Accounting & Business
Taxation services
Financial Planning services

 

 

Whether hiring bookkeeping resources into your business or partnering with a practice, finding the right talent to work with can provide significant value to your business's finances.

Your working relationship with your bookkeeper is as important as your accountant, and it's critical that they work well together to ensure the company's books are always healthy and up to date.

From providing useful insights into cash flow and perhaps dipping into the occasional data forensics, a good bookkeeper will act as your financial Swiss army knife.

So what questions should you ask a bookkeeper before hiring them?   CPA Tracey Sharah has a comprehensive list of questions that  to ask, and her responses are laid out in detail below.

1. What qualifications do they hold?

The Tax Agent Services Bill 2008 that took effect from 1 March 2010 means that anyone providing BAS services for a fee will need to be a registered BAS agent.

At a minimum, your bookkeeper should have qualifications such as Certificate IV Financial Services. Look for someone who is a member of one of the various professional bookkeeping associations in Australia, such as The Institute of Certified Bookkeepers (ICB) or the Association of Accounting Technicians (AAT).

Finally, ensure the candidate has had vast experience in all accounting software platforms and has used payroll and inventory options.

2. What insurances do they have?

At a minimum, professional indemnity insurance is desirable.

3. Who will undertake data entry and BAS preparation work?

Establish whether the work will be consistently undertaken by the same bookkeeper or by any member of the team and whether the work will be reviewed.

4. What experience and references do they have?

References may not always be reliable, but it is worth taking the effort to do a little research before hiring a bookkeeper.

5. If the work is done in an accounting package, who retains the ownership of the data file?

Many bookkeeping organisations will process the work on their own data file, which will save you the expense of purchasing the software upfront. If in the future you wish to bring the bookkeeping in-house, the transfer of ownership will cost a nominal fee.

6. Would they maintain reliable, off-site data backups?

Make sure that no matter where your bookkeeper works, they keep accurate backups of your files in case of an emergency.

7. Who will be responsible for rectification work?

Mistakes may date back years, and corrections can be costly exercises, involving re-keying data, reworking BAS, and reviewing end-of-year financial statements. Will the bookkeeping work be redone free of charge, or will the charges be reimbursed?

8. What is required to process the work?

Before hiring a bookkeeper, establish what they will need from you on a regular basis. Do they want the receipts sorted? Are you required to write account codes or explanations on the receipts? Unless you're paying extra for mind-reading services, expect this to be the case.

9. How will they communicate with your accountant?

You need to establish how the bookkeeper will communicate with the accountant and how the accountant will charge you. Introduce your bookkeeper to your accountant, and to encourage a professional relationship between them.

10. How much will it cost?

Today, bookkeepers' work is often vastly undervalued. Remember, if you pay peanuts you get monkeys. Once you have found your bookkeeper, don't simply outsource and ignore. You need to look at your management reports on a regular basis and incorporate them into your decision-making processes.

If you're looking for a bookkeeper contact us for a referral.  Clarke McEwan also offers training to your staff and outsourced bookkeeping solutions if you prefer for us to manage the entire process.

 

Measures small businesses can take to prevent debt

As a small business, bad debt can be a financially painful and even disastrous experience, especially if cash flow is tight. When it comes to bad debts, prevention is always better than the cure, particularly when it comes to the impact on customer relations. As a small business owner, there are a number of steps you can take to prevent late and unpaid client invoices from happening in the first place.

Check their credentials:

For larger transactions, conducting a credit check on a potential customer can give you some idea of their ability to pay on time. We can provide varying levels of credit and financial reports for businesses you are considering taking on as a client or customer. It may also be a good idea to speak with industry contacts such as other suppliers or business owners. In some cases, you may be able find out about customers who have a frequent habit of making late or non-payments.

Upfront payments:

For large sales or long-term projects, it may be advisable to ask for partial upfront payments before delivering the product or service, according to Small Business NSW. For example, a business may ask for a 25 per cent upfront payment before beginning a project, with the remainder to be paid on completion.

