In our own experience, and in our observations of other business owners, a number of particular attitudes need to change if we are to succeed at – and enjoy! – running our own business.

The main change in attitude is to ‘let go’ of the relationship between time and reward. If you are an employee, you make a basic deal with your employer. You sell them your time. They use that time to get the work done. But if the work cannot be completed in the time allotted, the employee does not have to do it. Yes, if a conscientious employee will usually be happy to work extra time, or extra hard, to get the job done. But, if the work is too much to be completed in the time available, then some of it remains incomplete. The employee can go home.

This is not what happens in your own business! Pretty much everyone who starts or buys their own business works longer hours, at least in the early days. We are sorry if that is bad news – but the business that you can run working four hours a week is elusive (and it certainly will not be the first business that you run). Most businesses need active management, especially in the early days. So, if you are a new business owner, be prepared to work longer hours. No one is buying your time any more. You simply have to do what needs to be done.

The other major mental adjustment can sound a little contrary to this advice. As employees, we tend to learn to measure our output by the amount of time it took. So, if one week we find that we have worked 50 hours, not 40, we tend to think we must have done more work. And if we are being paid by the hour, that makes sense.

But in business, time is not the most important measure. Quality is much more important. A lot of new business owners spend a lot of time on things that don’t need to be done. They are still using time as an indicator of performance. This can be a real trap.

Let us give you an example. A common mistake business owners make – still! – is to do their banking manually. A common method is to allow customers to pay by cash or cheque, and then drive to the bank two or three times a week, stand in the queue, fill out the deposit slip and hand over the cheques.

That’s why direct debit was created! Using direct debit, or Paypal, or some other form of electronic payment, means you need merely to ‘log on’ to your internet banking site to confirm if customers have paid. Indeed, modern accounting software can basically do that for you, too.

Paying by direct debit is usually easier for customers too – they too can just log on to their banking site and, with a few clicks, no postage and no trip to the post office, pay their bills and create their own record of payment. That is why the Reserve Bank has just announced that paying electronically has become much more popular than using cash.

The point is that physically going to the bank does not change the quality of your money management process: the money still ends up in the same bank account.

Spending time doing anything that does not improve quality is a waste of time. If you run your own business, time is your scarcest resource. You need to manage it accordingly. So, measure your business effort by how much you get done, not by how long your spent doing it. That is the best way to make your business fly.

If you would like more information on payroll tax contact MartinCo Today

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We love family homes. For a start, we love families – and families live in family homes. What’s more, enjoying your home is the easiest way to enjoy life in general. A happy home – and a home you are happy with – is an essential part of a happy life.

But that is not the only reason we love helping people get the best family home they can afford. Family homes are not just great places to live. History shows that family homes are also cracking investments. Over the last 20 years Australian property has averaged a return of more than 9.5% a year, including both rents and capital gains. That means that house values doubled every seven or eight years. (Yes, these are average figures across the country and not every market did this well. But all markets did at least quite well over that time period).

Things are even better when gearing is involved. ‘Gearing’ is a fancy word for borrowing – and most people borrow money to buy their family home. If you start with 20% equity (and borrow the remaining 80% of the purchase price), and the house doubles in value, then the value of your equity increases to 60% of the increased value of the house.  The proportion of debt halves when the value of the property doubles.

But that is not all. Even better is the fact that the family home does not attract Capital Gains Tax (CGT). This means that you do not pay tax when selling a home that has increased in value. This is a central plank of Australia’s taxation system and it is not going to change any time soon.

Combine this tax treatment with the long-term results that Australia’s housing market has achieved, and you find that most Australians are living in tax-free investment machines. For example, if you are in the 45% tax bracket and you own a $1,000,000 property and it goes up in value by just 5%, or $50,000, that’s the equivalent of earning an extra $92,500 a year in pre-tax salary. This is because you would have to earn $92,500 and pay tax at 45% to be left with $50,000 in cash. What’s more – you can’t live in cash. That is why houses are usually better places to hold wealth than cash.

The last 20 years has seen constant growth in the value of Australian homes, with Perth being an exception in the last few years (having grown by more than the national average prior to the tailing off of the mining boom). This has a lot to do with our constantly growing economy (we have not had a recession for 25 years now). In addition, immigration has been a particularly important driver of the national economy. And guess what? People still want to come to live in Australia. That won’t change any time soon.

The Australian obsession with home ownership is likely to continue. It makes sense to invest wisely in the home. We strongly encourage home ownership strategies, and their close cousin, debt management strategies, whenever we meet with a client. Even if the rate of growth slows (or we get a negative year or two), long term the right housing purchase turns out well. What’s more, this ‘investment’ gives you a place to live as well.

(One word of clarification: when we say housing we do not mean high rise apartments. Their economic future is very different to homes and units in small blocks).

And our advice is not just about homes for clients. We also help with homes for the children of clients and even sometimes the grandchildren of clients. Indeed, it is these adult ‘kids’ that our clients tend most to worry about. “How will our kids ever afford their own home?” is one of the most common things we are asked. In our blogs and ebooks for this month and next, we will discuss various ways to make buying and holding property as easy as possible. And we will not just focus on your home. We will look at ways to help other people – typically your kids – own their homes as well.

Feel free to contact MartinCo now and we can talk you through ways that make home ownership much more achievable for you and the people you care about.

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At MartinCo, we pride ourselves in being friendly, accessible accounting specialists who make it our business to make your business more successful. We work alongside you to build wealth and help you reach your financial goals.

You can find out all the information you need about working with us using our comprehensive suite of accounting services. For more information about us and on other parts of our business click the links below.

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Please take the time to browse our site and get to know us and how we can help benefit you, your family, your business and your retirement.

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Our Business Include:

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• Financial Advice
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