Category Archives: Real Estate bookkeeping

Changes to Real Estate Industry Award

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There are key changes to the Real Estate Industry Award, which you need to have implemented by 2nd April 2018.

There are now 4 levels of employee classification;

  • Real Estate Employee Level 1 (Associate Level)

Employees engaged as a Property Sales Associate, Property Management Associate or a Strata Management Associate will all fall into Level 1 and have the same minimum rate of pay. Two wage rates apply at this level. The first rate applies to employees during their first 12 months of employment and the second rate applies thereafter.

  • Real Estate Employee Level 2 (Representative Level)

Salespeople, property managers and strata managers will all fall into Level 2 and have the same minimum rate of pay.

  • Real Estate Employee Level 3 (Supervisory Level)

Sales, property management and strata management supervisors will all fall into Level 3 and have the same minimum rate of pay.

  • Real Estate Employee Level 4 (In-Charge Level)

Employees who are responsible for the overall operations of an agency will fall into Level 4.

New commission-only standards;

For an employee to be engaged on a commission-only basis from 2 April 2018, they must:

  • Be 21 years of age or older
  • Have a Real Estate Licence of Certificate of Registration
  • Be employed as a salesperson
  • Agree in writing to be employed on a commission-only basis
  • Have worked in the industry as a salesperson for at least 12 months in the last three years
  • Satisfy the new Minimum Income Threshold Amount (MITA) qualification test.

The MITA is satisfied if the employee can show that in a consecutive 12-month period in the three years immediately prior to entering into the commission-only agreement they received a salary (including commission or bonus payments, but excluding allowances and superannuation) at least equal to 125 per cent of the employee’s classification rate under the new Real Estate Industry Award, calculated as an annual amount.

The new MITA will be $52,733 and will increase as minimum rates of pay change each July.

Other things of note;

  • New mobile phone allowance
  • New motor cycle allowance
  • Extension to post-employment commission entitlements

Contact us for further information. To read the full award changes, REEF will be the best place to find all relevant information regarding all employment changes.

 

Running a Family Business? Here’s a Tip

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The real estate industry abounds in Family businesses, particularly husband and wife teams, and it is one of the enjoyable aspects of the industry for employees to work closely with the owner operators but beware of forgetting that employees are not family members.

Familiarity and time can blur the lines for owners when speaking to their staff, especially when providing instructions to employees for particular tasks. So here is a list for family business owners to work towards.

1. Agree on your roles.
2. Have formal meetings together in a closed room, and sign off on plans, agreeing; what is to be done and, who communicates it to the employees, ideally it should be written down.
3. The chosen owner should inform the relevant employees of the strategy and be clear.
4. The other family owner should remain out of the discussion and agree with the written or spoken instructions of the chosen owner.
5. Review the success or failure of each decision in private

The following list of don’ts can make employees feel awkward or uncomfortable

1. Arguing about the decision made, and saying it was wrong of the other family member to instruct the employee the way they were.
2. Confiding in the employee that you cannot express how exhausting it is dealing with business matters.
3. Being unpredictable in your decision making, which can cause employees to be confused.
4. Bringing other family matters into the conversation unnecessarily.

In short you have to get your communication right and remember to be clear when you are making business decisions, and when you are making family ones. Employees thrive in an environment of great leadership, they wilt in the face of division, they certainly don’t want to feel they have to pick sides.

OSR and NSW Payroll Tax in Real Estate: Talking Points

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The Real Estate industry is a big employee of people in the state, and is also a heavily regulated sector, which has important licencing requirements, due to the significant sums of money held of third parties. This creates numerous ways agencies cross refer, conjunct, partner and profit-share with employees, contractors or other businesses, given the main turnover of the sector relies on executing an exchanged property contract between a willing vendor and buyer, whom often are introduced by different agents.

image of contract

There is currently plenty of discussion in the industry about the Office of State Revenue looking closely at payroll tax compliance, so to help, I thought I would outline some points for business owners to think about, especially if you are worrying about these matters in the middle of the night.

A common problem is confusing the issues that are typically addressed during an OSR review. Also, there is nothing out of the ordinary for OSR to review a business to check how they are complying with the legislation.

On the matter of the specific issues that are commonly mistakenly  two spring to mind. Firstly, Grouping for Payroll Tax, and secondly, Exempt Independent Contractors.

So let’s address Contractors first.

Independent Contractors

  1. Know the law and its specific requirements. To do this, speak to your independent professional advisor, someone who understands the details of the law.
  1. Contractors are specifically discussed (for NSW) in the following link NSW payroll tax information 2013-14. It clearly states the grounds on which exempt status is granted.
  1. Don’t generalise. Payroll tax is legislated in states separately, and applies to services provided to achieve the core income production of the company.
  2. The wording says, where a contractor agreement is “not exempt” then they are included for payroll tax purposes. Therefore understanding the meaning of an exempt agreement is crucial.
  1. The biggest mistake for people is not doing the hard work up front to properly understand what is required to correctly implement a legal contractual agreement.
  1. No two agreements are identical. Therefore you’ll need to look at each contract on its own and the outcomes that you and your professional advisor determine. The paper work matters and it is a case by case basis whether a contractor agreement is exempt. Ultimately it comes down to the paperwork and how the money is handled. 

