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Employee V Contractor

Posted: Monday, July 24, 2017 at 2:58:09 PM EST by Anthony Davis

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Employee Vs Contractor

 This entire area of employment law is fraught with many traps and yet there continues to be a willingness on the part of many business owners, both start-up and very experienced, to go blindly down a path that in many cases have cost and will continue to cost the business dearly.

The decision to engage an Employee or a Contractor is that of the Business Owner and to do so with your ‘eyes wide open’ ensures that you will not find yourself in a place of future disadvantage. Many employers think that contracting is ‘less risky and constricting’ than an employment situation. As this article will reveal, contracting can be a minefield and a lot less certain and ‘clear-cut’ than an employment situation.
There have been many problems associated with independent contractors and this is mainly because the true nature of the relationship is hard to classify. This relationship between employer and contractor can change over time and if the negotiation and contractual proceedings are not updated, breaches in the Fair Work Act or sham contracting may result. Penalties (at date of writing) for such incidences are $54,000.
My word of caution in this area is that, as the employer, you are a ‘more likely’ target for the ATO, Fair Work, the Unions or any other organisation that has the ability to use these often conflicting pieces of legislation to their advantage. Why you? Because, as the employer/principal contractor you are the one with ‘apparent’ control!
Who is an independent contractor?
An independent contractor is defined as being engaged under a contract for services, as opposed to an employee who works under a contract of service. A master servant relationship is defined and the totality if the relationship is considered when determining the status of the relationship. This is why it is so important to clearly identify and record the relationship status.

There is a variety of Federal and State Legislation and statutory regulations that must be adhered to in order to ensure a risk free and compliant contracted workforce. These areas, further explored in the full article, include and are not limited to:

  • ATO legislation;
  • PAYG (Pay as You Go) Tax;
  •  Common law requirements;
  • Industrial Relations (Fair Work Act);
  •  Superannuation Guarantee Charge (SGC) legislation;
  •  Workers Compensation - State based regulations
  •  Payroll Tax - State based taxation;
  •  Personal Services Income (PSI) requirements;
  •  Sham contracting provisions.

We Also Look At

  • Unfair Contracts;
  • The ABN Myth;
  •  Contractor Reporting for the Building & Construction Industry.

There are a number of factors that may contribute to determining the difference between an employee and an independent contractor. It is important to note that no single indicator can determine if a person is a contractor or an employee. Each determination is based on the individual merits of the work arrangement in place. Courts always look at the totality of the relationship between the parties when determining the status of a person’s employment.
To find out more and for a complete version of this Compliance Corner follow this link (opt-in required).
If you would like to view previous Compliance Corner articles follow this link


anthonydavis

Anthony Davis

Anthony Davis is a twenty year veteran in the Business Coaching industry, leading a team of talented Business Advisers/Coaches using a proven system generating greater Wealth, Freedom and Excitement for owners of SMEs. Anthony has been the "Go-to" man in business coaching circles for two decades.

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Management Reporting

Posted: Tuesday, December 13, 2016 at 3:56:37 PM EST by Anthony Davis

Management Reporting

managementreporting

For you to effectively manage your business, it is critical that every time a Profit and Loss is prepared, Management (even if it is just you, the owner alone) should take time to review the results.  Even if you know the results are not what you want or what was budgeted, review and analyse any material variances.  If Income and Profit are above budget, it is imperative to ensure that Expenses have been maintained within budget.

Accrual vs Cash

This question often confuses business owners.  From a Management Reporting perspective the only form of Management Reporting should be accrual. This means that you account for the value of the sale when you invoice not when you get paid for it.

Actual to Budget Reporting

In order to gain the most benefit from the budgeting process, refer to the attached Compliance Corner article, a system of comparative reporting on a regular basis must be initiated in your Accounting System. 

In addition to the above, your Accounting System should be programmed to show the following ratios:

      Gross Profit as a percentage of sales;

      Net Profit as a percentage of sales;

      All major expense groups as a percentage of sales.

When reading your financial reports to analyse how your business has performed, you should consider the questions in each of the following areas:

Profit & Loss

Did Revenue grow in comparison to your Budget?

Did Gross Profit Percentage perform to your Budget?

Did Overhead Expenses dramatically increase and, if so, in what areas?.

