April meeting report: Michael and Katie Lawry on managing your business finances

By Sally McInnes

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Michael Lawry CPA and Katie Lawry AE speaking on finance and tax for editors. Photo: Nicole Mathers

At our April event, Michael Lawry CPA of Red Spark Consulting and Katie Lawry AE teamed up to deliver an informative presentation on managing your business finances. 

The talk covered general information on business structures, good and services tax (GST), bookkeeping software, tax deductions, dealing with overseas clients, superannuation and retirement. Some of the main points are outlined below.

Michael began with the importance of understanding business structure. Options are to operate as a sole trader, company or trust. While many people begin as a sole trader, transitioning to a company or trust carries considerable benefits: separation of personal and company assets; ability to employ yourself and others; and a large range of tax-planning advantages. Companies and trusts also have the downsides that they cost more to set up and run; therefore, they are more likely to be a viable proposition once your business has reached a certain size. 

Registering for GST can also have tax advantages, even if you have not reached the threshold limit of $75,000. If you are registered for GST, you can claim back any GST you’ve paid on business expenses. Of course, then you have to prepare a business activity statement (BAS), usually on a quarterly basis. 

To help you out with your record-keeping, there is a range of affordable bookkeeping software. Some of these provide real-time analysis of your business and help your accountant to give business planning suggestions. Products on the market include Xero, Rounded, MYOB Essentials, QuickBooks and many more. The features of the different products vary, and include such things as tracking invoices, tracking bank transactions, generation of your BAS and storage of photos of receipts from your phone. Some products are more limited than others, but most will serve your basic needs. 

Good bookkeeping habits are essential. Michael highly recommends keeping records up to date to avoid an end-of-financial year rush. Katie also attests to the fact that up-to-date records can be very handy if the tax office should come knocking for information! And always be sure to answer any requests from the Australian Tax Office (ATO) promptly.

There are a wide range of costs that you can claim as deductions. The ATO’s myDeductions phone app is useful for recording receipts and travel log, or you can use a logbook. You must keep all receipts for five years. 

Michael says that irrespective of whether you wish to eventually sell your business or not, ‘consider making your business into a business you would like to buy’. Keeping good records, building cash flow and profit, and building reputation are all ways to achieve this. Lastly, Michael and Katie touched on retirement planning and superannuation. Always consider your retirement; making super contributions can have considerable tax advantages too, and it is advisable to have an exit strategy. 

For information, the ATO website and telephone query lines (13 28 61 for individuals, 13 28 66 for businesses) are useful resources; however, for more detailed business and planning advice, see your tax adviser or financial planner.