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When should you start planning for retirement?

Thu, 16 Dec 2021 07:25:18 GMT

If you plan on retiring at 65 years old, chances are you’ll need your retirement savings to last you around 15 to 20 years – at least.

Saving for retirement can be daunting whether you’re still in the middle of your working career, nearing the end or already retired. The good news is, however old you are, there are always ways to create a more comfortable retirement for yourself.

When should you start planning for retirement?

The earlier you start planning for retirement, the better. Even if you think retirement is a long way off, it’s important to think about how much money you will need, what kind of retirement lifestyle you want to lead and how you can give yourself a head start.

40s and early 50s

When you are in your 40s and early 50s, it’s easy to push your retirement to the back of your mind. Things like paying off your mortgage, sending your kids to school and looking after elderly parents can seem like more pressing commitments. However, taking time to plan for your retirement will make it easier for you in the long term.

Good steps to take in your 40s and early 50s include:

Do the maths and figure out how much you will need to live comfortably in your retirement. Don’t forget to factor in bucket list goals and travel.
Sort out your superannuation. Remember if you are a business owner, you are responsible for your own super. You may prefer a self-managed super fund (SMSF).
Get on top of your debt. Seek advice about ways to reduce your debt. For example, making extra contributions toward your mortgage.
Consider making additional contributions to superannuation to help boost your retirement savings and reduce your tax e.g. salary sacrifice or personal concessional contributions to super.
Sort out your personal insurance cover to ensure you have a safety net if you are unable to work due to a disability Illness or death.

50s and early 60s

If you’re in your late 50s or early 60s, it’s not too late to start making a positive move towards a more secure retirement. This is a great time to work out a retirement plan and figure out how you want to transition out of work.

Steps to take as you move towards retirement include:

Make non-concessional contributions to boost your super.
Consider a self-managed super fund (SMSF) to have greater control over your super.
Look into a Transition to Retirement (TTR) pension if you want to reduce work hours without losing your income.
Review your personal insurance cover to ensure they reflect your financial position.

Over 65 years

If you are already in retirement or considering your options, there are still some things you can do to make your retirement more comfortable. Considering that your retirement may last 20 years or more, financial decisions you make now can still impact your future.

Things to consider if you are over 65 years old include:

Get advice about what to do with your super – whether to take it out as a lump sum, start a super income stream or leave it in there.
Review your investment strategy to better suit your retirement needs.
Plan your living situation. If you sell your home, you may be able to contribute up to $300,000 to your super.
Make sure you have the proper estate planning and that you have the right people stepping in for you to make financial and personal decisions on your behalf if you are unable.

Planning for your retirement can be daunting, whatever age you are. Make sure you seek professional guidance and financial advice when making decisions about your future.

The team at Design Financial Advisory helps busy business owners, working professionals and couples approaching retirement work towards a comfortable retirement that aligns with their goals.

Property and my SMSF

Mon, 18 Oct 2021 07:19:54 GMT

Directly held property makes up approximately 19% of all SMSF assets, indicating that many SMSF trustees consider it’s an important and significant part of a diversified portfolio. There are numerous strategies and ways for property to form part of an SMSF’s investments and each must be carefully considered.

Investment strategy first!

Before any investment decision, it is imperative and a legal requirement that you as an SMSF trustee must consider your investment strategy. Your strategy should detail such things as how much exposure you would like to the property market, the form of exposure and how appropriate it is for your current circumstances. A well-diversified portfolio is essential to provide income for retirement and spread investment risk so that any single asset class, such as property, does not dominate your SMSF risk and returns.

Direct investment

A common form of property exposure is direct investment into a property. This can be in the form of either a residential property or commercial property. When purchasing a property with an SMSF’s cash there are some important considerations that must be worked through including:

Your asset allocation and diversification.
Potential rental income and property expenses.
How close you are to retirement and the need for liquid assets to pay pensions.
Unless the property is a business real property (BRP) you or your related parties cannot use the property:
If the property is BRP you may be able to work from the premises which is owned by your SMSF.
You may also be able to utilise the small business CGT concessions and contribution limits.

Limited Recourse Borrowing Arrangements (LRBA)

SMSFs may also invest in property through an LRBA. These are complex borrowing structures which allows SMSF trustees to take out a loan from a third party lender. The SMSF trustee then uses these funds to purchase a property to be held on trust. The lender only has recourse to the property held in the trust – this is why the loan is “limited recourse”.

An LRBA should only be utilised when it is the right structure for your SMSF on the basis of SMSF Specialist advice. Some very important considerations in addition to the ones above include:

Can your SMSF maintain the loan repayments over a long period of time considering asset returns, interest rates, liquidity, and contributions caps?
Evaluating set-up costs and structures.
Is your property valuation accurate?
You cannot use borrowed money to improve the asset or change the nature of the property at any time.
Do you meet the strict bank lending requirements?
Typically, lenders require the SMSF to have a minimum of net assets of $200,000 or more and for the loan to have a loan to value ratio below 70%.

Indirect investment

Another way to gain exposure to property for SMSFs is through indirect investment. This can include listed invested vehicles such as listed investment companies and exchange traded. Managed investment trusts are also a common investment for SMSFs to gain exposure to property. Investing indirectly may suit your SMSF needs more than a purchase of a property because it is relatively simple and most likely will not require a large amount of capital. It also allows your SMSFs to get exposure to large value properties such as office blocks, shopping centres and industrial properties that would otherwise be out of reach. Investing in these products should be accompanied by SMSF Specialist advice.

How can we help?

SMSF Specialist advisors can help you understand how the different forms of property investment may or may not be relevant for your SMSF portfolio and the impacts it may have on you and your fund. Please feel free to give us a call to arrange a time to meet so that we can discuss your particular requirements, especially in regards to what property investment would be most appropriate for your SMSF.

For further information, visit the SMSF Association’s Trustee Knowledge Centre ( http://trustees.smsfassociation.com/ ) to keep up to date with different asset classes you can invest in within your SMSF, including property, and reach your financial goals.

