How do I value a business?

Business owners want to value their business for various reasons including; purchase, sale, selling a share in, financing for a business, or attracting investors.

There are also various methods used to value businesses. Each method has its advantages and disadvantages and valuations are generally based on a combination of methods. The method used will be entirely dependent on the type of business as well as on the reason for needing the valuation.

McKern can provide business valuations for any types of business and would be happy to discuss your specific needs in person. Contact McKern to make an appointment. 

What happens if I can't pay my bills/credit?

For various reasons, be it a general economic downturn, or health and family issues, people sometimes find themselves in financial difficulty. When your business is struggling to make repayments on the existing debt and creditors, it may be time to make an appointment to come in and discuss your options. These situations are usually resolved more easily if they are dealt with sooner rather than later.  

From re-financing solutions to business management advice, to meetings with our trusted insolvency specialists, McKern can assist you to make the hard decisions for the best outcome.  

What entity should I set up for my new business?

There are many reasons to get your business structure right including asset protection, flexibility to minimise income tax, capital gains tax concessions and succession issues, just to name a few.

For many new businesses, the decision about whether you are a sole trader, Trust, Company or Partnership may not seem important in the early days but in years to come you will be relieved when you find that your business was structured correctly, and that in the event of legal action your assets were kept safe. This is also important if you eventually sell your successful business for a large profit as you will have been able to utilise all the tax concessions that are available.

Business structuring is a complex area, we would be happy to discuss your specific circumstances and provide tailored advice to address all of these areas. Contact McKern for an appointment. 

What happens to my assets when I die?

Assuming you have a valid Will, your Executor will organise to transfer your assets as per your wishes.  Any superannuation you have will be transferred by the Trustees of the Superannuation Fund, in line with any nominations you have made.  

The Executor of your estate will also be responsible for ensuring your ATO lodgements are up to date and may also need to organise Deceased Estate Tax Returns, depending on the types of assets that you have and the amount of time it takes to transfer them to your beneficiaries.

McKern can assist with all deceased estate tax matters to ensure the obligations of the Trustee have been met in accordance with the ATO.

If you pass without having a valid Will your assets will be transferred in line with the current Intestacy rules, which may or may not result in your assets being distributed as per your wishes.  We strongly suggest that you have a valid Will in place at all times, one that is regularly updated to reflect your current circumstances.

Contact McKern to assist you. 

What happens to my assets in event of divorce?

In the sad event of a divorce, a negotiation will need to take place in order to separate your assets and liabilities.  If both parties are willing to reach an amicable agreement, McKern may be able to assist with the valuation of businesses and business assets to assist with the negotiations. This can save both parties substantial legal fees, but will only be effective where the separation is amicable and the parties are agreeable.

Unfortunately, it is more common that these situations do not end amicably, and in those circumstances each party will need to consult with a different family lawyer to assist with the negotiations. McKern can provide support for the lawyers, including Interim Financial Statements, Business Valuations, Tax Estimates, CGT estimates, concession advice, etc.  Some complex business structures will require a detailed analysis to determine the value of each asset and/or entity, inclusive of any future tax implications.

Contact McKern to discover how we can assist you during this difficult time. 

I want to buy a business, what do I do next?

The first thing that you should do prior to purchasing a business should be to request copies of various Financial reports from the vendors and request a Business Valuation to be undertaken.

McKern can undertake various forms of business valuations, dependent on the type and size of the business, the structure of the business, the industry in which it operates, the geographical location and several other considerations.

If you are comfortable with the price that you have negotiated to purchase the business, another important consideration before you sign any contracts is your own structure.  McKern can provide tailored advice which will consider your individual circumstances, and address many issues, including asset protections, tax minimisation, capital gains tax and concessions, succession planning, and cost effectiveness.  Our advice will include detailed steps for what you need to do to set up and register any new entities or businesses that you purchase.

Contact McKern to discuss the next steps to buying a business. 

What do I do if I am fighting with my business partner?

Firstly, we strongly recommend anyone going into business with a partner to draw up an agreement when the business commences.  The agreement should be as detailed as possible in order to provide clarity for both parties and possibly prevent too many future business related disagreements.

However, failing the existence of a valid agreement or an agreement that deals specifically with the issues you are facing, you may need to consider the possibility of you and your business partner parting ways if you are unable to resolve the issue agreeably.

There are a number of ways this can be achieved, depending on the complexity of the business. Potential options include either partner buying the business from the other or splitting the business between the partners. Either option has many issues to be considered, including stamp duty, income tax, capital gains tax, restraint of trade issues, deferred income tax, valuation, and many other issues.

