A few thoughts on achieving business growth

A few thoughts on achieving business growth

Growth is important when it comes to business. To remain viable most companies need to keep evolving, staying ahead of their competitors and innovating to meet the needs of a continually changing marketplace. It’s also personally gratifying to feel a sense of progression and be rewarded for the hard work that is part of running a successful business. There are some considerations, however when it comes to achieving growth as not all kinds of growth are equal.

Business growth can be measured in a variety of ways. While there is inevitably a focus on turnover and revenue other metrics can be used to measure, manage, and communicate results. Alternative financial metrics that can be used to track growth include sales and earnings growth figures, while non-financial indicators can also be effective measures of growth such as market share, customer loyalty and product quality or range. It’s important to reflect on what growth means to you and what measures of growth apply to your business objectives.

Decoupling scale and growth

It can be common to think of growth in terms of size – larger premises, increased number of personnel or greater manufacturing capacity – but it’s important to recognise that bigger does not necessarily mean more profitable. Bridgestone is the largest tyre manufacturer in the world according to market share and manufacturing figures. However, German manufacturer Continental records profits that are triple that of Bridgestone. What it lacks in scale, it makes up for in lower manufacturing costs, standardised processes, and better paying customers.

These companies have both pursued different growth strategies and while there are certainly benefits associated with increased scale of operations, it is possible to focus on growing revenue without scaling up much or even at all, by implementing efficiencies to reduce overheads.

There are also some advantages associated with being smaller. It can be easier to maintain a strong customer service focus and you tend to have greater autonomy and control, for example being able to be discerning about what projects you take on and make decisions without being answerable to a board or shareholders. One additional compelling advantage in today’s economic climate is being able to respond quickly to pivot and adapt to changing market conditions, something the big players can struggle with.

Many paths lead to growth

There are almost as many schools of thought as to the best ways to achieve business growth as there are businesses and it can be quite overwhelming trying to decide what’s right for you.

The primary types of growth a business can experience include:

Organic - focussing on increased products and services.

Strategic - looking at various measures to achieve longer term growth.

Internal - involving using currently available resources in a better way.

Partnership/ merger/ acquisition - can help businesses to enter, sustain and grow in a new market.

Considerations when pursuing growth

Growth that is not carefully managed can lead to resources being spread too thin, impacting staff morale, leading to customers feeling neglected and, in some cases, lower profits.

Pursuing growth can require investments in people, equipment, space, and suppliers. As these outlays occur before any potential increase in revenue, many businesses find themselves under pressure financially. On that note it’s important to manage your cashflow carefully. Effective credit management and tight control of overdue debts are essential.

Finally, one of the most powerful things you can do when aiming to grow your business is put your plan for growth down on paper. That takes business growth from being something that’s trickling away in the background to something you are actively and strategically pursuing.

Onwards and upwards!

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


What you should know before filing for bankruptcy

What you should know before filing for bankruptcy

As interest rates and debt levels rise, many individuals and small business owners are feeling the pinch. Most will make it through with some belt-tightening, but some may need to take further action.

As a last resort, a debt agreement or bankruptcy may be an option. But what are the implications?

Solutions to financial pressure

There are many reasons consumers and businesses are finding it harder to pay their bills, with pandemic closures, natural disasters and now an energy crisis piling on the pressure.

Figures from the Australian Financial Security Authority (AFSA) show in April 2022 there were 700 new personal insolvencies across the country, with the majority (61.4 per cent) being bankruptcies. Within these, 37.7 per cent were business-related bankruptcies.

But bankruptcy is not the only option. If you find yourself unable to pay your debts, you can also consider making a debt agreement, a personal insolvency agreement, or seeking temporary debt protection (TDP).

A TDP prevents creditors from seizing your assets or wages and gives you time to seek advice, while the other formal insolvency options (such as debt and personal insolvency agreements) are a longer-term answer for pressing financial problems.

Debt and declaring bankruptcy

The best-known formal insolvency option is bankruptcy. This is a legal process where you are released from most of your debts and can make a fresh start with your finances.

In 2020-21, around 6,800 Australians declared bankruptcy. This was 46.7 per cent down on the previous year, due largely to the special debt forgiveness rules in place due to COVID-19.