As always, the above information is general in nature and may not be suitable for your circumstances. If you require advice, give the team at Design Financial Advisory a call today on (08) 6263 9933 to discuss your needs.

Financial Strategies for the Sandwich Generation

Mon, 18 Oct 2021 07:15:23 GMT

The sandwich generation is a term used to describe people who are caring for their children as well as their aging parents.

It can be a stressful and tiring position to be in, and can put strains on both your financial and emotional wellbeing.

It’s important to get your own finances in order first so that you can be in a better position to help aging parents or children who are ready to leave the nest.

Here are 6 financial strategies to help take the pressure off.

Make a plan

When looking after multiple generations, it can feel like you’re being pulled in several directions at once.

It’s important to take the time to make a plan and consider your own financial goals before making any big decisions. When you’ve made a plan, you can feel more confident moving forward.

Talking with a financial advisor can help you consider all your options and may even open doors you may not have considered.

Understand your parents’ finances

As your parents get older, they may need assistance with managing their finances even if they don’t need direct financial support.

You should discuss things like their assets, debts and income sources, their living arrangement goals as they get older and estate options in case they can no longer manage their own affairs.

Discuss with your family

If you have siblings, it’s important to talk with them about how you will divide the responsibilities of caring for your parents.

Keep in mind that not all responsibilities are financial. If there is an imbalance in how much support each sibling provides, you may want to discuss the option of repayment using your parents estate if appropriate.

Involve your children

If you have adult children still living at home, consider ways they could help the household financially. Discuss the option of them paying some rent or covering some of the weekly household expenses.

This can be a good opportunity for them to learn financial and budgeting skills before moving out for the first time.

Protect your income

If you have two – or three – generations depending on you, it’s important to protect your income in case something should happen to you.

Your life and total and permanent disability insurance policy should be able to take care of your mortgage and any major life expenses to ensure you and/or your loved ones are looked after.

Trauma (or critical illness) insurance can provide a useful injection of money to pay for medical expenses and provide continuity for supporting loved ones while you recover.

If you’re not sure what coverage you need, speak with Lawrence Group about your priorities and ways to get the best coverage for your budget.

Consider government assistance

Research into government subsidies that you, your children or your parents may be eligible for. Centrelink is a good place to start for childcare subsidies, rent assistance and carer entitlements. Also check out My Aged Care website to apply for an aged care assessment.

Seek professional help

It can feel overwhelming to be responsible for both your children and your parents and it’s important to reach out for help if you need it. Getting professional financial advice can help you feel more confident and at ease going into the future.

As always, the above information is general in nature and may not be suitable for your circumstances. Chat with the Lawrence Group team about how we can help.

7 Ways to Reduce Costs and Increase Cash Flow

Sun, 01 Aug 2021 07:06:18 GMT

Healthy cash flow is a two way street. There are several things you can do to increase the amount of money flowing into your business, but you should also consider ways you can decrease outgoing cash.

Here are 7 ways small businesses can reduce costs to improve their cash flow.

Cut unnecessary expenses

Start by taking an audit of all your expenses from production and purchasing equipment to marketing, sales and administration. Identify areas where you can save. For example, are you paying for software or a subscription that you don’t use?

Take a close look at your biggest expenses – are they providing a good return on investment or do the costs outweigh the value they offer? Now might be the time to look for alternatives or scale back in these areas.

Make your processes more efficient

Lost time is lost money. By making your business processes more efficient you can win back time – time that you can spend on growing the profitability of your business.

This could involve using automatic accounting software to handle parts of your invoicing and accounting processes. Or it may involve restructuring your business and workflows to better reflect your goals.

Talk to your suppliers

Consider if you are overpaying suppliers and try to negotiate better prices where possible. If it makes sense for your business, you may be able to secure a discount for buying inventory in bulk.

You could also ask for an extension on your payment terms to avoid short term bottlenecks in your cash flow. If you cannot negotiate better prices from your current suppliers, take time to research alternative options.

Keep a close eye on marketing

Marketing is crucial for increasing cash flowing into your business. Unfortunately many small businesses end up spending a lot on marketing while getting a poor return on their investment.

Closely monitor your marketing efforts, cut out the tactics that aren’t working and focus on what is getting you good results.

Think about leasing equipment

If buying equipment outright presents an issue for your cash flow, consider leasing equipment instead. The equipment won’t be a fixed business asset, but paying smaller regular payments to lease it may help with budgeting and forecasting.

Consider outsourcing

Outsourcing non-critical business tasks could be cheaper than employing someone in-house to do the job. It can also free up your team to focus on other aspects of your business.

For example, hiring a marketing agency might be more cost effective than keeping your own marketing department. Outsourcing something like production can save you from expensive equipment costs and training costs.

Explore remote work

As the past year has proven, remote work is a viable option for many businesses. While it might not be right for everyone, choosing to have a full or partial remote workforce could lead to significant savings.

With employees working from home, you might be able to reduce your office size and associated overhead costs.

Chat with the team at Lawrence Group for tailored advice about reducing costs and improving cash flow for your business.

Is Your Self-Managed Super Fund (SMSF) Adequately Diversified?

Mon, 24 May 2021 06:59:29 GMT

Is your Self-Managed Super Fund (SMSF) adequately diversified?

SMSF trustees need to truly understand diversification and better diversify their portfolios.

The benefits of a well-diversified portfolio are numerous but the key ones that SMSF trustees should focus on are the benefits of mitigating volatility and short-term downside investment risks, preserving capital and the long-run benefits of higher overall returns. By spreading an SMSF’s investments across different asset classes and markets offering different risks and returns, SMSFs can better position themselves for a secure retirement.

However, did you know that 82% of SMSF trustees believe that diversification is important but in practice many do not achieve it?

This is because half the SMSF population cite barriers to achieving diversification. The top being that it is not a primary goal for SMSF trustees, and they believe they have a lack of funds to implement it.

Furthermore, 36% of SMSF trustees say they have made a significant (10%) asset allocation change to their SMSF over the last 12 months. This demonstrates that SMSFs may not be actively restructuring their portfolio on an annual basis to respond to changing market conditions.

