Trade Contractors - Concord Tax

REGISTRATIONS OF ABN'S, GST. COMPLETION OF BAS, TRADE CONTRACTOR TAX RETURNS. BOOKKEEPING AND INVOICING SYSTEMS. NO WORRIES.

BUSINESS ADVICE, CASH BUDGETS, LOANS VS LEASE CALCULATONS, TAX PLANNING, NO WORRIES.

ADVICE, ACCOUNTING & BOOKKEEPING.

Trade contractors often ask for recommendations on recordkeeping software for their business. There are many accounting and bookkeeping systems available in the market place. Many are specially designed to assist trade contractors and others whose work takes them out on the road. You have special requirements when you are constantly moving about from job to job.

Concord Tax can advise you of bookkeeping systems that help you file paper work on the run, that can allow you to invoice on the spot, that do much of the work automatically, and that can let you know how you are going at any time.

Talk to Donna Zillmann, or Kerry Orro to get in control of your paperwork. They can make the paperwork of business easy for you, and can give you important advice on running your business and reducing your taxes.

SET UP ABN'S, COMPANIES, TRUSTS, PARTNERSHIPS, AND SOLE TRADERS. NO WORRIES.

WE HELP YOU FOCUS

Trade Contractors need a good accountant and business advisor.

Should you register for GST?

Should you set up a company or trust?

Should you change your bookkeeping system?

Should you lodge your BAS monthly or quarterly?

How much money should you put aside to pay your BAS?

How can you reduce your ATO tax debt?

How can you collect that invoices from those stubborn payers?

We can help you with these questions. Contact Donna Zillmann, or Kerry Orro and make any appointment now.

QLD CONSTRUCTION INDUSTRY LICENSCS

When you need a licence

In Queensland, individuals and companies must hold a QBCC licence to carry out:

any building work valued over $3,300
building work valued over $1,100 where it involves Hydraulic Services Design
building work of any value where it involves:
- Drainage
- Plumbing and Drainage
- Gas Fitting
- Termite Management – Chemical
- Fire Protection
- Completed Residential Building Inspection
- Building Design – Low Rise, Medium Rise and Open
- Site Classification.

Note:

The value of building work is the reasonable cost to a consumer of having the work carried out by a licensed contractor on the basis that materials, labour and GST are included, regardless of who supplies the materials. This can sometimes be referred to as the ‘market value’.
A trust cannot obtain a QBCC licence. The trustee of the trust must apply for the licence.
Registered architects are able to carry out building design work and perform building inspections on all types of buildings. To check if your architect is registered, visit www.boaq.qld.gov.au

Licence classes

The scope of work for each QBCC licence class outlines the range of building work for that class. The building work you do must be covered by your licence. For some work, you may need more than one licence class.

Do employees need a licence?

If you are overseeing work that involves plumbing and drainage, gas fitting, pest control or fire protection, you need a QBCC licence regardless of the value of the work.

If you are an employee, you don’t need a licence unless you become responsible for:

Overseeing and directing the building work.
Ensuring the work is of a competent standard, i.e. free of defects.
Ensuring the work complies with the plans and specifications

PRICING TACTICS

Here are some Pricing Tactics you can use.

Discounting

Offering specially-reduced prices can be a powerful tool. This could be a clearance discount to sell old stock, a discount for making multiple purchases of the same or similar products, or you could offer bulk discounts to encourage larger orders. You should be able to make these more profitable through lower costs.

But be careful. If you discount too much, customers may question your full-rate pricing or see you as a cheap option, making it difficult to charge full-rate prices in the future.

Odd value pricing

Using the retailer’s tactic of selling products for $9.99 instead of $10 can be useful if the price is an essential part of customers’ buying decisions. Some customers perceive odd value prices like this as being more attractive.

Loss leader

This involves selling a product at a low or even loss-making price. Although you may not make a profit selling this product, you could attract customers who will also buy other, more profitable products.

Skimming

If you have a unique product or service, you can sell it at a high price. This is known as skimming – but you need to be sure that what you are selling is unique.

Otherwise, you may just price yourself out of the market if there is credible competition.

Penetration

This is the opposite of skimming – starting at a low price and gaining market share before competitors catch up with you. Once you have a loyal customer base, you should be able to find ways to raise prices later.

Raising or lowering prices

There will be times when you need to change your prices. But before you do, you should analyse the impact on your profitability of any proposed price change.

