Single Touch Payroll is almost here. What you need to do to get ready.

Single Touch Payroll (STP) is an Australian Taxation Office (ATO) initiative, designed to streamline the way businesses report their payroll information to the ATO.  What this means is that employers will be required to report to the ATO electronically each pay cycle versus on a quarterly and annual basis.  This means we will eventually say goodbye to end of year ATO payroll reporting.

Below are the top four things employers need to do:

  1. Count how many staff you have at 1 April 2018.

This determines whether you need to be single touch payroll ready by 1 July 2018.

You will need to count how many active employees you have, whether casual, permanent, part time or full time. Basically, anyone that is active on your payroll at the 1 April 2018 contributes to the count. Click here to view employee headcount guidelines.

From 1 July 2018 any business with 20 or more staff will need to be STP compliant. If you are a business with less than 20 staff, then you have until 1 July 2019 to implement, however you can elect to adopt STP earlier than the deadlines stipulated.

  1. Review your current payroll processes and data

There is a lot of information that will be reported to the ATO electronically via single touch payroll, so its important to know whether you are currently capturing all the correct data that will need to be reported.

Have you established the right systems to do the following?

  • calculate employees super entitlements correctly
  • pay your employees the right wages
  • collect employee information such as DOB, names and addresses correctly

Do you currently have the correct employee data on hand?

Are you subject to any risks with your current payroll system?

Are related party employees set up appropriately on your payroll system?

  1. Ensure your payroll software is STP compliant

If you are currently utilising payroll software, you will need to check with your provider on whether they will be STP compliant by 1 July 2018. Do you need to consider whether you need to upgrade your payroll solution or perhaps replace it with another provider that has great functionality? If you are still processing your payroll manually, then this is the time to make the change to a payroll software regardless of the date you need to be compliant. We are currently discussing the right solutions for many of our business clients to ensure they are maximising the efficiencies of their payroll systems as well as ensuring compliance.

  1. Ensure you and your employees are setup to benefit from STP

In order for your employees to benefit from STP, your employees need to be registered with myGov and linked to the ATO. Some benefits for employees are: being able see super balances as currently paid, receiving payment summaries online, access to online TFN declaration forms and Super choice forms. Start communicating with your employees to register on myGov, this process may take a few months to complete.  As a business you should also be registered to the Department of Human Services Business online services, to access a range of online services.

Can we help with getting you STP ready?

Yes we can.  At Prosperity, we are currently assisting a number of our business clients through this process as well as conducting payroll risk reviews and transitioning our clients to alternate accounting software solutions that are STP compliant.  We also offer an outsource payroll service, which has become increasingly popular with our clients, that ensures your payroll is managed efficiently and accurately.

If you would like to discuss your payroll situation or have any questions at all with STP, please contact us on 1800 855 844, we have experts ready to assist with these payroll changes.

A smarter way to buy a car

If you’re planning on purchasing a new car but don’t have a lot of time or the means to do all the legwork on your own, engaging a car broker or car buying service can be an excellent option. A car buying expert can save you a lot of time and hassle and will help you secure the best possible deal.

What exactly is a car buying service?

A car buying service is a third party engaged by you, the buyer, to assist you with buying a new car. Essentially, it is a car broker’s job to make your job easier when it comes to buying a new or used car.

When purchasing a new car, a significant deal of research is recommended to ensure you’re getting the best price on the car. A car buyer will complete all this legwork for you, including researching and negotiating a price across their database of dealerships. Using their networks, they’ll be able to do this for you much faster, and often more effectively, than you’d be able to on your own.

Car buying is an end-to-end service which includes finding the car to completing the transaction; test drives will be arranged on your behalf if desired, as well as negotiating the best trade-in value on your existing car and arranging competitive finance and insurance if required.

Ultimately, the benefit of engaging a car buying service is the minimalisation of hassle and the maximisation of savings. You are placed on equal footing with professional car sellers by employing a professional car buyer who can negotiate you the best deal.