Although bankruptcy is tempting when you or your business are drowning in unpaid bills, it’s a serious step so please speak to us to understand the consequences before taking any action.

Once you file for bankruptcy, a Trustee is appointed to manage your ‘bankrupt estate’ and dispose of assets to pay your debts. If you earn over a set amount during your bankruptcy, you may be required to make compulsory ‘contributions’ from your income to your Trustee.

Impact of bankruptcy

Bankruptcy has serious consequences. Your name will permanently appear on the National Personal Insolvency Index, which is likely to affect your ability to obtain credit in the future. When applying, you must inform any credit provider you are bankrupt and credit reporting agencies will keep a record of your bankruptcy for five years from the date you become bankrupt.

You are required to request written permission from your Trustee to travel overseas, even if it’s for work. Travelling without permission could extend your bankruptcy or result in a prison sentence.

Bankruptcy doesn’t stop you from working and normally the AFSA doesn’t inform your employer, but there are limitations when operating as a sole trader. Court permission is required to be a company director or manage a company.

Your Trustee may sell your assets to help repay your debts, although you are able to keep ordinary household goods, tools up to a set amount used to earn your income and vehicles valued under a threshold.

Recoverable debts

Once you are discharged from bankruptcy (which usually lasts for three years and one day), your creditors can’t recover any remaining pre-bankruptcy debts.

Bankruptcy doesn’t, however, release you from all your debts. If you have secured debts (such as a mortgage over your home), creditors have the right to take possession of your property even if you are in bankruptcy.

While most unsecured debts (such as credit cards, personal and pay day loans, utility bills and unpaid rent) are covered by bankruptcy, some debts must be paid. These include court-imposed penalties, child support and debts incurred after your bankruptcy starts.

Tax and bankruptcy

If you declare bankruptcy, you still need to lodge a tax return and outstanding personal returns and Business Activity Statements must be filed.

The ATO ranks equally with other unsecured creditors, so if it’s one of your creditors, your Trustee will not necessarily pay this debt first. The only priority tax claims are unpaid Superannuation Guarantee Charge (SGC) debts if you have employees.

If your Trustee decides to sell some of your assets to clear your debts, this may create a capital gain or loss and the CGT event must be recorded in your annual tax return. The ATO may also offset any tax refunds you become entitled to against any tax, child support or family assistance debts.

If you are experiencing financial difficulties, please call us to discuss your options.

Source: Australian Financial Security Authority

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


How to protect your business against scams and cyber threats

How to protect your business against scams and cyber threats

Cybercriminals are are becoming increasingly sophisticated in their exploits, using the latest technology as well as good old fashioned deception techniques to extract vast amounts of money from businesses. If you've not yet had a bad experience, firstly, consider yourself lucky and second, don't take your luck for granted.  Take every precaution...

In the 2020-21 financial year alone, individuals and businesses in Australia reported total losses of more than $33 billion. The main types of cybercrime were fraud (23 per cent), shopping (17 per cent), online banking (12 per cent) and ID theft (7 per cent); while Queenslanders were the most frequent targets, at 30 per cent of total reports.i

The federal government agency, the Australian Cyber Security Centre (ACSC) says there was an increase in the severity and impact of incidents last year with nearly half categorised as “substantial”. They are also becoming more frequent. The agency received reports of cyberattacks at a rate of about one every eight minutes during the year, up from every 10 minutes the previous year.

Business losses add up

Small to medium businesses were often in the firing line. Small businesses lost an average $8,899 each in cyber scams during the year while medium businesses lost an average $33,442 each.

One of the most significant threats is so-called ransomware, malicious software that blocks access to a computer system until money is paid. The ACSC reports a 15 per cent increase in attacks with ransom demands ranging from thousands to millions of dollars.

But it’s not only the loss of money that affects organisations. The attacks also disrupt services and can damage the reputation of a business if the cybercriminals carry out their threat to release sensitive data.

One regular scam has seen hackers gain access to a business’s email account then email the firm’s customers changing bank account details for upcoming payments. The payment redirection scams cost businesses $128 million in 2020 with small and micro businesses suffering most, according to the Australian Competition and Consumer Commission’s Scamwatch.