Another clear problem regarding diversification is the amount of SMSFs with half or more of their SMSF invested in a single investment. SMSF trustees say they primarily invest in shares to achieve diversification in their SMSF, while just a quarter say they invest in at least four asset classes to achieve this.

The bias and significant allocation to domestic SMSF equities conversely may highlight the fact that SMSFs are not adequately diversified, especially across international markets and other asset classes.

So what can you do?

Some of the steps you, with the help of an SMSF Specialist, can take to diversify your retirement savings and control your investments in a disciplined and planned way include:

Ensuring there is a clear and demonstrable retirement purposes in the choices you make.
Ensuring you have an investment objective and a strategy to achieve that objective in place.
Reviewing your portfolio and assessing it against the objectives you have set as often as you feel is necessary.
Minimising concentration to any one asset class.
Ensuring your Australian share portfolio is sufficiently diversified.
Considering the benefits of geographic diversification.
Ensuring your cash allocation is appropriate.
Considering the benefits of exchange traded funds, listed investment companies and other digital investment platforms that allow low cost access to different markets.

Always remember to document your actions and decisions, as well as your reasons, and keep them as a record in order to demonstrate that you have satisfied your obligations as a trustee.

Given the importance of having an appropriately diversified portfolio and its impacts on quality of life in retirement trustees ought to consider professional assistance in managing this important aspect of an SMSF.

How can we help?

If you need assistance with diversification with your fund, please feel free to give the team at Design Financial Advisory a call to arrange a time to meet so that we can discuss your particular circumstances in more detail, or refer to the SMSF Association Trustee Knowledge Centre.

Need tailored advice? Chat with the team at Design Financial Advisory today on (08) 6263 9933

Catch up on Concessional Contributions

Fri, 21 May 2021 06:51:30 GMT

Catch up on Concessional Contributions

Business owners may be able to claim a personal tax deduction for concessional super contributions over the yearly cap. Here’s what you need to know.

What are concessional contributions?

Concessional contributions are contributions you make to your super fund that are tax deductible. These contributions should be made before the end of the financial year. You can contribute up to $25,000 a year.

If you don’t make the full $25,000 contribution in a year, you can carry forward the unused portion to the next year. Carry forward contributions are tax deductible and can be used from up to 5 years previous.

Non-concessional contributions are contributions from your after tax income that are not tax deductible. These can be up to $100,000 a year.

How do catch up concessional contributions work?

From 1 July 2018, any concessional contributions you did not make under the cap ($25,000) can be carried forward to the next year. This makes it possible to make a concessional contribution this year which is greater than the cap.

For example, if you contributed $15,000 last year, the leftover $10,000 can be carried over to this year. This increases the cap from $25,000 to $35,000 for this year.

Concessional contributions that were not made can be carried forward for up to 5 years.

You may be eligible to use carry forward contributions this year if:

Your total super balance is under $500,000
You made less than $25,000 in concessional contributions in the 2018/19 or 2019/20 financial years
You are making concessional contributions over $25,000 this year

What are the benefits?

Being able to increase your concessional contribution cap for a particular year may help reduce your personal assessable income and personal income tax.

By making the most of carry-on concessional contributions, you may end up with a greater superannuation balance, setting you up for a more secure retirement.

Who should take advantage of catch up concessional contributions?

Although anyone can make carry on concessional contributions, the benefits are particularly positive for:

Self employed individuals
Business owners who don’t get paid a wage
People who want to retire early or improve their retirement savings

If you are a business owner who doesn’t get paid a wage, the super guarantee is not a legal requirement and you are responsible for making your own super contributions.

The carry-on concessional contribution gives you greater opportunity to make super contributions and save for retirement. Many business owners overlook the importance of super, but it should be a key part of their retirement strategy.

If you are a business owner whose income greatly varies from year to year, the carry-on concessional contribution allows you to make greater super contributions on the more profitable years.

As always, the above information is general in nature and may not be suitable for your circumstances. Before making any decisions regarding concessional contributions, it is important you seek advice to ensure this strategy is right for your situation and how it could benefit you. If you require advice, give the team at Design Financial Advisory a call today on (08) 6263 9933 to discuss your needs.

Secrets to Business Growth: Employee Retention and Company Culture

Fri, 07 May 2021 06:48:07 GMT

Secrets to Business Growth: Employee Retention and Company Culture

These days, employees are more likely to leave a company that doesn’t suit their personal or career aspirations. That means for business owners and managers, employee retention requires an active approach.

A significant part of improving employee satisfaction is developing a healthy company culture where employees feel seen, valued and motivated. Businesses that focus on employee retention and company culture tend to perform better and see stronger long term growth.

Succeeding with Employee Retention

If you’ve got a talented employee, it makes sense that you want them to keep working for your business. Hiring new employees involves significant costs in administration, training and productivity losses.

Improving employee retention requires you to create a workplace environment where employees can feel satisfied, motivated and proud of their work. Company culture is a big influence on whether employees decide to stay and whether they continue to perform at a high level.

Company Culture: What is it and why is it important?

Company culture is the shared values, goals, attitudes within your business. It’s what your organisation believes in, how the employees feel about their work and where the team sees the company heading into the future.

Fostering a positive company culture is critical for long term business success. Employees are more likely to keep working for a business when their personal values and attitudes align with the company culture, when they feel satisfied with their work and supported in their personal and career goals.

A strong company culture can lead to:

Improved employee satisfaction
Greater loyalty
Increased performance and productivity
Better teamwork and collaboration

5 Strategies to start implementing

1. Touch base with your team regularly

Being deliberate and creating time for open communication between yourself and your employees is crucial. Listen and respond to concerns they might have and make changes in the workplace to show them that they are heard and valued.

2. Be transparent and honest

A policy of honesty will help everyone feel part of the team instead of excluded. Allow employees time to give feedback or share their opinions. Also make sure you give feedback as well and reinforce behaviours that will help grow a healthy company culture.

3. Give opportunities to grow

Support your employees to achieve their personal career goals, whether that be through extra training and education, opportunities to support the community or pathways to promotion. Helping your team grow can help them feel more invested in your company.