Introducing Darren Lewis, Prosperity’s car buying specialist

Prosperity is thrilled to be launching the Smart Drive car buying service, and to have Darren Lewis on board as our car buying specialist. Darren has over 25 years’ experience in Motor Vehicle and Motorcycle sales, and is passionate about achieving outstanding value and savings for his customers. His solid background in vehicle sales means he is an expert at working with dealerships and sourcing the best possible price available.

Let us do the legwork for you

Prosperity Smart Drive makes buying a car easy.

  • We do all the legwork – sourcing models, getting quotes, arranging test drives, ordering and contracts, sorting valuations and arranging delivery
  • We will save you money by getting you the best available price on your new car, and the best available trade-in value on your current car
  • Our extensive experience and expertise means we can assist you in choosing a competitive loan for your personal circumstances

Contact Darren to discuss your next new car today.


Prosperity Smart Drive Pty Ltd is licensed under the Motor Dealers and Repairers Act 2013; License No. MD066789

Individual tax update

2017 has been largely about housing. On the good news front, we finally had the removal of the 1.5% budget repair levy from 1 July 2017 for those with taxable incomes over $180,000.  It is worthy of note that there is currently a proposal to reintroduce the temporary budget levy for high income earners.

The government has also announced that the Medicare levy will increase from 2% to 2.5% from 1 July 2019.

Also of note are the upcoming changes expected regarding super guarantee and employee wage reporting.

Residential Property Investors

There have been a host of changes around the way that properties are taxed following the budget. Most are now legislated or in the process of being passed without significant dissent.

Of note, with application from 1 July 2017 is the denial of travel costs to visit residential rental properties and limiting of deductions for depreciation of residential property fixtures, plant and equipment by property investors.

Prior to 9 May 2017, a deduction for depreciation is available when an investor purchases plant & equipment and fixtures as part of a residential property. Usually the deduction becomes available with the release of a quantity surveyors report.  From 1 July 2017 an investor can only claim a depreciation deduction for expenses actually outlaid for new items or acquired as part of a new property. Deductions for capital works are not affected by these changes.

Work Related Car Expenses

Individuals who claim the maximum allowable deduction on the cents per kilometre method are likely to get an ATO review based on a recent media release warning by the ATO.

The key message of the media release is to make taxpayers aware that the claim for motor vehicle expenses is not an entitlement. You must be able to prove that you were required to use your car for work purposes (not for travelling from home to work and back).

$1.6m Super Transfer Balance Cap

The new superannuation regime is now in place involving the $1.6m cap on contributions and commuting into pension phase, along with reductions to annual contribution limits. This will continue to involve some compliance and planning headaches during completion of the June 2017 accounts and Tax Returns as many pension phase SMSFs need to commute amounts back into accumulation phase.

Of particular note for many is the way the new rules apply to borrowing arrangements (LRBAs), borrowings by the super fund do not offset the asset value and payments to the loan from a non-pension phase source can count towards the contribution cap. This may make borrowings in super less appealing for those closer to the caps. 

Contributing the proceeds from downsizing into super

A motivation to sell property is created by the new downsizing super incentive, allowing significant contributions into the super environment.

From 1 July 2018, a person aged 65 years or older will be able to make a contribution into superannuation of up to $300,000 from the proceeds of selling their main residence. This contribution will be outside the current non-concessional rules.

To be eligible, the individual must have owned their main residence for at least 10 years.

Most likely less motivating is the new First Home Super Saver Plan, allowing certain withdrawals from super and the new CGT incentive when investing in low-rent affordable housing.

CGT and Land Tax Changes for Foreign Residents

Non-residents with property in Australia have also been attacked with the new charge for vacant properties and also the removal of the main residence exemption from 1 July 2019 (and any properties purchased post budget).

Following the lead of Victoria, NSW has also significantly increased the stamp duty and land tax surcharges on foreign persons, at least doubling the surcharges to 8% for stamp duty and 2% for land tax.  Complications can arise for companies and trusts where ownership exists overseas. In particular, trusts can be found to be a foreign person where a non-resident is a potential beneficiary. This has forced many to consider whether to amend the trust deed to remove certain beneficiaries.