In the event the client fails to pay in full, your business will still have recouped some of the losses. Alternatively, it may be possible to ask for staggered payments, with customers invoiced for each stage of a work project. This can be especially useful for freelancers and contractors who may need a regular source of income while working on the project.

Agree on payment terms:

Where possible, ensure you have an agreement in writing regarding payment policy. This not only provides clarification to your customers, but can also assist in the event of legal action. Invoices need to be professional and detailed, listing each specific charge and how it relates to the products or services your business provides. It is also extremely important to detail payment terms and payment options on invoices – otherwise, your customers may decide to pay by their own terms!

Offering incentives to pay on time can also be effective, such as discounts for early repayments. Alternatively, attaching late penalty fees or interest can motivate customers to pay on time or reap you financial compensation for late payments, but it may also damage the relationship with your clients.

Communication:

In many cases, customers who fail to pay on time may have simply forgotten the matter. If you don't hear back from a customer shortly after sending an invoice, follow the matter up. Send regular but polite reminders by mail or email. If the customer fails to respond, try calling. However, avoid any form of harassment or even publicly "naming and shaming" late payers – this is not only unprofessional, it can expose you to legal action.

Record keeping:

With so many other duties to tend to, small business owners can often fall behind on collecting payments. Ensure you have an efficient, up-to-date database of customers and outstanding payments. Accounting products such as MYOB usually include invoice records software, or you can use a generic spreadsheet product.

Of course, if all else fails, you can take the next step outsourcing your debt to an experienced debt collection agency. This allows you to receive more cash sooner, focus on core functions and reduce your operating costs.

IP Australia have developed a new tool, Trade Mark Assist, to help guide business owners when applying for a trade mark and protect their brand.

Trade Mark Assist is an educational tool designed to identify some of the trade mark basics, explore a proposed trade mark and identify common mistakes that may lead to a refusal to an application or a delay.

There are many things to consider when applying for a trade mark. Trade Mark Assist can help:

  • Explore a proposed trade mark
  • Discover if the proposed trade mark contains a word or phrase that may be difficult to register
  • Identify the goods and services the business owner wishes to protect
  • Searches for existing trade marks that may be a problem

Trade Mark Assist lets users search their proposed trade mark, identify what classes of goods or services they wish to protect, and identify any issues before they file an application.

A trade mark is a way of identifying a unique product or service. It's not limited to just 'a logo'; it can be a word, phrase, shape or distinctive design. A trade mark gives you the exclusive rights to use, license, and sell the mark.

For more information about applying for trademarks, visit IP Australia's website.

Disclaimer:  Trade Mark Assist is an educational tool for proposed marks comprising solely of word(s). Information provided should not be interpreted as legal advice.  At Clarke McEwan we work with a network of legal consultants to help clients with a range of legal issues.  Contact us for a referral.

Understanding the equity sweet spot

Keep that new car smell

So, you've taken the wheel of your new car. You love how it hugs the road, all the new tech and, of course, that new car smell. If only you could make this feeling last. Well, you can.

The equity sweet spot

As every car owner knows, new cars instantly lose value when they're driven out of the dealership. A car's value then continues to decline over time, but usually at a slower, more stable rate.

If you have a car loan, each repayment you make builds equity in your car. As most car loans have a five year term, by the time you're three or four years post-purchase, you'll reach a 'sweet spot' where the resale value of your car may be greater than the balance left on your loan. In financial terms, this is called being in 'equity'. If you chose to sell at this point, you may be able to pay out the rest of your loan and if there's any equity left over, you could put it towards the deposit on a new car.

But, won't my repayments increase?

That's up to you. Do you want to upgrade, or update?

If you choose to update your car with an equivalent model, your repayments could remain similar. If you upgrade to a more expensive model, however, your repayments will likely increase.

Each repayment you make builds equity in your car.

That said, you should always consider your personal financial situation and the total cost of car ownership when deciding to keep, update or upgrade your car. Slightly higher loan repayments for an updated or upgraded model may be offset by lower maintenance costs, free servicing and better fuel efficiency, for example.

