As crazy as it sounds save tax by putting your money in the bank.

The income depostied are then invested in assets to provide benefits to members when they retire or meet a condition of release.  All superannuation accounts carry a reduced tax scale of 15% so this can be very attractive when it comes to high income earners and salary sacrificing strateges for individuals and business owners.  

A Self Managed Superannuation Fund must have less than five members. From 1st July 1999, responsibility for SMSFs has been with the Australian Taxation Office (ATO). The trustees (you) control the investments and are generally responsible for the SMSF’s administration and its compliance with the law this includes having an investment strategy and preparing financial statement and a tax return and audit each financial year. Evolution Accountants can help administer these responsibiliteis on your behalf so call us today…  

A SMSF is controlled by a Trust deed. This deed sets out the rules the SMSF has to follow. It also sets out the obligations and responsibilities of the people/members connected to the SMSF.   

SMSF can be set up by people of all ages and from all walks of life. Younger people who want to use the SMSF as part of their overall investing plan are setting themselves up earlier, for the later life spoils and they are becoming increasingly common. The list of people setting up SMSFs typically includes:

1. Self-employed professionals
2. Employees, particularly those on higher salaries
3. People who want to manage their own investments
4. People who run businesses through companies or trusts as they can reduce their business taxes by paying more super

Who should setup a SMSF—It boils down to more that just a number crunch… here’s what you need to consider

•  Do you have the capacity to manage your own fund or are you willing to have professionals help you?
• Are you looking to use a SMSF as an overall strategy to build your personal wealth?
• Can you benefit from engineering a strategy for your business so that your SMSF contributions save your business tax?
• We have clients who started a SMSF with $30k in super
• ideally tho $100,000 in super is generally accepted and indoresd by the Australian Society of CPAs as the ‘break even point’ for a SMSF.

Some people use SMSFs with less than $100,000, confident that over time the enhanced returns with a view to increasing contributions over time, this will make up for any cost inefficiencies in the early days. Where the member faces tax of 30% or 45% (which is nearly everyone) any investment will perform better in a SMSF.

Why do assets preform better in a SMSF? 

1.  The tax deduction for contributions in as SMSF is 15% not 30% or 45% so more money can be invested upfront and the compounding aspects of that till retirement could be astronomical
2. More money can be invested, investment earnings are higher
3. Income made in the SMSF is taxed at 15% (and sometimes 0%) and capital gains are taxed at 10% (and sometimes 0%), so the after tax rate of return on the investment is always greater than for a 30% or 45% taxpayer.

The government is replacing the age pension with a system of private pensions and or private suppliemnts from your super. It is a mathematical certainty that an investment in a superannuation environment will do better than in a non superannuation environment.

Setting up a SMSF means you don’t have to wait for months after 30th June to see how your investment preformed… not to mension its too late if your fund looses value… in 2011 calender year “retail” super funds lost 11.1% of their value…

SMSFs can create synergies with the member’s other investment and business activities. The SMSF’s investment strategy should be prepared as part of an overall investment strategy reflecting the member’s attitudes and overall financial risk profile. this means you can engineer your financial future and take back control.

Keep in mind SMSF are generally protected from businesses and or persoanal bankruptcies but you should  always consider your life insurance needs and update your will as part of your estate planning.

SMSFs do not have to take up a great deal of time. Some people get by with just a few hours a year. They select quality blue chip shares and never sell or buy a investment property. Keeping and holding assets means lower administration costs since there are fewer transactions to record. This strategy is common with younger people with smaller funds and larger work and family commitments. Other people enjoy spending a few hours a week day trading shares, or in some cases, even a few hours a day, attending to their SMSF’s investments.

Why setup a SMSF

1. Control over the investment
2. SMSF assets are protected from bankruptcy
3. Control over the timing income: capital gains and, in many cases, other types of income, can be deferred to a year when the SMSF pays nil tax
4. Retirement benefits for spouses and children.
5. SMSFs can be even used to create retirement funds for spouses and children
6. Tax-effective savings. The deduction for contributions and the low rate of tax (15%, 10% or nil %)
7. Tax deductible life insurance premiums. Running life insurance cover through a SMSF means the cost of the cover is effectively halved.

We hope that the above summary helps you to understand the advantages and some of the details relating to SMSFs.