Did Net Profit Rates hold this year as per your Budget?

Were there any extraordinary gains or losses?

With proper analysis of the monthly financial reports you will quickly identify any emerging problems having a detrimental effect on the performance of your business, enabling remedial action to be swiftly taken.

Balance Sheet

Are Increases in Assets & Liabilities consistent with business growth?

Debtors & Creditors

Debtors:  Aged listing ie Currrent, 30, 60, 90 days and over;

Creditors: Aged listing ie Currrent, 30, 60, 90 days and over.

Cash Position

Cash flow – can the business pay its debts?

To find out more about Management Reporting and for a complete version of this Compliance Corner follow this link (opt-in required).

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If you would like to view previous Compliance Corner articles follow this link

anthonydavis

Anthony Davis

Anthony Davis is a twenty year veteran in the Business Coaching industry, leading a team of talented Business Advisers/Coaches using a proven system generating greater Wealth, Freedom and Excitement for owners of SMEs. Anthony has been the "Go-to" man in business coaching circles for two decades.

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Good H.R. Practices

Posted: Wednesday, September 14, 2016 at 1:30:12 PM EST by Anthony Davis

Good H.R. Practices

 goodhrpractices

There are only two forms of ‘leverage’ in business … Money and People!  Doing ‘People’ correctly is not easy and yet the rewards are great if you want a business that works for you.

There are many pieces of legislation that impact on your relationship with the people you employ. Remember:

Good H.R. (Human Resource) Management Practices minimises your exposure to

I.R. (Industrial Relations) losses and subsequent costs.

A recent headline read:   

Employer’s termination of latecomer - commendable

“Despite the employee alleging that he had been unfairly dismissed, Fair Work Commissioner said that the evidence warranted his dismissal and described the employer’s processes as ‘measured and considered’ and ‘commendable’.

Employers can be in a position of power to manage employees when their behaviour does not meet expectations.”

The following week another headline reported, “Employer forced to compensate bullied employee $43,900 for forcing him to resign.”  A good example of bad H.R.

Good H.R. you WIN …Bad H.R. you loose!

So what constitutes Good HR?

At the highest level, consider being an ‘employer of choice’.  A place where people love to come to work. 

Your First 5 Steps to Good H.R.

Good Employees start with a good employment process.

  1. Role Descriptions

The clearer you are about the Role they are to play, the better.  Let your employee know what you expect of them in detail.  Include Performance Indicators.  Remember the expression:

“If you tell me how I am to be measured, I will show you how I perform!” 

Role Descriptions are often not done because of the fear of leaving something out.  There is a ‘catch all’ phrase for you to include. See this blog article:  http://www.brightwater.com.au/Blog/business-boost-blog/Post/job-description

  1. Employment Agreements

Written to protect you against breach of contract.  Don’t write them yourself, don’t use someone else’s.  Get professional advice.

Advice can come from your Professional Association and if not, talk to Employsure.  http://www.employsure.com.au  Contact David Reid on 0402 443 852 and quote ERA0805.  They can also assist you with the next three points ...

  1. Induction Procedure

Getting your new employee ‘up to speed’.  In most businesses this is done poorly. It is the most important H.R. process you can have in your business.  Remember the National Employment Standards (NES). Read more at Fair Work Australia. www.fairwork.gov.au

  1. Work, Health and Safety Policies and Procedures

I call this “Your ‘Duty of Care’ to Yourself!”  This is important for all businesses and more so for the higher risk industries such as Construction & Manufacturing.

  1. Basic Human Resource Policies and Procedures

These form part of what you refer to as “The way we do things here at ABC Company”

Your greatest leverage in business comes from the people you engage to grow your business.  Remember ‘With Good H.R. you WIN’.

To find out more about Good H.R. and for a complete version of this Compliance Corner select the download button below

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If you would like to view previous Compliance Corner articles follow this link

 

As always, your feedback on this article is welcome.

 Regards, Anthony Davis

Brightwater Business Coach

anthonydavis

Anthony Davis

Anthony Davis is a twenty year veteran in the Business Coaching industry, leading a team of talented Business Advisers/Coaches using a proven system generating greater Wealth, Freedom and Excitement for owners of SMEs. Anthony has been the "Go-to" man in business coaching circles for two decades.