CGT Withholding Clearance Certificates

All Australian resident vendors are now likely to need clearance certificates from the ATO to certify residency when selling a property. The foreign resident capital gain withholding regime now applies to properties worth $750,000 or more (it was previously $2m). The rate of withholding has also increased from 10% to 12.5%.

Don’t forget that the obligation rests with the purchaser to withhold the tax a remit the funds to the ATO at the time of settlement where no clearance certificate has been provided.

First Home Buyers

NSW has revamped stamp duty exemption for first home buyers of properties worth up to $800,000, with a zero stamp duty rate up to $650,000 (vacant land thresholds are between $350,000 and $450,000).

First home buyers lose access to the $10,000 grant for properties worth over $600,000 (or owner builder up to a total value of $750,000).

Proposal to change superannuation guarantee rules

The government has proposed to change the superannuation guarantee rules so that compulsory super is payable on salary sacrificed amounts. Currently if you sacrifice into super, unless the employment contract stipulates otherwise, employees may lose a portion of the super guarantee amount. The proposed changes seem fair enough and perhaps overdue. These changes should be kept in mind when reviewing any new contracts with employers.

Single Touch Payroll is coming

Employers with 20 or more staff will be required to commence using the new automated reporting system from 1 July 2018. The remaining employers will need to start using the system from 1 July 2019. If affected, employees will then be able to access their payroll and super contribution information from their MyGov account. This will include payment summaries.

For those remaining taxpayers who have not yet registered with MyGov, it will be an additional reason to do so. Keep in mind registration with MyGov can impact on where ATO notices are sent, so your tax agent may inadvertently cease to be the initial recipient of correspondences. Contact your tax adviser if you are unsure.

The effect of exponential technology on the GP practice

Two years ago, the global market for wearable medical devices and portable patient monitoring systems was valued at $4 billion and is forecast to grow a staggering 28% per annum over the next 8 years. Australians are renowned worldwide as early adopters of technology, with 80% of us having smartphones. In this article we discuss the effects of the exponential growth in health technology, and the way we see that impacting on general practice.

What is mHealth?

Electronic health, or eHealth as it is familiarly known, was a term coined to encapsulate healthcare practices involving electronic processes and communication.

But what is mHealth and why do practices need to know about it?

mHealth, or mobile health, is the new buzzword which has emerged to describe the practice of medicine, supported by mobile devices.

What kinds of technology are currently available?

While there has been significant improvement in existing technology, for example digital stethoscopes and portable scanners, the real growth is seen in the area of mobile phone apps.

There are apps in the market which can detect, count and time pregnancy contractions and allow parents to listen to the heartbeat of their unborn baby, and apps which provide medical grade ECGs and test blood pressure, blood sugar and lung capacity.

While some may consider these to be gimmicks, what’s more important to consider is where the information might be heading. The obvious next step for patients wearing medical devices, and extracting that information via companion apps, will be those patients wanting to see that information used in personalising their healthcare plans and helping them to monitor and manage chronic healthcare conditions and improve their overall wellness.

What does this mean for general practice?

Practices need to consider what it will mean when they start receiving a constant flow of information from a patient’s device; how is that information going to be measured and monitored? If a semi-urgent or urgent condition arises, who will monitor the condition? Where does the duty of care rest for that information and any action that needs to be taken as a result?

Even if practices resist this form of remote monitoring, they need to consider what other technological advancements will mean for them. Technology will enable GPs to consult with their patients via tablets, laptops and other wireless devices, which technically means that patients will not need to be physically present for consultations. Practices now have the opportunity to become a kind of centralised medical hub, collecting data from mobile technology worn by patients and from other healthcare providers, to provide a centralised model of care. Innovative opportunities exist for practices in areas such as shared electronic health services, telehealth or patient portals. These technologies could allow practices to operate far more efficiently, by allowing administrative staff to be redirected to other opportunities.

