Business Development

Last time, we looked at the accounts of a parachute manufacturing company. We reorganised its Profit & Loss Account to help the owners make informed decisions. The current profit is $100,000 per annum (see below), but the owner wants $200,000.

Sounds ambitious? Let's examine his options using 3 approaches - costs, volumes and pricing.

This is a guide to some of the issues you need to consider when deciding whether to operate a business as a sole trader or through a "Pty Ltd" company.

Although the guide summarises some important considerations, you should always seek professional advice before deciding on the appropriate structure for your business.

Contact MJ Accountants on 02 6652 8788 or admin@mjaccountants.com.au to arrange an appointment today to discuss your options on business structure.

While it's often considered purely an administrative task of establishing and running a business, having the right structure in place is vital to achieving an SME owner's desired outcomes.

Unfortunately, many businesses see their accounting system as an evil necessity, there to record sales, purchases, wages and expenses just accurately enough to satisfy tax requirements. Expenses are often shown from A-Z, with the main costs, materials (or purchases) and labour (wages) just taking their place in alphabetical sequence.

Instead, your accounts should be a management tool, enabling you to make informed decisions to increase profit and cash flow.

Most entrepreneurs have a simple problem when it comes to business plans: they don't have one.

A National Australia Bank survey last found that 80% of Victorian small businesses and 66% in New South Wales did not have a business plan. The worst place was South Australia: only 3% of businesses there had one.

There are many good reasons why entrepreneurs don't bother to sit down and write a business plan. Entrepreneurs tend to be action oriented people and if you have to choose between selling to a customer and writing a plan, you follow the money.

While the Federal Government's 2010 Budget proposal for a 50% tax savings discount and a standard $500 deduction for work-related expenses grabbed most of the headlines, a key issue for businesses was the proposal on the CGT treatment of "earnout arrangements".

The government has decided to implement four changes to superannuation.

Small businesses have welcomed the Government's proposal to allow them to immediately write-off assets worth less than $5,000, with accountants saying the move will provide tax benefits for thousands of firms.

But experts have also warned the proposal will only apply to companies, so businesses run by either a sole trader or under a trust-type structure will be unable to claim either the write-off allowance, or benefit from the cut in the corporate tax rate to 28%.

For many industry groups the Henry Tax Review was a real mixed bag – actual Government policy changes were fairly thin on the ground, so many groups will need to wade through Henry's Review to find out what's been missed and what could be lobbied for.