Top Seven Tips for Budgeting Your Home Business

Let’s be honest, sticking to a budget is not an easy task! However, it is a rather rewarding one when done correctly. By creating a sustainable, yet realistic budget for your business, it allows you to:

  • Manage money effectively;
  • Determine a plan to meet future objectives;
  • Monitor performance; and
  • Identify any potential problems before they arise.

So, is reaching your financial goals with ease something that appeals to you? Keep reading for some invaluable tips about how to budget your business from home.

1. Research Costs

Before creating a budget, it is important to understand where your money is currently going, where it needs to go and where cuts need to be made. Your budget should account for both fixed, variable and start-up costs (for new businesses).

  • Fixed costs: include rent, utilities, phone/internet, accountant, legal fees, salaries, marketing and communications and technology.
  • Variable costs: include the costs of goods sold and labour costs.
  • Start-up costs: include business plans, research expenses, borrowing costs, technology, advertising, promotion and employee expenses.

By researching costs thoroughly, you will be able to create a detailed budget that caters for all expenses to operate your business.

2. Create a Contingency Plan

As mentioned above, researching costs is one of the most important steps. To ensure your business is prepared and on track to accomplish goals, it is important to always overestimate your expenses. This will allow for any future contingencies. An added bonus of creating a budget around worst case scenarios, is that there is always a surplus. Although it is not always possible to predict when something will go over budget, it is important to allow for any unforeseen contingencies.

3. Understand Economic and Industry Trends

Whether you’re working at home or not, your business will have to accommodate factors of the economy and the occurrences that happen within its industry. In order to prepare for any economic and industry trends, you should consider the following:

  • General industry growth;
  • Wider economic growth; and
  • Review predictions from reliable industry experts.

4. Review and Update Your Budget

It is important to prioritise a mid-year or quarterly review of your budget. This will help with acquiring a clearer representation of your business finances. It will also allow flexibility to set your business up for success. Your budget should change and evolve in accordance to growth and profit. By reviewing it throughout the year, it could give your business a huge advantage on your competitors.

5. Set Reasonable and Detailed Financial Goals

It is so important to ensure that your budget plan is both realistic and easy enough to adhere to. If you set too many unrealistic goals all at once, you’re going to become very overwhelmed and the chance of succeeding will be very slim. So, when listing all of your goals you want to achieve, ensure you set both short-term and long-term goals – but make sure they’re obtainable!

6. Look for Tax Deductibles

Another factor to keep in mind when running a business from home, is that you might be eligible to claim certain tax deductions.

This could include:

  • Occupancy expenses – including mortgage, rent, council rates, land taxes and house insurance premiums.
  • Running expenses – including gas and electricity, business phone, decline in value of office equipment and cleaning.
  • Vehicle expenses – including travel to and from your home for business purposes.

For more information, read our Top 5 Tax Deductions When Working from Home blog.

7. Don’t Eliminate Marketing from Your Budget

Last, but definitely not least, do not neglect marketing costs from your budget! In order to succeed, you need to advertise your business and create a positive brand image and awareness. Marketing strategies don’t have to cost an arm and leg, but they do need to be part of your business plan in order to be successful.

Remember: The overall concept of a budget is simple – spend less than what you make. By implementing these budgeting tips to your home business, it will ensure that your business is on the road to rapid success.

Top Activities for School Holidays in Isolation

Whether you’re choosing to self-isolate due to Coronavirus, or simply have no choice; you might be looking for some fun activities to keep the kids entertained. This is no-doubt a very scary and difficult time for many people – and reasonably so. Self-isolation is an uncommon experience for many of us. It is an unsettling and stressful time for families, and especially children – even if they don’t understand what is happening. We all know how hard it can be to try give children a new ‘normal’. However, your kids are going to look back and cherish the time they have spent with their family.

With school holidays fast approaching, here are some of our top ideas to keep kids and families entertained during isolation:

Get Creative in The Kitchen

Cooking or baking is a great way to get the family involved. Keep meals simple for the kids and even make it into a competition! Who can make the best pizza? You can be the judge! Plus, there is an added bonus – you don’t have to cook dinner!! Here are some delicious recipes that will keep the kids entertained:

Have an Indoor or Backyard Picnic

Get the kids in the kitchen and make up a picnic basket with lunch and some healthy treats. If you’re able to, set up a rug in your backyard and enjoy some fresh air and vitamin D.

Bring Out the Art Supplies

From drawing, painting or creating other arts and crafts is a great idea for kids to get creative. If you have access to your backyard, get the kids to collect some leaves and print them on some paper using paint. Here is an example:

With Easter approaching, try creating some Easter Bunny decorations. Here are two great ideas:

Learning at Home

Try to make learning fun by creating some interactive games or teaching your kids some new skills. There are many educational apps for different age groups that can be quite fun!

