Essential Business Tips to Overcome a Slow Economy
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Transcript of Essential Business Tips to Overcome a Slow Economy
Programme
14:00 - Registration
14:20 - Sharing Available Government Assist
14.40 - How to Manage Late Payment
15.00 - Managing Your Tax Computation
15.20 - Questions and Answers Session
15.40 - Tea & Coffee, Networking Time
How to Formulate Strategies and Actions Plans for Financial Stability
By Choy Mun KitBusiness AdvisorSME Centre @ Northwest
Empowering SMEs – Partner in Capacity & Capability Development
1. Introduction of SME Centre@Northwest
2. About Financial Statements
3. Formulate Strategies and Actions Plans for
Financial Stability
4. Government Assistance Schemes
For Today
Introduction
Responsible for helping Singapore enterprises grow and building trust in Singapore products and services
Founded in 1932 as a national body representing manufacturing companies
Provides SME with easy access to Business Advisory
About Financial Statements
� The Power of Financial Statements
� What are Financial Statements?
� How to Analyse and Interpret Financial Statements
What are the Financial Statements?
3 Basic Financial Statements
� Balance Sheet
� Income Statement
� Cash Flow Statement
Financial Statements – Balance Sheet
Balance Sheet (Statement of Financial Position)� Track Spending and Earnings.
� Shows what your company owns and what it owes.
– Assets are any items your business owns.– Liabilities are payments your business needs to make.– Equity is the amount your business's shareholders own.
� Assets are ideally equal to, or balance out, the Liabilities and theEquity.
Financial Statements – Balance Sheet
Balance Sheet (Statement of Financial Position)� Keep business owners informed about Company's Financial
Standing.
� If the ratio of your business's assets to liabilities is less than 1 to 1,your company is in danger of going bankrupt, and you'll have to makesome strategic moves to improve its financial health.
� Many business owners fail to recognize their companies are introuble until it's too late. This is because some business ownersaren't examining their balance sheets.
Financial Statements – Balance Sheet
Balance Sheet (Statement of Financial Position)� Let banks know if the business qualifies for additional Loans or
Credit.
� Current and Potential Investors better understand where their fundingwill go and what they can expect to receive in the future.
� Investors appreciate businesses with high cash assets, as thisinsinuates a company will grow and prosper.
Financial Statements – Income Statement
Income Statement (Profit & Loss Statement)� Shows the profitability of a company during the time interval specified
in its heading.
� Income statement shows revenues, expenses, gains, and losses; itdoes not show cash receipts (money you receive) nor cashdisbursements (money you pay out).
Financial Statements – Income Statement
Income Statement (Profit & Loss Statement)� If a company was not able to operate profitably—the bottom line of
the income statement indicates a net loss—a banker/lender/creditormay be hesitant to extend additional credit to the company.
� On the other hand, a company that has operated profitably—thebottom line of the income statement indicates a net income—demonstrated its ability to use borrowed and invested funds in asuccessful manner.
� A company's ability to operate profitably is important to currentlenders and investors, potential lenders and investors, companymanagement, competitors, government agencies, labour unions, andothers
Financial Statements – Cash Flow Statement
Cash Flow Statement � Cash Flow indicates the Health of the Company.
� Sources : Payments from customers, Receipt of a loan, Monetaryinfusion from an investor, or Interest on savings or investments.
� Make your business run: Expenses like stock or raw materials,employees, rent and other operating expenses.
� Positive cash flow means your business is running smoothly. Highpositive cash flow is even better and will allow you to make newinvestments (hire employees, open another location) and furthergrow your business.
Financial Statements – Cash Flow Statement
Cash Flow Statement � Positive cash flow is driven by two things:
Organization and Planning� Begin by looking at the cash you have in hand.
This could be money you’ve invested in the business, cash in the business bank account, loans that you’ve received, or an investment from a partner.