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Budgeting Your Business Success

Posted: Thursday, July 14, 2016 at 7:05:37 AM EST by

Budgeting Your Business Success

budgets

Budgeting should be seen as an important part of your business compliance processes.

Have you started budgeting for the next financial year?  If you haven’t created a budget for your business in the past, it is possibly because you don't know why.

Many times the question is asked, “How can I budget for something I don’t even know is going to happen?”  The only response that makes any sense is, “Once you have created your budgets for what you want to happen, you have a very compelling reason to make them happen!”

Budgeting is the process of 'declaring' your intentions to yourself, your team and the universe!

"Once you make a decision the universe conspires to make it happen!" Ralph Waldo Emerson

Budgets are a set of financial projections that the company is targeting for a defined future period.

You budget to reveal the financial aspects of where you are heading ... how much capital do I need? How big an overdraft do I need? When and how much profit will I make? What sort of tax issues will I face?

Budgets provide a benchmark against which your performance can be measured.  Once you have established your budget, actual results can be measured against that budget.  Significant variances can be investigated which then puts you in control of your business.  

Your Budget gives you something at which to aim.  Without one, you will spend the next year aimlessly achieving the same as last year or perhaps even less!  Without a budget you have little reason to regularly check your progress.

The saying to consider here is:

 “What you Measure you Manage ... and What you Manage Improves”.

To help you find out HOW to budget, join us for a 1 hour Webinar. Click here to Register NOW!

 

 

anthonydavis

Anthony Davis

Anthony Davis is a twenty year veteran in the Business Coaching industry, leading a team of talented Business Advisers/Coaches using a proven system generating greater Wealth, Freedom and Excitement for owners of SMEs. Anthony has been the "Go-to" man in business coaching circles for two decades.

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Credit Policy and Debt Collection

Posted: Thursday, July 14, 2016 at 7:04:50 AM EST by

Credit Policy and Collection

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If Cashflow is an issue in your business, consider how well you do the following:

1.       Credit Policy

‘Credit’, in commercial terms, refers to the approval for delayed payments for purchases.  ‘Policy’ is a course or principle of action adopted by an organisation.

Credit Policy is the time period you allow your Customers to pay for their purchases, the form of payment (cash, credit card, cheque, etc.) and discounts offered for early payment and charges applied for late payment.

Customers need to understand the agreed delay and method by which you expect to have the Credit you have given them to be paid.  It is the lack of a clearly stated Credit Policy that causes the greatest level of Debt Collection issues and poor Cashflow in many businesses.

Be sure you understand why you ‘give credit’.  Just because the rest of your Industry gives Credit, doesn’t mean you have to.  If you build a desired reputation for your business you can set your own Credit Policy.

If you expect to be repaid in a certain time, then create a Policy and ensure that your Customers agree to your Policy before you deal with them.  Remember when you buy retail you pay immediately!

2.       Debt Collection

The best Debt Collection system in a business is one you don’t need to use.  A well implemented Credit Policy will ensure a minimum level of use of your Debt Collection System.

Trying to impose ‘Credit Terms’ after you have provided your Product or Service is like ‘closing the door after the horse has bolted!’

Even with a very strong Credit Policy, there will always be an opportunity to use a Debt Collection System.  There must be an accounting process to know all debts are being paid ‘on time’. 

 The tougher you are at policing and implementing your Debt Collection System, the less likely are your customers to exceed your Credit Policy.   Your System must be well documented and starts the day the Credit Policy is broken.

Your System will include phone scripts, letters, ‘letters of demand’ and if all else fails your use of a Solicitor/Collection Agency.  It should also contain ‘what if’ scenarios and allow for part payment or a regular repayment program.  Another useful tool is to restrict (not stop) continuity of supply until the old debt is repaid.

For a more detailed and complete version of this Compliance Corner click the dowload button below (opt-in required).

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anthonydavis

Anthony Davis

Anthony Davis is a twenty year veteran in the Business Coaching industry, leading a team of talented Business Advisers/Coaches using a proven system generating greater Wealth, Freedom and Excitement for owners of SMEs. Anthony has been the "Go-to" man in business coaching circles for two decades.

Connect with Anthony  |  Facebook  |  Google Plus | linkedin | color-twitter-128 | color-youtube-128
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