Is your practice roadmap on target?

Accounting News

Is your practice roadmap on target?

By Peter Towers – ESS BIZTOOLS Pty Ltd

Did you catch the May 2022 Accounting Market Pulse Report by CommBank?

According to the report, Business Advisory Services were rated as the top product that accountants were planning to offer in 2022/23. So how’s your business shaping up to meet this rollout?

The CommBank report also identified how firms were having to provide a range of initiatives and incentives in their battle for Talent Attraction and Retention.

In another industry report, The Access Group recently noted that motivated staff are more likely to drive positive revenue growth. Practices with highly motivated people are significantly more likely to meet and exceed their revenue targets, compared to those whose staff have low morale.

This study supports the comments of Australian Accounting Guru, Andrew Geddes, former Chair of an ASX top 200 company (Green Cross Ltd). In a previous Accountants Minute edition, Andrew emphasised the problems that some accounting firms were having in attracting and retaining young accountants.

In his observation of the industry, Andrew claimed there were enough young accountants available in the marketplace, however they had chosen not to work in accountancy firms, because they had been asked to do tax compliance work only. He said many firms set the productivity target for compliance work at 80%.

According to Andrew, this has caused many young accountants to say “I’m not sure I want to work in that sort of environment.”

Andrew Geddes’ recommendation was that partners in accountancy firms need to take their younger accountants out of the office with them on client visits so they can see the process and the outcomes their stakeholders want and need.

The reality is that accounting firms have got to pay young accountants more, teach them well and, even more importantly, the partners and directors need to make themselves available as mentors.

Furthermore, Andrew said that it was important for younger accountants to work with partners and other experienced accountants as their ‘shadow’ when they were dealing with clients. This way, they can learn the real issues within a business and how to communicate with clients. In doing this, they will get significant experience to develop their skills base and provide interesting and challenging work for them. Taking this type of action will help accountancy firms overcome the problems of retaining valuable talent.

The Access Group commented on key drivers of practice growth and how to engage with their people saying:

“Practices with little to no turnover of staff saw higher likelihoods of being able to achieve their revenue targets compared to those with high employee turnover rates.”

These insights point to the critical nature of retaining valuable Intellectual Property (IP) and client relationships that your people develop in their time at your practice.

They went on to say, “Practices with clearly defined client profiles are more likely to exceed their revenue targets.”

US accountant, Adam Hale, Partner of Summit CPA, emphasises the need for accountancy firms to look for opportunities to become “an expert” and specialise in a few industry niches, so that their knowledge of that specialty is “1 inch wide and a mile deep.” Adam has been featured numerous times in our Accountants Minute as the pioneer of virtual CFO services, which have grown rapidly in America over the past two years and are starting to be accepted as a valuable concept by SMEs here in Australia.

There are significant opportunities offered by client specialisation. The Access Group has noted that, “Once a practice has a clearly defined client profile, they are able to explore the opportunities to specialise in niche products, industries or professions to help unlock further efficiency, referrals and overall business growth.”

In other words, specialising in a particular market segment and building a reputation around that knowledge makes you and your team far more valuable.

The Access Group’s study found that more than 1 in 3 practices surveyed (38%) currently specialise in certain client segments, including:

• e-commerce and retail
• agriculture
• building and construction
• hospitality
• family-owned businesses

This study found that accounting practices that specialise in handling specific client areas are 20% more likely to exceed their revenue targets compared to those that don’t have any client specialisation.

It further reinforces the opportunities for accountancy practice to grow by better understanding their market, optimising their systems and processes and enabling people to maximise their potential.

“Practices with CRM’s are more likely to meet and exceed their revenue targets”, according to The Access Group. The report went on to comment that only 14% of the surveyed practices have a CRM that’s used in its entirety. The group stated that firms wishing to offer Business Advisory Services benefit significantly from the regular use of their CRM, recommending “actively requesting referrals and leveraging digital marketing leads”.

Implementing a system to maximise the opportunity to generate referrals is a key feature of the sales articles in The BOSS Factor Library for Accountants, produced by our affiliate, Marchant Dallas Consulting.

Click here if you’d like to see details of their range of articles relating to commercial business operations.

A system for referrals is very important for accountants offering a broader range of services.

Keeping your practice at the forefront of your client’s mind is a crucial part of the “total package” that accountancy firms need to implement.

Your toolbox for keeping in touch with clients should include regular e-newsletters, websites that are updated on a regular basis, and even podcasts that feature members of the accounting firm discussing issues with clients and experts, like bankers. Anything is helpful, as long as it’s relevant to your clients.