4. Recognise hard work

Everyone likes to feel seen and valued. Take time to show gratitude to your employees. They should be well rewarded for their work with salary and bonuses but also consider the extra value you offer them such as paid leave, catered lunches and wellness programs.

5. Encourage collaboration

Get people to work together as a team and create opportunities for your employees to interact and get to know each other on a personal level. For example, team meals, excursions or team social get-togethers can help improve workplace relationships and team morale.

Need tailored business advice? Chat with the team at Design Financial Advisory today on (08) 6263 9933

Sell more and close more deals with Behavioural Economics

Thu, 25 Feb 2021 06:39:25 GMT

In order to sell more products or gain more clients, you need to understand how your target audience thinks and behaves. This is what behavioural economics is all about. It’s the study of consumer psychology and how it affects their purchasing decisions.

Once you understand common patterns in consumer behaviour, you can find ways to increase your conversions and maximise your profits. Here are 7 valuable insights that behavioural economics gives us.

Exclusivity & Scarcity

By making a product, service or experience exclusive you increase desire for it. When something is rare, consumers tend to act with more impulsivity.

Similarly, scarcity tactics like “sale ends today” and “only 4 spots left” can drive up a sense of urgency, encouraging customers to make action immediately.

Rule of three

If people are presented with two options, they will tend to go for the cheaper option. However, when you introduce a third, more expensive option they will tend to choose the middle option.

For example, a mobile phone service provider could offer three packages:

$40 / month for 40GB
$70 / month for 80GB
$110 / month for 120 GB

The middle price point acts as an anchor – the third option is too expensive and the first option isn’t perceived as good value for money. Pricing like this will help drive customers to the second option.

Reduce the number of choices

Having a wide range of options to choose from sounds like a good thing, but it can end up backfiring. Presenting a potential customer with too many options can actually result in choice paralysis.

When making a decision is too hard, people will often choose the easy way out – not buying anything. Consider reducing the number of options you offer to encourage more conversions.

The Power of Suggestion

A small suggestion or nudge can influence what and how much people buy. For example, when you offer group pricing like “3 items for $15” people will tend to buy 3.

If you label one of your packages “best value”, you encourage more sales of that package. By using language like “luxury”, “deluxe” and “premium” you can influence the way customers perceive your product.

“Free”

“Free shipping”, “free gift with every purchase”, “buy 1 get 1 free” – using the word “free” is a highly effective way to attract potential customers. Often more so than a discount.

Studies h ave shown that people tend to choose the free option even if a discounted option represents more savings or more value.

Rewards

Receiving gifts or rewards for making a purchase can help encourage customers to engage with your business again. Offering customers additional value is a good way to generate loyalty and drive up repeat sales. For example, you could offer loyalty cards or discounts to customers who have previously made a purchase in your store, encouraging them to buy from you again.

Social Proof

Before people invest in a product or service (particularly if it’s a high price point) they look to what others are saying and doing. In other words, you want to show potential customers that other people like what you offer.

Ways to use social proof include positive reviews, customer testimonials, social shares, awards and credentials, celebrity endorsement and positive media stories. In addition to collecting positive reviews, it’s important that you act on bad reviews directly and swiftly. One bad review can outweigh a hundred good reviews, so it’s paramount that you handle them appropriately.

Need advice about smarter business tactics? Get in touch wit h D e sign Financial Advisory today.

Am I Charging Enough For My Services?

Tue, 23 Jun 2020 14:05:56 GMT

Knowing what to charge for services is really difficult for a lot of small and medium business owners. Overcharging comes with the risk of not getting enough work, while undercharging can lead to overwork and burnout just to make enough income.

Unfortunately there is no golden rule for how to price your services correctly. There are, however, a number of strategies that you can implement to help you get the balance right.

How to price your services correctly

There are many ways to price your services, such as charging according to a fixed amount for a project, an hourly fee or a sales commission. Choosing the right method will depend on your particular service type, industry and market, and of course your pricing strategy should help you move towards your business goals.

Three of the most common ways businesses approach their pricing are:

Calculating expenses plus a profit percentage
Pricing according to what the customer is prepared to pay
Pricing according to what competitors are charging

While a lot of businesses might choose and stick to one method, it’s best to incorporate all three approaches and review your pricing strategy regularly for the optimal outcome. Let’s take a closer look at some of the key factors that should be considered.

Expenses plus profit

Boiled down to basics, pricing should be a combination of covering your expenses plus earning a profit. When considering what to price your services one of the first things you should do is calculate all the expenses involved. Expenses can cover a whole range of things including:

Equipment
Office supplies
Rent & utilities
Travel expenses
Insurance
Legal and accounting fees
Advertising and marketing costs
Postage and packaging costs
Credit card fees
Phone expenses
Labour expenses

One method of pricing would be to add up all your expenses, including labour and overhead costs, add on the profit you want to earn and then divide the total by how many hours you worked.

Price of services = (total expenses + desired profit) ÷ (hours worked)

What the customer is prepared to pay

When deciding what to price your services, you must consider what your potential customers think they should be paying. Who are your potential customers? Whether they are bargain hunters or people prepared to pay more for quality should play a role in your pricing strategy. Market research is an important step every business should take.

What competitors charge

Most customers shop around. That’s why it’s important to understand what your competitors charge and why. This doesn’t mean you need to price match your competitors. If you charge a different price, you need to communicate to customers why your price is different. For example, your services might be more expensive because you offer higher quality and a better service experience. Remember that your competition might also find pricing a struggle, so you should never assume they’ve got it right.

What is a self managed super fund vs. a standard superannuation fund?

Sat, 16 May 2020 13:49:58 GMT

Employees automatically have contributions made to their super fund by their employer, but if you’re self-employed that responsibility falls on your own shoulders.

In Australia there are a number of super options available to self-employed individuals including self managed super funds (SMSF). Like standard industry or retail super funds, SMSFs are devoted to providing for your retirement. However, there are a number of key differences which you should understand before making the right choice for yourself. SMSFs are often a lot more involved than people realise.