Financial Statements – Cash Flow Statement
Cash Flow Statement � Make a list of all the one-time start-up expenses that you have paid
or expect to pay.
Think incorporation fees, legal and accounting, licenses and permits,construction or remodeling, security deposit on a rental agreement orpurchasing property, marketing materials and signage, initial inventory orsupplies, fixtures like cash registers, office supplies, furniture, equipment,etc.
Financial Statements – Cash Flow Statement
Cash Flow Statement � Next, determine your monthly expected cash sources.
These can be projected sales, loans that are coming in at a certain date,investments from partners or investments.
� If you’re a new business you might want to project salesconservatively (better to outperform and have a better inflow of cashthan you thought).
� If you’ve already started your business or are purchasing a businessfrom someone else, you have a distinct advantage: Sales history.
� History can’t predict the future, but it can paint a decent picture ofwhat the future looks like and what business changes you might needto make.
Financial Statements – Cash Flow Statement
Cash Flow Statement� Finally, assess your monthly expenses.
This can be a bit tricky because it’s easy to overlook things and get asurprise you really don’t want. Monthly expenses to factor in can includerent or mortgage, insurance, advertising, marketing, website hosting,travel, utilities, payroll, inventory, taxes, loan payments, working capital,and last but not least paying yourself!
Financial Statements – Cash Flow Statement
Cash Flow Statement � The most important thing about this process is being honest and
objective.
Do your homework and get accurate estimates of costs. If costs lookhigh, simply projecting more sales when you don't have the capacity toclose those sales won’t fill that proverbial water tank.
So perhaps you tighten the outflow. What can you reduce or cut? Forexample, if you're launching a boutique, maybe you rent that 500 squarefoot space instead of the open, airy 1,000 square foot one.
Financial Management
• What you cannot Measure, you cannot Manage.
• Unless you Measure, you cannot manage for Continual Improvements if you don't know what is getting better and what isn't.
• Hence, the need to Establish a tracking mechanism by incorporating safety markers on the business reporting system ensures the business stays on track.
(Source: https://smetoolkit.abs.org.sg/Public/ResourceLib.aspx)
Financial Management Toolkit
RSM in Singapore is a member of the RSM International network of independent public accounting firms providing assurance, tax and business advisory services. We serve internationally active businesses and companies aspiring to go global.
Formulate Strategies & Actions Plans for Financial Stability
4 Steps to a Stronger Balance Sheet1. Determine the Current Situation (Starting Point)
2. Determine the Target Situation
3. Examine the resources
4. Close the gap
4 Steps to a Stronger Balance Sheet
1. Determine the Current Situation (Starting Point). � What is the starting point?
� It is important you have your financial statements as a
starting point.
� For example: The latest available financial statement
4 Steps to a Stronger Balance Sheet
2. Determine the Target Situation.� What do you want to achieve?
� It is important to know what you want. You can consider
preparing a business plan
� For example: Double the revenue while increasing the
expenses by 20%
4 Steps to a Stronger Balance Sheet
3. Examine the Resources.� What resources do you have to achieve your target?
� It is important to consider all the resources at your
disposal. This includes credit facilities and people you
can collaborate with
� For example: Govt Funding, Self Funding, Motivated
Staff.
4 Steps to a Stronger Balance Sheet
4. Close the Gap.� What are the steps you can take to achieve the target?
� It is important you develop steps to move towards your
target and a time frame that you want to work with.
� For example: Build up a sales plan on commission basis,
Boost marketing efforts. Enhance accounting capability to
be able to track progress
ICV - Criteria
All local SMEs can apply for ICV if they meet the following criteria:
1. Registered and operating in Singapore
2. Have a minimum of 30% local shareholding
3. Have group annual turnover of not more than $100 million OR group employment size of not more than 200 employees
Innovation and Capability Voucher (ICV)
$5,000 Voucher
To encourage SMEs to take the first step towards capability upgradingEnhanced from 1 Mar
Consultancy Projects
Up to 2 vouchers for each capability area• Innovation• Productivity• Human Resources• Financial Management
Productivity Solutions
Up to 2 vouchers in total• Integrated Solutions
SME may apply for up to 8 vouchers
Paid to Participating Service Providers
Reimbursed directly to SME.