So how do scammers access your system?

Phishing for cash

Most often these cyber criminals begin by fishing, or ‘’phishing” for personal information. They do this through phishing emails, where the email appears to be a legitimate request for information, such as passwords or credit card information, or encourages the user to click a link to a website that installs malicious software on the computer.

These phishing attacks can also come through mobile phone messages and from apparently trusted friends, colleagues or business partners.

Another access point is via vulnerabilities in computer software. These vulnerabilities are regularly patched by the software vendors, so it is a good idea to keep on top of any software updates to keep your system more secure.

Time for action

It might be difficult to imagine that anyone would bother to attack you or your business, but it appears cybercriminals don’t discriminate when it comes to searching for victims. The ACSC notes that no one is immune from cybercrime. That includes everyone from government agencies, large organisations, critical infrastructure providers, small to medium businesses, families and individuals.

So, it's important to take a few steps to keep you and your business as safe as possible.

The ACSC guide to protecting your business recommends improving your chances of warding off attacks by:

  • Installing the latest anti-virus software,
  • Regular back-ups of your phones and computers in case of a ransomware attack,
  • Immediately restoring data from your latest back up to minimise any losses or business disruption,
  • Thinking carefully about responding to requests for identifying information or passwords even if an email appears to be from a trusted source such as your bank.

The ACSC warns that scammers are savvy enough to perfectly reproduce bank logos and email formats. The rule of thumb is to never give out your password to anyone and to contact the organisation directly through a phone number that you source independently of the email to check the request.

That goes for an unusual payment request from a supplier too, which may be a payment redirection scam. If your supplier unexpectedly changes their bank account details or sends an invoice you did not expect, it might be worth investigating further. Cybercrime is a serious threat that can disrupt businesses and take a heavy financial and emotional toll on individuals. So call us to discuss any concerns you may have about securing your business and personal financial information.

i ACSC Annual Cyber Threat Report 2020-21 | Cyber.gov.au

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


How to protect your business from ID thieves

How to protect your business from ID thieves

A surge in ID theft over the past 12 months has meant a significant escalation in cybersecurity threats to small businesses in Australia. We take a closer look at this trend and the countermeasures business owners now need to take.

The Australian Competition and Consumer Commission’s (ACCC’s) Scamwatch recently reported that ID theft in Australia increased 234 per cent in 2021.

The scale of the problem is worrying, with a recent survey by the Australian Institute of Criminology finding 19 per cent of respondents had experienced misuse of their personal information.

What identity criminals want

The explosion in ID crime is not just a problem for individuals, it’s a growing headache for businesses. This is due to the increasing amount of personal information they now hold, about their employees, clients and customers.

The ATO has been reminding small businessowners that ID documents are like gold to tax scammers, who can use information such as a driver’s licence, passport and tax file number to steal tax refunds and super.

Cybercriminals can also commit fraud in your name, take over your business and submit amendments to your Business Activity Statements. This makes it vital to protect key information ID thieves target, such as employees’ personal information, business records containing personal information, BAS documents and myGovIDs.

Check your physical records are protected

Worrying about the physical security of your information may seem old-fashioned, but ensuring your business premises and systems are protected is vital.

ID criminals can obtain invaluable business and client details simply by breaking into your premises and photographing business records or employee details.

To combat this, fit physical barriers such as window and door locks, file copies of documents and ID information in lockable storage units, and ensure you install an appropriate alarm system to protect against intruders.

Securing your business online

Strong online security practices are also essential to protect information about your business, employees and clients from ID thieves.

If you hold financial records, confirm the identity of anyone requesting changes to their information and fully verify new payment details. Ensure your employees are trained to identify suspicious requests for personal information, or emails that may link to fake websites built to capture passwords.

It’s also important to secure your email account through multi-factor authentication or a strong, unique passphrase.

Good online security also means changing all the passwords used in the business on a regular basis and ensuring they are not easy for potential thieves to guess. Updated security and anti-virus software needs to be installed on all devices used by the business and by any employees working from home.

When sourcing business software and support (such as payroll services), ask vendors about their system security, including where the data will be stored and their security certification and support services for data breaches.