What is a self-managed superannuation fund in Australia?

A self-managed super fund is a private super fund that you manage yourself. It is also a type of trust which means it needs its own Australian Business Number (ABN), Tax File Number (TFN) and bank account. A SMSF can have up to four members or trustees who are all involved in managing it.

Is a self-managed super fund worth it?

The main advantage of a self managed super fund is the level of control you have over your own super. You choose the investments and insurance that you want. The downside is that all this control means a lot of responsibility also falls on your shoulders. SMSFs require much more effort and knowledge than traditional funds so you should only set one up if you understand the risks and responsibilities involved. According to Money Smart , SMSFs tend to perform worse than professionally managed super funds.

SMSF risks and responsibilities

Managing a SMSF is a significant time commitment.
Costs for setting up and running a SMSF can be high.
You are personally liable for all decisions made, even if you get professional help.

Non-compliance can result in penalties and fines from the Australian Tax Office.

You are responsible for managing the fund, no matter what your circumstances (for example, even if your business cash flow is low).
The investments you make might not result in good returns. You will need sound knowledge and skills about investing to properly manage a SMSF.
If your SMSF loses money due to theft or fraud you will not be eligible for compensation, unlike traditional super funds would.
Insurance may be impacted or harder to obtain for SMSFs compared to traditional super funds.
Relationship issues with other trustees of the fund could have a negative impact on your SMSF.

Can I have a SMSF and an industry fund?

It is possible to make contributions to both a SMSF and an industry fund. However, it would be a unique circumstance that would make this a beneficial strategy. Having two funds would mean extra costs and more time commitment, so the pay off would need to be worth it.

If you have an industry fund, you can roll your super over to an SMSF. The opposite is also possible: if your SMSF winds up, you can roll your super over to an industry fund. Whatever your circumstances, it is important that you make the right decision for you. Seeking expert advice can help give you the tools you need to make an informed decision. At Lawrence Group, we offer financial services , business planning and support for stronger local businesses. Speak with us today to see how we can help you.

This article is general information only. It does not give business, accounting, taxation, financial planning or other professional advice or service. It does not consider your specific situation, objectives or needs and if personal advice is required, a detailed analysis of your particular circumstances would need to be sought. Please see our Privacy and Disclaimers page for further information.

Asset Protection Strategies – How to Protect Your Wealth

Fri, 15 May 2020 13:37:58 GMT

When you’re a business owner or company director, many things can go wrong. And when they do, your assets – both business and personal – are at risk. Whether you’re in the early stages of business, or have been in the game for a while, it is crucial that you take the steps towards adequate asset protection.

What does it mean to protect your assets?

Protecting your assets means putting in place legal strategies that will safeguard your wealth in the unfortunate event of a lawsuit or creditor claims. Below we outline some of the techniques individuals and businesses use to limit how much access creditors have to certain assets.

How can I protect my assets in Australia?

1. Choose the right business structure

There are multiple considerations to make before deciding on the right business structure, but in terms of asset protection, sole traders and partnerships are not the best options. In Australia, if you are a sole trader or an individual partner in a partnership, your personal assets are exposed to business liabilities. Companies and trusts offer somewhat more protection.

2. Separate personal from business

Don’t mix your business activities with your personal. You should have a separate bank account for your business, and your business name should be used on all business documents. That way if your business runs into trouble, your personal assets may have more protection.

3. Use the correct procedures

If you act negligently or don’t meet your legal obligations, creditors may have grounds to get at your personal assets. To avoid this, you should ensure your contracts, agreements and procedures are carried out professionally and meticulously. Effective and robust contracts can help limit your liability with relevant stakeholders.

4. Get business insurance

Insurance is a crucial aspect of any business to protect you if something unfortunate happens. It’s important that you get the right type of insurance for your business, as different industries are more susceptible to some events than others. Consider whether your business would benefit from an ‘umbrella liability insurance’ on top of your other insurance types.

5. Transfer assets to spouse’s name

If one spouse is more at risk of being sued in their occupation than the other spouse, it can be a strategic move to place assets in the less at-risk spouse’s name. Generally, the creditors of the at-risk spouse will not be able to touch the assets in the other spouse’s name.

6. Use trusts or other entities

Discretionary trusts are another strategy business owners can use to protect their assets. When you are the beneficiary of a discretionary trust, you don’t own any of the trust’s assets which means your creditors will have a difficult time making a claim on them. While trusts and other entities can be an effective strategy for asset protection, the finer details can be complex and professional assistance is key.

7. Speak to an expert

Even if you recognise the importance of asset protection as a business owner, it can be overwhelming to make and implement a plan. The question ‘what is the best way to protect my assets?’ may feel daunting, but speaking with an expert can make all the difference. We offer financial planning to help Australian businesses find the best way forward. Speak with us today to see how we can assist you.

What are the Benefits of Financial Planning?

Fri, 13 Mar 2020 13:34:04 GMT

Consider for a moment, if you want to achieve a goal, but don’t think about the practical steps you need to take in order to get there, you probably won’t ever achieve it.

The same is true for Financial planning. It is all about creating achievable goals that help you realise financial well-being. A financial plan will give you perspective and can help you feel empowered about your finances and provide the practical steps you need to reach your goals.

What are the benefits of financial planning?

Become debt-free

Being in debt can be overwhelming, and it’s often hard to see how the situation can change. However, a financial plan with clear and achievable steps can make managing debt easier. Developing a sound financial plan could set you on the path towards a debt-free life.

Manage income and increase cash flow

A financial plan will enable you to manage your income more effectively and make sure it’s going to the right places. A financial plan will also help you manage your spending and expenses efficiently so that you can maximise cash flow . Without a plan, chances are your income isn’t being managed as effectively as it could be.

Reduce your tax

The world of tax obligations can be complex and intimidating, but developing a plan with a professional financial advisor can help you successfully navigate tax . A robust plan will help you meet your tax obligations, while taking advantage where you can. Handling tax successfully will help you advance towards your overall financial goals.