ICV – Consultancy Projects
Consultancy Projects - Supportable Services
Innovation• Technology Feasibility Study• IP Business Diagnostic• IP Legal Diagnostic • Customer Insights
Human Resources• Recruitment & Selection• Compensation & Benefits• Performance Management• Learning & Development
Productivity• Quality Management (ISO 9001: 2015)• Environmental Management
(ISO 14001: 2015)• Occupational Health & Safety Management
(OHSAS 18001)• Business Diagnosis• Service Improvement
Financial Management• Planning & Budgeting• Cash-flow & Working Capital Management• Financial Assessment and Planning for
Growth
ICV – Productivity Solutions
Supportable Categories Examples of Supportable Items
Integrated Solutions(1st April 2016)
1. Appointment Scheduling and Booking System2. Asset / Personnel Tracking and Identification System3. Clinic Management System4. Customer Relationship Management System5. Document Management and Mobile Access System6. Enhanced POS System7. E-Procurement Management System8. Fleet Management System9. HR E-scheduling System10.Inventory Management System11.Mobile Ordering and Payment System12.Queue Management System13.School Management System14.Wireless Paging System
How to apply
Step 1Apply online via the ICV Online Portal.
Documents Required for Productivity Solutions Applications
1. ACRA Business Profile dated within 6 months from the date of ICV application.
2. Quotation of the listed solution
All applications will be processed within 6 to 8 weeks upon submission of all required documentations.
Successful applicants will be notified via email.
Capability Development Grant (CDG)
Criteria
� Registered and operating in Singapore� 30% Local shareholding� Have group annual sales turnover of not more than $100
million OR� Group employee size of not more than 200 employees
Benefits
� Up to 70% grant for the qualifying cost
Capability Development Grant (CDG)
*Includes Manpower related costs, Consultancy, Training, Equipment, Software, Intellectual Property Rights
Online Portal ApplicationFrom 1 April 2015Simplified application process for projects with CDG support of $30,000 or less:- 5 easy to answer guiding questions
CDG – Financial Management
Enable SMEs to manage and leverage their financial resources to address their business and growth needs by improving financial performance and financial growth
Develop strong financial resiliency
Improve financial management capabilities
Supportable Activities
• Develop financial framework and strategy to validate and enhance expansion plans
• Develop measures and controls and implement corporate financial systems to meet financial challenges and enhance financial resilience
• Develop framework to support inorganic growth, through mergers and acquisitions, and fundraising
Deliverables
• Detailed final report• Implementation roadmap with
actionable steps for SME
CDG – Financial Management
Hai’s Pte LtdSpecializes in the production and distribution of well-known instant pastes such as curry mix, chili and othersauces to hotels, restaurants and food caterers
Tapped on CDG support to develop financial strategies and action plans to establish financial and business plans
for expansion
Financial performance review and
analysis
Revamp of internal
operations and systems
Better manage fluctuation in raw material costs
Created a more robust pricing model for products
Revenue growth by more than 10%
Project Outcomes
Capability Development Grant (CDG)
Project Details – Please elaborate on the following in 150 – 200 words each.