This is very complex area that is entirely dependent on your individual circumstances. Make an appointment with the McKern team to discuss your options.

What legal agreements do I need for my company?

There are various forms of legal agreements that will be necessary for different reasons and different types of companies.  If your business structure involves multiple entities, Intellectual Property, or Management Rights, you may need legal agreements in place confirming the arrangements. If the shareholders of a company will be arms-length business partners, it may also be advisable to put a Shareholders Agreement in place. This may assist to resolve any issues the shareholders may face when they have a disagreement in future years.

This is a very specific area requiring detailed advice for your needs and circumstances based on a review of your business structure. Contact McKern for an appointment. 

Do I have the right insurance for my business/business partner?

In the unfortunate or tragic event of something happening to you or someone in your family, having the appropriate level and type of insurance can make a difficult time in your life less stressful.

An important type of insurance that people don’t always consider is Buy/Sell insurance.  It is ideal for anybody with business partners and can be tailored to suit any type of business structure that you are involved in.  We can help you to identify where there is a need to consult with an appropriate professional, facilitate this, and also provide supporting information or valuations where necessary.

Although we do not hold a financial services license, and are therefore unable to advise you in relation to insurance policies and products, we strongly recommend that you speak to your insurance broker about the various types of business insurance and the level of cover you may need. McKern also works closely with several trusted insurance brokers.

Contact McKern for personalised business advice. 

How do I manage ATO bills?

McKern has met many business clients who, during financial struggles, put off their ATO lodgements and debts when they are finding it difficult to meet repayments.

In the past, the ATO were less aggressive when it came to pursuing debts and outstanding lodgements.  However, in the last few years, they have actively ramped up their actions taken on delinquent lodgers and payers. In our experience, it is always better to negotiate with the ATO early on to try and organise a payment arrangement.  The ATO will always negotiate based on your ability to pay and, in almost all circumstances, will consider remitting the interest charges.  McKern can negotiate with the ATO on your behalf to try to achieve a manageable outcome.

If you are able to get your financial information to us early, we can also provide you with certainty of the amount of any income tax or GST you will need to pay.  The earlier you have this information, the better prepared you can be when the due dates roll around.

Contact McKern to discuss your ATO relations. 

What do I need to do to account for my new rental property investment?

If you have a rental property, you will need to include any income and expenses in your income tax return each year.  When you sell the property, you will also need to include the details of any capital gain or loss you made in the tax return for that year. For Capital Gains purposes, you are required to retain the cost information (Settlement Statement, Contract etc) for a period of upto 5 years after you sell the property.

When you lodge your own tax return each year you will need to provide details of any rental income, details of any interest paid on finance, as well as invoices for any other expense that you have incurred, including but not limited to, Council Rates, Electricity, Gardening, Repairs, Insurance. 

You are allowed to claim an amount of depreciation on the building each year to represent the decline in value of the building over time. Depreciation on a typical house is significant and will result in tax savings. We usually recommend that you seek a Depreciation Report from a qualified valuer to be used each year to calculate your claim for depreciation.

Discover more about finances involving your rental property. Contact McKern

How will a new property investment save me tax?

You can obtain tax savings by negatively gearing a new property investment. For example, if you purchase a residential investment property and the interest expense each month exceeds the amount of rental income that you receive, you will have a shortfall that you will need to pay to the bank each month to cover the interest payments.  

However, as you will be making a loss on the property, in most cases you will be able to offset that loss against any other income you have earned, and save tax at your marginal tax rate.

However, there are additional costs you can claim on a rental property including depreciation and capital allowances, which will increase the tax savings possible.  Give McKern a call and we can estimate tax savings based on your personal situation.

How do I manage audits/questions from ATO/OSR (payroll & stamp duty), work cover, super?

From time to time, tax payers will be subject to an Audit by the ATO, or State Revenue (in relation to payroll tax or stamp duty) or other government authorities (in the case of Workcover).

This is a daunting experience for anyone, but assuming that you have retained all of your records you would have been advised to retain, it doesn’t have to be too difficult.

We have dealt with many of these audits for our clients and are experienced in dealing with these agencies on your behalf.  Even if you would like to handle an audit yourself, we strongly suggest that you would contact McKern (or your Accountant) first, to confirm you understand the questions or information they have requested. 

Contact McKern to discover how we can help to make this situation less stressful.