Play Some Games

You know that cupboard crammed full of board games? It’s time to pull those out and have some fun! Board games are a brilliant way to focus children’s minds and is the perfect indoor activity. Here are some of our suggestions:

  • Monopoly
  • Connect 4
  • Guess Who
  • Celebrity Heads
  • Card games – UNO, Go Fish and Snap!

Have a Movie Marathon

This one is for the whole family. Prepare some yummy snacks, get your pyjamas on and have a movie marathon. Use this time in isolation to catch up on Netflix and spend time with family.

Build an Indoor Fort with Blankets

Kids love to build their own little hideaways. To limit the chaos, give them some supplies and limit them to one room. Make sure they’ve got lots of big blankets and cushions. This will keep them entertained for hours! At night time, you could read them a bed time story in there as a special treat.

Have A Dance Party

Whatever age they are, kids love music! Put on some music, turn up the volume and let them dance around the room. Have the whole family join in and play musical statues or musical chairs! This is a great way to let them burn off some energy during isolation.

Indoor Treasure Hunts

Yes, that’s right! You don’t have to be outside to have the kids searching for treasure! Why not set them off on a scavenger hunt around the house! You might even get a bit of time to relax while they’re busy searching.

Find Some Photos and Reminisce

Dust off some old photos and home videos and reminisce with your family. Your kids will love hearing about all of the memories from when they were growing up. I can guarantee there will be some laughter with this one!

Tip for Mum: Don’t forget to take some time to self-indulge and put on a face mask or give yourself a pedicure – you deserve it! We hope these tips help keep the family happy, active and healthy over the isolation period.

Please remember to check on your friends, family members and colleagues during this time. We’re all in this together.

Where to go for support?

In times like this, it is very important to seek out help if you, or someone you know need it.

  • Lifeline:

What COVID-19 Means for Households and Small/Medium Businesses

As the global Coronavirus (COVID-19) outbreak continues to evolve, it can be quite a concerning time for households and businesses. On the 12th of March 2020, the Australian Government announced their first economic stimulus package worth $17.6 billion, to support the most affected sectors. This first package has four sections:

  • Supporting business investment;
  • Providing cash flow assistance to help small and medium sized business to stay in business; and keep their employees in jobs;
  • Targeted support for the most severely affected sectors, regions and communities; and
  • Household stimulus payments that will benefit the wider economy [i].

Australian Prime Minister, Scott Morrison, stated “our targeted stimulus package will focus on keeping Australians in jobs and keeping businesses in business so we can bounce back strongly” [i]. On the 22nd of March, the Commonwealth Government released the second stage of its economic plan to “cushion the economic impact of the coronavirus and help build a bridge to recovery” [ii]. An additional economic support package of $66.1 billion has been announced. In summary, this package includes:

  • Support for households (including casual workers, sole-traders, retirees and those on income support);
  • Assistance for businesses to keep people in a job; and
  • Regulatory protection and financial support for businesses to stay in business [ii].

This is an incredibly harrowing time, where many people and businesses are becoming overwhelmed. We understand that a lot of new information is being released daily, and can be quite difficult to process. We wanted to share some important information recently issued by the Australian government, to give a little piece of mind.

The first package includes incentives for small and medium sized businesses, to keep them afloat and employees in work during this trying time.

Tax Incentives for Business Investment

Instant Asset Write-off Increased:

  • Increase in the instant asset write-off threshold of $30,000 to $150,000
  • The higher threshold is in place from March 12th – June 30th 2020
  • Applies to new and second-hand assets installed in businesses during these dates
  • Eligible businesses will have an aggregated annual turnover of less than $500 million (up to $50 million) [iii].

Backing Business Investment Incentive:

  • 50% accelerated depreciation for investments
  • Temporary 15-month investment incentive available through to January 30th 2021
  • Supports business investment and economic growth (short term)
  • Eligible businesses will have a turnover of less than $500 million that are purchasing new depreciable assets [iii].

Cash Flow Assistance for Businesses

Boost Cash Flow Payments for Employers:

  • Cash flow payment of up to $25,000 for employers
  • A minimum payment of $2,000 may be available to businesses that pay wages but are not required to pay tax.
  • Eligible businesses will have a turnover of less than $50 million that employ staff between January 1st 2020 and June 30th 2020 [iv].

Supporting Apprentices and Trainees

  • Businesses can apply for subsidy of 50% of the apprentice’s or trainee’s wage for up to 9 months from January 1st – June 30th
  • Eligible businesses will have fewer than 20 full-time employees who retain apprentice or trainee [iv].