There are two key questions you will need to answer:

What effect will the price change have on the volume of sales?
What will the effect be on the profit per sale?

Increasing prices

Increasing prices can improve your profitability even though your sales volume may drop.

If you are increasing your prices, always explain to your customers why you are doing it. You can use the price change as an opportunity to re-emphasise the benefits you offer. A good explanation can also strengthen your relationship with a customer.

There are also ways that you can hide price increases. For example, you might:

introduce new, higher-priced services and make older, cheaper ones obsolete
lower the specification – and your costs – while maintaining the same price

But be aware that hiding price increases can risk adverse reactions from customers if they realise what you are doing.

Reducing prices

You should never take the decision to lower prices lightly. Low prices often go hand-in-hand with poor-quality service – is this the image you want to create for your business?

Concentrate on building profits rather than cutting prices to build up sales. In most circumstances, your customers decide to buy from you because of the benefits you offer, along with your price. It is rare for the decision to be made based solely on the price.

PRICING YOUR SERVICE PROPERLY

Pricing your service properly is very important.
If it is too high you lose customers. If it is too low, it will stunt business growth or could lead to serious cashflow problems.

You should create a pricing strategy, and then have regular pricing reviews.

When setting your prices you must make sure that the price and sales levels you set will allow your business to be profitable. You must also take note of where your product or service stands when compared with your competition.

Here are some suggestions to help you build a pricing strategy, to calculate your costs to monitor your business for profitability. You should consider different pricing tactics.owing the difference between cost and value can increase profitability:

the cost of your service is the amount you spend to produce it
the price is your financial reward for providing the service
the value is what your customer believes the service is worth to them

Pricing should be equal to the value of the benefits that your business provides for its customers, while also bearing in mind the prices your competitors charge.

To maximise your profitability, find out:

what benefits your customers get from using your service
the criteria your customers use for buying decisions. Is it speed, convenience or reliability
what value your customers place on receiving the benefits you provide
Wherever possible, set prices that reflect the value you provide – not just the cost.

Divide your costs under two headings:

fixed costs are those that are always there, regardless of how much or how little you sell, for example rent, salaries and business rates
variable costs are those that rise as your sales increase, such as additional raw materials, extra labour and transport

When you set a price, it must be higher than the variable cost of producing your product or service. Each sale will then make a contribution towards covering your fixed costs – and making profits.

There are two basic methods of pricing your services: cost-plus and value-based pricing. The best choice depends on your type of business, what influences your customers to buy and the nature of your competition.

Cost-plus pricing

This takes the cost of producing your product or service and adds an amount that you need to make a profit. This is usually expressed as a percentage of the cost.

It is generally more suited to businesses that deal with large volumes or which operate in markets dominated by competition on price.

But cost-plus pricing ignores your image and market positioning. And hidden costs are easily forgotten, so your true profit per sale is often lower than you realise.

Value-based pricing

This focuses on the price you believe customers are willing to pay, based on the benefits your business offers them.

Value-based pricing depends on the strength of the benefits you can prove you offer to customers.

If you have clearly-defined benefits that give you an advantage over your competitors, you can charge according to the value you offer customers. While this approach can prove very profitable, it can alienate potential customers who are driven only by price and can also draw in new competitors.

How to build a pricing strategy

You need to decide whether to use cost-plus or value-based pricing.

It’s important to find out what your competitors offer and what they charge. If you phone your rivals and ask them for a quote, you can use this information as a framework.

It’s probably unwise to set your prices too much higher or lower without a good reason. If you price too low, you will just be throwing away profit. If you price too high, you will lose customers, unless you can offer them something they can’t get elsewhere.

The perception of your product or service is also important. In many markets, a high price contributes to the perception of your product as being of premium value. This might encourage customers to buy from you – or it might deter price-conscious customers.

It can be useful to charge different prices to different customers, e.g. to customers who purchase repeatedly, or buy add-on or related products, as a thank you for their loyalty. Bear in mind that customers who are expensive to satisfy will be less profitable, unless you charge them higher prices. One-off sales may cost you more than repeat business.

You can also use pricing tactics to attract customers. See the section below on different pricing tactics.

Whatever prices you set, check that they cover your costs and can deliver a profit. See the page in this guide on covering fixed and variable costs.

THE CASH ECONOMY

It’s a legal requirement for you to keep records of your business transactions for a minimum of five years, so it’s important that you have good record keeping practices in place. The records you must keep include all documents relating to your income and expenditure.