But even if practices aren’t interested in pursuing some of these current opportunities, technology growth raises other issues that they need to consider. So what other issues may arise for general practices? To date, we know general practices have been quite slow in adopting some of this new technology. There are quite valid concerns in areas such a confidentiality, privacy and patient security. Even an issue apparently simple as communicating test results with a patient via email raises all kinds of issues around patient security, privacy and technology. Finally, in an era of digital communication, the whole issue of managing patient expectations and patient/doctor boundaries becomes far more problematic.

With bodies like RACGP saying that mobile technology presents significant innovative opportunities for the healthcare sector, mHealth is a fascinating area and practices should be abreast of what is happening in this space and be prepared for it to cause a wave of development in the industry.

Recent case highlights the need for diligence when it comes to Service and Facility Arrangements and the interaction with payroll tax for Medical Practices

It’s common place for medical practices to use a Facility Fee arrangement where a Practitioner derives an income and the practice charges them a Facility Fee for the use of the premises, support staff, etc. This is typically excluded from payroll tax. A recent decision in NSW highlights the challenges for practices in getting this approach right and the implications if they get it wrong, or don’t follow the agreement in practise.

Written in conjunction with Prosperity Health BS&T Manager, Moien Khan

A recent and important decision given by the New South Wales Civil and Administrative Appeals Tribunal, in the case of Winday International Pty Ltd vs Chief Commissioner of State Revenue, sought to impose payroll tax on Winday’s service agreement with its practitioners.

We want to share with you the outcomes of this case and what it means for medical and dental practices when it comes to payroll tax obligations.

What is payroll tax and what payments are subject to payroll tax?

Payroll tax is a state imposed tax on wages paid to employees and certain deemed employees if the wages paid by the tax payer exceed a threshold amount which currently is set at $750,000 in NSW and $1,100,000 in Queensland.

What happened in this case?

Quick facts about the Winday International Pty Ltd case:

  1. Winday provided fully operational radiology facilities to radiologists who then provided radiology services to the public.
  2. Each of the radiologists entered into a service agreement with Winday for the use of its facilities.
  3. The practitioners had access to the following provided by Winday:
    1. Place to conduct their services
    2. Specialist plant and equipment required to perform their service
    3. Medical supplies
    4. Staff to assist the practitioner
    5. Administrative staff
  4. Winday collected all the patient fee on behalf of the practitioners and made a net payment to each practitioner after withholding the service fee.

The Tribunal’s decision challenges the agreements from a payroll tax perspective in that the agreement indicated that this was a typical arrangement that would not attract payroll tax, however the Tribunal thought otherwise, and ruled that Winday is incorrect and should be liable for Payroll Tax on its payments to practitioners.  Here are some of the key points that led the tribunal to think the practitioners were actually employees for payroll tax:

  1. Contrary to the agreement, the practitioners were obliged to provide locum cover if they were unable to attend the facility on any day.
  2. Winday ensured that the amount payable to the radiologists would be no less than $2,000 for each day services were provided.
  3. Winday referred to the radiologists as “our staff” on the website they advertised their services.
  4. Winday’s actions and procedures differed from the terms of the agreements.

The Tribunal’s decision has since raised a number of points not usually present in service arrangements in the healthcare space.

What does this mean for medical and dental practices?

It is prudent for practice owners to carefully consider the wording of any contractual arrangements between themselves and their associate practitioners, with all potential tax consequences carefully considered with an accountant and a lawyer. This could help your practice to avoid potential payroll tax consequences down the track.

Further words of caution

If it has been a while since you have reviewed your service agreements, we would recommend that you undertake a review to check that these agreements reflect what they are intended for, and also ensure the clauses in the agreements are being followed in practise. Please note that payroll tax is a state based tax and the specific rules for payroll tax do vary state by state, but are similar.  Also Payroll tax has interaction with income tax, however they are governed by different rules and being assessed as an employee for payroll tax will not necessarily be the same for income tax.

