- On July 19, 2021
- July/August 2021, NSW Doctor
CUTCHER & NEALE
Welcome to the July edition of Financial Paracetamol.
Setting goals for the financial year ahead.
Happy new financial year!
As we begin another financial year now is the perfect time to set your financial goals. Setting measurable goals is a powerful tool in helping you reach your full financial potential both now and into the future. Following are a few of our hints and tips to get you started:
Having a budget will increase your chances of success. A successful budget will be monitored on an ongoing basis to ensure it is still on track to reach your overall financial goals. A simple starting point when looking to prepare a budget is to break down your expenses and outgoings into categories so they are easier to understand. Understanding where your money is going is a pivotal first step.
Gone are the days of keeping your accounting program on the hard drive of your computer. Cloud accounting allows you to keep mobile, up to date and informed in a very simple manner. Accounting software not in the cloud can be tedious and time consuming and can take far too much of your time and effort. One of the biggest advantages of cloud accounting is the ability for your income and expenses to flow straight from your bank account to your accounting system without hours of data entry. Cloud accounting software enables you to know your financial position at any time.
Get your team right
It is important to have the perfect team of professionals to assist you in setting goals as well as achieving them. Your accountant should be your first contact and will have the best understanding of your financial position and can assist you in developing your financial goals. If you are looking to focus on entering the property market, the introduction of a buyer’s agent into your team can not only bring skill and knowledge but a hefty time saving as well. An informed business banker is also an important factor. Your banker should understand the career and income progression of a medical practitioner and in turn your borrowing capacity.
Set a target
Whether it’s paying down debt, retirement planning or growing your property portfolio you need to know what you are towards. Recognising, recording and communicating this target primarily to your accountant will enable them to help you achieve this. If paying down debt is your area of focus, your accountant will help you determine how much you are able to commit to debt reduction each year and which debts to tackle first.
Final tips… It is worthwhile to take time to make sure your goals are achievable and measurable. Tracking how you are progressing against these goals throughout the year will keep you motivated and gives you the ability to adjust if necessary.
Need help in getting started with your goals? Contact our team today.
What’s new in Cloud Accounting?
If you’ve established your cloud accounting system, growing your ‘cloud maturity’ is an on-going task– and that includes staying on top of the latest developments in cloud accounting.
Here’s our round up of new programs and features to be aware of:
E-invoicing is available in Australia. As part of the government’s commitment to improve the way businesses interact with each other you are now able to register and utilise e-Invoicing.
Invoices are electronically exchanged between accounting software systems without manual data entry. This means businesses will no longer need to generate paper invoices or PDF documents and send out to customers.
This also means bills can be received straight into your bills area of your accounting system without any data entry required ready to be approved and paid.
There is a new Multi Factor Authentication App released by Xero for their accounting software called Xero Verify.
You can now authenticate quickly and easily using push notifications rather than generated codes within the app.
Xero have worked on a solution to make the 2-layer security option much simpler and smarter for its customers. This new solution is more seamless than other 2 factor authentication apps making the task so much easier.
The acceleration of open banking
Open banking in Australia allows customers of the big 4 banks to securely share some of their banking data with other accredited banks and soon financial software providers.
You will have the control of which third party can access your data and how this data is then used. This information can include transaction history and account balances and if shared with accounting software providers will hopefully assist with account types that currently have no bank feeds available.
No more providing transaction history files for importing data.
Currently customers of the big 4 banks can request and share their various types of account information with an accredited data recipient who will provide this to other banks and providers to speed up application processes, switching financial institutions, finding products more tailored to your current situation and giving you a better overview of your finances.
Smaller financial institutions are also now offering opening banking access and towards the latter half of 2021, third party software providers can start to include open banking in their product offerings.
If you would like to discuss your accounting software, please feel free to chat to one of our cloud accounting specialists.
Employing your spouse
Does your spouse assist you in the day-today operations of your practice or your work undertaken as a medical practitioner?
There may be tax savings to be had by remunerating your spouse for the work they do.
It is important you have the appropriate documentation prepared and adhere to the rules and obligations as an employer.
Paying your spouse or family member a commercial wage for work performed for your medical practice can also mean that you are able to pay additional super contributions above the super guarantee and thereby maximise their concessional super contributions each year.
Some common activities that your spouse could be assisting you with might include bookkeeping, practice management, billings and invoicing, creditor payments and other administration tasks. You will need to ensure the work arrangements are implemented as you would any employee, including paying them a reasonable amount and making sure that an employee contract is entered in to for the work performed.
You would also need to register for single touch payroll and a superannuation clearing house to meet your employment obligations, but most accounting software programs will assist with this.
Is your spouse assisting in your medical practice? Are you unsure whether paying them a salary is possible? Do you need to get the correct documentation in place?
Our team can help!
Single touch payroll is set to expand!
The ATO has confirmed Single Touch Payroll (STP) reporting for micro-employers with 1 to 4 employees and small employers with closely held payees will commence from 1 July 2021.
A closely held payee is an individual who is directly related to the entity from which they receive payments, for example:
• Family members of a family business
• Directors or shareholders of a company
• Beneficiaries of a trust
STP reporting for micro employers is not the only update, the expansion of STP continues with the introduction of STP Phase 2.
In the 2020 Budget it was announced that the ATO would expand the data collected through STP.
This expansion is mandatory from 1 January 2022.
Interestingly the ATO have recently indicated the role out is largely dependent on the software companies and this may not be a definitive cut-off.
STP Phase 2 is designed to reduce the reporting burden for employers needing to report information about their employees to relevant government agencies and assist the administration of the social security system. clearing house to meet your employment obligations, but most accounting software programs will assist with this.
Additional information required to be reported in STP Phase 2 includes:
• Employment Conditions
• Income types and country codes
• Itemisation of allowances
• Salary Sacrificed amounts
• Categorisation of lump sum payments
A lot of this new reporting is reliant on software companies and payroll providers updating their software to accommodate these changes.
Our resident Xero Heroes will be keeping a close eye on STP expansion and the potential impacts it may have on our clients.
Cutcher & Neale are proud presenters on a range of topics to help you along your journey as a medical professional. To see where we are presenting next, scan the QR code to visit our events page, or visit cutcher.com.au/events.
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Important Disclaimer: The material contained in this publication reflects General Advice only, and has not been prepared to provide specific Personal Advice to any particular individual(s). It does not take into account the individual circumstances, risk profile, needs and objectives of specific individuals. The examples are used for the purposes of illustration only. Readers should not act upon any matter or information contained in or implied by this publication without seeking appropriate professional financial planning advice. The publishers and authors expressly disclaim all and any liability to any person, whether a client of Cutcher & Neale or not, who acts or fails to act as a consequence of reliance upon the whole or any part of this publication. If the advice relates to the acquisition or possible acquisition of a particular financial product, you should obtain a copy of and consider the Product Disclosure Statement before making any decision.