October 27, 2021 • 35 mins
If you've ever wondered how to manage your cashflow and pick a great accountant, or what your accountant can actually do for you, you're in the right place! Emma Fawcett is MYOB's SME General Manager, and is going to answer our community's most burning questions regarding all things accountants.
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Speaker 1 (00:12):
Today on the Business Bible, we're answering some questions that
you guys have. You probably saw in the Facebook group
recently that we asked if any small business owners had
some specific questions for one of our friends at MOYOB,
and now we are going to answer them this week
thanks to our friends at MOYOB, We're going to be
speaking to Emma force It. Emma is the General Manager
(00:35):
SME at MOYOB, where she leads the team that sets
the vision for small to medium sized enterprise products and services.
If that is not impressive, I don't know what is.
Emma was so entertaining, so insightful, and honestly so inspirational.
She has gone from strength to strength in her career
and this week she answers all of our pervy questions,
(00:57):
from how much you should set aside for tax to
how to a good accountant to exactly when you should
graduate from a spreadsheet to some accounting software. This is
episode thirty two Q and A with Emma force It
from MYOB and as always, thank you so much to
our partners at ROYOB for keeping this Business Bible show
(01:17):
on the road and free and in the ears of
the BBC community for the rest of the year. This
is the Business Bible, Emma, let's jump into it. I
have a number of questions from the Business Bible community
(01:38):
all about small business that I have heard on the grapevine.
You're probably the right person to ask. So do you
mind if we just jump straight in?
Speaker 2 (01:47):
Of course?
Speaker 1 (01:47):
Oh my gosh, all right, So from page page would
like to know, Emma, how do we select a good accountant?
Speaker 2 (01:56):
Ah, that is a million dollar question. A good accountant
literally worth their weight in gold, and it's a really, really,
really important relationship that a small business owner needs to have.
I'll start by saying, no to accounts are the same
and most have an area of specialty, something they specialize in.
So that's really important to consider what areas you're business in,
(02:17):
what industry is it in, and do you need an
accountant that specializes in that. We actually have a whole
host of content on our myob puls blog if people
want to go there about how to select the right accountant.
Speaker 1 (02:29):
So we put that in our show notes so that
you guys can link up really easily. I've read that content.
It's really good. I've found a golden accountant. No, I'm
not sharing.
Speaker 2 (02:39):
No, you should share.
Speaker 1 (02:41):
You should's best closed though, Emma, I'll get in trouble.
Speaker 2 (02:45):
Yeah, well, I think that that's a really good point. Though.
Relationship is really important. They've got to obviously have credentials,
they've got to know something about your industry. But word
of mouth is really important, so you can ask around,
ask your friends, ask other businesses who they use. And
then it is really about things like location. Do you
want them to be close to you in the day
of zoom calls? Are you happy for them to be
(03:06):
further away? And then do you vibe with them? Do
you feel like it's someone that you can build a
really close and trusted relationship with because they are going
to be a key member of your small business team.
So at the end of the day, got to have credentials,
they've got to know something about your industry, they've got
to be able to do the job. But you've got
to vibe and be able to have a great relationship
with that person as well. So they would kind of
(03:28):
be our top tips. Yeah.
Speaker 1 (03:30):
I absolutely couldn't agree more. And it's one of those
things where I think at the very start of being
in business myself, I was always like, oh, an accountant,
you just see them for tax time.
Speaker 2 (03:40):
Right.
Speaker 1 (03:40):
I now know my poor accountant, Louis. He listens to
this podcast and he knows I've got him on speed dial.
Like every time I go to make a business decision,
I'm very likely to pick up the phone and ask
my accountant what is the best way for me to
make this decision or grow my business? Or what structure
should I be looking at? Or more recent, let's be
(04:01):
a little bit more selfish. I wanted to buy a
new car, Louis, should I be buying it in the business?
Speaker 2 (04:05):
Should I not?
Speaker 1 (04:06):
And he took me through the pros and cons of
each from my personal situation, because it's very different than
just googling should I buy my car in my business?
Speaker 2 (04:15):
No, And that that relationship we talk about is really important.
Is your account going to want that relationship where you
can call them any time of day or is it
a once a month standard meetup? And you might have
to try a few accountants until you find the one
that fits you, because, as I said, that relationship is
absolutely critical to your business.
Speaker 1 (04:31):
Couldn't agree more all Right, So, speaking of small business,
our friend Elissa has said, what is the best way
to put money into super if I'm a sole trader.
Speaker 2 (04:42):
Ah, that is such an awesome question. And I'm actually
thrilled to hear small business owners asking about SUPER because
it's often something we find that they overlook. A lot
of people will treat their business as their nest egg
and think, I'll just sell my business in a few
years and there's my retirement. But we all know what
co it's shown us is that that it can be unreliable. So,
(05:03):
first of all, awesome that someone is asking about SUPER.
I think again, talking to your accountant or a financial
advisor for this one or both, so that you can
make a plan that's right for you and what you want.
Only you can know the type of retirement you want,
like are you happy for a very lean retirement or
is it all going to be travel and cruises and
(05:23):
things like that, And that's going to impact the amount
of money that you need to put away. So again,
your accountant and a financial advisor or one or the
other is going about to help you with that. A
really common rule of thumb is if you want to
retire at standard sixty, you're going to need about fifteen
times the annual amount of money you want. Right, So
if you estimate you're going to need sixty grand per year,
(05:46):
then you're going to need about nine hundred thousand SUPER.
So that's one way from an individual as a sole trader,
the easiest way to make sure you're paying SUPER is
to actually pay yourself a wage, which again is something
we really advocate that people bullying businesses do even if
they're sole traders.
Speaker 1 (06:03):
You are too cheeky and don't.
Speaker 2 (06:05):
Do it, But it's such an important way to assess
your business health as well, like set of ways that
you want to be paid and make sure that your
business can pay you that. And then if you use
amazing software like nyob, it will calculate all your SUPER
for you and make sure you pay yourself you're SUPER,
so you can automate that and want to take it
out of your own hand.
Speaker 1 (06:25):
Honestly, that's one thing that I wish I had set
up sooner, because I was one of those cheeky small
business owners that was like no, like I just can't
afford it at the moment, Like I need to reinvest
in my business, and I think it's okay to have
that period, but there's a time that you need to
go in it. I need to buckle down. I need
to put myself first. I actually need to care about
future me, because the future you isn't okay, Like, how
(06:47):
is the business going to be okay?
Speaker 2 (06:49):
Yeah, and I would add to that I was about
to add, particularly for the young business owners out there,
don't skimp this because your future you will thank you.
If you're in your mid twenties and you're a soul
trader and you think our super is so far away,
trust me, when you hit your forties like I've just done,
you are going to want to have some money in super.
Speaker 1 (07:07):
There is government you are in your forties. Emma, absolutely not.
Speaker 2 (07:12):
I am so leading on.
Speaker 1 (07:14):
From Super something else that is really important to pay,
but not nearly as exciting as tax. And our friend
Moira has asked, how much should I be setting aside
for tax to be safe?
Speaker 2 (07:27):
Yes, well, I will start by saying first and foremost
that I can't give specific financial advice. No, we don't, No,
but we do have again a great deal of resource
on the NYOB site that you can link to that
will help people understand what they should be doing as
far as tax go, including tips on how to bring
tax down for sole traders and small businesses, which I
(07:47):
know everyone wants to know. So ultimately, there's no easy
answer on how much I should set aside for tax.
It really comes down to the specific circumstances of everyone's
individual business. Again, you're going to need to talk to
a great accountant or a bookkeeper to set up a
specific plan for you. But when it comes to tax time,
you want to be prepared to safe guard yourself from
(08:09):
any nasty surprises. And I'm going to give our business
a plug. Yob's accounting software can help you do that.
You want to digitize and automate your tax stuff. You
really don't want to be scrambling at the end of
the year at tax time trying to find receipts and
things like that. And there is so much great software
out there, like our Capture app that allows you to
take a photo of every invoice or record it electronically
(08:32):
as it comes in, and then when tax time comes,
all of those expenses are automatically recorded and actually accessible
for your accountant or bookkeeper. So you can make tax
time really easy for yourself by using some smart software.
