What is life insurance & why you need it?

CLIENT QUESTION:

What is life insurance and why do I need it?

OUR ANSWER:

Life insurance is always a difficult topic to talk about as we humans don't want to think about us not being around. But do your family and children a favour and have your insurances reviewed. I feel morally obliged to educate all my clients about life insurance and the consequences of not having enough cover.

Imagine a scenario: You are the sole earner in your household and you pass away leaving your family behind with a mortgage and childrens' education, etc to pay on top of meeting their day to day financial needs.Not a good thought right?

Let me educate you on life insurance now. Life or Term Life Insurance pays out a lump sum if you die before a pre-agreed date (the term). With Term Life Insurance the life you're really insuring is yours to provide for your family and dependents if you weren't around, with the lump sum being enough to provide for your family's long-term financial requirements. You can nominate whether you would like the insurer to pay an ongoing annual payment to make sure that they live in the way that they are accustomed.

ANSWERED BY SURESH RAJANI

Suresh Rajani is the Business Leader at Tax First - an accounting and business advisory firm located in Wayville, South Australia. 

To discuss this further you can email Suresh Rajani at suresh.rajani@taxfirst.com.au or give him a call at 08 8372 7837.

Increase your bank balance by not focussing on costs

CLIENT QUESTION:
I want to increase my bank balance (profits). How can I cut down my costs (expenses)?

OUR ANSWER:
There are lots of people out there who think that the only way we can increase profits in a business or bank balances (if you are an individual) is by cutting down the expenses we incur. This whole idea is flawed because it just focusses on expenses. People don't seem to realise that there is only so much you can cut down in expenses. So instead of focussing on the expenses shift your focus to your income. Now income doesn't have any upper limit does it?

If you are making say $50,000, think of ways in which you can earn $75,000 or even $100,000. But if you are making $50,000 and your expenses are say $20,000 then there is just so much you can cut down on.

I see the so called "expenses" we incur as an investment. I invest in food so I can live. I invest in travelling around so I can have a good time. They are not expenses but an investment to a better me.

Remember if you focus on the wrong goals you will "achieve" the wrong goals!!!

ANSWERED BY SURESH RAJANI

To discuss this further you can contact Suresh Rajani.

Suresh Rajani the Business Leader at Tax First - an accounting and business advisory firm located in Wayville, South Australia.

What business to start?

CLIENT QUESTION:
I am tired of the job I am doing and want to start up my own business. What business should I start?


OUR ANSWER:
You should first think about what your passion you have in life and then start a business related to that. If you are passionate about food then you can start say a restaurant.

If you go into a business just to make money you wont love working in or on the business. If you make your passion your business then you have a better chance of not only making money but loving what you do.

So start with passion...

ANSWERED BY SURESH RAJANI

To discuss this further you can contact Suresh Rajani.

Suresh Rajani is a registered Tax Agent and Business Leader at Tax First - an accounting and business advisory firm located in Wayville, South Australia.

Who should you network with professionally?

CLIENT QUESTION:
What kind of people should I network with professionally?

OUR ANSWER:
In my opinion the group of people you should network with depends on if you work for someone else (are an employee) or if you are are self employed.

If you are employed by someone else and you are or would be looking for employment opportunities then you should be networking with people in your field. So say you are an personal trainer in a gym, you should be networking with other personal trainers so that if there are good employment opportunities out there you are aware of them.

On the other hand, if you are self employed then you should focus on networking with people who are not from your industry. For example if you are self employed as a personal trainer then networking with other personal trainers would not bring new business for yourself. You should spend your time networking with people from all other professions that might take on your services.

ANSWER BY SURESH RAJANI

To discuss this further you can contact Suresh Rajani.

Suresh Rajani is a registered Tax Agent and Business Leader at Tax First - an accounting and business advisory firm located in Wayville, South Australia.

Are all donations tax deductible?

CLIENT QUESTION:
I give donations to various religious institutions and charities. Are all the donations tax deductible?

OUR ANSWER:
No all donations are not tax deductible. Only donations made over $2 to a deductible gift recipient (DGR) are tax deductible.

The religious institution or charity you make the donation to would normally write on their receipt if the donation you made is tax deductible or not. If no details are given on the receipt and you want to check if the entity is a DGR then go to the site www.abn.business.gov.au and type the entity's name and check the Deductible gift recipient status.

