compliance. In 2025, the GST threshold remains at $75,000 annually, meaning businesses earning above this must register and lodge regular BAS (Business Activity Statements). Staying on top of GST obligations not only keeps you compliant but also improves cash flow management and business transparency. Changes from July 1, 2025 The government has introduced enhanced digital BAS reporting requirements starting July 1, 2025. All businesses registered for GST must use software that directly integrates with the ATO’s systems for real-time data submission. Manual lodgments will no longer be accepted. Why GST Matters GST compliance is not just about avoiding fines; it’s a reflection of your business’s professionalism. Lodging accurate BAS statements can build trust with the ATO and help you avoid costly audits. Additionally, it allows you to claim GST credits for business-related purchases. Key GST Obligations Register for GST: If your turnover exceeds $75,000 annually, you must register. Voluntary registration is also possible for businesses under the threshold. Charge GST: Add 10% GST to your taxable goods and services. Keep Records: Maintain detailed invoices, receipts, and transaction records. Lodge BAS: Submit BAS statements either monthly, quarterly, or annually, depending on your reporting cycle. Steps to Simplify GST Management Use Accounting Software: Ensure your software is updated to comply with the new digital BAS submission rules. Reconcile Regularly: Perform monthly reconciliations to ensure all income and expenses are accurately recorded. Understand Input Tax Credits: Claim GST credits on eligible business purchases to reduce your net liability. Set Aside GST: Open a separate bank account for GST collections to avoid spending funds meant for the ATO. Common Errors to Avoid Incorrect GST Classification: Ensure you understand what’s taxable, GST-free, or input taxed. Missing Deadlines: Late lodgments attract penalties and interest charges. Overlooking Small Transactions: Even minor errors can accumulate and cause issues during audits. Advanced Tips Consider engaging a bookkeeper or accountant to review your BAS lodgments periodically. They can identify trends, rectify errors, and provide strategic advice to optimize your GST position. Useful Link: ATO GST Guide

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Superannuation

Staying Ahead with Superannuation Compliance

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For Australian business owner-operators, superannuation compliance is not just an obligation—it’s a key part of maintaining a healthy, trustworthy business in 2025. With the Super Guarantee (SG) rate now at 11%, ensuring contributions are made accurately and on time is more important than ever. This is especially vital as penalties for late payments can include interest and administrative charges, which can significantly impact small businesses. Changes from July 1, 2025 From July 1, 2025, the SG rate will increase to 12%, in line with the government’s commitment to boosting retirement savings. Employers need to prepare for this change by adjusting payroll settings and budgeting for the higher contribution rate. Why Super Compliance Matters Superannuation isn’t just a legal requirement; it’s a way to show your commitment to your employees’ future. Failing to meet obligations can result in financial penalties and harm your reputation. With super being such an integral part of employee benefits, compliance also boosts staff retention and satisfaction. Understanding SG Deadlines Super contributions must be made quarterly, and the deadlines for 2025 are: January to March: Payment due by 28 April April to June: Payment due by 28 July July to September: Payment due by 28 October October to December: Payment due by 28 January Missing these deadlines can lead to penalties that aren’t tax-deductible, so timely payments are critical. Practical Steps for Compliance Automate Payments: Most accounting software platforms allow you to automate superannuation payments. This reduces the risk of human error and ensures payments are made on time. Review Payroll Settings: Double-check that your payroll system accounts for the 11% SG rate and adjusts automatically to 12% from July 1, 2025. Communicate Changes: Inform your employees about the increased contributions to avoid confusion or concern. Keep Accurate Records: Maintain detailed records of all super contributions for each employee. This is essential for audits and resolving disputes. Common Pitfalls to Avoid Underpayments: Ensure you calculate SG based on the correct earnings base, including overtime and bonuses where applicable. Missing Deadlines: Late payments attract a Superannuation Guarantee Charge (SGC), which includes penalties and interest. Ignoring New Employees: Ensure new hires are added to your super system promptly. Looking Ahead Stay informed about potential changes to superannuation laws, as updates can affect rates or deadlines. Proactively managing compliance now saves time, stress, and money down the line. Useful Link: ATO Super Guarantee Information