Reporting cybercrime to the ATO

While your business’s reputation can take a real battering if you don’t have adequate protections for both your own and your clients’ ID information, there are also regulatory requirements when it comes to data breaches.

Businesses have an obligation to report all tax-related security issues to the ATO.

To help you manage your obligations to protect identity information, the ATO has an online security self-assessment questionnaire small businesses can use to check their performance in this area. This can help you identify which online security measures you are getting right as well as potential areas for improvement.

Businesses also have data breach reporting obligations under the Privacy Act. The Office of the Australian Information Commissioner has helpful tips on how to create a solid data breach response plan.

Protect your myGov ID

The government’s push for more online transactions means more and more personal and business information needs to be protected. If you or a key employee accesses the government’s online services on behalf of your business, you will need a myGovID.

This new digital identity key uses encryption technology to protect your identity when interacting with government agencies online. To strengthen protection of your identity and business information online, you can now set up face verification on myGovID.

If you are aware or suspect your myGovID has been inappropriately accessed, you need to report it immediately.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Embracing the power of automation

Embracing the power of automation

Life seems to be getting busier year after year, especially in the workplace. Just as well there are measures we can take to increase productivity and create efficiencies within not only our workplace, but our personal life as well.

Automation within organisations is a common occurrence these days due to the importance placed on streamlining processes and increasing productivity. And with technology changing at such a rapid rate, it’s empowering businesses to implement changes along the way.

While most jobs can benefit from a degree of automation, ‘automation’ doesn’t need to be and shouldn’t be a scary word. When used effectively in the workplace and your day-to-day life, it can free up time for the critical tasks, allowing you to do what you do best; foster creativity, think strategically and build relationships.

Advantages and challenges to be aware of

We all have those tasks that bog us down, they are often repetitive and prevent us from undertaking the more important aspects of our roles. Automating these mundane tasks can provide many advantages including;

  • Reducing busy work, freeing up resources to focus efforts on more important tasks that require critical thinking.
  • Increasing knowledge sharing within and between teams, with improved reporting and processes.
  • Minimising duplication of data and the possibility of data entry errors.

Introducing change comes with its own set of challenges, even if automating processes leads to improved satisfaction and productivity. Some key considerations when implementing new technology and automation include;

  • The initial costs of new products or services, team training and the time for the team to take up the new process.
  • Data security issues with the increased reliance on technology.
  • Being mindful not to introduce unnecessary complexity. Automation for the sake of automation will not always create efficiencies.
  • Developing indicators to measure the success of the new process.

Where can you start making changes today

Automation should ultimately make your working environment simpler and it’s one of the best tools we have at our disposal for efficiency. A few areas where you can begin making changes include;

  • Sales and client onboarding: Client relationships are built over time, and often require a personalised touch. However, there are simple ways to reduce the administration of finding, converting and onboarding new clients. This may include an integration between your emails and CRM for better client profiles, appointment setting tools and a sales workflow with automated emails to prospects to maintain regular touch points.
  • Data entry across various areas of the business: No one likes to get bogged down entering, or worse re-entering data. Investigate integrations between your accounting software and CRM (and any other platforms) so data only needs to be entered once. This will both reduce time and the possibility for errors.
  • Invoicing and accounts: Online accounting software enables businesses to manage accounts and payroll effectivity - but are you making the most of the tools available to you? Do team members enter timesheets directly into the accounting software, eliminating data entry? Also consider issuing repeat invoices and invoice reminders to assist with prompt payment.
  • Marketing: There has been an explosion of tools to assist you in effectively marketing your business. Consider scheduling your social media with a free scheduling tool. Share content across the business to maximise your efforts. Collect and store new leads in your CRM or email platform so you can market to them in future.

Get on board with change

There are many reasons why automating processes within an organisation is beneficial for productivity, but it can also have a positive effect on team morale and job satisfaction. By removing manual tasks and replacing them with an automated process, you could reduce stress levels and potentially have a beneficial impact on absenteeism within the workplace.

One key thing to remember is now that flexible working is a high priority for most people, whatever strategies you implement, they must have the ability to be accessed remotely.