Other Measures:

  • Tax-free, one-off $750 stimulus payment to individual income support recipients and eligible concession cardholders from March 31st
  • Targeted regional and community support aimed at businesses and communities particularly affected by economic downturn due to coronavirus.

Tax (ATO) Relief

  • Deferring up to 4 months the payment of tax amounts due
  • Allowing affected businesses on a quarterly reporting cycle to opt into monthly GST reporting to get faster access to any GST refunds.

The second stimulus package builds on the measures announced within the previous package.

Support for Workers and Households

Coronavirus Supplement

  • The Australian Government is temporarily expanding eligibility to income support payments and establishing a new, time-limited Coronavirus supplement to be paid at a rate of $550 per fortnight.
  • This payment will be made to both new and existing recipients of the JobSeeker Payment, Youth Allowance jobseeker, Parenting Payment, Farm Household Allowance and Special Benefit.
  • The Coronavirus supplement will be paid for the next 6 months. Eligible income support recipients will receive the full amount of the $550, as well as their payment each fortnight [ii].

Payments to Support Households

  • In addition to the $750 stimulus payment announced on 12 March 2020, the Government will provide a further $750 payment to:
    • Social security and veteran income support recipients
    • Eligible concession card holders (except for those who are receiving an income support payment that is eligible to receive the Coronavirus supplement [ii].

Early Release of Superannuation

  • Affected individuals will be able to withdraw up to $10,000 from their superannuation funds in 2019-2020 and a further $10,000 in 2020-2021.
  • To apply for early release, a fund member must satisfy one or more of the following requirements:
    • They are unemployed; or
    • They are eligible to receive a Jobseeker Payment, Youth Allowance for Jobseekers, Parenting Payment (which includes the single and partnered payments), a special benefit or Farm Household Allowance; or,
    • On or after 1 January 2020:
      • They were made redundant; or
      • Their working hours were reduced by 20 per cent or more; or if they are a sole trader — their business was suspended or there was a reduction in their turnover of 20 per cent or more [iv].

Temporarily Reduce Superannuation Minimum Drawdown Rates

  • The Government is temporarily reducing superannuation minimum drawdown requirements for account-based pensions and similar products by 50% for 2019-2020 and 2020-2021.
  • This will benefit retirees by providing them with greater flexibility in how they manage their superannuation assets [ii].

Assistance to Business to Keep in a Job

Boosting Cash Flow for Employers

  • The Government is providing up to $100,000 to eligible small and medium sized businesses and not-for-profits (including charities) that employ people, with a minimum payment of $20,000.
  • These payments will assist businesses’ and not-for-profits’ cash flow, so they can continue operating, pay rent, electricity and other bills, as well as, retain staff.

Regulatory Protection and Financial Support for Businesses to Stay in Business

Coronavirus SME Guarantee Scheme

  • The Government will provide tax-free payments of up to $100,000 for eligible small and medium sized enterprise entities (SMEs). These are businesses with an aggregated annual turnover under $50 million that employ people with a minimum payment of $20,000.
  • This will assist with cash flow so businesses can continue to operate, pay expenses and retain staff [iv].

Providing Temporary Relief for Financially Distressed Businesses

  • The Government is temporarily increasing the threshold at which creditors can issue a statutory demand on a company and the time companies have to respond to statutory demands.
  • Temporary relief will also be provided for directors from any personal liability for trading while insolvent.
    • The Corporations Act 2001 will be amended to provide temporary and targeted relief for companies to deal with unforeseen events that occur as a result of COVID-19.

This concludes the summary of the important information regarding both stimulus packages in regard to COVID-19.

We hope this important information released by the Australian government can help your business in these hard times. Here at Horan & Bird, we are actively following all advice issued by the Australian Government, and ensuring all team members are supported with clear health and hygiene protocols. During this tough time, it is important to continue supporting local businesses. This is when they need your support the most.

It is understandable that during times like this, people may be feeling afraid, worried, anxious and overwhelmed. If you need someone to talk to, Lifeline are available 24hrs, 7 days a week.

To Contact Lifeline: 

Phone: 13 11 14 (24hrs/7 days)

Text: 0477 131 114 (6pm – midnight AEDT, 7 nights)

Chat online: https://www.lifeline.org.au/crisis-chat (7pm-midnight, 7 nights)

 

[i] https://www.pm.gov.au/media/economic-stimulus-package

[ii] https://www.pm.gov.au/media/supporting-australian-workers-and-business

[iii] https://www.smallbusiness.wa.gov.au/blog/coronavirus-stimulus-package-small-business

[iv] https://www.bdo.com.au/en-au/insights/tax/technical-updates/australian-economic-stimulus-package-in-response-to-coronavirus-includes-tax-measures