Be OK when the unexpected happens

Unexpected bumps in the road are a fact of life, and we all experience them at one time or another. A robust financial plan takes this into account, and helps you be prepared for the unexpected. Whatever happens, financial planning is an important step towards getting through it comfortably.

Make your future secure

Financial planning encourages big-picture thinking. While it will help you with your immediate financial needs, it will also help you create a secure future for yourself and your family. Understanding what you value, and what lifestyle you want in the future can help you develop a financial plan to achieve your retirement goals .

Feel in-control & confident

In the end, a financial plan is all about making you feel in control of your money, and confident about your financial security. Knowing where you want to go and how you’re going to get there can give you peace of mind, letting you focus on the things that are really important in life.

Do you need professional financial planning?

Some people choose to do their own financial planning, but it is important to obtain advice from a qualified financial planner as there are many complex factors that should be considered. An expert can help provide you with clarity and confidence that you will be able to achieve your financial goals.

At Lawrence Group, we help individuals and businesses who:

Want to manage their finances successfully but aren’t sure how to go about it.
Don’t have enough time to handle their own financial planning.
Aren’t confident with the ins and outs of financial matters such as investments, taxes, superannuation or retirement planning.
Have created a financial plan, but would like a professional opinion about it.
Experience an unexpected situation that they need assistance handling financially.

If any of these situations apply to you, why not get in touch with us and see how we can assist?

At Design Financial Advisory, we offer financial services , business planning advice and solutions that really work for individuals and businesses to achieve their goals. Understanding what you value and desire financially is at the core of our services, and we are committed to creating forward-thinking strategies that suit your unique needs.

Business strategies for economic downturn

Mon, 02 Dec 2019 12:55:20 GMT

No one likes to think about an economic downturn, especially when things are going well. But the unfortunate truth is that it’s inevitable: the economy goes through ups and downs, and so do businesses.

Don’t be discouraged though. By putting sound strategies in place, you can help your business become sturdy in the case of an economic downturn. We have a number of financial planning solutions to share with you that can help your business stay afloat during tough economic times.

Strengthen your customer base

Providing quality customer service is so important for keeping your existing customers. Having a strong customer base is an essential part of making it through economic hardship. Treating existing and new customers with stellar service will reap you long-term benefits: they’re more likely to keep coming back and promote your business to others.

You might consider having a loyalty program, or putting in place strategies for following up clients after a sale.

Don’t rely on one customer

While it’s important to make your existing customers happy, it’s also important your business isn’t dependent on just one customer. What would happen if you lost that customer during an economic downturn? It’s great practice, whatever the state of the economy, to diversify your customer base to ensure you won’t be left without sales.

Don’t rely on one main supplie

Similarly, don’t rely on just one supplier. In an economic downturn, you don’t know if you’ll be able to count on them as solidly as you have before. When you’ve got multiple suppliers you can turn to, if one falls through, you’ll be alright.

Build relationships with other businesses

It’s tough to get through hard times by yourself. Networking with other businesses can give you a sense of community and may provide financial planning solutions you haven’t thought of.

You might be able to trade ideas on how to cope, or you may be able to make mutually beneficial arrangements. Building strong alliances with other businesses is pivotal to doing well at anytime.

Treat your team well

A healthy, motivated team is essential for business success. In times of economic downturn, it may seem the only way through is to lay off some employees. Before you turn to that, communicate clearly with your team about what’s happening and try to involve them in the problem solving process. If you treat your team well, they will likely go the distance with you through the hard times.

Make use of free marketing tools

Get measurable results from your marketing strategies to make sure you know what’s working. That way, you can put your resources into what’s giving you the best results.

Reduce your marketing costs by making use of the free marketing tools out there. Social media and a robust Search Engine Optimisation (SEO) will go very far. Also, don’t underestimate the power of word-of-mouth and positive reviews.

Seek assistance with a business advisor

If you’re finding it difficult to cope during a time of financial hardship, talking to a financial advisor can help reveal the light at the end of the tunnel.

At Lawrence Group, we’re here to help you make sense of the situation and provide financial planning solutions so that you can move forward with confidence. If you’d like to talk to one of our financial crisis specialists, get in touch today.

When Should You Start Planning For Your Retirement?

Fri, 01 Nov 2019 12:46:43 GMT

Small business owners are intensely focused on making their business succeed and sometimes this means re-investing significant amounts of their finances into the business.

While this passionate approach is to be admired, self-employed individuals should take care that they also plan and save for their future selves. Seeking advice about financial planning for your retirement is a smart move for any self-employed individual.

When should I start planning to retire?

The short answer is now! Even if you believe your retirement is years and years away, it would be unwise to not think about it at all. After all, the decisions you make today will inevitably affect your future self.

In Australia, there is no such thing as a ‘retirement age’, so each individual can choose when to stop working when they want. Many business owners and entrepreneurs are passionate about their work and want to keep working as long as they’re able. Others work hard now, so that they can retire at a relatively young age.

What are your retirement goals?

To make the best plans for your retirement, it’s vital to think about your personal retirement goals. When do you want to retire, and what kind of lifestyle do you want to have when you do?

Knowing your goals means you can begin to outline the clear, practical steps you’ll need to take in order to achieve them.

Also consider that unforeseen circumstances, such as illness, injury or financial crisis, might significantly affect the decisions you will make around retirement.

It is therefore wise to start planning and saving for your retirement as early as possible. Taking small steps now will ultimately pay off in the future.

How much money will you need for retirement?

The Association of Superannuation Funds of Australia (ASFA) suggests a couple around 65 years old, who have a modest lifestyle, will require $40,000 annually. A couple who have a more ‘comfortable lifestyle’ might require closer to $62,000.

The significant difference in figures is because everyone has unique goals for their retirement. So it is important to work out what you desire, and then take the steps towards that now.

Ways to fund your retirement

In Australia, you will be eligible for Age Pension when you reach a certain age (currently 66). But it’s not wise to rely on this only.

Many business owners consider selling their business and using the profit to fund their retirement. While this may be an avenue you consider, keep in mind you will need to work towards this for several years. Most buyers will want to see at least three years of financial statements, and you’ll need time to increase the value of your business.