By incrementally introducing a few new strategies across various areas of the business or your role, you’ll start reaping the rewards sooner than you think.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


How to Protect Your Business From Losing its Most Important Assets: Key Person Insurance

How to Protect Your Business From Losing its Most Important Assets: Key Person Insurance

No one ever plans on their business failing, but it happens more often than we care to think. A common cause of failure is the loss of one or more key people who can't be replaced in time. Though you can't use it to cover every possibility, key person insurance will help you insure your business against some forms of loss. In this post, we'll look at the how and why of insuring against loss of key people for Australian businesses and how it helps protect the business.

If you’re a business owner, it’s important to think about what would happen if you or one of your key employees or business partners suddenly became critically ill or died.

Key person insurance can help protect your business in the event this occurs. In some situations, it may even have tax benefits.

Understanding key person cover

Just like any insurance cover you hold in your business, key person insurance (KPI) protects your business assets. It’s just in this case what you are protecting is your human assets.

Key person cover provides a lump sum if an essential employee or part-owner suffers a critical illness, is permanently disabled, or dies. You can then use the payout from the policy to cover any financial losses caused by the key person being unable to continue taking an active role in the business.

Most policies are structured as a life insurance benefit that pays out if the key person dies, while Total and Permanent Disablement (TPD) cover pays out if the insured person suffers a disability. Trauma cover is triggered if the insured person suffers a trauma condition – like a heart attack or stroke – listed in the policy.

Business advantages of KPI

To maximise the benefits from this cover, the business should own the policy, not the insured person. This ensures the business receives the payout if a claim is made.

With these policies, if the key person in your organisation becomes ill or dies, you can use the insurance payout for expenses like recruiting and training a replacement, guaranteeing a new business loan, settling debts, or making severance and liquidation payments if the business is forced to close.

You can also use the money to cover any capital value losses and help stabilise the business’ financial position. It can also be used to replace the revenue the key person would have generated if they were still working, which can help ensure your business continues to operate.

Who is a key person?

KPI policies generally define a key person as someone directly associated with the business who provides significant economic gain and whose loss would cause it financial difficulties or call its ongoing success into question. This is typically the managing director, sales director, IT specialist or financial controller.

Even less senior employees who have strong relationships with major clients, or specialist technical knowledge on which the business relies to continue operating, may be considered a key person.

Generally sole traders and one-person incorporated businesses can’t insure themselves as a key person. If you have employees, however, you may be able to buy cover for them.

Annual premiums for KPI are based on the amount of cover applied for, together with the insured’s age, health and occupation.

Premiums may be deductible

The ATO recognises the value of KPI to many businesses and in some situations the annual premiums your business pays are considered a legitimate tax deduction.

Unfortunately, the rules around deductibility are complicated and depend on whether the policy is held for revenue or capital purposes. Generally, if you use a KPI policy for revenue purposes such as replacing lost revenue, or for operating expenses such as rent, advertising and utilities, the premiums are deductible.

If the policy is used for capital purposes such as debt repayment, compensation for loss of goodwill, or as a lump sum payment to the deceased’s estate, premiums are not tax deductible.

This is a complex area and it’s vital to document carefully the purpose of a KPI policy to ensure the deductibility of annual premiums and that any future payout is not subject to capital gains tax (CGT). The purpose of the policy should be regularly reviewed and the documentation updated to avoid future tax problems.

For more information about the tax rules around key person insurance, contact us today.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Tips to help you achieve your professional goals in 2022

Tips to help you achieve your professional goals in 2022

As we ring in the New Year, you’ve probably set yourself a few personal new year resolutions. What is the likelihood of you sticking to them long-term? Interestingly, most of us will have failed to achieve these resolutions within a few months (if not sooner).

They’ve either become so onerous that we don’t care anymore, or we simply don’t have the time – life and work often get in the way.

How about professional targets, do you set yourself professional goals as well as personal? Do you consider how you’re going to work smarter this year, is work-life balance something you want to improve upon in 2022, or is your objective to spend more time focussing on your clients and less time doing admin?

Goal setting to achieve an objective

To be successful at setting goals and actually achieving them, you must be clear on what your objective is. Goals cannot be put in place until you’ve set your objective. Once this has been decided, only then can you put steps in place to achieve it.