Remember that older cars usually cost more to maintain than new ones. And, as new car warranties expire anytime from three to seven years after purchase, you may be left to cover the full maintenance costs of your aging car.

Do your homework

Of course, it's important to know your budget and financing options before buying a new car. With a little homework, you can enjoy that new car smell every few years – at little or no extra cost.

 

On average, small business owners spend at least 10 hours each week recording, organizing, and processing financial transactions – everything from accounts receivable and payable, to employee payments, expense receipts and supplier invoices.
While the process may be time-consuming and seem tedious, effective bookkeeping is the foundation of sound financial management – which in turn, is the lifeblood of your business.

If you are frequently overwhelmed by mountains of paperwork and complex calculations, take note of these three bookkeeping basics which will help ensure a healthy financial future for your small business.

1 - TRACK EXPENSES WITHOUT DELAY
Accurate and consistent expense tracking is crucial for claiming tax deductions and lowering your overall tax bill. Plus, analyzing expenses can offer crucial insights into spending patterns and the overall profitability of your small business.
Small business owners should consider using a mobile app for simple, consistent expense tracking. Mobile phone apps like Xero help do away with manual data entry with automated functions, including:
• Receipt data capture via your smartphone's camera (no need to hold onto paper receipts, which can get lost or misfiled);
• Synchronization with your phone's GPS to track mileage of business travel; and
• Importing bank and credit card data, plus integration with accounting software.

2- CREATE SYSTEMS FOR INVOICING & FILING
Efficient invoicing is about more than ensuring you get paid in a timely fashion. An invoice is an official record of the terms of each transaction and must be completed accurately to avoid errors in your bookkeeping process.
Here are a few tips for professional invoicing:
• Ensure each invoice includes all the important details: contact information, a tracking number, a detailed list of products or services rendered, and a breakdown of the total amount due;
• Provide an electronic receipt to reduce waste and create a "paper trail" if there's ever a dispute; and
• Maintain an invoice-filing system that records when you sent the invoice, to whom, when payment was made, and any reminders sent out.
An online invoicing tool can streamline this aspect of your bookkeeping process and provide an efficient backup filing system.

3 - SAVE TIME WITH ACCOUNTING SOFTWARE
By law, every business is required to keep organized and timely financial records. However, manually posting income and expenses to ledgers and journals is time consuming – not to mention stressful for the math-averse.
Shave some time (and stress) off your weekly bookkeeping with an all-in-one accounting software solution like SageOne, Xero, QuickBooks, MYOB or CashFlow.

Online bookkeeping offers numerous advantages, such as:
• Instant reports and real time insights on profits and loss, customer accounts, payroll – and your overall financial "big picture";
• Simplified data entry so you can collate and print invoices, purchase orders, and payroll much faster than with manual methods; and
• Improved accuracy through automation (once data is entered, the software handles all subsequent calculations and processes – including invoicing).
When it comes to accounting, vigilance is the key to mitigating risk and ensuring the long term profitability of your small business. Be sure to set aside time each day, week, and month to update and review your books to catch any red flags and ensure your finances are on track.

Should you require any additional information or want to arrange to have our bookkeeper take care of your business please do not hesitate to contact us. #bookkeepers #recordkeeping #clarkemcewan #financialmanagement

To Tick or Not To Tick

....that is the Question !

Simplified BAS makes lodging easier however there are still a few pitfalls to be aware of.  One of the more common errors we see relates to the selection required after Label G1 Total Sales.

The question prompt after label G1 is: Does this amount include GST?  at which point you either tick Yes or No.  We find that up to 50% of self-lodgers get this wrong.

 

To report this correctly, you need to consider your invoices. If your gross receipts are GST Free, the amount shown at G1 (Total Sales) does not include GST.  You select NO .  This will be consistent with the amount at 1A (GST owed to ATO) being zero.  That being the case correctly reported that the amount shown below:

 The converse is then true.  If your gross receipts are GST Inclusive, the amount shown at G1 (Total Sales) includes GST.  You select YES.  This will be consistent with there being an amount shown at 1A (GST owed to ATO)

Contact us if you need help with your activity statement.