Rifling through paper receipts is not an effective use of time,
so you want to be you want to free that
(08:52):
up yourself.
Speaker 1 (08:53):
No, gorne are the days of the shoe box, I believe.
All right, So moving on important question about growth. So
Jess has asked, when we're hiring stuff and starting that
process and taking on our first employee, what does it
actually mean from an accounting point of view? Like, what
have we got to do?
Speaker 2 (09:14):
How awesome? Again that like you've got the best listeners.
That someone is growing their business to be able to
hire people.
Speaker 1 (09:20):
The BBC community is next level, Like I have never
felt more heard in that community. And all of their
questions are spot on and also so direct. They're like,
we're going to make the most of this opportunity we've
got emma, all right tell.
Speaker 2 (09:33):
Us Because sixty seven percent of businesses never go on
to hire. So if you've grown a business to the
point where you can hire staff, congrat some kudos to you.
You are doing a fabulous job. It does. Hiring stuff
is a big step and it does bring with it
a lot of government regulations and other requirements that you
really have to be on top of. When you start
employing people, someone else's livelihood is in your hands and
(09:55):
you've got to do the right thing by them. So
again you want to get specialist advice early. On Again,
your accountant can help you get across those requirements early.
If you're already on MB accounting software, then onboarding people
is super easy because your software will do all the
hard work, so from tackling the regulatory requirements to talking
(10:17):
to the ATO and making sure your staff are paid
correct wages and leave and you've got to accrew leave
correctly as well. So again the right bit on software, yes,
can do all that for you. It's complex in Australia.
You should see how complex it is in New Zealand.
There's about ten different types.
Speaker 1 (10:33):
I I've heard bad, I haven't seen it. I only
function in Australia and to be honest, I now just
have one touch payroll. I don't have to think about it.
You guys deal with it for me. And I know
that I'm not going to get into any trouble with
fair Work for not paying my staff. So that's all
the thing that's nice to.
Speaker 2 (10:51):
Know we'll not paying super because it's so synced up
now that you know you will get found out and
then that becomes something that you need to pay back. So,
as I said, you take on a lot of responsability
when you hire people and I think their livelihood is
in their hands. You want to make sure you're doing
the right thing. So again, accounting software will take that
up for you, but you do need to go and speak.
You should go and speak to an account and make
sure you ride across the rules and regulations there.
Speaker 1 (11:14):
Yeah, absolutely all right. So we've got a really good
question about investing in business from Cody, and Cody has asked,
if you've invested your own personal money into a company,
how would your company potentially pay that back?
Speaker 2 (11:30):
So this is another great question from your listeners. More
often than not, business owners pay and address a whole
range of expenses before they look at what they owe themselves. Right,
So we know that they'll often put their own money
into start up a business.
Speaker 1 (11:42):
And you actually not track it properly.
Speaker 2 (11:44):
No, Yes, this is where I was going to go.
You want to make sure that you are securing your
own cash flow as an individual as much as you
are securing your business cash flow. Ultimately being paid back
in this context is going to depend on where whether
you chose to loan the business the money or whether
you chose to invest your money in the business. Does
(12:06):
that make sense you can set it up right from
the start. I'm either investing my money in this business
and I don't expect to be paid back, or I
am making a loan to the business, and you need
to account for those separately. So it needs to be
a conscious choice that you're making.
Speaker 1 (12:20):
So many needs to be clean upfront as well, because
it's one of those things where, especially if you're going
into partnership with somebody else, like Emma, if you and
I were like, let's start a business together, we'll both
invest XYZ. If someone then turned around and said like,
oh hey, Emma, I was thinking like, how's that money
going to get paid back? You're like, oh, that was
actually an investment you made, it could put you in
(12:42):
a position where you're having a little bit of a
fickle conversation.
Speaker 2 (12:46):
Yeah. I think, particularly when partners are involved, you want
to be so so clear on that, But even for yourself,
I just think it's good discipline when setting up a
small business right to think about these things. Am I
making an investment or am I making a loan? Because
if you make an invest you're helping the business grow
and you're ultimately going to increase your wage and your wealth.
Down the line, right, But tracking that transaction, whether it's
(13:08):
a loan or an investment, in a way that is easy,
transparent and guarantees some sort of return. Best you can
do that digitally. Again, you need to find an accountant
to help with this because whatever option you've chosen is
going to impact your tax Like if it's an investment
versus alone, the loan needs to be structured to be
paid back. So again not financial advice, but advice would
(13:29):
be think about that before you start the business. And
if Cody is asking the question, now, maybe he's already
made an investment, but other than alone, and I mean
not to his accountant.
Speaker 1 (13:39):
Your accountant's going to have the answers to all of
these questions though, and that's where a really good relationship
with an accountant is going to pay itself off. Being
able to pick up the phone and get advice that
is super specific to you is really really valuable. All right, Emma,
Speaking of investment, we have a question from Taylor who
has and I think this is a pretty popular one
(14:02):
in our community. Should I have accounting software from the
start or would a spreadsheet be enough?
Speaker 2 (14:10):
It's a question where you get all the time and
Obviously I'm biased. I work for MYIB and I think
our accounting software is absolutely amazing, But it can be
picked up at any stage of the business journey, and
whether you love them or hate them, we know that
a lot of people rely on spreadsheets or Google sheets
in some form in their business, even if they do
have accounting software. Right. So if you start a business,
(14:31):
I think in some way you need to make peace
with spreadsheets because you're probably going to be using them.
But what software enables you to do is get rid
of having to deal with all that stress that comes
from managing it all yourself, right, Because when you're using
a spreadsheet, you are setting up the columns, you're setting
up the rows, you're entering in all the data, and
you're doing that manually all the time. And it can
be really tempting when you're starting out to think I'll
(14:53):
get to accounting software later, but often by the time
you think about that. We talk to small business owners
all the time who've then got the most complex spreadsheet
ever manually recorded, and they're trying to transfer that into
accounting software, and we often end up diving in and
helping them with that. I would say it's much easier
to start how you mean to continue? Right? If you're
(15:13):
you agree serious about the business that you're setting up,
then you need accounting software, you need business management software.
I would start how you mean to continue?
Speaker 1 (15:22):
Yeah, And I think that that's actually a really important
thing to point out, like if you want to continue
it instead of changing your strategy a little bit later,
it's really important. I know for me personally, I used
to deal off spreadsheets one hundred percent. I would say
that I'm a pretty good spread sheeeter if I do
say so myself. But that still leaves a lot of
(15:43):
room for human error and the amount of hours I
have spent trawling through spreadsheets to find the formula error
to work out where I went wrong and why things
weren't adding up in the way that I anticipated them too,
I'm not willing to talk about. But also when it
comes to talk about your platform, like the NYOB platform,
I think you'll find it's not nearly as expensive as
(16:05):
you might anticipate it to be because you can scale
it with you, Like they aren't going to charge you
what it is for a big business on moyob. They're
going to charge you as a sole trader.
Speaker 2 (16:16):
If that's what you are. Yeah, and they're like our
simplest subscriptions, which is our light one doesn't have payroll
or things like that included, right because exactly you don't
need that. And I just point out as well, we
did a big research study in June ow myob Business Monitor,
and it showed that through COVID, like, COVID has changed
the way that we're all interacting and businesses are running.
(16:39):
Businesses that were already digital or digitized quickly have been
far more successful during the pandemic. And that's across all industries, right.
They're fifty percent more likely to have grown their revenue
during COVID, which is quite a fee, which a good.
Speaker 1 (16:53):
Investment figure like that means I probably should be digitizing
myself even more.
Speaker 2 (17:00):
Call them digitally enriched businesses, and you know they're really too.
But they're eight times more likely to believe that coming
out of COVID they will be creating jobs, and fourteen
times more likely to believe that they'll be offering new
products or services. So they're really ahead of the curve
on digitization. And I think anyone listening who is on
a spreadsheet wants to think about that. We're in a
(17:21):
digital world. There's been more digital transformation in the past
two years than in the past decade, and we think
that that is only going to continue, and you really
risk getting left behind. I think if you don't have
a look at your workflows and what you can be
digitizing in your business.