If you are in doubt about whether your processes are compliant or if you change your business model and need assistance to determine how you should deal with payroll tax, please contact a Prosperity Adviser to discuss your circumstances.


^Details of the decision in the Winday International Pty Ltd case can be found here.

Part 3: tax tips for your small business

First published in Kochie’s Business Builders

In the third of our three-part series, we look at actions small businesses can consider to reduce their tax for 2017.

This article is all about income. As with accelerating deductions, deferral of income can result in a slightly lower personal top marginal tax rate next year and provide a cash flow benefit. Of course, deferring a taxable profit only works if the relevant entity is paying tax.

Owner remuneration
Income of family members from a business depends on the ownership structure (e.g. sole trader, partnership, trust or company). Wages, dividends or profit share may, in certain circumstances, have different tax outcomes to the recipients. It is therefore worthwhile to ensure you are aware of what your personal tax position is likely to be and plan appropriately.

Where wages or other forms of income are being paid to other family members, it’s worthwhile considering if a minor under 18 years can commence a full-time occupation prior to 30 June as this can provide them with the lower adult tax rates.

Owners should also consider repayment of any “Division 7A” loans (these are borrowings from a company) prior to year-end. Repayment this year can avoid a dividend (and resultant personal tax) that is usually required under the relevant rules. And if you have a discretionary trust involved, distribution resolutions should be completed prior to year-end.

Income deferral
Income deferral could be as simple as delaying the issue of invoices, however it is often necessary to review customer contract terms to determine when income becomes assessable. The general rule is that income becomes assessable when it is “derived”, typically meaning non-refundable or a present debt exists.

Despite being derived, income may also be non-assessable if it is not “properly referrable” to an income year. In practice this usually means that where services have been paid for but are yet to be performed they can be considered non-assessable “unearned income”.

Such amounts should be accounted for in a separate balance sheet account, which can be made as an adjustment after year end but they need to be identified. This can include a proportion of a receipt where a service is only partially performed. So, if you receive 20% of a contract up front but will not start work on it until July, that amount will be excluded from this year’s taxable income.

Income from the sale of goods is generally not assessable until the goods are delivered.

Be careful however when dealing with an associate. Schemes designed to provide an immediate deduction to one party but defers income to another may result in the deduction being denied.

Certain businesses may want to consider if they can use a cash accounting method for determining income, this may be possible for micro-businesses providing services relating to professional skill and personal work that does not rely on capital items such as plant and machinery.

Other areas to consider
Many businesses have multiple entities with transactions occurring between them. End of year is a time when you should ensure the appropriate invoices and other paperwork has been prepared. It is good practice to get a handle on what taxable profits are being made in each entity to ensure you don’t end up with, for example, profits in one entity and losses in another.

In terms of non-business investments, any term deposits may want to be commenced in early July if on an annual maturity cycle. Any investments sitting in a loss may want to be sold before year-end if other capital gains exist. Avoid repurchasing the same asset as anti-avoidance provisions may apply. Similarly, the sale of investments with an underlying capital gain may want to be deferred until July so the tax payable is effectively delayed for a year. The same principals can apply to depreciable assets if you are not using a small business pool method.

Finally, if you are expecting a refund, get your affairs in order and lodge your returns early. Your accountant will also love you for it!

Payroll risk & lessons learned from celebrity chefs

If you have watched the news over the last month you will no doubt have heard about the payroll compliance woes of George Calombaris and Adriano Zumbo (both of MasterChef fame). The media surrounding these issues gives rise to some key questions for businesses – especially ones which grow quickly, employ staff across multiple locations, and have staff on many different contracts or employment bands.

While payroll is never an easy task, it certainly can be managed so it’s accurate every time, on time and with minimal fuss for the employer and employee. The good news is that payroll complexity can be navigated and mistakes avoided by being aware of your responsibilities and acting appropriately.

