At a glance
Mark Morris CPA
Principal Morris & Associates, Melbourne
What will it cost to get tax advice?
It is always important to manage client expectations, including the time it will take and the cost to provide a considered written tax advice. Because it will be billed on an hourly basis, make your schedule of fees clear before you start any work, but convey that any fee is merely an estimate based on the number of hours expected to take to complete the assignment.
However, once a client accepts a fee estimate, to maintain trust it is important as far as is practicable to stick to the quote.
When can I get the advice? I really need it tomorrow!
It is crucial that work be turned around on a timely basis, but tax law is also complicated and always changing. Therefore, it is essential to balance any need to quickly respond to a client against ensuring that the advice given is technically correct, comprehensive and understandable.
For example, according to the ATO [Australian Taxation Office] 90 per cent of practitioners get their small business concessions wrong. Sometimes it may be better to forego a fee than risk a significant professional indemnity exposure by rushing an advice, particularly given that in practice the perceived deadline may not be a real deal-breaker.
Why should I go to you if another practitioner charges less?
All practitioners need to recognise that there may be a competitor willing to charge a lower fee. Because I believe the fees I charge are reasonable given market rates, I am prepared to walk away from a job rather than compromise the quality of advice.
If someone is just fixed on fees, it should raise a red flag. A key part of the client engagement process involves educating the client on the complexity of a matter and the imperative to get it right in full compliance with the law.
Tanya Titman FCPA
Founder and managing director Consolid8, Brisbane
Where did my profit go?
This is a typical question we get from clients running successful businesses. They need to pay tax on their profit but the money is not in their bank account.
To answer this, we work through the client’s balance sheet, reviewing the difference between the figures in last year’s balance sheet and this year’s. It’s often an illuminating conversation as the client starts to understand how they've spent the business’ profit. It is also a great opportunity to educate clients about the difference between profit and cash flow.
Should I buy or finance?
The business advisory team at Consolid8 is asked this all the time. The answer will vary depending on a client’s circumstance but we usually recommend conserving cash and financing through the business. We refer to cash as the “oxygen” a business needs to keep running day-to-day.
We work with clients to build a cash reserve to help them trade through lean months. Taking the pressure off cash flow allows business owners to think in a more proactive and strategic manner and is also an opportunity to educate them about “good debt” (tax-deductible debt) and “bad debt” (non-deductible debt).
How can I fund growth?
What a great conversation to have with clients. In educating our clients about options for funding business growth we get to calculate how much working capital they need to fund that growth. It requires us to project forward at least three months to assess the impact of carrying the extra funding costs before the client returns to a breakeven position.
We assess if the client can tolerate a cash deficit and work out the percentage lift in turnover required to justify the funding, which is an exciting dialogue to have.
Jason Cunningham CPA
Founding partner The Practice, Melbourne, Sydney
How can I be more successful?
Most business owners know they should be more successful but are just too busy and say they don’t have enough time. I say, you have to make the time – extricate yourself from the business, get away on your own, remove yourself from the day-to-day and work on your strategic plan.
Firstly, book time out in your diary well in advance. Second, book a flight and accommodation. Third, switch your phone to aeroplane mode so no one can contact you.
It is impossible to think strategically, be a visionary or to find purpose from behind a desk. Seek some space, clear your head and have a crack.
What am I going to do when I’m done?
My answer is to begin with the end in mind, to build a business that is ready for sale even if you don’t want to sell it. If you have amazing profitability, fantastic cash flow, clients that are a delight to work with, unbelievable team members and the business does not rely on you for it to operate, someone will give you a big cheque to take it off your hands.
The irony is that when you get to that point you won’t want to sell because you will have the time to enjoy what you’re doing day-to-day.
How can I grow my business?
Typically, in most businesses and professions people will do business with you for one of three reasons. These account for about 90 to 95 per cent of our [The Practice] clients. So, be nice to people and engage with them, because if they like you they will do business with you.
Second, ensure you have a system in place that encourages existing clients to refer you more business, and third, become known as an expert in your field.
What are your most frequent client questions? Share them with us and they might feature in an upcoming edition of INPRACTICE. Email [email protected]