Tax Planning Tips To Maximise Your Return

The end of the tax year will soon be upon us with 30 June just around the corner. Now’s a good time to take a look at both your expected income for the current financial year; and your projected income for next financial year, as they will help guide your tax planning strategy.

In this short video I will give some general tips to help with your year end tax planning.


To Improve Your Cash Flow, One is The Number

Every business has a seven financial principals that underpins the way they operate from a financial viewpoint.

Not knowing your principals is like walking through a maze blindfolded. These consist of the four drivers of profit and three drivers of the balance sheet.

The four drivers of profit are:

  • Price
  • Volume
  • Direct costs/Cost of Goods
  • Overheads

The three drivers of the balance sheet are:

  • Accounts Receivable days
  • Inventory days
  • Accounts Payable days

They are the drivers that management should have some control over. Business improvement is driven by changes to these drivers. 


In this article, OnPoint Advisory Gold Coast Business Accountants, will discuss ten ideas to maximise the value of your business.

Realizing the maximum value for a business when it sells is the goal of all business owners.

Businesses value can exist separately and apart from its owners. This occurs when there are processes, methods, products, property rights or anything else that allows the business to continue without its current owners.

The ten ideas below will give you a guide to help you see if you are on the right path:

1. Have a Stable Management Team

A business with a solid management team, allowing for important activities to operate autonomous of the owner, will command a higher price.

The stability and knowledge of the management team are an extremely important part of the valuation review by a potential buyer.

If most of the main relationships between the business and suppliers / customers, buyers will factor this risk into the valuation or the deal the proposed deal. Part of the proposed purchase price may become contingent on the owner staying with the business for a period to help continuing customer relationships as part of the hand over process.

2. Demonstrate Sustainability of Earnings

Revenue and earnings that have been steadily growing over several years, versus earnings that fluctuate dramatically, will improve the business valuation.

Year over year growth shows a solid business that is attracting new customers and/or market share. Big fluctuations in sales typically indicate that either the businesses products may be subject to outside factors, or the business has experienced other issues, which could indicate that management may not be stable.

It makes sense to have a written plan detailing future growth and how that growth will be achieved based on industry information, increased demand for the company’s products, new product lines, market plans and growth via acquisition.

3. Systems and Procedures

The amount of goodwill that a buyer is willing to include in the purchase price will be dependent upon systems and procedures.

A business must exist separate from the daily involvement of the business owner to create goodwill. If the owner is seldom away from the business for any length of time, buyers will question the strength of the procedures, systems, and the management team.

4. Maintain Excellent Financial Records

Poor financials are a concern for both buyers and lenders. Business Valuation will be based primarily upon the numbers and the more reliable the financial statements, the more chance they will hold up in due diligence.

5. Keep Personal Expenses Paid by the Business to a Minimum.

When the financials are clean with little “add backs” related to the business owner’s personal expenses, potential buyers and lenders have higher faith in the numbers.

6. Transition Planning

When a seller has a definite plan to “phase out” of the business over a period of time, a potential buyer will recognize that sound planning and thought has gone into the process.

Developing a transition plan will often generate excellent suggestions for improvement in management’s role in the everyday operations of the business. Many business owners should begin this process by outlining their job description, This will highlight functions that should be delegated more to their management.

7. Diversification

Having a concentration of customers is often a detriment to the value of a business. When the sale to any one customer accounts for a significant part of the sale for the business, the business will be valued down. If you were to lose this one customer, what impact will it have on the business? Working to diversify the customer base will result in a significant increase in the value of the business.

8. Solid Reputation

People looking to acquire a business are constantly searching for “industry leader”. These people now have a wealth of information and feedback about the business at their fingertips, thanks to a multitude of websites where customer can leave comments and feedback about the business.

9. Diversified Suppliers

A for having only a small concentration of customers can be a problem to a business, so can also having a limited number of suppliers. Many businesses buy from multiple sources just to manage the risk that if one supplier experiences a shortages or interruptions in supply, they have a fall back provider. “What happens if…” is a typical question a buyer may ask – and many sellers do not have a ready answer for that question.

10. Secured Premises

A business may or may not be dependent upon its location, but a buyer will not want to take the risk of moving the business right after the purchase. The business should have the right to remain in their current facility for at least 3 – 5 years through an existing lease, or ownership of the building. If the lease is about to expire, and the buyer will have to renegotiate the lease right after settlement, this situation creates uncertainty for the buyer, which will reduce the valuation. Lease options are an excellent method to remove this uncertainty, whereby the business has the right, but not the obligation to extend their lease beyond the current term.

If you want to learn more about how to improve your business value, contact us today.

In this article, OnPoint Advisory, Gold Coast Accountants, discuss a few ways to improve profit.

There is a common thought that owning a business is like a licence to print money. I can hear many small business owners saying – “I wish”.

It’s not as easy as, for example, buying a kilogram of flour, mix in a few other ingredients, bake it for 40 minutes and sell it for  $10 a cake – easy money. Right? The margins on this is huge. However, the Net Profit (amount left after paying electricity, gas, phone, rent, staff, insurance and everything else) can be modest.

There are benchmarks available for a lot of industries and professions which can be used as a guide to see how your business is performing compared to others. It is worth the exercise to compare your business to these.

So, to make all your hard work in the business worth while, you really need to exceed these benchmarks. Following are a few tips to assist you get ahead of the bunch.

Know Your Numbers

Not everyone is great with the figures of the business. Some business don’t even have accurate system to capture this information. That is all for another post.

But generally there are some key figures that you will generally need to focus on. You need to get to know and understand your Profit and Loss intimately.

An example of a business P & L benchmark report

It’s pretty clear that this business is beating the industry average in the main areas. Now these are the main areas for this example as they are the three biggest expenses. 

By measuring these on a regular basis, we will know where the opportunities are and then start to formulate and implement changes to improve the Net Profit.

Start Growing Sales

The usual place that people start to look at when trying to improve profit is by cutting costs.

This will improve margins for time but sales will then start to decline as the quality of the products and services provided fall. Then with less sales, more drastic measures will happen with costs, and the business will eventually disappear.

The alternate to cutting costs to improve your percentages is to increase sales.

At his point most will jump on marketing ideas – discounts, social media, etc. While these will generally work there is no real substitute for providing a top quality consistent product or service. 

Improve Efficiencies

No one like inefficient services. It not only affects the customers but also the staff.

So what can be done to help make your business more efficient?

 – Simplify your product range. 
 – Improve your workflow.
 – Automate as much as possible, whether it be the accounting function, stock management or staff scheduling, for examples.
 – Reduce double handling of information.

Change Your Product / Service Mix

The “Mix” of the products or services you sell are NOT all equal. Some have high sale values and high margins, while others will be the opposite will low margins.

The first step is to know your products and services, and their profitability.. Once you have the information, you can determine what is the best for your business.

Think the low selling, low margin items are dragging your profit down, and are at times also the most time consuming or expensive to produce. 

Increase Capacity.

Once your Sales start to grow, and you have discovered and improved efficiencies within your business, you will generally find that you are inadvertently created the opportunity to increase the capacity of your business.

If you would like to finds out more, reach out to us for a coffee and a chat.

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