Call Evolution Accountants 1300 506 664 or email info@evolutionaccountants.com.au  today to start Engineering your fianancial life… younger, older, business owner, employee, single parent, retiring, … take control and get informed…

This sometimes seems too good to be true…..this does not happen overnight, but if you don’t focus on the important focus points for your business, it might never happen….that is a certainty!

Any business can identify their key performance indicators (KPIs), set a new benchmark for their focus areas and start implementing ways to achieve these, and dramatically turn their business performance around.

Examples of key performance indicators may include:  average sale, gross margin %, number of sales, time taken to answer the phone, time taken to response to a client enquiry, number of times rework had to be undertaken…

As you can see these focus areas include financial and non financial points of interest.  I remember hearing about a CEO of an airline company who solely focused on one key point of interest:  how many planes departed behind schedule in any one day, every time a plane departed late he was informed by his staff and then he queried what had happened for this to occur and fixed those issues.  By focusing, recording, watching and implementing strategies to improve this very important KPI, this airline company went from almost complete collapse to one of the most successful airline companies in all of Europe!

So what KPIs are you going to focus on this week (and every week) for your business and how are you going to test and measure these KPI?

Author:  Tracey McGuinness CPA

1. Increase your number of customers
2. Increase your number of transactions
3. Increase your average sale
4. Increase your effectiveness

Lets look at how powerful business coaching and mentoring can be with a quick customer example

Now ignoring item 1 for the time being, as that is a bit of a given

Let’s focus on Item 2 – increase your number of transactions

Now what does this mean? basically it means rather than concentrating all your efforts on getting new customers, concentrate on increasing the number of times your current customers come back to you.

For example………. A hairdressing customer visits the hairdresser once every 4 months.  This is 3 interactions per year.  Now if you were able to encourage the customer with new services or more regular treatments and have them come in every 3 months instead of 4, then you have immediately increased your business transactions and your profit by 33%

You have immediately increased your business transactions by 33%

Sounds simple doesn’t it………………… and it is……….. sadly though businesses just don’t do it. Have a think about your existing database, if you have been trading for some time this could now be huge!  When was the last time you made contact with each and every one of those customers?

The biggest mistake you can make is ‘assume’ your customer doesn’t want to see you more than they currently do…………that is not a decision for you to make………….your role is to offer your suggestions/invitations of your services/products and they will decide if they engage the transaction.

What is the effect?  Is it worth it……………….

Continuing with our example above : hairdressing business currently performs 65 hair appointments per week – average appointment sale  is $80 – 2 hairdressers on staff.

On average customers come in 3 times per year for appointments (every 4 months)

If they had 40% of their customers come every 3 months rather than every 4 months, what would the effect on profit be?

Answer………………………….. an extra $ 34,200 profit each year for the business. 

Which for this business is a 131% improvement on their profitability and this is without getting 1 extra customer…………….powerful isn’t it………

H

Author: Tracey McGuinness CPA

Practice Manager and Business Consulting Accountant

tracey@evolutionaccountants.com.au    1300 506 664

Tips to achieve the maximum rent:

1. A fresh coat of paint – Presentation is everything… first impressions count… have a neutral colour scheme that most people furniture will go with.
2. Clean curtains and blinds – Replace if torn, damaged or not functioning…
3. Professionally cleaned – Ensure that the property is sparkling.
4. Smells Clean and fresh – ensure all windows are open and you have a nice fragrance or aroma
5. Clean driveways and paths & Cut the grass – Ensure the outside is well presented too
6. Low maintenance garden – Mulch and ensure the gardens look after themselves.
7. Update faulty cooking appliances – ensure the kitchens and bathrooms are all up to scratch.
8. Employ an agent to screen your tenant – this is vitial as the tenant may have a bad tenant history or be unemployed you need to ensure they are going to look after things and pay on time
9. Get an agent or a few to appraise the property – Often owners underprice there properties as they are not familiar with the rental market and fluctuations… get some estimates before advertising
10. Don’t set the weekly rent to high that you get high turnover of tenants… this will cost you in lost rent as the property may end up vacant and you may have to pay a letting fee with your agent everytime its relet… in addition moving furniture in an out of the property causes damage and more maintenance down the track.

key is market value for rent… quality tenant and regular inspections.