biz finance

Business tips: Finding Finance That Suits YOU

biz finance

Do you need extra funding to take the next step in your business strategy? We’ll help you review lenders and finance products – so you can find the best finance option for your business. #businessadvice

Every business needs finance to get the initial enterprise off the ground. You may well have entered into finance arrangements to fund the initial stages of the business, taking out loans to purchase equipment, lease premises or take on staff.

When was the last time you reviewed your finance or looked at the options for accessing other routes to funding? Are your finance facilities still offering the best interest rates and repayment terms, or are there better deals out there?

Other finance options may be available to help you fund your continuing growth, so taking a look at the current finance market is well worth thinking about.

Refinance your existing loans

It’s possible that you already have business loans in place. Sourcing that initial capital is such an important part of the startup process, and a vital stepping stone in getting your business idea operational. When was the last time you reviewed these finance arrangements? Could you, in fact, be getting a better deal?

The finance market is always evolving. New challengers will enter the market, new specialist finance products will be introduced and interest rates and repayment schedules will fluctuate and change. You may well have got a great deal on the business loans you took out five years ago – but refinancing these existing loans is likely to have multiple benefits.

You could:

  • Consolidate your existing loans into one finance facility
  • Lower the interest rate you’re currently paying on the loan
  • Pay off your loan more quickly, to reduce the debt in the business
  • Improve your cashflow position by cutting your repayment expenses

The key point here is that your business finance shouldn’t sit still. A loan is not a static debt. You can revisit and refinance your debt so it works in the best interest of the business.

Look for alternative routes to finance

Traditionally, businesses went to their bank manager when additional funds were needed. But the dynamic in the funding market has changed dramatically in recent years. Due to economic pressures, and the impact of the pandemic, the big banks have scaled back their lending to small businesses. Your high street bank is no longer the first port of call when finance is needed.

On the flipside of this, there are a growing number of alternative lenders, smaller challenger banks and specialist finance providers to choose from. And this has created a wide choice of different finance products to fit the needs of your growth plan.

  • If you need new equipment, asset finance is available.
  • When you have a short-term cashflow crisis, invoice finance is a good option.
  • If larger premises are needed, there are commercial mortgages to consider or bridging loans to make the initial purchase while you source the full capital that’s needed..

Explore the tax deductions that are open to your business

Another element of government-back financial support is the use of tax relief. One of your major expenses as a business will be paying your tax. There are usually various tax deductions available to help you reduce your tax bill and reinvest that saved money back into your business. Careful use of these tax breaks can make a big difference to your finances.

For example, Australia has research and development (R&D) tax relief scheme. To encourage businesses to innovate and invest in R&D, the government will offer a relief against the company’s expenditure on operational R&D costs. This may result in getting an R&D Tax Offset for your company. May rules apply to this so check with us or have a look at https://www.ato.gov.au/Business/Research-and-development-tax-incentive/

Another example is the Temporary Full Expensing of assets purcashed for business purposes. Temporary full expensing supports businesses and encourages investment, as eligible businesses can claim an immediate deduction for the business portion of the cost of an asset in the year it is first used or installed ready for use for a taxable purpose. More info on ATO website here

Choosing the right funding and finance will be vital to your long-term success as a business – so work closely with your advisers and think carefully about your choices.

We can recommend trusted finance brokers to assist with this process.

Wood Accounting

Tax Time 2020

2020 was a year to remember. I am sure everyone of us has been affected in some way. Find out all you need to know for tax 2020

ITWV 2020

Income Tax Withholding Variation (ITWV)

One of the services we offer our clients is to prepare an ITWV which can be used to get early access to a future tax refund. If you are expecting a large tax refund in the current tax year we can prepare an ITWV which is an estimated future tax return. We must include an estimate of ALL income an expenses for the year. Wages, interest, dividends, capital gains, rent, trust distributions as well as deductions.

From this estimated return ATO determine a new tax rate applicable to your gross pay for the remainder of the tax year. ATO send a letter to you and to your employer.

Effectively you get a little bit of your future refund as reduced tax each pay period. Note that each ITWV expires at the end of the tax year that it applies to.

Common reasons to submit an ITWV would be negative geared rental property losses, high motor vehicle deductions or any deductions that will generate a large tax refund.