Speaker 1 (17:35):
And the plays a little bit into my personal opinion,
not necessarily research, because you're Emma really well researched backed
and I'm like, here's my opinion on this situation. But
when it comes to business, especially when you're starting a
small business and you're planning on investing into it, that's
one of those investments that you're going to make and
if you're saying, Okay, I genuinely believe this is going
(17:58):
to be really successful, that's a tool that's going to
give you more time back to focus on the business
that you're building. So whether you are making candles and
scaling that or you are running a financial advice podcast,
it's one of those things where it's going to give
you time back, and that's the most important thing at
the end of the day when you are a small business,
because we only have so many hours in a day
(18:20):
and we don't often have an entire team behind us
to do things. So, Emma, I actually think that leads
into another sneaky question from Moira from before, at what
point should I hand over my books to a professional?
Like when should we be getting a book keeper? Or
I know that I had an accountant from the start,
but should someone else be taking that over from me
(18:41):
as a small business owner at some point?
Speaker 2 (18:44):
Yeah, I think you can engage your professional and share
your books at any stage, right. I definitely think you're
going to have to get accountants advice when you're setting
up your business, no matter how big or small. Sharing
your books early may give you're accountal bookkeeper more time
to manage your account kind of golden hour for taking
that first initial step. What's more important is having kind
(19:05):
of a trusted relationship so that you can get the advice.
It's important to take the time to discuss where you
are now, where you'd like to be in the future,
and given the lockdown situation, a lot of us find
ourselves in what support you may be able to access,
Like if you've been coping with doing your own books fine,
and you've got a great relationship with your accountant and
you're using business management software like moyob and that's all.
(19:27):
Your boss is done, your income tax is done, you've
got all your receipts, and it's not a huge time burden,
then feel free to continue. But I think one of
the answers to that question has to be that time piece. Right,
when do you feel that that time spent on your
books is better invested elsewhere in your business, Because that
is what handing over your books to a bookkeeper does, Right,
(19:48):
You pay someone else to do that for you, but
you free up that time to then work on your
own business and invest that in generating more income or
more sales, things like that.
Speaker 1 (19:57):
And I think it's important as well. You don't just
and them over and never see them again. Like I
have a bookkeeper and Nicole, you are my saving grace.
I adore you with everything I have. But it means
that I can log in and just see what's going on,
and I know that everything is up to date, and
I know that my invoicing is on track, and I
know that my staff, you know, all of their payments
are done, and I know that all they leave has
(20:19):
been entered, and every single little admin task that I
was doing when it came to the financial side, of
my business she's now managing, so I'm not necessarily leaving
it not being able to see it anymore. When somebody
else is in control of it, I'm still in control,
and they still do have to chase up invoices on
my own sometimes, and I still do have to tell
Nicole when my staff are having breaks or taking time off.
(20:41):
So I am across it. But oh my gosh, I
don't know why I didn't BUYE the bullet and get
someone to help me sooner, except for the fact that
obviously we do have to pay for that advice. But
I mean that goes back to having a good accounting software.
Speaker 2 (20:54):
Right.
Speaker 1 (20:54):
The better the accounting software, the longer you can push
off getting a bookkeeper.
Speaker 2 (20:58):
Yeah, that is absolutely right. And it also comes down
to the planning that you do in setting up your business, right,
like understanding the kind of time that you're going to
have to spend on these things and the amount and
what that's worth to you, and at what point you're
going to make that leap, because at some point your
time as a business owner, particularly once you have staff
and all the complications that come with that, is not
(21:19):
going to be best invested in doing the books right,
it's going to be best invested in your product, your marketing,
managing your people, creating a great work environment. There's so
many other things you need to be doing with your time.
Speaker 1 (21:42):
All right, And we've got a question from ol friend
Sarah and Emma. I think this is another one of
those situations where we can't give specific advice, but we
can talk about the concept more generally. And she has asked,
what is a safe split of revenue to start off
with tax and what I should be investing back into
my business?
Speaker 2 (22:03):
Yeah, excellent. Often when we hear that question, I'm going
to reframe it a little bit because often that question
is asked that way that means something else. What people
tend to be talking about when they're talking about what's
the split of revenue for profit, tax and investment into
the business? Is there actually talking about how can I
best set myself up for sustainable growth? Right? Like I
want to build a business that's going to grow, how
(22:25):
I can improve my cash flow but making sure that
business is able to navigate any future economic or environmental turbulence,
Like it's not going to be a smooth sailing road.
So how do you manage your cash flow? Across that
I reckon.
Speaker 1 (22:37):
Sarah's listening to that, going yeah, actually, and that's exactly
what I meant.
Speaker 2 (22:42):
Yeah. So when people talk about splitting revenue at face value,
it seems like a quick and easy business boost, but
it doesn't always talk to sustainability, and we want to
be building sustainable, great businesses, right, So there's some there's
I guess four easy steps that we tend to provide,
you know, lots of content around for people to follow.
And the first one is really important to maintain good books.
(23:04):
Like you've got to know your numbers as a business owner,
even if you have a bookkeeper and a great accountant.
This goes just beyond sales. You've got to know your costs,
your outgoings. You've got to have strong bookkeeping foundations so
you can know exactly where you are at a glads.
And again, business management software like NYV is going to
do that much better for you than a spreadsheet. It
goes way beyond profit loss. You might be making good profits,
(23:26):
but if your cash flow is terrible, your business may
fail the moment you hit a bump in the road, right,
So you've got to keep an eye on your cash flow.
Speaker 1 (23:33):
I think that That's one of the things that came
out of COVID that I was super surprised with was
so many businesses that I deemed to be quote successful
or have really high turnover or really beautiful products not
being able to stand on their own two feet because
they hadn't thought about this so far in advance, and
they didn't have what I would refer to as kind
of like a business emergency fund.
Speaker 2 (23:55):
Yes, you've got to have an emergency fund, like COVID
has showed that, right. Yeah, like profit loss is one thing.
Got to make sure you have cash flow that can
see you through the good times and then the hard times.
So when you're making more money, puts on a way
to see you through the low points as you set
an emergency fund. The second sort of business sustainability thing
that we see and we'd love to see more of
among small business owners is setting measurable and realistic goals,
(24:19):
like arbitrary goals like I want to earn more money
and not going to work. It's important to be able
to measure the goals and you've got to be accountable
for achieving them. So a better goal that I want
to make more money would be I want to improve
the efficiency of admin in my business so that I
can take on two new clients. Because that measurable goal
is going to keep you motivated and make your business stronger.
(24:40):
And it's more specific, and it's hard as the small
business owner to hold yourself to account. So second tip
is set measurable and realistic goals. And then the third
one I think every smart business owner should be doing
is diversify so your growth doesn't rely on one factor.
Just as you don't want to keep your prices stagnant
over time, you don't want to keep your service or
(25:02):
product offering to just one stream, So diversification means you
have a more comprehensive range of profit sources. So it
might mean you know, I think over time we see
a lot of small businesses become very dependent on one
core supplier or one core client, and I think that's
really dangerous because if that client decides to change supplier
or change who they use, then you can find it
(25:24):
yourself with a business that's not very healthy. So you
want to be thinking about diversification. And again, business management
software will help you see where your sources of income
are coming from, so you can see if that's healthy
or not. And then finally to that point, you want
to focus on customer and client success for a sustainable business,
So maintaining your clients and customers is really critical to
(25:45):
achieve sustainable growth. It's the quickest way to secure cash
flow is to keep your customers happy and make sure
that they come back loyal satisfied. Customers are going to
pay for your product and service, but they're also going
to recommend it right, and word of mouth is the
most powerful and free advertising that you can get. So
in sure, like splitting your revenue seems like a tempting fix,
(26:08):
it doesn't always result in sustainability. To secure that, you've
got to know your numbers, set measurable and realistic goals, diversify,
and focus on your customer success. I guess I.