 

Fee indexation - New fees now apply to ASIC documents

 

The statutory fees for some commonly lodged documents changed on 4 July 2018.

Annual Review fees from 4 Jul 2018 are now  $263 for a proprietary limited company and $53 for a Special purpose proprietary company.

Late penalties are now $79 for lodgement or payment up to one month late, and $329 for lodgement or payment over one month late.

From 14 July,  ASIC Registered Agents will be able to get company invoices for their registered clients online.

The fees ASIC charges for various regulatory services will change to reflect the actual cost to ASIC associated with the work. New industry funding laws that changed the way ASIC is funded took effect on 1 July 2017. Under the new arrangements, regulated entities will receive an invoice for ASIC's regulatory services delivered in the prior year.

While around 90% of ASIC's regulatory activities will be now be recovered in the form of industry funding levies, approximately 10% will be recovered via fees for service.

 

Down to the Crunch

With the end of the financial year fast approaching we're getting down to the crunch for tax planning.   McCullough Robertson Lawyers offer some practical strategies that SME's should implement by 30 June!!  

Uncertain of how to apply these suggestions? Contact us for advice now.

SMALL BUSINESSES

There are additional tax planning strategies if your business is considered to be a small business under the Tax Act.

From 1 July 2017, in order to be a small business, the turnover of the business, including connected entities and affiliates, has to be less than $10 million GST exclusive per annum.  The turnover for either the current financial year or the previous financial year can be used.

The small business turnover for accessing the 27.5% tax rate has increased to $25 million for the 2017/2018 year.

The following 3 strategies apply only to small businesses. 

1.  Instant asset write-off of $20,000

A small business with a turnover of less than $10 million (GST exclusive) can claim an immediate tax deduction for "individual" assets (including motor vehicles) costing less than $20,000 (GST exclusive), including individual assets that form part of a set.

This immediate write-off applies equally to the purchase of new and second hand assets which are used in the business.

Note that to be entitled to the deduction this financial year the asset needs to be acquired at or after 7:30pm on 12 May 2015, and ordered, used, or installed ready for use by 30 June 2018.  The Government have also proposed that, as part of this year's budget, this will be extended to 30 June 2019.  For assets acquired before 12 May 2015 or from 1 July 2019, the immediate deduction can only be claimed if the asset's value is below $1,000.

The increase in the turnover threshold to $10 million, which applies from 1 July 2016, provides an additional tax planning opportunity for many businesses that did not previously meet the definition of small business.  Significantly, the immediate deduction available for depreciating assets valued under $20,000 acquired between 12 May 2015 and 1 July 2018 (and potentially up to 30 June 2019) can be accessed by these new small businesses (rather than having the item depreciated over a number of years).

2. Deduction for pre-paid expenses

A small business can claim an immediate deduction for certain prepaid business expenses where the payment covers a period of 12 months or less and that period ends before the end of the next income year.  The most common expenses that you should consider prepaying by 30 June 2018 include lease payments, interest, rent, business travel, insurances and business subscriptions.

Note that your business must be able to make the prepayment under the relevant contractual agreement to get the immediate tax deduction this financial year - you cannot simply choose to prepay the expense.

3. Other tax concessions

A small business is also entitled to the following additional tax concessions:

  • Simplified trading stock rules, giving small businesses the option to avoid an end of year stocktake if the value of their stock has changed by less than $5,000 from the previous year; and
  • The option to account for GST on a cash basis and pay GST instalments as calculated by the ATO.

Make super contributions by 30 June 2018

From 1 July 2017, the maximum concessional superannuation contribution limits is $25,000 for all individuals regardless of their age.

Note that employer super guarantee contributions and salary sacrifice contributions are included in the cap. Where a concessional contribution is made which exceeds these amounts, the excess is taxed at your marginal rate, less a 15% tax offset for the tax already paid by the super fund on the excess contribution.

If you are self-employed and making a personal superannuation contribution, ensure you obtain the correct documentation from your superannuation fund to substantiate claiming the deduction before lodging your tax return.