For example, your main objective for 2022 might be to spend more face-to-face time with clients. Ask yourself the right questions – how you currently spend your day versus how you would like to spend your day. Look at areas where you could potentially create efficiencies within the business to free up your time.

Are you spending more time managing the business's finances or working on the administration side of things as well as trying to market to your existing clients or reach potential clients each month?

That is a lot to juggle on any given day, so you should consider whether any of these tasks could be outsourced to people who can do it in half the time. Obviously, there will be costs associated with outsourcing these jobs, but you must weigh up the benefit to the business as well as your clients.

How to set attainable goals

The key to success here is to break down your goals so they are achievable. You could begin with a monthly goal, which is broken down to a weekly target and then into a daily task – what individual steps do you need to take to achieve your overall goal.

By breaking it down into individual tasks, you’ll take the pressure off, especially if you don’t manage to tick something off your daily ‘to do’ list. You can just move it to the following day.

Tips for success in 2022

  • Understand your overall objective (what does success look like?)
  • Develop a strategy
  • What tasks can be outsourced/delegated/or automated
  • Create a monthly and weekly schedule
  • Break it down and create a daily ‘To Do’ list
  • Stop multi-tasking – pay full attention to the task at hand
  • Exercise and a good night’s sleep are also important!!

Another strategy you could implement is the SMART strategy. You must ensure the goals you set are specific, measurable, attainable, relevant, and timely.

Accomplishment

Imagine finishing your workday with a sense of accomplishment, knowing that you’ve been productive and ticked everything off your ‘to do’ list as well as continually working towards your main goal.

There will be occasions where something unexpected will pop up and interfere with your day, so you must allocate time in your day to be able to deal with these situations.

Here are some useful productivity apps to help with your ‘to do’ list:

  • Trello: Collaborate and manage projects in a very visual way.
  • Evernote: Record and remember everything to tackle projects with your notes, tasks and schedule all in one place.
  • Friday: Plan your day, communicate as a team and to keep all your most important work together in one place.

We can help

If your objective is to work smarter this year, then we’re here to help. One of our objectives is to help our clients with their finances so they’re able to continue to do what they do best. Call us today to see if we can free up some of your time and assist you in achieving your goals in 2022.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


The new Australian Director ID: Do you need one?

The new Australian Director ID: Do you need one?

It’s been a busy year for many of Australia’s two million plus directors. Now there's a new task on the to-do list for all of them - including directors and corporate trustees of SMSFs.

From 1 November 2021, if you’re a director or want to become one, you will need to apply for the new Director Identification Number (Director ID) being rolled out by the Federal Government.

Directors of businesses and entities of all sizes – including directors and corporate trustees of self-managed super funds (SMSFs) – will all need to apply. If you run your business as a sole trader or partnership, however, you won’t need a Director ID.

Director ID: what is it?

The new Director ID is a unique 15-digit identifier most directors will need before they can take up a directorship.

Before you join a board, you will need to apply for your own Director ID which you will keep forever, even if you change boards, stop being a director, change your name or move interstate or overseas.

This new identifier is part of a broader registry modernisation project combining the Australian Business Registry Service (ABRS) with numerous ASIC registers to form a single system overseen by the ATO.

According to the government, unique director identifiers will create a fairer business environment by preventing the use of false and fraudulent director identities.

Who needs a Director ID?

The new regime casts a pretty wide net and will catch most business entities and organisations.

You will need a Director ID if you are an eligible officer of a company, Aboriginal and Torres Strait Islander corporation, corporate trustee, charity or not-for-profit organisations limited by guarantee, or a foreign company registered with ASIC and conducting business in Australia.

Directors of registered Australian bodies (such as incorporated associations registered with ASIC that trade outside the state or territory in which they are incorporated) also need to apply.

If your organisation has an Australian Business Number (ABN), you can use the ABRS LookUp tool to check whether it is registered with ASIC.

Officers outside the ID regime

Some company officers are not required to apply for the new identifier.

If you are a company secretary but not a director, act as an external administrator of a company, or are called a director but haven’t been appointed as a director under the Corporations Act, you won’t need a Director ID.