Speaker 1 (26:19):
Would absolutely agree. I mean when it comes to splitting, though,
I absolutely agree with having a quote split or a
percentage that you decide to put into your tax fund
so that you're never stung. And a couple of episodes ago,
I spoke personally about what I do, and I'm someone
who likes to over allocate into my little tax bank
account so that come tax time one I'm not stressed
(26:41):
and two, I feel like it's a bit of a
bonus time because I end up seeing a little bit
more cash back that I can then put into my
business emergency fund so that I can feel super secure
instead of going like, oh my gosh, perfect, like I've
got the right amount of tax or something coming up,
or realizing that I actually needed a little bit more.
So I'm someone who does a little bit over, But
I think you're right when it comes to profit and
(27:02):
what you invest back into the business. These things are fluid.
You can't pick a number.
Speaker 2 (27:06):
No, And I think starting out, you want to be cautious.
You want to put more away for tax in particular,
you do not want to be caught short there. But
if you've been running your business for a few years,
you start to get an idea of being come round
in the tax and maybe you don't need to stash
quite so much in your emergency tax fund.
Speaker 1 (27:21):
Absolutely agreed. And I think the other thing that's interesting
in that perspective is when small business owners first start
out and their cash flow starts to significantly increase, they
get so happy and they go, oh my gosh, I'm
going to take some out. I'm finally going to treat myself.
That's actually the time that we need to kind of
knuckle down and go, okay, cool, this is the time
to really solidify my business, establish that emergency fund, set
(27:45):
up a proper structure for putting tax to the side,
and make sure that this isn't just cash flow that
might dwindle off. We can create this into something sustainable,
because too often do I see people who like, oh
my gosh, I got to having ten thousand dollar months
in my business and I've got nothing to show for
it because I started spending ten thousand dollars a month.
(28:06):
So I think it's really important to just keep our
heads screwed on even when success comes knocking.
Speaker 2 (28:12):
Yes, you don't want to take your personal money principles
into your business. You need to have a different set
of yes money principles of business.
Speaker 1 (28:19):
We've got to be a little bit more structured there.
Or Emma, I know we've been talking for a while,
but do you have time for one more question? Of course,
all right, I have this sneaky one from our friend Madeleine,
and Madeleine has asked if we are starting from scratch,
so we've got absolutely nothing, no business set up yet.
(28:40):
What records do we need to keep and what things
are we potentially able to claim on tax as a
sole trader that we might not have known about before.
Speaker 2 (28:49):
Yeah, we've got some tips here for your listeners. I
say one for last tax. It seems like we hear
from people starting out that tax is often the most
daunting thing because it just sounds complicated, it feels really scary.
So there is you know, there is quite a bit
to keep on top of. Ultimately, it's important to keep
as much as possible to help your account and make
(29:11):
the most informed and accurate claim for you. I spoke
before about Miob's capture app, but really recommend a piece
of software like that. You don't want to be keeping
paper receipts. You want to snap them as you go.
Making this process of keeping all of your receipts and
paperwork digital is going to make your life so much easier.
So that's the first thing. Keep as much as you can,
(29:32):
but keep it digital, don't store it offline. And then
there are a range of things that you can claim
as a sole trader. These can depend entirely upon the
type of asset purchased or the service engaged. It's important
to be across the differences between personal and business expenses. Again,
we see a lot of sole trader businesses where they
(29:53):
don't have a separate business account. They're running their business
from their personal account. Again, that's worth thinking about whether
you want to that out. And for example, they're depending
on the type of business you operate a motor vehicle,
So a car and all its expenses may be deductible,
but traffic fines aren't likely to be right, you're still
going to have that split between business and personal. We've
(30:14):
got a really good article on our web page that
goes through a range of sole traded tax deductible expenses.
But ultimately, while there's lots of info in that and
too much to mention here, and accountant is going to
be best place to advise you on the specifics of
your business and your industry, but things like motor vehicles
definitely you can look at some services as well. If
(30:35):
you're looking to get started on tax early and bring
down tax costs as a sole trader, there are some
steps you can take as a starting point. If you've
got a healthy cash flow, you can pay some expenses
in advance and actually bring down the deduction for the year.
Speaker 1 (30:50):
So these did this earlier. I did this with my
business insurance by being a little bit cheeky and paying
it at the end of June so I could claim
it last financial year.
Speaker 2 (31:00):
Yeah, there's a whole host of those you can do.
You can do office and equipment lease payments, you can
do business related subscriptions, you can do insurances. You can
even do telephone and it you know, internet type services.
And you might actually with that one be able to
kill two birds with one stone. So you can see
if you can combine the benefit of bringing forward an
(31:21):
expense into the taxia with also getting a discount for
paying your supplier in advance, because just like you want
to bring deductions forward, there's a hell of a lot
of businesses that are looking to close off the end
of year with stronger sales, right, So they might be
you see it all the time with end of fin
near office sales and car sales.
Speaker 1 (31:42):
They want to achieve at that time of the year.
It's literally because they want to boost their sales for
the financial year.
Speaker 2 (31:48):
Guys. Yeah, so you can, yeah, kill two birds with
one stone, get a tax deduction and a bit of
a bargain, and then the other thing that we want
to encourage small businesses and soul traders to utilize. Is
the instant a set right off. So soul trade is
are eligible claim the instant asset right off which allows
them to claim immediate deductions for new or secondhand plant
(32:09):
and equipment asset purchases, so cars, office equipment, and tools.
And I'm not sure we tend to find that small
businesses don't seem to know as much about that instant
asset right off. So we really encourage all your listeners
to go out and book it.
Speaker 1 (32:22):
Up and what that actually means, because I think that
there's been a little bit of confusion in our community
that the instant asset right off is just cars when
that's absolutely not the case. The equipment for your business,
it could be like an office fit out, it could
be so many things. So yeah, I absolutely would be
talking to your accountant and saying, hey, I know this exists.
(32:42):
Is this something I should be taking advantage of? But
on the flip side, I think we need to be
careful of not getting caught up in the savings and
spending money on things out business potentially doesn't need.
Speaker 2 (32:53):
Yeah, there's no point buying a second car you don't
need it, but it was so cheap board. Yeah, absolutely
so Again on our website, we've got an awesome article
tax deductible expenses for Soul Traders, so there's a lot
of tips in there. We have a lot of accountant
bookkeepers who work for us and with us, and they
provide us up to date advice every year, so it's
(33:15):
a good resource to look at around kind of you know,
if you're in Australia that March time, so that you
can maximize your deductions in the last quarter of the
thin year and really set your business up for success
in the next year.
Speaker 1 (33:26):
Yeah, and I always find the Maob blog a really
nice source of truth in a way during those periods
of time, especially coming into the new financial years or
coming up to Christmas time, lots of news outlets tend
to put out lots of articles about these topics and
it's really hard for us as small business owners scree
Is that right? Is that not? But we know that
(33:47):
if we go to your website, they've actually been vetted
by actual accountants and bookkeepers and people who know what
they're talking about, not just a journalist who knows that
that will work. On the main page, and get click through.
Speaker 2 (33:58):
No, And I think the other thing that's important to
know is supplies such as ourselves have a really close
relationship with the government. The government relies on us to
help educate small businesses on their changes, things like single
touch payroll, and there's more changes coming with that next
year that we're working really closely with the government on
so that we can enable it in our software and
help communicate that government message out. So not only is
(34:20):
it up to date, but we try and take government
messaging and simplify and make it easy to understand as well.
Speaker 1 (34:27):
Yeah, of course, Well, thank you so much, Emma. I
think that is as always all we have time for today.
But this has been a super interesting chat that I
know our community is absolutely going to love and to
eat up and probably have a million more questions about.
Speaker 2 (34:41):
No worry, Thank you for having me, of course.
Speaker 1 (34:55):
All right, thank you once again to myob for allowing
me to share ema force that with the BBC community.
I know that Q and A episodes are one of
my favorite types of episodes to listen to because I
feel like they are packed with so much value and
I know that there's probably a fair few of them
that we are still yet to do. Hopefully I can
swindle myob interostelling another one of their experts to share
(35:18):
with our community. But as always, that is all we
have time for today. So just before we head off,
we'd like to acknowledge and pay respect to Australia's Aboriginal
and torrest Rate islander peoples. They're the traditional custodians of
the lands, the waterways and the skies all across Australia.