Communications is a specialist service that many firms have found is best outsourced to an expert, such as our Affiliate, Brad Smart, a long-time media consultant and author of “Selling the Message”.

Click here for details of Brad’s e-newsletter package offer.

Let’s now return to the question that we posed at the beginning – Is your practice roadmap on target with implementing Business Advisory Services? I hope it is.

If any sections of this article have raised questions you’d like answered, we’d be happy to talk to you.

Please visit our website www.essbiztools.com.au, or our grant website www.essbizgrants.com.au, so that you can get a better idea of the services that we offer to Australian Accountants and Bookkeepers. With decades of experience, our team has an in-depth knowledge of Australian accounting and business operations for both publicly listed and private companies.

If you are interested in finding out more, click here to book a complimentary Zoom meeting with Peter Towers, our Managing Director, to get a better insight of how ESS BIZTOOLS can help your firm broaden the range of services that you can offer to your SME clients.

Small business relying more heavily on accountants: Xero

Survey finds more practices support their clients with wide-ranging advice as a result of deeper ties forged during the pandemic.

Small businesses are relying more heavily on their accountants since the pandemic and increasingly want advice on a range of non-traditional topics such as human resources and sustainability, according to the latest Xero survey.

Its State of the Industry report also reveals the changing shape of accounting with a majority of firms either merging or starting a new practice in the past year and many citing staff shortages as the reason.

Xero country manager Will Buckley said small business had a lot to navigate this year supporting them was an important responsibility for the industry.

“The findings from Xero’s research highlight more clearly than ever the critical role accountants and bookkeepers play in keeping small businesses up and running — not just with their finances but now in other business-critical functions as well,” he said.

CLICK HERE to read more from Accountants Daily.

If you are interested in supplying advisory services to your clients and prospects, yet you realised that you will need a significant amount of resources (articles, videos, training webinars, training resources, mentoring, helpline, etc), ESS BIZTOOLS can help.

 We have resources to assist accountants and bookkeepers introduce a broader range of services.

 Click here to visit our website, to familiarise yourself with the wide range of resources that are available to help you introduce these important services that will assist your SME clients to add value to their businesses.

 Interested in finding out how these products can assist you?

 Give us a call on 1800 232 088 to arrange a free strategy and demonstration session at a date and time that suits you.

 We look forward to hearing from you.

Seed grants open to support research translation

$10 million in grants funding is now available to researchers looking to commercialise their work through Australia’s Economic Accelerator initiative.

The seed grants, which opened to applications on Monday, will support “projects seeking to confirm proof-of-concept on research ideas pursuing a commercial outcome”, Education minister Jason Clare said.

Funding is targeting four priority areas: renewable and low-emission technology, medical science, resources, and agriculture, and forestry and fisheries. Project impact can also be demonstrated by applicants by identifying “alignment with a National Reconstruction Fund priority,” according to the program guidelines.

CLICK HERE to read more from Innovation Australia.

ACCOUNTANTS DAILY ARTICLES

Employsure to pay $3m fine for misleading ads after ACCC appeal

Court raises fine on human resources supplier for falsely representing that it had government approval.

Employsure, an HR specialist for small business, has been fined $3 million for making false and misleading representations in its online adverts following an appeal by the Australian Competition and Consumer Commission (ACCC).

The Full Federal Court found the original fine of $1 million imposed in November 2021 was “manifestly inadequate” and raised it to $3 million, as well awarding costs to the ACCC.

Employsure engaged in “misleading or deceptive” conduct with Google adverts that misrepresented the company as having government sponsorship or approval, the court found.

“[Employsure] represented to business owners that Employsure is, is affiliated with, or is endorsed by a government agency when, in fact, Employsure is a private company that has no affiliation with, and is not endorsed by, any government agency,” it said.

CLICK HERE to read more.

Where the Guardian appeal was won and lost

The court’s decision highlighted the differences between s100A and Part IVA.

The facts

Guardian AIT Pty Ltd was the trustee of the Australian Investment Trust (AIT), a discretionary trust of which Mr Springer was the “principal”. AIT Corporate Services Pty Ltd (AITCS) was incorporated with all its shares held by Guardian and was then appointed as a corporate beneficiary of AIT.

Broadly, in each of the 2012 and 2013 income years:

• Guardian as trustee of the AIT made AITCS presently entitled to income which was not physically paid thereby creating an unpaid present entitlement (UPE).
• AITCS drew part of the UPE to fund its tax liability and then declared a fully franked dividend back to AIT, which was paid by offsetting the balance of the UPE.
• AIT then appointed the income comprising the fully franked dividend to Mr Springer, a non-resident individual (and no further tax was payable).