Neither will directors of charities not registered with ASIC to operate throughout Australia.

The officers of an unincorporated association, cooperative or incorporated association established under state or territory legislation (unless the organisation is also a registered Australian body), are also exempt.

Applying for your Director ID

From November 2021, you will need to apply for your Director ID on the ABRS website and log in using the myGovID app. The myGovID app is downloaded on your smart device to verify your digital identity and is different to your existing myGov account.

When applying for your Director ID, you are required to personally make the application so you can verify your identity.

There are varying application deadlines for the new identifier, with current directors (on or before 31 October 2021), having until 30 November 2022 to obtain their Director ID.

While existing directors have plenty of time, if you become a director between 1 November 2021 and 4 April 2022, you must apply for your Director ID within 28 days of your appointment to the board.

Directors appointed after 5 April 2022, must apply prior to taking up their directorship.

If you are unable to apply for your Director ID by the relevant deadline, you can apply for an extension.

Once you receive your new Director ID, you will need to pass it on to your company recordholder who is usually the company secretary or authorised agent. The ABRS is not permitted to disclose Director IDs to the public without consent and your details won’t be searchable on the register.

If you would like more information about Director IDs, whether you need one and how to go about applying, please get in touch.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Cyber security - protecting yourself at home

Cyber security - protecting yourself at home

Greater flexibility in working arrangements has been a by-product of the pandemic, as working from home has become more widespread. In fact, The Families in Australia Survey: Towards COVID Normal reported in November 2020 that two thirds of Aussies were working from home.

While this flexibility has many benefits, it does also bring downsides, such as the increase in cyber security risks. With working from home to continue to be a reality for many, as workplaces move to more flexible working arrangements, here’s what we can do to stay safe.

Why cyber security is of greater risk at home

According to the ACSC Annual Cyber Threat Report 2020-21, there was an increase in the average severity and impact of reported cyber security incidents, with nearly half categorised as substantial. And there were over 67,500 cybercrime reports, an increase of nearly 13% from the previous financial year.

Not only are cyber security attacks impactful to the individual, but they also take a toll on businesses. The Australian Cyber Security Centre (ACSC) found that the total estimated cost of cyber security incidents to Australian businesses is $29 billion per year.i

With so many Australians working from home, it’s no coincidence that the rates of cyber security attacks are on the rise. When we work from home, we are no longer protected by a closed office network, so we are at greater risk of cyber security threats.

Given we tend to be working alone at home, this also makes us more vulnerable to scams and phishing attempts. Click on a suspect email in the office, and it’s either caught before it gets to you or you can ask a co-worker if they have received the same. With fewer opportunities for water cooler chat, you are more likely to be out of the loop.

How to stay safe

There are various ways you can protect yourself from cyber-attacks, and you don’t need to be an IT whiz to do so.

Install antivirus and security software
Your first layer of protection should be the use of antivirus and security software, such as Norton or Bitdefender. If you already have this software installed, ensure that it is up to date.

Update software, including all security updates
You also want to stay up to date with your software, so don’t skip those security updates that appear on your computer and phone. You can turn on automatic updates, so you don’t have to worry about missing these.

Secure your home Wi-Fi
As well as having a secure password for your home Wi-Fi, you should also use a strong encryption protocol for your router (currently WPA2 is the most secure type of encryption) – you can check this through your device settings.

Review and update your passwords
If you have had the same password for years and don’t have variations for different purposes, it’s worth updating your passwords. It sounds obvious, but don’t choose a password that will be easy to guess, such as something relating to your street name or workplace.

Opt for multi-factor authentication
Multi-factor authentication provides an extra layer of security when it comes to accessing your devices, making them harder to hack into. An example of multi-factor authentication is the combined use of a secure password, an item such as a security key or token, and a validation such as a SMS or email.

Be aware of scams
Scamwatch.gov.au is regularly updated with the latest scams. Run by the ACCC, this website contains comprehensive and current information on scam attempts such as phishing and extortion. Share this info with family and friends so they also know what to be on the alert for.