In order to obtain a deduction in the 2018 financial year, the contribution must to be received by your superannuation fund by 30 June 2018 (see below).

Super contributions made by cheque or electronic funds transfer (EFT)

Care needs to be taken where last minute contributions are made by cheque or electronic fund transfer to ensure that the deduction can be claimed in the current financial year.

Where the super contribution is made by cheque and the fund receives it by 30 June 2018, the deduction is allowed in the current financial year so long as the trustee banks the cheque within 3 business days and the cheque is not subsequently dishonoured.

Where the contribution is by EFT, it is taken to be made when the amount is "credited" to the bank account of the fund and not when the transfer is made.

Unless the contribution is made between linked accounts of the contributor and the fund (held at the same bank), the deduction may be deferred to the next financial year where the funds are not credited to the super fund account by 30 June 2018.

Defer income & capital gains tax

  • Businesses that return income on a cash basis are assessed on income as it is received.  A simple end of year tax planning strategy is to delay "receipt" of the income until after 30 June 2018.
  • Businesses that return income on a non-cash basis are generally assessed on income as it is derived or invoiced. Income may be deferred in some circumstances by delaying the "issuing of invoices" until after 30 June 2018.
  • Realising a capital gain after 30 June 2018 will defer tax on the gain by 12 months and can also be an effective strategy to access the 50% general discount which requires the asset to be held for at least 12 months. The date of the contract is the realisation date for capital gains tax purposes. In some cases, the capital gain can be further reduced to Nil under the small business capital gains tax concessions. 

Family trust distributions

For the 2017/18 year, minors (i.e. children under the age of 18 at 30 June) can receive investment income (including trust distributions) of up to $416 without paying tax.  Any income earned above this amount is taxed at penalty rates.

Income received by a family trust should be allocated amongst the various beneficiaries by 30 June each year and documented by way of resolution. It is preferable that the resolution is made by 30 June 2018 to avoid any later dispute with the ATO as to whether the income was properly allocated by this date.

The exact requirements for allocating trust income are set out in the trust deed, and as each trust deed is different, it is vital that trustees are aware of the terms applying to that particular trust.

Failure to follow the terms of the trust deed and to allocate the relevant income by 30 June may result in the trustee paying tax on income of the trust at the top marginal tax rate of 49% (including 2% medicare levy).

Note also that special rules apply to the "streaming" of capital gains and franked dividends received by family trusts to particular beneficiaries, and if you wish to stream it is critical that there are sufficient "streaming" provisions in the family trust deed which allow the trustee to do so.   

Write-off slow moving or obsolete stock

All businesses have the option of valuing trading stock on 30 June 2018 at the lower of actual cost, replacement cost, or market selling value. A different valuation method may be applied for each item of trading stock.

For example, where the market selling price of stock items at year-end is below the actual cost price, your business can generate a tax deduction by simply valuing the stock at market selling value for tax purposes.

Also, in situations where stock has become obsolete at year-end (e.g. fashion clothing), your business may elect to adopt a lower value than actual cost, replacement cost, or market selling value, provided the value adopted is reasonable.

Maximise depreciation claims for non-small businesses (i.e. turnover >$10M) 

  • An immediate deduction can be claimed for assets costing less than $100 GST inclusive (e.g. minor tools).
  • A tax deduction can be claimed for depreciable assets that are scrapped or sold for less than their written down value.
  • Assets costing less than $1,000 GST exclusive can be allocated to a "low value pool" and depreciation claimed of 18.75% for 2018 (37.5% thereafter) regardless of when the assets were acquired during the income year.

Claim deductions for expenses not paid at year end 

All businesses are entitled to an immediate deduction for certain expenses that have been "incurred" but not paid by 30 June 2018 including:

Salary and Wages: A tax deduction can be claimed for the number of days that employees have worked up to 30 June 2018, but have not been paid until the new financial year.

Directors Fees: A company can claim a tax deduction for directors fees it is "definitely committed" to at 30 June 2018 and has passed an appropriate resolution to approve the payment. The director is not required to include the fees in their taxation return until the 2018/19 year when the amount is actually received.