We thank you for sharing and for caring for the
land on which we are able to learn. We power
(35:40):
respects to elders past and present, and we share our
friendship and our kindness
Today on the Business Bible, we're answering some questions that
you guys have. You probably saw in the Facebook group
recently that we asked if any small business owners had
some specific questions for one of our friends at MOYOB,
and now we are going to answer them this week
thanks to our friends at MOYOB, We're going to be
speaking to Emma force It. Emma is the General Manager
(00:35):
SME at MOYOB, where she leads the team that sets
the vision for small to medium sized enterprise products and services.
If that is not impressive, I don't know what is.
Emma was so entertaining, so insightful, and honestly so inspirational.
She has gone from strength to strength in her career
and this week she answers all of our pervy questions,
(00:57):
from how much you should set aside for tax to
how to a good accountant to exactly when you should
graduate from a spreadsheet to some accounting software. This is
episode thirty two Q and A with Emma force It
from MYOB and as always, thank you so much to
our partners at ROYOB for keeping this Business Bible show
(01:17):
on the road and free and in the ears of
the BBC community for the rest of the year. This
is the Business Bible, Emma, let's jump into it. I
have a number of questions from the Business Bible community
(01:38):
all about small business that I have heard on the grapevine.
You're probably the right person to ask. So do you
mind if we just jump straight in?
Speaker 2 (01:47):
Of course?
Speaker 1 (01:47):
Oh my gosh, all right, So from page page would
like to know, Emma, how do we select a good accountant?
Speaker 2 (01:56):
Ah, that is a million dollar question. A good accountant
literally worth their weight in gold, and it's a really, really,
really important relationship that a small business owner needs to have.
I'll start by saying, no to accounts are the same
and most have an area of specialty, something they specialize in.
So that's really important to consider what areas you're business in,
(02:17):
what industry is it in, and do you need an
accountant that specializes in that. We actually have a whole
host of content on our myob puls blog if people
want to go there about how to select the right accountant.
Speaker 1 (02:29):
So we put that in our show notes so that
you guys can link up really easily. I've read that content.
It's really good. I've found a golden accountant. No, I'm
not sharing.
Speaker 2 (02:39):
No, you should share.
Speaker 1 (02:41):
You should's best closed though, Emma, I'll get in trouble.
Speaker 2 (02:45):
Yeah, well, I think that that's a really good point. Though.
Relationship is really important. They've got to obviously have credentials,
they've got to know something about your industry. But word
of mouth is really important, so you can ask around,
ask your friends, ask other businesses who they use. And
then it is really about things like location. Do you
want them to be close to you in the day
of zoom calls? Are you happy for them to be
(03:06):
further away? And then do you vibe with them? Do
you feel like it's someone that you can build a
really close and trusted relationship with because they are going
to be a key member of your small business team.
So at the end of the day, got to have credentials,
they've got to know something about your industry, they've got
to be able to do the job. But you've got
to vibe and be able to have a great relationship
with that person as well. So they would kind of
(03:28):
be our top tips. Yeah.
Speaker 1 (03:30):
I absolutely couldn't agree more. And it's one of those
things where I think at the very start of being
in business myself, I was always like, oh, an accountant,
you just see them for tax time.
Speaker 2 (03:40):
Right.
Speaker 1 (03:40):
I now know my poor accountant, Louis. He listens to
this podcast and he knows I've got him on speed dial.
Like every time I go to make a business decision,
I'm very likely to pick up the phone and ask
my accountant what is the best way for me to
make this decision or grow my business? Or what structure
should I be looking at? Or more recent, let's be
(04:01):
a little bit more selfish. I wanted to buy a
new car, Louis, should I be buying it in the business?
Speaker 2 (04:05):
Should I not?
Speaker 1 (04:06):
And he took me through the pros and cons of
each from my personal situation, because it's very different than
just googling should I buy my car in my business?
Speaker 2 (04:15):
No, And that that relationship we talk about is really important.
Is your account going to want that relationship where you
can call them any time of day or is it
a once a month standard meetup? And you might have
to try a few accountants until you find the one
that fits you, because, as I said, that relationship is
absolutely critical to your business.
Speaker 1 (04:31):
Couldn't agree more all Right, So, speaking of small business,
our friend Elissa has said, what is the best way
to put money into super if I'm a sole trader.
Speaker 2 (04:42):
Ah, that is such an awesome question. And I'm actually
thrilled to hear small business owners asking about SUPER because
it's often something we find that they overlook. A lot
of people will treat their business as their nest egg
and think, I'll just sell my business in a few
years and there's my retirement. But we all know what
co it's shown us is that that it can be unreliable. So,
(05:03):
first of all, awesome that someone is asking about SUPER.
I think again, talking to your accountant or a financial
advisor for this one or both, so that you can
make a plan that's right for you and what you want.
Only you can know the type of retirement you want,
like are you happy for a very lean retirement or
is it all going to be travel and cruises and
(05:23):
things like that, And that's going to impact the amount
of money that you need to put away. So again,
your accountant and a financial advisor or one or the
other is going about to help you with that. A
really common rule of thumb is if you want to
retire at standard sixty, you're going to need about fifteen
times the annual amount of money you want. Right, So
if you estimate you're going to need sixty grand per year,
(05:46):
then you're going to need about nine hundred thousand SUPER.
So that's one way from an individual as a sole trader,
the easiest way to make sure you're paying SUPER is
to actually pay yourself a wage, which again is something
we really advocate that people bullying businesses do even if
they're sole traders.
Speaker 1 (06:03):
You are too cheeky and don't.
Speaker 2 (06:05):
Do it, But it's such an important way to assess
your business health as well, like set of ways that
you want to be paid and make sure that your
business can pay you that. And then if you use
amazing software like nyob, it will calculate all your SUPER
for you and make sure you pay yourself you're SUPER,
so you can automate that and want to take it
out of your own hand.
Speaker 1 (06:25):
Honestly, that's one thing that I wish I had set
up sooner, because I was one of those cheeky small
business owners that was like no, like I just can't
afford it at the moment, Like I need to reinvest
in my business, and I think it's okay to have
that period, but there's a time that you need to
go in it. I need to buckle down. I need
to put myself first. I actually need to care about
future me, because the future you isn't okay, Like, how
(06:47):
is the business going to be okay?
Speaker 2 (06:49):
Yeah, and I would add to that I was about
to add, particularly for the young business owners out there,
don't skimp this because your future you will thank you.
If you're in your mid twenties and you're a soul
trader and you think our super is so far away,
trust me, when you hit your forties like I've just done,
you are going to want to have some money in super.
Speaker 1 (07:07):
There is government you are in your forties. Emma, absolutely not.
Speaker 2 (07:12):
I am so leading on.
Speaker 1 (07:14):
From Super something else that is really important to pay,
but not nearly as exciting as tax. And our friend
Moira has asked, how much should I be setting aside
for tax to be safe?
Speaker 2 (07:27):
Yes, well, I will start by saying first and foremost
that I can't give specific financial advice. No, we don't, No,
but we do have again a great deal of resource
on the NYOB site that you can link to that
will help people understand what they should be doing as
far as tax go, including tips on how to bring
tax down for sole traders and small businesses, which I
(07:47):
know everyone wants to know. So ultimately, there's no easy
answer on how much I should set aside for tax.
It really comes down to the specific circumstances of everyone's
individual business. Again, you're going to need to talk to
a great accountant or a bookkeeper to set up a
specific plan for you. But when it comes to tax time,
you want to be prepared to safe guard yourself from
(08:09):
any nasty surprises. And I'm going to give our business
a plug. Yob's accounting software can help you do that.
You want to digitize and automate your tax stuff. You
really don't want to be scrambling at the end of
the year at tax time trying to find receipts and
things like that. And there is so much great software
out there, like our Capture app that allows you to
take a photo of every invoice or record it electronically
(08:32):
as it comes in, and then when tax time comes,
all of those expenses are automatically recorded and actually accessible
for your accountant or bookkeeper. So you can make tax
time really easy for yourself by using some smart software.
Rifling through paper receipts is not an effective use of time,
so you want to be you want to free that
(08:52):
up yourself.
