Why estate & inheritance planning is so important

Imagine how you would feel if you lost all of your hard earned assets & wealth to a 3rd party or to your offspring’s estranged spouse?  Not a pleasant thought is it?

It’s a scary thought but so many families leave their inheritance and estate planning to chance.  This article introduces some increasingly popular asset protection, estate planning and tax reduction strategies to protect and manage a family’s assets.

Trusts originated in feudal England centuries ago when the King rewarded his Knights with land after they returned home from battle.  To protect their estates from outsiders, the Knights bequeathed their estates to their trusted fellow Knights for them to control their estates for the benefit of their loved ones.

Not much has changed since in asset protection and estate planning.

A family trust is simply a legal obligation created by a person (“Settlor”) who gives the assets in control to another (“Trustee”) for the benefit of another (“Beneficiary”).  A trust deed is formed to document the “rules” that the trust must operate within.

The more common reasons for establishing a family trust include:

• Offering asset protection for family members by transferring ownership of some assets to a trust (commonly the family home).  Some business owners may be exposed to high levels of risk and may decide to protect their family home from future creditors
• Providing some level of estate planning by ensuring certain assets (for example: the family home, business or farm) are transferred intact to the next generation
• To make sure some assets are retained for other family members when one, or more of them needs rest home or hospital care
• To protect family members or a family business from possible relationship property or family protection (contesting a will) claims
• To manage the assets of someone who is unable to manage their own affairs, perhaps through age or infirmity
• To manage tax liability through income splitting

If you would like to establish a family trust, it’s important that you understand your trust and what trustees are responsible for before you establish it.  You should talk to your accountant or solicitor to ensure that the terms of your trust fully meet your needs & fulfil the intended purpose and will not be exposed to tax authority scrutiny.

You should assess whether a family trust is a suitable vehicle to meet your objectives.  You should also weigh up the advantages and disadvantages of your various options, including any ongoing management compliance costs of each. Your accountant or solicitor will be able to help you determine what is required to meet your needs.

Like many professional people, your accountant or solicitor charges for their time, experience and skill in looking after your affairs.  Ask them at the outset how much it is likely to cost or tell them that you don’t want to spend more than a specific amount.
 

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5 tips to work more effectively

Most business owners feel like they could work more productively throughout their work day. By implementing strategies to help you work more effectively, your business revenues should improve over time.

Here are 5 tips to help you to work more effectively and productively throughout the day:

Automate Your Systems
Automation is the key for many businesses success. Simple tasks such as responding to a customer’s question or comment can be performed online through an email auto-responder.

You can use an automated phone system to provide customers or potential customers with valuable information instead of spending time on the phone providing the same answers multiple times throughout the day.

Marketing campaigns can be automated and your time management systems can be automated with simple to use software programs.

Wherever you can automate a system, there will be a time and cost saving transformation to your business.

Implement Time Management Strategies
Good time management skills are at the core of any successful business. It is important to consistently identify and remove any time wasters that are present in your day.  Common time wasters are reading emails, surfing the internet, taking phone calls throughout your day and an unorganised schedule.

Remove any distractions that you currently have and start each day with a specific plan to complete the most crucial and highest revenue producing activities.

Time management is an active skill that requires constant attention and modification for it to be effective in your business. 

For more information on how to prevent those “time-stealers” visit www.secretstobettertimemanagement.com

Outsource
If there are activities that you complete throughout your day that could be performed by someone else, you are costing yourself valuable time and money if you are doing them yourself.

Start outsourcing slowly by choosing administrative tasks that you can delegate to someone else and then eventually you can build systems to continue to outsource work.

To learn more information about how to leverage outsourcing, click here to read one of my latest articles.

Track your Data and Results
Data about your business and its performance is vital to helping you make business decisions on a daily basis. Ensure that you are collecting and reviewing your business data on a daily basis for to facilitate your business’ optimal performance levels.

Organise your Work Space
Your business work space should be organised and uncluttered. If your work area is messy, you will spend valuable time looking for things instead of working on things.

Your desk area should also include the vital tools that you typically need throughout your day to avoid time wasted walking to another side of your home or the office to complete a given task.

Begin with these 5 strategies to help you work more effectively and productively in your business TODAY! 

Discover how you can take a control of your time at www.secretstobettertimemangement.com

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The difference between a margin and a mark-up

I am often asked what the difference is between a margin and a mark-up. 

They actually refer to the same thing and it really depends from what perspective you are looking at. 

A margin is the difference between the cost of your product and how much you sell it for.  Mark-up is the amount you add to the cost of your product to arrive at a selling price, so the 2 amounts are actually the same.  However, the difference as a percentage are NOT the same.

Let’s look at an example:

You buy a product for $10 and sell it for $14 and therefore your profit is $4.

The profit margin is 28.6%, which is $4 / $14 

The mark-up is 40%, which is $4 / $10.

Margins and mark-ups are two important ratios for any business selling a product.  They define the amount of profit that you make from your product.  You can use these ratios as guides for setting your prices and to compare those of your competitors or industry.  Traditionally, mark-ups are usually expressed in dollars (ie a $20 mark up) and margins are expressed as percentages (ie a gross profit of 20%).

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Plan to succeed

How did you spend your Christmas break?

Often for many small business owners, it’s a great time to catch up on a few of those administration jobs that you’ve been putting off.  Or, without the ‘phones ringing, it’s an ideal time to focus on some strategic tasks.

I’ve just finished a 32 page draft of my business plan.  I have had a Business Plan in place for Business Advisory Accounting & Tax Services from the 1st day I began the business.  When I look back now on what the original was, I’m amazed at its simplicity.

The business plan has had a few changes over the years and I have always been quite good at revisiting my plan once or twice a year. However now that our tax and business consulting practice is growing, I really needed to revisit where we were and where I wanted the company to be. It was an exhausting but rewarding process and I found some things out about my market and my competition that I hadn’t previously given much thought to.

When I say the plan is a draft, it’s been sent to my dependable virtual office assistant at www.theofficeelves.com to proof read and format, so there will probably be more work on it soon when I get back from a short break in Wellington.

Not that a business plan is ever really finished in my view. I see it as an evolving, living document that should be updated regularly and referred to often. If we fail to plan, we plan to fail. I also really like this quote from Brian Tracy: “A clear vision, backed by definite plans, gives you a tremendous feeling of confidence and personal power.”

I have previously written about the benefits of preparing one which can be read here

Although, we prepare comprehensive business plans for many of our clients, you can prepare a simple one by buying one of the many available software packages available.  Try this one from Palo Alto by visiting here

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