In the case of Calombaris, the Fair Work Ombudsman identified major discrepancies in employee payments. What seems to have started as a simple administration oversight has resulted in back payments to employees amounting to approximately $2.6 million, with potentially massive penalties still to be determined.

As we head towards the end of another financial year, this is a timely wake-up call to all business owners who employ staff – payroll risk is a real and important consideration for your business.

The major areas of risk in your payroll are:

Compliance with awards and EBAs

It’s imperative that you are identifying and adhering to the relevant industry awards for your employees. A simple misinterpretation of the award or an unaddressed change can result in significant over/under payments.

Superannuation obligations

The ATO received over 10,000 employee complaints in the 2015-16 year related to incorrectly paid superannuation with many of these triggering audit or review actions. Regardless of the size of your business, you need to be compliant with superannuation. This involves not just paying the mandatory 9.5%, but making sure it is paid on-time, via the prescribed superstream method, dealing with superfund choice and salary sacrificing arrangements and reporting correctly in your annual PAYG payment summaries.

Payroll Tax

Payroll tax is a state specific tax, charged on the total wages of a business over a prescribed threshold. Like super obligations, payroll tax can attract penalties and fines if payments are made late (monthly, quarterly or annually). This is an area which is often overlooked, and should be reviewed annually to ensure ongoing compliance. Businesses which operate across multiple States and Territories will need to be mindful to account for the differences in their payroll processes and keep up to date on local changes.

Are you on top of your payroll?

It’s common practice for SME businesses to rely on their payroll staff or bookkeepers to administer and manage the payroll function. Taking this approach blindly can result in increased risk of under or overpayments, non-compliance, and the risk of ATO audit and penalties.

Prosperity Advisers has a dedicated payroll team that can help you to minimise risk and simplify the reporting burden. Key benefits of outsourcing your payroll include:

  • Focus on your core business – time spent on payroll administration doesn’t increase sales or customer reach.
  • Reduce your risk – access the knowledge bank of experts who will ensure you are ATO & industry award compliant.
  • Free up your staff and reduce administration overload.
  • Access the most up to date systems & processes.
  • Increased security – protect your staff and assets from payroll fraud.

We recommend that you review your procedures and systems ahead of 30 June and if you are at all concerned about your payroll obligations and want to ensure you are minimising your risks we suggest that you get in touch with your Prosperity Adviser to discuss your situation.

Help for your payroll

A large number of businesses are discovering that outsourcing payroll can eliminate a very time consuming and risky function.

Prosperity offers an outsourced payroll service that ensures your payroll is managed efficiently and employees’ salaries and wages are accurately calculated and paid on time.

A successful partnership is easy to get started:

  • We work with you to streamline your systems so your data reaches us easily and with minimal fuss.
  • You nominate a relationship manager who will partner with our team to ensure the best outcomes.
  • We constantly update our knowledge and notify you when a change in process or pay rate is required.
  • We provide annual summaries and compliance documentation to your staff.

Contact your Prosperity Adviser to find out more.

Part 2: tax tips for your small business

First published in Kochie’s Business Builders

It’s that time of year when small businesses can benefit by considering strategies to minimise tax burden. In this second article of our three-part series for year-end tax tips we look at accelerating deductions and how small businesses can reduce their tax for 2017.

With the individual tax rate set to reduce by 2% for those in the top bracket, a tax deduction is worth a little bit more in 2017 than 2018. The mere deferral of a tax liability for one year can provide some welcome cash flow relief when it comes time to paying your tax. Indeed you never know what the future will bring, so a tax deduction taken in a year when you know tax will arise is like a mid-year gift.

Incur necessary expenses including prepayments
A business deduction does not necessarily need to be paid in order to be claimed. You often just need to have been issued an invoice. So for all those expenses (excluding inventory) you know you will need to outlay for, it may be better to order it this financial year. Suppliers who offer generous terms of settlement are ideal but even paying the cash before year-end can also be a good idea. Repairs and maintenance is a good example. Simply ensuring all invoices received have been accounted for is also something that can sometimes be neglected.