Staff Bonuses and Commissions: A business can claim a tax deduction for staff bonuses and commissions that are owed and unpaid at 30 June 2018 where it is "definitely committed" to the expense.

Repairs and Maintenance: A deduction can be claimed for repairs undertaken and billed by 30 June 2018 but not paid until the next income year.

Write-off bad debts

If your business accounts for income on a non-cash basis and has previously included the amount in assessable income, a deduction for a bad debt can be claimed in 2017/18 so long as the debt is declared bad by 30 June 2018.

Your business will need to show that it has made a genuine attempt to recover the debt by 30 June to prove that the debt is bad.  It's preferable that this decision is made in writing (e.g. a company directors minute).

Your business can also claim back the GST paid on debts that have been written off as bad, or where not written off as bad, the debt has been outstanding for 12 months or more.

Personal services income rules

If you conduct a business through a trust or company structure that relies on your personal effort and skill to generate the income, there are different rules that apply to the diversion of some or all of that personal services income.

For example, if your company earns personal services income, the ATO can treat the income as having been earned by the individual rather than the entity that earns the income, unless certain tests can be satisfied.  The personal service income regime also denies particular types of deductions which would otherwise be available to a business.

#2018taxplanning #smallbusinesstips #endoffinancialyearplanning

Our thanks to McCullough Robertson Lawyers for this insightful content .

Time Management - Is it a Myth?

Do you feel the need to be more organized ?   more productive?  Is your day spent in a frenzy of activity and afterwards you wonder why you haven't accomplished much?

 

Time management is learned and by instilling some basic tips you can increase your productivity while staying Calm, Cool and Collected. Here's how:

 

Real time has only 24 hours

This is the first thing you have to understand about time management is that no matter how organized you are, there are always only 24 hours in a day.   Time doesn't change.  All you can actually manage is yourself and what you do with the time that  you have. Appreciate this. Internalize it. And move on as soon as possible to the next tip.

  

  The Time Wasters

Many of us are prey to time-wasters that steal time we could be using much more productively. What are your time bandits? Do you spend too much time 'net surfing, reading email, Facebook posting, texting, or making personal calls?

In a survey by salary.com , 89 percent of respondents admitted to wasting time every day at work:

31 percent waste roughly 30 minutes daily

31 percent waste roughly one hour daily

- 16 percent waste roughly two hours daily

-   6 percent waste roughly three hours daily 

 2 percent waste roughly four hours daily

So if you suspect you may have fallen into a time-waster pattern, try tracking your daily activities so you can form an accurate picture of how much time you spend on various activities, the first step to effective time management.

  

A Change to Behaviour

Remember, the focus of time management is actually changing your behaviours, not changing time. A good place to start is by eliminating your personal time-wasters. For one week, for example, set a goal that you're not going to take personal phone calls or respond to non-work related text messages while you're working. 

 

Find a system that works for you

Whether it's a Day-Timer, a software program or a phone app, the first step to physically managing your time is to know where it's going now and planning how you're going to spend your time in the future. A software program such as Outlook, for instance, lets you schedule events easily and can be set to remind you of events in advance, making your time management easier

 

Prioritize ruthlessly and stick to it 

    You should start each day with a session prioritizing the tasks for that day; set your performance benchmark. If you have 20 tasks for a given day, how many of them do you truly need to accomplish?

    Learn to Delegate or Outsource    

   Delegation is one of the hardest things to learn how to do for many business owners. No matter how small your business is there's no need for you to be a one-person show. You need to let other people carry some of the load.

   Establish Routines & Get in the Habit of Setting Time Limits for Tasks

   For most people, creating and following a routine lets them get right down to the tasks of the day rather than frittering away time getting started. If a crisis does arise, you'll be much more productive if you follow routines most of the time.

 Finally, set a limit of one hour a day for certain tasks and stick to it.  For instance, reading and answering email can consume your whole day if you let it.

 

 

A well documented business plan can be an effective management tool if it is designed to suit the structure and needs of your business.  Putting one together need not be as complicated as it sounds.  There is no set formula that you have to follow and each business will have different points to address and elaborate on.