Speaker 1 (08:53):
No, gorne are the days of the shoe box, I believe.
All right, So moving on important question about growth. So
Jess has asked, when we're hiring stuff and starting that
process and taking on our first employee, what does it
actually mean from an accounting point of view? Like, what
have we got to do?
Speaker 2 (09:14):
How awesome? Again that like you've got the best listeners.
That someone is growing their business to be able to
hire people.
Speaker 1 (09:20):
The BBC community is next level, Like I have never
felt more heard in that community. And all of their
questions are spot on and also so direct. They're like,
we're going to make the most of this opportunity we've
got emma, all right tell.
Speaker 2 (09:33):
Us Because sixty seven percent of businesses never go on
to hire. So if you've grown a business to the
point where you can hire staff, congrat some kudos to you.
You are doing a fabulous job. It does. Hiring stuff
is a big step and it does bring with it
a lot of government regulations and other requirements that you
really have to be on top of. When you start
employing people, someone else's livelihood is in your hands and
(09:55):
you've got to do the right thing by them. So
again you want to get specialist advice early. On Again,
your accountant can help you get across those requirements early.
If you're already on MB accounting software, then onboarding people
is super easy because your software will do all the
hard work, so from tackling the regulatory requirements to talking
(10:17):
to the ATO and making sure your staff are paid
correct wages and leave and you've got to accrew leave
correctly as well. So again the right bit on software, yes,
can do all that for you. It's complex in Australia.
You should see how complex it is in New Zealand.
There's about ten different types.
Speaker 1 (10:33):
I I've heard bad, I haven't seen it. I only
function in Australia and to be honest, I now just
have one touch payroll. I don't have to think about it.
You guys deal with it for me. And I know
that I'm not going to get into any trouble with
fair Work for not paying my staff. So that's all
the thing that's nice to.
Speaker 2 (10:51):
Know we'll not paying super because it's so synced up
now that you know you will get found out and
then that becomes something that you need to pay back. So,
as I said, you take on a lot of responsability
when you hire people and I think their livelihood is
in their hands. You want to make sure you're doing
the right thing. So again, accounting software will take that
up for you, but you do need to go and speak.
You should go and speak to an account and make
sure you ride across the rules and regulations there.
Speaker 1 (11:14):
Yeah, absolutely all right. So we've got a really good
question about investing in business from Cody, and Cody has asked,
if you've invested your own personal money into a company,
how would your company potentially pay that back?
Speaker 2 (11:30):
So this is another great question from your listeners. More
often than not, business owners pay and address a whole
range of expenses before they look at what they owe themselves. Right,
So we know that they'll often put their own money
into start up a business.
Speaker 1 (11:42):
And you actually not track it properly.
Speaker 2 (11:44):
No, Yes, this is where I was going to go.
You want to make sure that you are securing your
own cash flow as an individual as much as you
are securing your business cash flow. Ultimately being paid back
in this context is going to depend on where whether
you chose to loan the business the money or whether
you chose to invest your money in the business. Does
(12:06):
that make sense you can set it up right from
the start. I'm either investing my money in this business
and I don't expect to be paid back, or I
am making a loan to the business, and you need
to account for those separately. So it needs to be
a conscious choice that you're making.
Speaker 1 (12:20):
So many needs to be clean upfront as well, because
it's one of those things where, especially if you're going
into partnership with somebody else, like Emma, if you and
I were like, let's start a business together, we'll both
invest XYZ. If someone then turned around and said like,
oh hey, Emma, I was thinking like, how's that money
going to get paid back? You're like, oh, that was
actually an investment you made, it could put you in
(12:42):
a position where you're having a little bit of a
fickle conversation.
Speaker 2 (12:46):
Yeah. I think, particularly when partners are involved, you want
to be so so clear on that, But even for yourself,
I just think it's good discipline when setting up a
small business right to think about these things. Am I
making an investment or am I making a loan? Because
if you make an invest you're helping the business grow
and you're ultimately going to increase your wage and your wealth.
Down the line, right, But tracking that transaction, whether it's
(13:08):
a loan or an investment, in a way that is easy,
transparent and guarantees some sort of return. Best you can
do that digitally. Again, you need to find an accountant
to help with this because whatever option you've chosen is
going to impact your tax Like if it's an investment
versus alone, the loan needs to be structured to be
paid back. So again not financial advice, but advice would
(13:29):
be think about that before you start the business. And
if Cody is asking the question, now, maybe he's already
made an investment, but other than alone, and I mean
not to his accountant.
Speaker 1 (13:39):
Your accountant's going to have the answers to all of
these questions though, and that's where a really good relationship
with an accountant is going to pay itself off. Being
able to pick up the phone and get advice that
is super specific to you is really really valuable. All right, Emma,
Speaking of investment, we have a question from Taylor who
has and I think this is a pretty popular one
(14:02):
in our community. Should I have accounting software from the
start or would a spreadsheet be enough?
Speaker 2 (14:10):
It's a question where you get all the time and
Obviously I'm biased. I work for MYIB and I think
our accounting software is absolutely amazing, But it can be
picked up at any stage of the business journey, and
whether you love them or hate them, we know that
a lot of people rely on spreadsheets or Google sheets
in some form in their business, even if they do
have accounting software. Right. So if you start a business,
(14:31):
I think in some way you need to make peace
with spreadsheets because you're probably going to be using them.
But what software enables you to do is get rid
of having to deal with all that stress that comes
from managing it all yourself, right, Because when you're using
a spreadsheet, you are setting up the columns, you're setting
up the rows, you're entering in all the data, and
you're doing that manually all the time. And it can
be really tempting when you're starting out to think I'll
(14:53):
get to accounting software later, but often by the time
you think about that. We talk to small business owners
all the time who've then got the most complex spreadsheet
ever manually recorded, and they're trying to transfer that into
accounting software, and we often end up diving in and
helping them with that. I would say it's much easier
to start how you mean to continue? Right? If you're
(15:13):
you agree serious about the business that you're setting up,
then you need accounting software, you need business management software.
I would start how you mean to continue?
Speaker 1 (15:22):
Yeah, And I think that that's actually a really important
thing to point out, like if you want to continue
it instead of changing your strategy a little bit later,
it's really important. I know for me personally, I used
to deal off spreadsheets one hundred percent. I would say
that I'm a pretty good spread sheeeter if I do
say so myself. But that still leaves a lot of
(15:43):
room for human error and the amount of hours I
have spent trawling through spreadsheets to find the formula error
to work out where I went wrong and why things
weren't adding up in the way that I anticipated them too,
I'm not willing to talk about. But also when it
comes to talk about your platform, like the NYOB platform,
I think you'll find it's not nearly as expensive as
(16:05):
you might anticipate it to be because you can scale
it with you, Like they aren't going to charge you
what it is for a big business on moyob. They're
going to charge you as a sole trader.
Speaker 2 (16:16):
If that's what you are. Yeah, and they're like our
simplest subscriptions, which is our light one doesn't have payroll
or things like that included, right because exactly you don't
need that. And I just point out as well, we
did a big research study in June ow myob Business Monitor,
and it showed that through COVID, like, COVID has changed
the way that we're all interacting and businesses are running.
(16:39):
Businesses that were already digital or digitized quickly have been
far more successful during the pandemic. And that's across all industries, right.
They're fifty percent more likely to have grown their revenue
during COVID, which is quite a fee, which a good.
Speaker 1 (16:53):
Investment figure like that means I probably should be digitizing
myself even more.
Speaker 2 (17:00):
Call them digitally enriched businesses, and you know they're really too.
But they're eight times more likely to believe that coming
out of COVID they will be creating jobs, and fourteen
times more likely to believe that they'll be offering new
products or services. So they're really ahead of the curve
on digitization. And I think anyone listening who is on
a spreadsheet wants to think about that. We're in a
(17:21):
digital world. There's been more digital transformation in the past
two years than in the past decade, and we think
that that is only going to continue, and you really
risk getting left behind. I think if you don't have
a look at your workflows and what you can be
digitizing in your business.