Small Businesses have the advantage of not having to spread out a deduction into a future year for prepayments where the service period is less than 12 months. Prepayments do not necessarily need to be “paid” however it is often necessary to trigger the deduction in the first place. Prepaying rent and interest are obvious big ticket items that can provide an early deduction.

Depreciable Assets
We raised the $20,000 Instant Asset Write-off in the last edition, which means depreciable assets are usually limited for small business for old and expensive assets. Even these assets can be added to a “pool” providing a 30% depreciation rate (15% in the first year). But for those who have not pooled, it can pay to have a look at your depreciable assets prior to year-end to determine if any assets are no longer being used. These can be written off and their remaining depreciable balance claimed as an immediate tax deduction if they have been “scrapped”.

Bad debts
To get a deduction for a bad debt in the current year it needs to be “written off” in the ledger, before year end. There also needs to have been reasonable attempts to recover the debt and an argument can be made that there is limited likelihood of the debt being recovered. It can pay to review your debtors list and identify defiant customers.

Pay super
While super for the final quarter is not payable until 28 July, it will not be deductible in the current year if not paid before year end. So you might as well pay it. Also be wary of paying after 28 July, you will not receive a deduction at all.

For both staff and owners, additional concessional contributions into super should be considered both to take advantage of the cap ($30k or $35k if 49 years of age or over in 2017 then reducing to $25k next year) and to reduce taxable income.

In order to claim a deduction for bonuses the amount needs to have been determined before year-end and documentation should exist to prove that the decision to pay it was made, usually by way of a minute or communication with the recipient.

Analyse inventory
The value of closing stock is usually added back to taxable income and therefore the lower the value the better. An exception is where the simplified trading stock regime is chosen which avoids the need to make an adjustment if the movement in value is reasonably estimated to be less than $5,000. Either way it can be beneficial to carry out a detailed stocktake. The value of trading stock is reduced where stock can be argued to be obsolete or damaged, so the nature of the stock and trading history for each item can be relevant in minimising taxable income.

Cyber Security and WannaCry

In the news recently there has been coverage of a large global computer attack, infecting computers with a ransomware program called WannaCry. This attack has raised questions for SME businesses on what can be done to protect against these types of attacks.

Ransomware attacks can cause unnecessary stress and affect productivity, in addition to hurting your wallet. It’s important your business responds quickly if affected, and you make sure your systems are protected from these types of attacks.

What is ransomware?

Ransomware blocks access to a computer system or files until a sum of money is paid. It works by encrypting your data and demanding payment for its release, threatening the deletion of the data if the payment is not made.

How is ransomware deployed?

Ransomware can be deployed via phishing emails, attachments to emails and by exploiting weak network defences. Once a machine has been infected, the ransomware will attempt to spread to other computers.

How do I protect against an attack?

While it depends on the strain of ransomware, you can help to protect your system by:

  • Keeping your systems up to date – this attack takes advantage of a critical hole in older versions of Windows. Microsoft released a patch to cover the vulnerability in March 2017, so businesses with up to date software will not be affected.
  • Backing up your files – ransomware encrypts your data and demands payment for its release. An attack will be less concerning to those businesses who frequently back up their data. SMEs backing up their own systems need to ensure those systems can’t also be compromised if an attack spread.
  • Educating yourself and your staff – small businesses lost over $2 million to scams in 2016, so it’s important to educate yourself and your staff on cyber security.

Do you have your cyber security under control?

Prosperity Advisers can assist you to develop and implement a cyber security plan, which covers:

  • Conducting regular scheduled system checks, including penetration testing and using your external auditor to assist.
  • Changing your security levels as required.
  • Identifying cyber security and forensic experts that you can call on when the need arises.
  • Implementing a breach plan, including a cyber security incident response plan which involves law enforcement agencies and regulators, and a press release statement.
  • Considering limiting the impact by putting in place cyber insurance cover which can provide both indemnity and liability cover.