By Suresh Rajani

Suresh Rajani is a registered Tax Agent and Business Leader at Tax First - an accounting and business advisory firm located in Wayville, South Australia.

Are tips received taxable?

CLIENT QUESTION:
I work in a restaurant and at the end of the day we equally share the tips received from the customers during the day. Do these tips need to be declared on my tax return?

OUR ANSWER:
Yes the share of tips you receive at the end of the day are taxable income and need to be reported on your tax return as income. You should keep record of the tips you receive everyday and report them as income at the end of the year when you do your tax return.

A Trap That Causes Many Businesses To Go Broke, While They’re Making a Profit

A Trap That Causes Many Businesses To Go Broke, While They’re Making a
Profit

There’s a saying in business, “You can go broke making a profit.” And another, “Cash is king. Profit is theory.”

As you know only too well, you don’t pay rent, meet payroll or pay your bills with profit. You pay them with cash.

A business can make a lot of sales, have a book full of orders, have delighted customers and clients, have a great reputation, be growing, and yet still go broke.

Why? Cash flow.

The business might be profitable on paper, but have no money left in the bank.  They become insolvent.

A growing business is often hungry for cash ... hungry for inputs so it canmake the business’ outputs, be they physical products, services or a combination of both.

The tragedy in this is that cash flow crises can often be averted. They can be predicted, planned for, and then contingency measures put in place.

For example, if a business has seasonal effects where some months are busier than others, or if a business knows it has some jumps in expenses or fixed costs approaching—such as moving to a larger premises or hiring more staff to cope with growth—then these expenses can be planned for and compared with the planned income in those months.

Which would you prefer to do?

Call your bank manager and ask for a short-term loan or increase in overdraft when you are urgently in need of the cash (and therefore stressed, and desperate, and not in a great frame of mind to negotiate good terms), or


Call your bank manager 6 months in advance and meet with him or her to explain the coming cash crunch, the reasons behind it, and plan for the funding in a calm, relaxed, totally-in-control manner?

Not only would you get the loan, you’d impress the bank manager and strengthen the relationship for further funding, should it be needed to support your growth.

The bank manager would see you are a professional operator with a planned approach to your business, not a fly-by-the-seat-of-your-pants operator. (They see a lot of those. They don’t like doing business with them.)

Apart from the relationship with your bank, there’s the immediate effect of sleeping better at night.

We all seek a level of certainty to comfort us. Knowing what lies ahead in business and planning your cash flow gives you a peace of mind and confidence in your day-to-day work that will rub off on those around you ... in your workplace and at home. It’s a good feeling.

This is one of the reasons we are so passionate about helping our clients put together cash flow forecasts, to help them keep their business on track and to avoid any stressful, unpleasant surprises in the coming months.

It doesn’t matter whether a business is a one-person hairdressing or lawn mowing business, or a 10 person, 20 or 200+ person business.

Every business needs a cash flow forecast.

Running your business without a cash flow forecast is like driving a car at night along a dark country road with only your normal headlights on. It’s hard to see what lies ahead. A kangaroo or some other wildlife might come
right out in front of you, leaving no time for you to react. CRASH!

On the other hand, a cash flow forecast is like driving along that country road with high beam on. You can see so much more. You can drive with much more confidence. Less stress. And avoid the CRASH!

Another thing we often find in helping our clients build realistic cash flow forecasts, is that we can spot problems and make suggestion that help improve the business’ cash cycle. This puts money in your bank account.

For example, a combination of negotiating better terms with suppliers, tightening up or at least clarifying and enforcing your business’ own credit terms, and reducing stock holding and waste can have a powerful positive
effect on your cash flow.

So, if a cash flow forecast is so crucial, why do many businesses not have one?

Simple. Business owners get busy. Busy pleasing customers or clients. Busy dealing with staff. Busy paying suppliers. Busy generating sales.

Also, it’s easy to get ‘too close’ to your own business. “You can’t see the forest for the trees,” as the saying goes.

Having an independent and fresh pair of eyes come in and look at your business—especially cash flow which is its life blood—allows opportunities for improvements to be identified. Things that are there, but difficult for the business owner to see amidst the ‘busy-ness’ of it all.

So, what should you do about it? Call us. Take action. A cash flow forecast investment is more valuable than you think.

Your next step ... Call us on 08 8372 7837 or email us on admin@taxfirst.com.au_ to make a time to meet and discuss your options. We’ll then outline your investment in our services so you know exactly what
lies ahead.