1. Please provide information about your company.
2. Please describe your company’s plans in the next 1-3 years.
3. Please elaborate on the reasons for embarking on the project.
4. Please describe the scope and deliverables of the project.
5. Please describe the expected outcomes of the project
Contact Us
Woodlands Civic Centre900 South Woodlands Drive, #06-01,Singapore 730900
Tel (号码) : 6248 5518Email (电邮): [email protected]
西北中小企业中心
• Strictly by appointment
1. Status of payments in APAC and Singapore
2. Why la te payments?
3. How does la te payment affect your business?
4. Learn best pract ices in get t ing paid on - t ime (or ear l ier ! )
5. F inancing opt ions
98% experienced late payment from their customers
33daysAverage domestic payment terms
47% of the total value of invoices being paid late
88%
32days
43%
APAC SG
46days Average DSO41days
3431 44.2% 40
42
41.7%30
46.8% 40
Payment Term(days)
Late Payment DSO(days)
ManufacturingWholesale / Retail Distribution Services
47%Customer’s liquidity issues, due to challenging business conditions
35%Customers’ intentional delay of invoice payment for the
purpose of financing their businesses
27%Dispute over quality of goods delivered or service provided
23%Complex payment procedure
17%Incorrect information on invoice
KYC –Credit assess
potential buyer
1. BEFORE A SALE IS MADE
Agree payment schedule & term
in advance
Minimise potential dispute
Payment process is fully
understood
Avoid concentration
risk
Goods / services are delivered early or on time and according
to the agreed requirements
2. DELIVERY
Obtain an official document confirmation of delivery
acceptance
3. INVOICE
Submit invoice promptly
to the correct personnel / department
Invoice contains complete and correct information
Offer a discount for early payment
Regular contact with your customer
Identify any problem early
4. COLLECTION
Data is easily accessible
to be alerted of any upcoming payment or late payments
Do not threaten the client or get
angry
Collection process is in place
Regularly forecast your cash flow
5. MANAGEMENT PLAN
Financing facility to support when needed
Delay a non-critical payment
Consider credit insurance
FINANCING OPTIONS
Limited
PROs CONs
Large amount
Expensive; Make sure you pay on time as it can affect your credit
Bank loans Loan lead time, high rejection rate, require collateral
Grants Free money Long turn around, up to 6-12 months
Bank overdraft Quick access to funds
Credit card Quick access to funds
Friends & Family May affect personal relationshipQuick access to funds
Alternative finance is emerging
Invoice TradingEquity Crowdfunding
%
Debt–based transactions between individuals and existing businesses with many individual lenders contributing to
any one loan
Firms sell their invoices at a discount to investors in order to receive funds immediately rather than waiting for
invoices to be paid
Peer-to-peer LendingSale of a stake in a business to a number of investors in return for
investment
3. Get paid upfront2. Trade goes live1. Upload invoice 4. Get paid the rest
1 day 60 days
$7,90080% (less fees)
$1,90020% (less fees)
$10,000
0 day
TransparentNo lock ins, no hidden fees, real-time pricing
FlexibleSell invoices only as and
when needed
FastDrawdown funds in 24
hours
PAYG24 hrs
Scalable funding
Size of funding can scale with business growth
1
While utmost care has been taken to ensure content accuracy at the time of writing, no person should rely on the contents in this presentation without first obtaining advice from a qualified professional. These presentation slides are issued on the terms and understanding that (1) the author is not responsible for the results of any actions taken on the basis of information in these slides, nor for any error in or omission from these slides; and (2) the author expressly disclaims all and any liability and responsibility to any person, whether a reader of these slides or not, in respect of anything, and of the consequences of anything, done, or omitted to be done by any such person in reliance, whether wholly or partially, upon the whole or any part of the contents of these slides. Information contained herein is proprietary to AccountServe and no part should be reproduced without prior permission and due acknowledgement.
Disclaimer
Managing Your Tax Computation
Anuradha Rai, Tax Manager
23 Feb 2017
2
Outline
Taxation of Income
Deductibility of expenses
Capital Allowances & PIC
Tax Exemptions & Rebates
3
Capital vs Revenue Receipts § In Singapore, tax is imposed on income and there is no capital gains tax. Hence, it
is important to distinguish between revenue and capital receipts. Examples of capital gains are:
– gains on sale of fixed assets; and – gains on foreign exchange on capital transactions.