For further reading on managing your cyber security risk, please refer to the Australian Cyber Security Centre (ACSC).

We recommend that you review your procedures and systems and if you are at all concerned about your cyber security, please get in touch with your Prosperity Adviser. To receive our Free Cyber Security Checklist and request one of our directors contact you to discuss your situation, please send an email by clicking here.

Bring in the new financial year with a clear plan for success

As another financial year comes hurtling to an end it’s a great time to pause and reflect on what you can do to ensure FY 2018 is all you want it to be. Here are my top 5 tips in preparation for a new year. Tackle one a week and you will be on track to start the year with confidence and a recipe for success.

  1. Set a budget for the year

Assessing financial performance is subjective. To know whether you have succeeded you need to be able to measure your results against an agreed plan (or budget). Having a budget also allows you to make financial decisions around setting revenue budgets and sales strategies, making decisions to invest in capital expenditure and team development. Importantly, it enables you to allocate personal remuneration and drawings without fear of unexpected bills or a cashflow crisis you didn’t see coming.

Most SME owners start with a good idea, an identified market niche and a tremendous amount of enthusiasm to drive their vision to succeed. But to what end? Having a clear financial goal in mind assists in shaping your broader business strategy for the year and also provides a sense of purpose to your company.

  1. Set your top 5 priorities 

Setting clear and concise goals gives you focus and direction. By identifying the 5 most important things to get done for you to be able to meet or exceed your financial budget you will ensure that your hard work pays rewards as your activity and efforts are directly linked to factors which contribute to your goals.

Of your 5 priorities it is also great practice to identify the number 1 priority – the one goal which is the most important thing for the business to achieve. You may also find that your top 5 priorities contain longer term projects, if so, identifying shorter term milestones or actions related to each one can keep it achievable and ensure you are making progress with steps in the right direction.

What you focus on gets done. 

  1. Use an advisory board

Being in business can be lonely, and being busy can mean time passes by without stopping to check on your progress. Implementing an Advisory Board provides owners a sounding board, guidance, and an outside perspective to hold you personally accountable. It is a great way to break the dynamic from working IN the business, to working ON the business.

I recommend at least a quarterly cycle of meetings, including a meeting agenda and financial reports (compared to your budget).

The Advisory Board team may be limited to one or two individuals (depending on the size and complexity of the business and the internal skills in the business) and meetings should be kept to 2 or 3 hours maximum. In my experience, businesses with an Advisory Board more often meet their financial targets and stay on track with their strategic priorities than those without one.

  1. Streamline a process 

Like decluttering your house during a spring clean, finding an inefficient process in your business and streamlining it can reap great rewards. For business efficiency as well as staff satisfaction.

We live in an age where technology can provide solutions for all sorts of problems and you might be surprised to find an “off the shelf” solution to your process inefficiency.

Are you spending too much time entering receipts and filing them? Try Receipt Bank to snap a photo of your receipts and bills and watch it load itself into your accounting system – and no more need to file the paper. Perhaps you are sick of entering and remembering too many passwords for the multiple applications you use each day? Try LastPass and save yourself time (and frustration) every day. 

Creating a culture of continuous improvement has immense benefits. Start now with one change and see where it leads. 

  1. What to stop doing!

Time is a limited commodity. To do new things and create new habits, you need to find some stop doing activities and bench old habits. To identify some things you can stop doing, consider the following questions:

  • Do you say ‘yes’ too often?
    • Next time, pause and consider “does it need to be done?”, “can someone else do it”, “if I need to do it, how urgent is it?”.
  • Do you do things that others could do?
    • Focus on delegation. Leverage the time of others to get tasks progressed and only get involved when they are advanced to a stage where they need your input.
  • Stop being a perfectionist.
    • Ensure the time spent is commensurate with the value of the task.
  • Cease & desist from doing repetitive tasks.
    • Take advantage of technology and start automating repetitive processes.

Help is close by. Your accountant should be a sounding board for your ideas or feel free to contact Prosperity Advisers if you want a fresh approach.