Do you like surprises? I am not talking about surprise parties, surprise dates or sweet surprises like a hug from your child….. I am talking about surprises that stress you out, unexpected surprises like large bills, the surprise of having to find money you don’t have, and the surprise that you have spent more than you should have in your business.
So, before we continue, and to make sure there are no surprises, the surprises you don’t want are your quarterly compliance bills such as discovering your Super, BAS and your end of year tax is more than you can afford.
As a business owner in Australia these bills are guaranteed, they WILL be arriving and they will be due. For me, it is surprising how many business owners do not plan for these compliancy bills and are stressed when they arrive!
BAS is due end of February, April, July and October
Super is due end of January, April, July and August
End of year tax as a business is due mid-May, as an individual it is due end of October
Here are 3 steps you can apply to ensure you are not surprised, not scrambling for money and not seriously regretting being a business owner. I simply call this is “The 30% rule.”
- Open a separate bank account – call it “GST account”.
- For every deposit you receive, immediately transfer 30% of that deposit into the GST account. Do this weekly.
- Wait for your BAS, Super and end of year tax bills and celebrate as you manage to pay them with ease!
The bottom line is this: 30% saving now saves 100% stress later!
- Why 30%?
Although this may vary from client to client, generally speaking 30% will cover your BAS, Super and end of year tax.
30% is a nice round figure that will enable you to pay all 3 of those bills and possibly have savings at the end of the year which, (once everything is paid!) you may choose to invest in bigger purchases for your business.
- What if I can’t afford to put 30% away each month?
This is the opportunity to take a deep dive into your finances, establish what you can put away, what you should be putting away and start making a plan to get there as soon as possible.
- I am a start up with no staff and low profit – is 30% still the magic number?
For start ups with no profit, I would recommend starting with the absolute minimum of 10% Remember, The ATO is not negotiable on their 10%, If your business can not afford to put away 10% it is time to relook at your pricing and spending to ensure your business is sustainable. As you employ staff and increase your profit the 10% can be amended and upped.
To achieve the “no surprise” requires discipline.
- Discipline to PUT the money away
- Discipline to NOT spend the money
- Discipline to pay your BAS, Super and year-end tax as soon as you receive the bills.
If you are wanting to engage with a bookkeeper who is able to easily assist you in establishing how much you should be putting away, how to budget effectively so you can put the money away and how to plan and prepare so there are no unexpected nasty surprises , I Invite you to reach out to me so we can have a chat and see how I can help you. And since surprises should be nice …. Cake and coffee is on me!