Speaker 1 (17:35):
And the plays a little bit into my personal opinion,
not necessarily research, because you're Emma really well researched backed
and I'm like, here's my opinion on this situation. But
when it comes to business, especially when you're starting a
small business and you're planning on investing into it, that's
one of those investments that you're going to make and
if you're saying, Okay, I genuinely believe this is going
(17:58):
to be really successful, that's a tool that's going to
give you more time back to focus on the business
that you're building. So whether you are making candles and
scaling that or you are running a financial advice podcast,
it's one of those things where it's going to give
you time back, and that's the most important thing at
the end of the day when you are a small business,
because we only have so many hours in a day
(18:20):
and we don't often have an entire team behind us
to do things. So, Emma, I actually think that leads
into another sneaky question from Moira from before, at what
point should I hand over my books to a professional?
Like when should we be getting a book keeper? Or
I know that I had an accountant from the start,
but should someone else be taking that over from me
(18:41):
as a small business owner at some point?
Speaker 2 (18:44):
Yeah, I think you can engage your professional and share
your books at any stage, right. I definitely think you're
going to have to get accountants advice when you're setting
up your business, no matter how big or small. Sharing
your books early may give you're accountal bookkeeper more time
to manage your account kind of golden hour for taking
that first initial step. What's more important is having kind
(19:05):
of a trusted relationship so that you can get the advice.
It's important to take the time to discuss where you
are now, where you'd like to be in the future,
and given the lockdown situation, a lot of us find
ourselves in what support you may be able to access,
Like if you've been coping with doing your own books fine,
and you've got a great relationship with your accountant and
you're using business management software like moyob and that's all.
(19:27):
Your boss is done, your income tax is done, you've
got all your receipts, and it's not a huge time burden,
then feel free to continue. But I think one of
the answers to that question has to be that time piece. Right,
when do you feel that that time spent on your
books is better invested elsewhere in your business, Because that
is what handing over your books to a bookkeeper does, Right,
(19:48):
You pay someone else to do that for you, but
you free up that time to then work on your
own business and invest that in generating more income or
more sales, things like that.
Speaker 1 (19:57):
And I think it's important as well. You don't just
and them over and never see them again. Like I
have a bookkeeper and Nicole, you are my saving grace.
I adore you with everything I have. But it means
that I can log in and just see what's going on,
and I know that everything is up to date, and
I know that my invoicing is on track, and I
know that my staff, you know, all of their payments
are done, and I know that all they leave has
(20:19):
been entered, and every single little admin task that I
was doing when it came to the financial side, of
my business she's now managing, so I'm not necessarily leaving
it not being able to see it anymore. When somebody
else is in control of it, I'm still in control,
and they still do have to chase up invoices on
my own sometimes, and I still do have to tell
Nicole when my staff are having breaks or taking time off.
(20:41):
So I am across it. But oh my gosh, I
don't know why I didn't BUYE the bullet and get
someone to help me sooner, except for the fact that
obviously we do have to pay for that advice. But
I mean that goes back to having a good accounting software.
Speaker 2 (20:54):
Right.
Speaker 1 (20:54):
The better the accounting software, the longer you can push
off getting a bookkeeper.
Speaker 2 (20:58):
Yeah, that is absolutely right. And it also comes down
to the planning that you do in setting up your business, right,
like understanding the kind of time that you're going to
have to spend on these things and the amount and
what that's worth to you, and at what point you're
going to make that leap, because at some point your
time as a business owner, particularly once you have staff
and all the complications that come with that, is not
(21:19):
going to be best invested in doing the books right,
it's going to be best invested in your product, your marketing,
managing your people, creating a great work environment. There's so
many other things you need to be doing with your time.
Speaker 1 (21:42):
All right, And we've got a question from ol friend
Sarah and Emma. I think this is another one of
those situations where we can't give specific advice, but we
can talk about the concept more generally. And she has asked,
what is a safe split of revenue to start off
with tax and what I should be investing back into
my business?
Speaker 2 (22:03):
Yeah, excellent. Often when we hear that question, I'm going
to reframe it a little bit because often that question
is asked that way that means something else. What people
tend to be talking about when they're talking about what's
the split of revenue for profit, tax and investment into
the business? Is there actually talking about how can I
best set myself up for sustainable growth? Right? Like I
want to build a business that's going to grow, how
(22:25):
I can improve my cash flow but making sure that
business is able to navigate any future economic or environmental turbulence,
Like it's not going to be a smooth sailing road.
So how do you manage your cash flow? Across that
I reckon.
Speaker 1 (22:37):
Sarah's listening to that, going yeah, actually, and that's exactly
what I meant.
Speaker 2 (22:42):
Yeah. So when people talk about splitting revenue at face value,
it seems like a quick and easy business boost, but
it doesn't always talk to sustainability, and we want to
be building sustainable, great businesses, right, So there's some there's
I guess four easy steps that we tend to provide,
you know, lots of content around for people to follow.
And the first one is really important to maintain good books.
(23:04):
Like you've got to know your numbers as a business owner,
even if you have a bookkeeper and a great accountant.
This goes just beyond sales. You've got to know your costs,
your outgoings. You've got to have strong bookkeeping foundations so
you can know exactly where you are at a glads.
And again, business management software like NYV is going to
do that much better for you than a spreadsheet. It
goes way beyond profit loss. You might be making good profits,
(23:26):
but if your cash flow is terrible, your business may
fail the moment you hit a bump in the road, right,
So you've got to keep an eye on your cash flow.
Speaker 1 (23:33):
I think that That's one of the things that came
out of COVID that I was super surprised with was
so many businesses that I deemed to be quote successful
or have really high turnover or really beautiful products not
being able to stand on their own two feet because
they hadn't thought about this so far in advance, and
they didn't have what I would refer to as kind
of like a business emergency fund.
Speaker 2 (23:55):
Yes, you've got to have an emergency fund, like COVID
has showed that, right. Yeah, like profit loss is one thing.
Got to make sure you have cash flow that can
see you through the good times and then the hard times.
So when you're making more money, puts on a way
to see you through the low points as you set
an emergency fund. The second sort of business sustainability thing
that we see and we'd love to see more of
among small business owners is setting measurable and realistic goals,
(24:19):
like arbitrary goals like I want to earn more money
and not going to work. It's important to be able
to measure the goals and you've got to be accountable
for achieving them. So a better goal that I want
to make more money would be I want to improve
the efficiency of admin in my business so that I
can take on two new clients. Because that measurable goal
is going to keep you motivated and make your business stronger.
(24:40):
And it's more specific, and it's hard as the small
business owner to hold yourself to account. So second tip
is set measurable and realistic goals. And then the third
one I think every smart business owner should be doing
is diversify so your growth doesn't rely on one factor.
Just as you don't want to keep your prices stagnant
over time, you don't want to keep your service or
(25:02):
product offering to just one stream, So diversification means you
have a more comprehensive range of profit sources. So it
might mean you know, I think over time we see
a lot of small businesses become very dependent on one
core supplier or one core client, and I think that's
really dangerous because if that client decides to change supplier
or change who they use, then you can find it
(25:24):
yourself with a business that's not very healthy. So you
want to be thinking about diversification. And again, business management
software will help you see where your sources of income
are coming from, so you can see if that's healthy
or not. And then finally to that point, you want
to focus on customer and client success for a sustainable business,
So maintaining your clients and customers is really critical to
(25:45):
achieve sustainable growth. It's the quickest way to secure cash
flow is to keep your customers happy and make sure
that they come back loyal satisfied. Customers are going to
pay for your product and service, but they're also going
to recommend it right, and word of mouth is the
most powerful and free advertising that you can get. So
in sure, like splitting your revenue seems like a tempting fix,
(26:08):
it doesn't always result in sustainability. To secure that, you've
got to know your numbers, set measurable and realistic goals, diversify,
and focus on your customer success. I guess I.
Speaker 1 (26:19):
Would absolutely agree. I mean when it comes to splitting, though,
I absolutely agree with having a quote split or a
percentage that you decide to put into your tax fund
so that you're never stung. And a couple of episodes ago,
I spoke personally about what I do, and I'm someone
who likes to over allocate into my little tax bank
account so that come tax time one I'm not stressed
(26:41):
and two, I feel like it's a bit of a
bonus time because I end up seeing a little bit
more cash back that I can then put into my
business emergency fund so that I can feel super secure
instead of going like, oh my gosh, perfect, like I've
got the right amount of tax or something coming up,
or realizing that I actually needed a little bit more.
