TIPS

1. Setting payment terms for your customers and following up on debt collection regularly ensures a healthy cash flow to the business.

2. Calculate an hourly rate for your services to the business. Analyse how you spend your workings hours. Make decisions based on where your skills are and where your skills are most effectively used for your business.

3. Open a Business Bank Account specifically for setting aside GST collected, PAYG Withholding Tax, PAYG Instalment Tax and Superannuation payable. Each time you receive debtor payments, transfer the GST component into this account. Making this practice a habit will ensure funds are available to meet your Australian Taxation Office payment obligations each month or quarter.

4. Make a habit of paying yourself a regular wage. Calculate your gross wage and PAYG tax and transfer the net amount to a private account each time. Transfer the PAYG Withholding Tax amount to a separate business account (specifically for the purpose of setting aside GST and PAYG taxes). It is good practice not to use your business account for private use.

5. If you operate your business through a company structure, and access company funds for private use, it will be necessary to have a written loan agreement. The Division 7A Loan Agreement must predate the drawing of the funds, where the amount remains outstanding past the end of the financial year.

6. For a business to enjoy long term success, it is important for the manager to have a snapshot of the business’ financial position regularly. Where you are not confident with your ability to track and document the business transactions accurately and regularly, you should use the services of someone who is. Incorrect analysis of the business financial wellbeing can be disastrous. Relieving yourself of this burdensome task will free your time to focus on improving your business income, or to enjoy with your family.

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