Case Study 1-Complex Taxation
The Situation:
The client had poor advice from another accountant who didn’t understand the implications of a grouped entity and the common traps to look for. The client had a combined turnover of $30 Million and with size comes greater scrutiny and complexity.
The Approach:
By meeting with the client and analysing their current position, the entities under control and the regulation’s that needed to be followed, we were able to ensure the client had a solid foundation moving forward.
The Results:
During the analysis process and discussion we identified a number of key issues that needed resolving. These areas included research and development tax, Fringe Benefits tax and Payroll tax. We guided the client through a payroll audit with the office of state revenue, due to the issue not being identified by the previous accountant, and were able to negotiate the penalties for lack of lodgement from 75% to 25% and establish the payment and lodgement of payroll tax on time moving forward.
Case Study 2 -Savings
The Situation:
The client had been advised by a previous accountant to take fully franked dividends out of his company to fund a development project. This moved the client’s individual tax rate to 46.5c for every dollar, losing him almost half of all funds in tax.
The Approach:
Through careful discussion, we were able to identify the need of the funds and establish agreements to allow the client to fund the project without being double taxed on every dollar taken out upfront. By building a relationship and understanding the needs of the client we are able to help facility business decisions that are not only tax effective but good management.
The Results:
The funds were loaned to the development and paid back with interest upon the successful completion of the project. This increased cash flow up front and allowed the client to save $120,000 in the last 2 years, while allowing the development project to move forward.
Case Study 3- Trust and business planning
The Situation:
The client previously moved from accountant to accountant, looking for the right advice and strategies to move her business in the right direction. Constantly being over charged and under serviced, she was very hesitant to trust a new accountant.
The Approach:
By slowly building a relationship and trust we were able to build confidence and suggest a number of different strategies to help move her business in the right direction. The price is not as important as value for money.
The Results:
With continued advice and guidance, the client was able to move from a negative cash flow position with an overdraft to a positive cash flow position. The client was able to take a regular wage from the business for the first time. Through an education process including Xero training we were able to help her understand her business better, regularly reconcile her accounts, give her good usable data to make decisions while knowing her profit and cash position at any given time. With advice she was able to improve her workflow WIP and billing cycle and hire a new staff member to assist her with the growth.
Case Study 4- Profitability
The Situation:
The client purchased an existing restaurant that was performing poorly due to ill health of the previous owner and poor management.
The Approach:
We believe in relationship, open communication and trust. By building this with the client and by having regular contact, meetings and discussions we were able to identify the problem areas and suggest improvements that could be made to the business to decrease cost and increase profitability. We explored many areas of business including marketing channels, target market, the financial trends to determine appropriate strategies to increase customers and identified the key cost areas, ratios and benchmarks and stay within or exceed the expectations and guidelines.
The Results:
By carefully scrutinising the financials and continually monitoring the profit and loss and cash flow of the business we were able to turn the business around provide guidance on new services and products and was able to achieve profitability in under 6 months of starting.
Case Study 5: Accounting Systems and Super Advice
The Situation:
The client was poorly advised in the past and did not understand his obligation to pay super and the difference between employees and contractors. The client had no accounting system and would only know his financial position every 3 months on completion of business activity statements.
The Approach:
An accounting system is key for any growing business, as is knowing your financial position, therefore Xero has made it easy to reconcile bank accounts, keep track of debtors and creditors and pay employees. It also allows the adviser to have real time access to the client’s data and provide support and feedback on their business.
The Results:
Through continued guidance the client is now using Xero to keep their records. The client is now paying super quarterly, has employee contracts in place and is reconcile accounts on a regular basis. Through the implementation of Xero we were able to clearly separate business and private expenses, identify any liabilities and pay down existing ATO debt. We also successfully assisted the client through a superannuation audit for unpaid super for 3 years and have started paying the directors a regular wage, mitigating large lump sum tax bills at the end of the year and minimising the entities tax position.
Case Study 6- Attention to detail and strategic planning
The Situation
The client moved from their previous accountant due to lack of support and advice. The client required a thorough review of the bookkeeping and accounting system.
The Approach:
Attention to detail in important and having a good understanding of the business structure is key to identifying issues and finding problems. Education is also important for the client to understand their business and know the limitations and regulations necessary to operate. We also met with the client to make a strategic plan and a succession plan.
The Results:
After reviewing the clients MYOB file and the bookkeeping completed in the past we were able to determine wages had been overstated and reported to the ATO. This resulted in a refund of $20,000 allowing the client to pay down previously accrued ATO debt and improve the businesses cash flow. Through client meetings we were able to advise on management decision to reallocated expenses, streamline operations and start planning for the succession/sale of the business.
Case Study 7-Revision and attention to detail
The Situation:
The client wished to withdraw funds into a personal account and had been paying dividends to a sole shareholder.
The Approach:
After reviewing the client’s constitution we found the previous accountant had not reviewed the shareholding of the company and had failed to identify the existence of two shareholders (husband and wife).
The Results:
As the company had two shareholders we were able to review and amended the previous two years tax returns, paying each shareholder an equal dividend saving the client $89,000 in tax.