§ Distinction is sometimes unclear; recurring items = revenue receipts. § IRAS generally takes an aggressive position. § It is important to determine if a trade exists as different charging section and tax
treatment applies.
4
Let’s consider… Ø Sale of tables and chairs in trading company vs sales in a furniture dealing
company; Ø Sale of property. Is the gain taxable? Ø My company received a Government grant. Is the grant taxable?
Capital vs Revenue Receipts
5
Capital vs Revenue Expenses § Capital gains not taxable è Capital expenditure not deductible § No statutory definition of capital & revenue expenses
Ø Depends on facts of each case
§ Capital expense Ø Once and for all, non-recurring Ø Acquiring an enduring benefit
§ Revenue expense Ø Operational Ø Recurring
6
Capital vs Revenue Expenses Examples of capital expenses: § Depreciation of fixed assets à Claim CA?
§ Legal fees and stamp duty on new lease agreement
§ Purchase of fixed assets à Claim CA?
§ Renovation costs à S14Q deductions?
§ Start-up expenses such as licence fee, registration fee, signboard fee
7
Capital Allowances
What are capital allowances (CA)? § Deductions claimable on the wear and tear of fixed assets bought and used by a
taxpayer in his trade, profession or business. § Expenditure incurred for purchase of fixed assets including the accounting
depreciation Not deductible for tax purposes. § In recognition that wear & tear of fixed assets represents a real business cost, the
SITA provides CA on capital expenditure incurred, subject to conditions.
8
Capital Allowances Examples of qualifying plant and machinery: § Containers used for carriage of goods § Security / alarm system, sprinkler system § Blinds, curtains, carpets § Furniture § Movable partitions § Escalators Examples of non-qualifying plant and machinery: § Mirrors installed in an accounting firm § Fixed partitions § False ceilings, cornices, flooring, tiles § Doors, windows § Container office
9
Productivity & Innovation Credit + scheme § PIC is available from YA2011 to YA2018 § As announced in Budget 2016, PIC scheme will lapse after YA2018 § The PIC scheme provides for 400% tax deductions or allowances of qualifying
expenditure on each of the following activities: Ø Investments in IT and automation equipment Ø Training Ø R&D expenditure Ø Acquisition / in-licensing of IP Ø Registration of IP Ø Investments in design
§ For expenditure incurred from 1 Aug 2016, PIC cash payout will be 40% from current 60%
11
Tax Exemption Scheme for New Start-up Companies • Granted to qualifying new company for its first 3 consecutive YAs
• Exemption granted on chargeable income taxed at 17%:
YA Exempt Income 2008 onwards
First $100,000 @ 100% = $100,000 Next $200,000 @ 50% = $100,000 $300,000 $200,000
• Maximum Exempt Amount is $200,000 for each YA
12
Corporate Tax Rebate
YA2017 Corporate tax rebate % 50% Yearly cap $25,000
YA2018 Corporate tax rebate % 20% Yearly cap $10,000
13
Personal Tax Rebate and Rates
YA2017 Personal tax rebate % 20% Yearly cap $500
Chargeable Income Income Tax Rate (%) Gross Tax Payable ($) First $240,000 - 28,750
Next $40,000 19.5 7,800
First $280,000 - 36,550
Next $40,000 20 8,000
First $320,000 - 44,550
In excess of $320,000 22
Tax Rebate
Tax Rates from YA2017
14
Personal Tax Rebate and Rates
Tax Change Summary
Taxes on Director's fee, Consultation fees and All Other Income
From YA 2017, the tax rates for non-resident individuals has been raised from 20% to 22%
Introducing a cap of $80,000 on personal income tax reliefs
From YA2018, the total amount of personal income tax reliefs that an individual can claim will be capped at $80,000 per YA
Removing the tax concession on home leave passages for expatriate employees
From YA2018, the tax concession of taxing only 20% of the value of home leave passages for expatriate employees will be removed.