Keeping good records makes paying your taxation and other business transactions much easier and helps you to monitor how your business is going.

You also need to keep other important papers, legal documents and contracts in a safe place, so make sure to set up a filing system for easy retrieval.

RECORD KEEPING FOR TRADE CONTRACTORS

One of the first things you need to find out when you’re starting out is what laws apply to your new business. As a small business owner, you’ll know that being legally compliant relies on being aware of rules and regulations. You may wish to consult a legal professional to help you with all the legal requirements that you must comply with, such as licences and registrations, contracts and leases.

BUSINESS REGISTRATIONS

All business owners in Australia have to register before commencing any business activities. As well as registering a business name, there are a variety of taxes that can impact on your business that you may be required to register for. These may include:

an Australian Business Number (ABN)
the Goods and Services Tax (GST)
a Tax File Number (TFN)
Pay as you go (PAYG) withholding.

LICENCES.

If you operate a business, it’s likely you’ll need certain licences to make sure you’re complying with your legal obligations.

The licence or permit you require may depend on the product or service you’re selling. You’ll need to find out whether there’s a licensing requirement for your particular business, or you may face fines or other difficulties.

Businesses selling products for consumption as food, for example, could need a Food Business Licence. However, there may be other licenses that aren’t so obvious, so it’s best to do some research into this area. Licenses and permits can vary from state to territory, so it’s best to find out this information from your local, state/territory, or federal government, to ensure you’re doing the right thing.

PRIVACY ACT

A new set of privacy principles was introduced in March 2014. The principles cover how a business handles personal information, including the:

handling and processing of personal information
use of personal information for direct marketing purposes
disclosing of personal information to people overseas.

Find out your Privacy Act 1988 obligations from the Office of the Australian Information Commissioner

ANTI-BULLYING LAWS

People who believe they’re being bullied in the workplace can apply to the Fair Work Commission for help in resolving the issue.

Bullying occurs when a person or group of people, repeatedly behave unreasonably towards a worker. The behaviour also has to be deemed a risk to the worker’s health or safety. Read our Employing people topic for more information.

INDEPENDANT CONTRACTORS

Independent contractors are self-employed and provide a service to a business.

They often negotiate their own payments and working arrangements, and have the opportunity to work for a range of clients at any given time.

Before entering into a contract, you’ll need to determine whether someone is classified as an independent contractor. Their status will affect their rights and obligations. It’s possible for someone to be an employee for some work and an independent contractor for other work.

You also need to remember that it’s illegal to fire, or threaten to fire, an employee if they don’t agree to become a contractor.

It’s important to know whether you’re hiring an independent contractor or an employee, so you can be sure you’re complying with your legal obligations.

UNFAIR DISMISSAL

Small businesses have different laws compared with larger businesses when it comes to unfair dismissal. Most small businesses (those with fewer than 15 employees) will fall under the Small Business Fair Dismissal Code .

If you are planning to terminate an employee, it’s important you follow the rules outlined in the Code.

AM I AN EMPLOYEE OR CONTRACTOR?

If you’d like to start a business in Australia, but you’re not an Australian citizen or permanent resident, you should know:

how to get the right visa
the legal and government requirements that apply to Australian businesses.

We’ve put together this news article to help you work out the basics and point you in the right direction for the information you need.

Business visas

The Department of Immigration and Border Protection (DIBP) is responsible for Australian business visas.

Business Innovation and Investment visas

If you have business skills and want to set up and manage a new or existing business in Australia, take a look at the Provisional Business Innovation and Investment visas .

Before you can apply for these visas, you must be nominated by a state or territory government.

Generally, you’ll need to follow these steps:

Submit an expression of interest through DIBP’s SkillSelect online service.
See if a state or territory government decides to invite you to apply for a visa. You can wait for a state or territory government to contact you, or you can contact them directly.
If you receive an invitation, apply for a visa. You’ll need to meet certain requirements and provide documents to support your application.

If you’re granted one of these provisional visas, it will be valid for four years, and you’ll have completed the first step towards getting a Permanent Business Innovation and Investment visa .

Business Talent visas

You may also be eligible for the Permanent Business Talent visa if you:

own or part-own an overseas business, have net business and personal assets of at least AUD $1.5 million, and an annual business turnover of at least AUD $3 million, or
have obtained at least AUD $1 million in venture capital funding in Australia to develop a high-value business idea.