Additionally, an unforeseen circumstance, such as an economic downturn, might force you to make suboptimal decisions about selling your business. So it’s wise not to count solely on the sale of your business.

The most important thing you can do now is start making contributions to a super fund.

Superannuation for the self-employed

Employees automatically have regular contributions made to their super fund by their employer. However, if you’re self-employed, you’re responsible for your own super contributions.

There are several options available to self-employed individuals, including starting a Self-Managed Super Fund (SMSF). These super funds require a high level of responsibility and knowledge. It is wise to speak to a financial planner who can help you navigate the range of options.

Super contributions have special tax rules, including that you can claim a tax reduction for super contributions. Depending on your annual income, you may also be eligible for government assistance with super.

Having a super fund, and contributing to it regularly, should be a critical part of your retirement plan.

Need help from a business consultant in Perth?

We understand it’s not always an easy thing to make decisions for a future that may still seem far off. However, it is wise in business and for your personal life to think long term.

If you want to speak to a professional business consultant in Perth about determining how you’re going to meet your retirement goals, or have any other concerns about planning for your retirement, we’d love to help you out.

At Design Financial Advisory, we want to help you feel confident about your future security. Give our office a call today on (08) 6263 9933

Setting Business Goals & Objectives for 2019

Fri, 30 Aug 2019 12:26:40 GMT

When it comes to running a business, ensuring you allocate time to assess your current goals and create new ones is pivotal to your ongoing business success.

Why? Reviewing your business as a whole allows you to gain a more expansive view or your business, your progress and how well your goals are being achieved.

More specifically, reviewing your business objectives and goals allows you to:

Scale in a more efficient way and timely way
Track and achieve your goals and the time each goal takes to accomplish
Optimise collaboration & assist with better teamwork efforts
Improve the overall understanding of your business direction
Help to determine the effectiveness of previous strategic efforts
Guide future strategies
find any bottle-necks in finances, operations and processes

Mid-year is a great chance to re-evaluate and reset your goals for the next six months. It will ensure you make the most of the remaining months 2019 / 2012 financial years has to offer. Your goals when done correctly can propel your business to new heights in a far shorter period of time. Your goals should also be reflected in your business plan as your objective.

Review your current situation first

Before you write down your goals, a good practice is to determine how your business is currently doing. You should determine areas your business could improve on and determine the priority of each area in relation to the direct effect each problem area has on your bottom line and your scalability.

Here are a few quick activities to help you get a better handle of your business’s current situation:

S.W.O.T Analysis:

Identify your strengths, weaknesses, opportunities and threats. Another handy one is the shortened S.W.T to identify strengths, weaknesses and trends.

Competitive Analysis:

Researching similar businesses in your industry to compare industry averages on expenses, revenue, staff turnover, profits etc. which your business advisor can assist you with.

Now that you’ve got a better understanding of where you are in relation to the industry, your competitors and your goals, you can now get to work on the fun part – goal setting!

How to Set Goals

Not all goals are made equal, in fact, believe it or not, there’s a formula to create effective goals. It’s an industry standard and many business advisors will offer you this acronym to help you determine your goals. It’s called ‘S.M.A.R.T Goal’s. What’s a smart goal? It’s:

S pecific. Meaning you’re clear on what you’re trying to accomplish.
M easurable. Meaning it has a value attached to allow you to recognise that you’ve achieved it.
A chievable. Meaning it’s not unrealistic or outside of your current financial, time and skill abilities.
R elevant. Meaning it ties in with the direction of your business and where you want it to go.
T imely. Meaning it’s bound with a due date in order to achieve the goal.

How to Achieve your Goals

Now that you’ve learnt how to set goals and made a list of your own business goals, you’ll need to create a clear action plan to achieve them. Why? Action plans break each goal down into smaller, more manageable steps. Here is what you should consider when you’re breaking down your goals into these action steps.

– Responsibilities
– Actions
– Timeframe

We call it the ‘Who, what, when’ chart, and it’s really that simple. Simply determine who’s responsible for that step, what actions they’re required to complete, and when they need to complete it by.

How to determine whether you’ve met your goals?

Implement a simple system to help you track and monitor your goals progress – like the who, what, when charting or a Project Management system for more complex tasks. Implement more catch-up meetings within small businesses or between departments for bigger businesses to realign with the mission and the goals at hand. Lastly, reward employees for taking initiative, achieving goals and contributing to the overall mission.

Design F inancial Advisory are experts in their field , helping small to medium size businesses experience year on year growth. Please get in touch with our team today on 6263 9933 to see how we can help you grow.

The Coalition wins a third term – your superannuation policy update in preparation for the end of the financial year

Fri, 07 Jun 2019 12:16:04 GMT

The Coalition Government has been re-elected in the 2019 Federal Election, with a small majority of seats in the House of Representatives, after taking a policy of stability for superannuation to the election.

After the introduction of the significant legislative changes which came into effect on 1 July 2017, you may be relieved to hear that for at least the next three years we hope to have sustained stability for super. You may also be relieved to hear the proposal to ban refunds for excess franking credits and other superannuation changes will not be implemented. This means that you can focus on managing your financial needs rather than worrying about changing rules.

Before the election, the Coalition did announce tweaks to the superannuation system that we anticipate will be implemented by the Government including:

Guaranteeing no new taxes on superannuation.
Greater flexibility for retirement contributions.
From 1July 2020, Australians aged 65 and 66 will now be able to make voluntary superannuation contributions, both concessional and non-concessional, without meeting the work test. Previously, this was only available to individuals below 65.
This also includes extending access to the bring-forward arrangements to individuals aged 65 and 66 which allows individuals to make three years’ worth of non-concessional contributions to their super in a single year.
Increasing the age limit for individuals to receive spousal contributions from 69 to 74.
Reducing red tape for superannuation funds — exempt current pension income (ECPI) changes.
The Government will streamline administrative requirements for the calculation of ECPI.
Reducing costs for the super industry by including superannuation release authorities in electronic SuperStream Rollovers.
The Government will provide $19.3 million over three years beginning in 2020-21 to the Australian Taxation Office (ATO) to send electronic requests to superannuation funds for the release of money required under a number of superannuation arrangements.
Retaining limited recourse borrowing arrangements (LRBAs).
Increasing the maximum number of SMSF members from four to six.