So I'm someone who does a little bit over, But
I think you're right when it comes to profit and
(27:02):
what you invest back into the business. These things are fluid.
You can't pick a number.
Speaker 2 (27:06):
No, And I think starting out, you want to be cautious.
You want to put more away for tax in particular,
you do not want to be caught short there. But
if you've been running your business for a few years,
you start to get an idea of being come round
in the tax and maybe you don't need to stash
quite so much in your emergency tax fund.
Speaker 1 (27:21):
Absolutely agreed. And I think the other thing that's interesting
in that perspective is when small business owners first start
out and their cash flow starts to significantly increase, they
get so happy and they go, oh my gosh, I'm
going to take some out. I'm finally going to treat myself.
That's actually the time that we need to kind of
knuckle down and go, okay, cool, this is the time
to really solidify my business, establish that emergency fund, set
(27:45):
up a proper structure for putting tax to the side,
and make sure that this isn't just cash flow that
might dwindle off. We can create this into something sustainable,
because too often do I see people who like, oh
my gosh, I got to having ten thousand dollar months
in my business and I've got nothing to show for
it because I started spending ten thousand dollars a month.
(28:06):
So I think it's really important to just keep our
heads screwed on even when success comes knocking.
Speaker 2 (28:12):
Yes, you don't want to take your personal money principles
into your business. You need to have a different set
of yes money principles of business.
Speaker 1 (28:19):
We've got to be a little bit more structured there.
Or Emma, I know we've been talking for a while,
but do you have time for one more question? Of course,
all right, I have this sneaky one from our friend Madeleine,
and Madeleine has asked if we are starting from scratch,
so we've got absolutely nothing, no business set up yet.
(28:40):
What records do we need to keep and what things
are we potentially able to claim on tax as a
sole trader that we might not have known about before.
Speaker 2 (28:49):
Yeah, we've got some tips here for your listeners. I
say one for last tax. It seems like we hear
from people starting out that tax is often the most
daunting thing because it just sounds complicated, it feels really scary.
So there is you know, there is quite a bit
to keep on top of. Ultimately, it's important to keep
as much as possible to help your account and make
(29:11):
the most informed and accurate claim for you. I spoke
before about Miob's capture app, but really recommend a piece
of software like that. You don't want to be keeping
paper receipts. You want to snap them as you go.
Making this process of keeping all of your receipts and
paperwork digital is going to make your life so much easier.
So that's the first thing. Keep as much as you can,
(29:32):
but keep it digital, don't store it offline. And then
there are a range of things that you can claim
as a sole trader. These can depend entirely upon the
type of asset purchased or the service engaged. It's important
to be across the differences between personal and business expenses. Again,
we see a lot of sole trader businesses where they
(29:53):
don't have a separate business account. They're running their business
from their personal account. Again, that's worth thinking about whether
you want to that out. And for example, they're depending
on the type of business you operate a motor vehicle,
So a car and all its expenses may be deductible,
but traffic fines aren't likely to be right, you're still
going to have that split between business and personal. We've
(30:14):
got a really good article on our web page that
goes through a range of sole traded tax deductible expenses.
But ultimately, while there's lots of info in that and
too much to mention here, and accountant is going to
be best place to advise you on the specifics of
your business and your industry, but things like motor vehicles
definitely you can look at some services as well. If
(30:35):
you're looking to get started on tax early and bring
down tax costs as a sole trader, there are some
steps you can take as a starting point. If you've
got a healthy cash flow, you can pay some expenses
in advance and actually bring down the deduction for the year.
Speaker 1 (30:50):
So these did this earlier. I did this with my
business insurance by being a little bit cheeky and paying
it at the end of June so I could claim
it last financial year.
Speaker 2 (31:00):
Yeah, there's a whole host of those you can do.
You can do office and equipment lease payments, you can
do business related subscriptions, you can do insurances. You can
even do telephone and it you know, internet type services.
And you might actually with that one be able to
kill two birds with one stone. So you can see
if you can combine the benefit of bringing forward an
(31:21):
expense into the taxia with also getting a discount for
paying your supplier in advance, because just like you want
to bring deductions forward, there's a hell of a lot
of businesses that are looking to close off the end
of year with stronger sales, right, So they might be
you see it all the time with end of fin
near office sales and car sales.
Speaker 1 (31:42):
They want to achieve at that time of the year.
It's literally because they want to boost their sales for
the financial year.
Speaker 2 (31:48):
Guys. Yeah, so you can, yeah, kill two birds with
one stone, get a tax deduction and a bit of
a bargain, and then the other thing that we want
to encourage small businesses and soul traders to utilize. Is
the instant a set right off. So soul trade is
are eligible claim the instant asset right off which allows
them to claim immediate deductions for new or secondhand plant
(32:09):
and equipment asset purchases, so cars, office equipment, and tools.
And I'm not sure we tend to find that small
businesses don't seem to know as much about that instant
asset right off. So we really encourage all your listeners
to go out and book it.
Speaker 1 (32:22):
Up and what that actually means, because I think that
there's been a little bit of confusion in our community
that the instant asset right off is just cars when
that's absolutely not the case. The equipment for your business,
it could be like an office fit out, it could
be so many things. So yeah, I absolutely would be
talking to your accountant and saying, hey, I know this exists.
(32:42):
Is this something I should be taking advantage of? But
on the flip side, I think we need to be
careful of not getting caught up in the savings and
spending money on things out business potentially doesn't need.
Speaker 2 (32:53):
Yeah, there's no point buying a second car you don't
need it, but it was so cheap board. Yeah, absolutely
so Again on our website, we've got an awesome article
tax deductible expenses for Soul Traders, so there's a lot
of tips in there. We have a lot of accountant
bookkeepers who work for us and with us, and they
provide us up to date advice every year, so it's
(33:15):
a good resource to look at around kind of you know,
if you're in Australia that March time, so that you
can maximize your deductions in the last quarter of the
thin year and really set your business up for success
in the next year.
Speaker 1 (33:26):
Yeah, and I always find the Maob blog a really
nice source of truth in a way during those periods
of time, especially coming into the new financial years or
coming up to Christmas time, lots of news outlets tend
to put out lots of articles about these topics and
it's really hard for us as small business owners scree
Is that right? Is that not? But we know that
(33:47):
if we go to your website, they've actually been vetted
by actual accountants and bookkeepers and people who know what
they're talking about, not just a journalist who knows that
that will work. On the main page, and get click through.
Speaker 2 (33:58):
No, And I think the other thing that's important to
know is supplies such as ourselves have a really close
relationship with the government. The government relies on us to
help educate small businesses on their changes, things like single
touch payroll, and there's more changes coming with that next
year that we're working really closely with the government on
so that we can enable it in our software and
help communicate that government message out. So not only is
(34:20):
it up to date, but we try and take government
messaging and simplify and make it easy to understand as well.
Speaker 1 (34:27):
Yeah, of course, Well, thank you so much, Emma. I
think that is as always all we have time for today.
But this has been a super interesting chat that I
know our community is absolutely going to love and to
eat up and probably have a million more questions about.
Speaker 2 (34:41):
No worry, Thank you for having me, of course.
Speaker 1 (34:55):
All right, thank you once again to myob for allowing
me to share ema force that with the BBC community.
I know that Q and A episodes are one of
my favorite types of episodes to listen to because I
feel like they are packed with so much value and
I know that there's probably a fair few of them
that we are still yet to do. Hopefully I can
swindle myob interostelling another one of their experts to share
(35:18):
with our community. But as always, that is all we
have time for today. So just before we head off,
we'd like to acknowledge and pay respect to Australia's Aboriginal
and torrest Rate islander peoples. They're the traditional custodians of
the lands, the waterways and the skies all across Australia.
We thank you for sharing and for caring for the
land on which we are able to learn. We power
(35:40):
respects to elders past and present, and we share our
friendship and our kindness
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