Consult with your IT Department
If your workplace has an IT Department, contact them to ask for any additional tips on how you can stay secure working from home.

i https://www.cyber.gov.au/acsc/view-all-content/news/announcing-acsc-small-business-survey-report

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.


Lease vs buy business assets in Australia. Which is best?

Lease vs buy business assets in Australia. Which is best?

If you're a business owner, you may be thinking about acquiring new equipment as conditions continue to improve in Australia. There are two main options for doing this: lease or buy. When weighing up which is best for you, you have a few factors to consider, including the need for future flexibility, your risk tolerance and the type of industry that you work in.

The question is, which way will provide your company with more value? In some cases, leasing may make more sense but in other scenarios purchasing may be a better option. Let's take a look at some of these different points so you can decide which route is best for you!

Whether it’s a new delivery van or a high-end digital printer, problem free equipment and tools are essential to keep your business running smoothly.

In the May 2021 Federal Budget, the government announced full write-off of eligible business assets will be available for another year, so the opportunity to tool up is even more attractive.

Issues to consider

Unfortunately, deciding the best way to acquire business assets is not always straightforward as you weigh up whether to buy outright or lease.

With leasing, you are able to use the plant or equipment under the terms of a contract and return it when your lease expires. Whereas buying means you purchase and own the equipment outright. If you have insufficient cash to buy an asset, you can also finance your purchase and repay the lender over time.

For both buying and leasing it’s not just the immediate costs and tax benefits you should bear in mind. You need to calculate the total costs, including ongoing maintenance, usage conditions, termination fees and equipment return.

You also need to review whether your business’s cash flow is steady and reliable, and allows you to commit to regular lease payments, or is subject to seasonal fluctuations.

Impact on your tax bill

A key factor to consider when it comes to the lease or buy decision is tax, as there can be valuable tax benefits if you buy an asset outright.

At the moment, the government’s COVID-19 temporary full expensing provisions provide a significant tax incentive to buy new equipment. These instant write-off incentives allow you to claim the cost of your asset against your business’s tax bill in the year of purchase.

For many eligible businesses, these tax incentives could tip the scales towards buying rather than leasing between now and 30 June 2023.

GST and leasing

The rules around claiming GST credits also favour purchasing.

When you lease equipment for your business it’s similar to renting, so you can only claim GST credits for your lease payments, not the total cost of the asset. For example, if you purchase equipment valued at $66,000 (including GST) you can claim back $6,000 in GST credits in your next BAS, but only a couple of hundred dollars for each monthly lease payment.

If you purchase a vehicle for business purposes valued at over the annual car limit ($60,733 in 2021-22), the maximum amount of GST credit you can claim is one-eleventh of the limit ($5,521 in 2021-22). If you pay luxury car tax on a vehicle you purchase for your business, you are unable to claim GST on the tax paid.

Leasing is still attractive

Although buying can be sensible for some businesses, if you have insufficient cash to cover the cost of new equipment leasing still offers benefits, especially while interest rates are low.

Leasing also allows you to keep working capital within the business and available for other uses. For example, if you want to acquire an asset worth $120,000 and finance it at 4 per cent interest, your business retains the $120,000 on its balance sheet and still has access to it if required.

What’s more, you may be able to invest the $120,000 and achieve a return higher than 4 per cent.

In addition, leasing is often more appropriate for assets that rapidly become obsolete and need regular updating, such as IT equipment.

Leasing new equipment can also make it easier to match regular monthly loan repayments to your business cash flow, rather than having to make a large one-off outlay for the asset.

Making your decision

Whichever way you are leaning – buy or lease – it’s important to review your business cash flow, your future growth plans and the current business and economic outlook.

Your personal approach to your business is also a factor to consider. Some owners prefer the certainty of ownership and not having to worry about a lot of fixed costs. For others, it’s more important to have access to the latest equipment and to focus on rapidly expanding their operation.

If you would like to discuss whether buying or leasing would be best for your business in the current economic environment, call us today.

This article is intended as an information source only and to provide general information only. The comments, examples, words and extracts from legislation and other sources in this publication do not constitute legal advice, financial or tax advice and should not be relied upon as such. All readers should seek advice from a professional adviser regarding the application of any of the comments in this article to their particular situation.