Any queries please contact us. Current clients please fill in the form below. New clients please contact us to discuss.

Small-Business-Loan-Form

How to get a business loan

Banks and other lenders offer a variety of loans, so make sure you investigate your options and find a loan that suits the needs of your business.

Deciding how much to borrow

Consider what source and type of finance will suit your needs.  The method of funding and term of the loan should match the purpose for which the loan is being used. 

Think realistically when assessing your financial needs.  Consider initial set-up costs.  Estimate how long before your business is likely to be self-supporting.  You should be able to demonstrate that you will be able to repay the loan, taking into account potential risks such as lower than predicted sales or interest rate increases. 

Applying for a loan

If you are starting up a new business and need to apply for a loan, the lender will require the following information from you: 

  • A description of the products and/or services you intend to provide
  • A marketing plan showing how you intend to bring in business
  • Evidence of the demand for your products and/or services.

You will also need to provide details of your own qualifications (both business and educational), previous business experience and past achievements.

Obviously, the amount you need to borrow and the purpose for which the loan would be used will need to be communicated to the lender, and repayment terms will need to be clearly established. 

If possible, financial information such as sales and profit projections over the term of the loan should be provided to the lender together with a cash flow forecast, showing the loan repayments, for the 12 months ahead.

Likely, the lender will seek security from you to protect the loan and this can vary from one lender to another and will depend on the type of loan and amount to be borrowed.  Some generally acceptable forms of security are:

  • real estate
  • shares in public companies
  • a personal guarantee.

Your loan application is more likely to be successful if you provide the lender with a well written Business Plan which includes: 

  • your business goals and objectives
  • results of your market research which support your financial projections and anticipated borrowings
  • systems you intend to implement to enable you to monitor your business and respond to changes in your financial position.

YOUR ACTION PLAN

  • Have your Business Plan ready.
  • Prepare financial information including a cash flow forecast.
  • Seek expert advice. We can assist you.
  • Decide on a form of security
  • Speak with a finance broker

Contact Wood Accounting team today. We have numerous finance broker connections who are experts in Business Finance

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All you need to know about Single Touch Payroll (STP)

Our friends at Xero have written a comprehensive blog article explaining STP. Rather than re-hash this info we are linking over to their blog.

For our current Xero clients we are working through our list and offering assistance, for a small fee, with reviewing payroll and registering for STP.

Single Touch Payroll explained

ATO also have a comprehensive section of their website dedicated to STP. We welcome STP as we feel this will even the playing field for businesses. STP will force ALL businesses to report their PAYG tax and Super obligations to ATO each pay run rather than at end of quarter or end of year. This will give ATO more visibility on those employers not meeting their obligations allowing them to take earlier action against those breaking the rules.

Does your business run STP compliant software?

IF you are running Xero you certainly do have STP enabled software. Many other software providers also have STP ready software.

If you are not sure give us a call and we can get you organised before the due date.

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Should I buy a business?


Advantages

Buying an existing business offers a sense of security because you have a good idea of what you’re getting for your money.

Existing customers and goodwill

An established business will generally come with existing customers, clients, suppliers and staff. This eliminates much of the effort and expense needed to generate goodwill, branding, advertising and hiring staff.

Expenses and finance

The business is already operational and stock is already on hand, so your initial expenses would be minimal and you can quickly generate a cashflow. If you need to obtain finance, it may be easier because the business has a proven track record.

Training and assistance

First-hand experience is valuable and the previous owner and employees remaining with the business are best placed to give you the training and assistance you need.


Disadvantages

An existing business does not come with a guarantee of future success!

Goodwill may not last

There’s a risk that customers and clients may leave when the business changes hands. Staff may wish to leave too and you may have to pay their entitlements, such as long service leave. The departure of the owner may have a negative effect on the business, so you can’t necessarily guarantee the profits.

Reputation

The business may have a bad reputation or have made a poor impression in the past – this might prove difficult for you to turn around.

Premises and equipment

The premises may be inadequate and the equipment or stock may be out dated or in need of replacing or repair.

YOUR ACTION PLAN

Thoroughly research the business!

For expert advice on buying a business, make an appointment to talk with your accountant, solicitor or business adviser.

Contact Wood Accounting team today on
1300 098 852 for assistance with this Action Plan!