The Commissioner assessed Guardian as trustee for the AIT under s100A and s99A and in the alternative made determinations under Part IVA and assessed Mr Springer. The primary judge found that neither s100A nor Part IVA applied. The Commissioner appealed to the Full Federal Court submitting that s100A applied to the 2013 year and that Part IVA applied to the 2012 and 2013 years.

 CLICK HERE to read more.

How the Guardian case shines a light on reimbursement agreements

In a seminal decision about how s100A applies to trust distributions, the Federal Court rejected the ATO’s position.

On 24 January, the Full Federal Court handed down its much anticipated decision in Commissioner of Taxation v Guardian AIT Pty Ltd as trustee for Australian Investment Trust [2023] FCAFC 3. It will become a seminal decision in the interpretation of both section 100A ITAA 1936 and Part IVA ITAA 1936.

When applicable, s100A results in the trustee of a trust being assessed on a distribution that was made to a beneficiary of the trust at the highest marginal tax rate on every dollar of the distribution. In addition, the ATO could apply penalties. This can result in a significant tax increase for a family group.

In the Guardian case, the ATO lost its argument regarding s100A due to the absence of a “reimbursement agreement”. However, it did win its Part IVA argument in relation to one year of income. This article focuses on the implications for s100A.

CLICK HERE to read more.

Why concerns linger over s100A final ruling

The ATO improves its guiding documents on trust distributions, but too much remains uncertain.

Section 100A of the Income Tax Assessment Act 1936 (ITAA 1936) is an anti-avoidance provision that has been in the law since 1979 and applied since 1978. It was originally designed to prevent aggressive trust-stripping arrangements but the deliberately broad drafting of the provision encapsulates arrangements long thought to be outside its scope.

Broadly, s100A will apply to an arrangement where all the following criteria are satisfied:

• A beneficiary of a trust (who is not under a legal disability) is presently entitled to a share of the trust income, and is therefore assessed under section 97 of ITAA 1936 on that share of the trust’s net income
• That present entitlement arises in connection with a reimbursement agreement — a reimbursement agreement is an agreement (whether or not written) that provides for money to be paid, property transferred, or services or other benefits provided to someone other than the beneficiary
• At least one of the parties to the reimbursement agreement entered into it with a purpose of reducing or deferring someone’s income tax liability
• The arrangement was not entered into in the course of an “ordinary family or commercial dealing” (the primary exception)

The effect of s100A is to treat the beneficiary as never having been presently entitled to the share of trust income. This results in that proportionate share of the trust’s net income being assessed to the trustee under s99A of ITAA 1936.

Few s100A cases have come before the courts over the past 40 years, and those that have were characterised by practitioners as being of the more egregious kind. Together with the legislative exception, this historical context contributed to the false notion that the provision doesn’t apply more widely and is therefore not relevant to ordinary families.

CLICK HERE to read more.

Grants Update

There are number of grants for which your SME clients might be eligible.

Want to know what they are? Click here for a list of current grants, prepared by ESS BIZTOOLS.

ESS BIZTOOLS Podcast

Our podcast channels are available to access at different platforms. Click on your preferred platform to access.

Business Advisory Services Podcast

The latest episode of our ESS BIZTOOLS Business Advisory Services Update Podcast, which will be available on Thursday 16 February 2023, will discuss on how to use The BOSS Factor Library for Accountants to develop your accounting firm.

In the meantime, feel to listen to our previous episodes at your preferred platform (Apple Play will be available soon):

Accountants Minute Podcast

The latest episode of our ESS BIZTOOLS Accountants Minute Podcast is available on Wednesday 15 February 2023. Click on your preferred platform to listen:

ESS BIZTOOLS Webinars

Upcoming Webinar – Click to Register

Assisting SMEs on the Innovation Journey – Wednesday 22 February 2023 at 11am AEST

Previous Webinar – Click to Watch

The BOSS Factor – featuring Trevor Marchant

Want to know more?

Visit www.essbiztools.com.au. You are also welcome to visit www.essbizgrants.com.au, a website that can assist in the identification of government grant(s) suitable for your clients.

If you would like to have a discussion about how this concept of virtual CFO services can be supplied by Australian accounting firms please ring our Managing Director, Peter Towers, on 1800 232 088 and we will arrange a complimentary 15-minute Zoom meeting to discuss your firm’s position and to give you our advice.

We believe that this is the blueprint for the delivery of an enhanced range of services by Australian accounting firms to assist SME businesses to add value to their businesses and to assist accountants not only to attract but to retain outstanding talent who want to be involved in the delivery of “real accounting services”.

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