To design your own business plan you first need to  identify the reasons why you need planning.  Sometimes a concept that starts as a rough idea needs to be fleshed out and certain criteria to be identified before it can move forward.   The most effective approach could be to set business goals and objectives, establish performance benchmarks, and communication to people inside or outside the business.

Sample Business Plan Structures

A business plan usually serves a number of purposes. It is a good idea to identify the purposes you'd like your business plan to achieve because this could affect how you choose to structure and write your plan. For example, you're likely to focus on different information depending on whether your plan is intended as in internal document for management to refer to, or for raising finances from an external source.

Use the three business plan structures in the table below to find the best structure for your business. Because there is no set way to structure a business plan, the format is one of personal preference. You might find one outline is more suited to your business than another.

 

Structure 1

Structure 2

Structure 3

Cover page

Cover page

Cover page

Table of contents

Executive summary

Brief statement

Executive summary

Table of contents

The market

The Business

Business overview

Personnel skills and resources

Marketing

Market overview

The benefits of your product

Staffing

Business goals/objectives

Business goals/objectives

Purchasing

Requirements overview

Long-term plans and needs

Production

Operations overview

Financial targets

Finances

Sales and marketing overview

Business history

Supporting documents

Financial overview

Supporting documents

 

If you're writing your business plan as part of the process of applying for a loan, it is a good idea to include a one-page cover letter. The cover letter should include the following.

  • The type of loan you are looking for
  • The amount of the loan and period you wish to borrow the money
  • What you need the money for
  • A reference to the business plan attached

If you are applying for a loan, you will probably also need to include more detailed personal information, including your tax returns, bank account statements, assets, liabilities and other business interests.

Writing your business plan

Keep your business plan as short and simple as possible. Use simple language and short sentences so that it is easy to understand, and edit your draft to remove unnecessary words. Use bullet points or tables if this makes ideas easier to read or understand.

Present your facts and information so that they flow logically rather than jump around, and make sure that the information presented in different sections supports each other. You don't want to present information that does not add up or raises questions about the accuracy of your plan.

Do not give in to the temptation to overstate the truth, and bear in mind that the figures you present will need to back up the words in your business plan.

Start by jotting down points and ideas under each of the headings you plan to include in your business plan. Then sort these ideas so that there is a logical flow. At the same time, look out for any gaps or weaknesses and fill them in with the necessary research.

Start writing your business plan as soon as possible and keep refining and editing your work to keep it as short, simple and easy to understand as possible.

Writing your executive summary

Your executive summary is a very important part of your business plan. It is the first section people will read, and provides a brief but complete overview of your entire business plan. Because it contains reference to the entire business plan, the executive summary is usually written towards the end of the business plan writing process.

Your executive summary should be less than three pages, simply written and to the point, with an emphasis on the key issues of your business plan and a focus on the areas that will make your business successful in a competitive market.

Use your plan's table of contents to map out your summary, and elaborate on the areas that are important. It is a good idea to end your executive summary with a short statement of why your business is poised to be a success.

The table of contents

The table of contents will appear before or after the executive summary. It is a list of headings with page number references that help your reader locate specific information in your plan. The numbering of the headings in your table of contents is one of the last things you will do when finalizing your business plan.

The presentation of your business plan

The presentation of your business plan could be one of the first impressions someone gets of your business. It is a good idea to include a cover page and to bind your business plan with a cardboard or plastic front and back cover so that it is professionally presented.

It is also important that the layout is neat and professional looking and that the pages are numbered. Spend a little extra time on the presentation of your business plan to ensure it presents your business in the best possible light.

Does my business plan need an external review?

Your business plan does not need to be approved or verified by anyone, but it is a good idea to let a few people read your draft business plan before you finish it and print it out.

Paying to have your business plan professionally proof read will ensure that it is free of embarrassing spelling and grammatical errors. Asking your accountant and a few business acquaintances or mentors to read through your plan will also help to identify any inconsistencies or gaps in the information.

***

 


Contact Clarke McEwan