Next steps

With the end of financial year now fast approaching and certainty with the Government and its super policies it is the time to ensure everything is in place for your SMSF before 30 June. We have compiled some strategies that you may need to consider and ensure the plans you have in place are the best for you and your SMSF.

Contribution caps

Before 30 June you should:

Review if you have any income available to contribute to your fund; and
Review your total contributions to ensure they are below the caps.

Non-concessional (after tax) contributions are limited to $100,000 for the 2019 financial year and concessional (before tax) contributions are limited to $25,000.

Members under 65 years of age have the option of contributing up to $300,000 over a three-period depending on their total super balance. Transitional arrangements also apply to individuals who brought forward their non-concessional contribution caps in the 2016-17 financial year.

Anyone making large superannuation contributions should exercise extreme care to avoid excess contributions. Making sure you do not exceed the contribution caps will save you both money and time of dealing with excess contributions.

Contributions are included in a financial year if they are received in your fund’s bank account by 30 June. With 30 June falling on a Sunday this year, it would be prudent to make your contributions by Wednesday 26 June to ensure they are received by your fund prior to the end of the financial year.

Drawing superannuation pensions

If you are in pension phase, you need to ensure the minimum pension has been paid to you for this financial year. Where these requirements have not been met your fund will be subject to 15% tax on your pension investments, rather than being tax free.

Personal superannuation contributions

Most people regardless of their employment arrangement, can claim a deduction for personal super contributions they make to their fund until they turn 75.

Individuals who are aged between 65 and 75 will need to meet the work test to be eligible to claim the deduction.

If you wish to claim a tax deduction for personal contributions, you must complete and lodge a notice of intent with your fund before June 30 and have this notice acknowledged (in writing) by your fund. Any contribution also needs to be received by your fund before June 30.

Co-contributions

If you meet the relevant work tests and earn less than $52,697, it is also worth considering if you can take advantage of the Government super co-contribution.

SMSF fund expenses

For members in the accumulation phase, it is important that any expenses are actually incurred or paid before 30 June to be deductible in the current financial year.

Rebalancing accounts between spouses

The end of financial year is also the perfect opportunity to rebalance pension accounts between spouses, to ensure that super balances are as even as possible and the $1.6 million transfer balance cap is maximised for each member.

Transfer Balance Account Reporting (TBAR)

Funds that were paying a pension during 2018-19 will need to complete and lodge a Transfer Balance Account report with the ATO. The date of when you have to report depends on the size of your superannuation balance.

How can we help?

If you have any questions or would like further information in ensuring you and your fund are well prepared for the end of the financial year and beyond please feel free to give me a call to arrange a time to meet so that we can discuss your particular requirements in more detail. Alternatively, you can refer to the SMSF Association’s trustee education platform, SMSF Connect.

All credit for the article to this websiet: https://www.smsfassociation.com

Benefits proposed for Self Managed Super Funds & other changes that may impact you…

Thu, 12 Jul 2018 09:54:51 GMT

Government delivers Self Managed Superfund (SMSF) friendly 2018-19 Federal Budget

A SMSF friendly budget is the good news coming out of the 2018-19 Federal Budget. With SMSF members still working through the wide-reaching and complex superannuation changes which took effect from 1 July 2017, this Federal Budget will provide much needed stability while looking to reduce costs for SMSFs and prove additional flexibility.

The key changes proposed for SMSFs and superannuation are:

Three‑yearly audit cycle for some self‑managed superannuation funds

The Government will change the annual SMSF audit requirement to a three-yearly requirement for SMSFs with a history of good record keeping and compliance. The measure will start on 1 July 2019 for SMSF trustees that have a history of three consecutive years of clear audit reports and that have lodged the fund’s annual returns in a timely manner.

Expanding the SMSF member limit from four to six

As already announced, the Federal Government confirmed its decision to expand the number of members allowed in an SMSF from four to six. Expanding the definition of an SMSF to a fund with a maximum of six members will provide greater flexibility in how funds can be structured.

Work test exemption

The Government will provide more time for Australians aged 65 to 74 to boost their retirement savings, by introducing an exemption from the superannuation work test.

This exemption will apply where an individual’s total superannuation balance is below $300,000 and will permit voluntary superannuation contributions in the first year that they do not meet the work test requirements.

Life insurance cover in super to be opt-in for individuals under 25 years of age

The Government will legislate that life insurance cover in superannuation will be opt-in for those individuals under 25 years of age or with account balances under $6000 to ensure that unnecessary fees do not erode smaller balances. Life insurance cover will also cease where no contributions have been made for a period of 13 months.

Older Australian package

The Government introduced the following measures to enhance the standard of living older Australians:

Increase to the Pension Work Bonus from $250 to $300 per fortnight.
Amendments to the pension means test rules to encourage the take up of lifetime retirement income products.
Expansion of the Pensions Loan Scheme to allow more Australians to use the equity in their homes to increase their incomes.

Personal income tax bracket changes

The Government has provided personal income tax relief to lower and middle-income earners. A Low and Middle-Income Tax Offset will now be available for individuals with incomes of up to $125,333.

The $87,000 income threshold, above which a 37 per cent tax rate applies, will increase to $90,000.

Other changes

A surplus of $2.2 billion is expected in 2019-20, one year ahead of schedule.
The Government’s planned increase in the Medicare levy from 2 per cent to 2.5 per cent, to fund the National Disability Insurance Scheme, will now not go ahead due to increased tax revenues.

How can we help?

If you have any questions or would like further clarification in regards to any of the above measures outlined in the 2018-19 Federal Budget, please feel free to call the team at Design Financial Advisory so that we can discuss your particular requirements in more detail.

–Steve Neuwert, Financial Planner

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What you need to know about 2018 Federal Budget.

Our diverse team of specialists will be able to help see how this budget could affect you or your business.