As I mentioned, people often confuse the above matter with “Grouping”. Grouping is a matter that relates to the common ownership of separate entities. Should the OSR deem that companies are grouped for payroll tax purposes, then the grouped companies will share the payroll tax free threshold and, combine all qualifying payroll amounts in each of the grouped entities to calculate the amount payable for payroll tax.

Grouping

  1. Speak to your accountant about all tax implications (including payroll tax) before you establish or incorporate any entity which will employ staff.
  2. Grouping( for NSW) is explained by the OSR  on their website in the following link OSR NSW explanation of Grouping
  1. Essentially, keep it simple. If two companies have a common majority shareholding, they will be grouped. 

I need to make it clear that I am not writing this blog to provide answers to specific circumstances of any business, but to clearly separate the issues where the real estate industry has been in the spot light. If you’re confused about the above matters, then I reiterate, go and speak to your trusted professional Tax Accountant to review your situation in detail, and follow their advise based on your particular circumstances.

As trusted bookkeepers for many real estate agencies, our team at Live Bookkeeping assist our clients where we can to help clear up any confusion there might be for owners trying to clarify their payroll tax liabilities, and should you want us to point you in the right direction, or refer you to a professional tax accountant to talk to you, then don’t hesitate to contact us info@liverealestateaccounts.com.au

I will write about accounting for Payroll tax and how to cost it in to your business plan in a blog at a later date.

Chris Mercer

10 Actions Points for your Business to be the Big Fish in your Real Estate Market?

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Want to be the dominant business in your market and have a profit to show for it? Here’s a word of advice, don’t rely how today’s successful businesses got there, that can’t be replicated ever again, but if you have the ambition to match them, if not topple them, then adopt these action points and if you want it bad enough, there is nothing stopping you. 

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I am currently working on my book, and in preparation for its completion I was asked how I would run an agency if I was to do so. It got me to think about what I have learned from successful businesses I have analysed from the inside out, across all markets.

So here are the actions points you must complete if you are to become the market leading agency no matter where you are.

  1. Work hard! Your best competitors are. If you want to be the best business, you have to beat the best business.
  2. Focus on innovative ways to get an edge, but on the important factors first. Which ones you might ask? no surprise here: “LISTINGS , LISTINGS, LISTINGS” or “PRODUCTIVE AGENTS, PRODUCTIVE AGENTS…..!
  3. You can’t become invincible in your first year, but you can become insolvent. Keep cash flow flowing.
  4. You can always pay your best agents more, if they do more.
  5. If a good business in your market comes up for sale, buy it, but do your homework
  6. Property Management is small in cash flow, but big in value. It’s not a complaint line, it’s a golden egg.
  7. Profit is the goal, not income. Business is about spending a $1.00 to make $1.16, not 85c. Income is great, but margin is what you keep.
  8. Measure everything and review it. Learn from your successes and failures.
  9. Don’t limit your potential, but minimise your risks. Always know when to stop a bad decision and don’t apologise.
  10. Listen to experts, not naysayers. If you have good people, your business will fly and remember to look after them.

If you are thinking about getting into agency business and want to know how it all works, speak to people you either trust or who you know have had success in real estate business. It makes it so much easier when you get things right from the start, rather than the all to familiar “learning the hard way” mentality.

We are always available to help any agent who wants to get their books in order and their business plan finished, just contact us at info@liverealestateaccounts.com.au . The rest is all about hard work and results.

Happy listing and selling,

Chris

4 Things Your Real Estate Business Can Do To Protect Cash

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Spring is ending and summer is almost upon us, so what does this mean to Real Estate Business Owners? I’ll tell you what it means, 5 weeks left to determine how much money you will have in your bank account in March 13 is what.

Every year a sizeable percentage of business owners that don’t get this right suffer the hardship of cash flow shortages coming into Easter, and they don’t need to.

The silly thing is that even if you are having moderate or weaker finish to the year, you can have a big impact, to soften the blow, by planning ahead.

Here are 4 things you can do to manage your cash flow.

1. Have a good look at your settlements and when they are anticipated, in short make sure you know how much money you have coming in after xmas and when.

2. Depending on answer above, if it looks tight, get busy listing as early as possible on the other side of xmas, if you can’t impact your pre xmas selling opportunities. Act with intent and make sure your agents are focused on preparing for January, if you log off early, so will your team, don’t make that mistake. Get creative and put some ideas and pitches together for Vendors, that get them ready for January as well.

3. Don’t splash out on unnecessary items, protect your cash flow over the Xmas period. Remember you will have BAS payable in February and April, on top of quieter settlements because of the Late December early January period, you often have poor incoming cash flow just when the Tax is due.

4. If you think you may need to, get busy talking to your bank, because your spring period is often a good time to show your profitability, and arrange for some extra cash flow by discussing OD extensions, if you wait until March, it could look a lot worse. Be prepared.

I hope you have a great finish to the year, and I know that 2012 won’t be looked upon fondly, but the reality is looking ahead, maybe this 2012 are the market conditions that will be in place for the foreseeable future. Opportunities are there for the people facing reality and getting busy, the Victims are the businesses pining for the past. I hope you are getting busy.

Are All Bookkeepers The Same? Definitely Not!

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Bookkeepers are all the same – they make sure the numbers add up and the petty cash balances, right? Wrong.


Bookkeeping is a skill beyond being able to turn a calculator on – and real estate bookkeeping is more specialised again. The average real estate business owner is more than likely a great sales person, not an experienced bookkeeper. So it makes sense for them to spend their time driving new business and leave the accounting and reconciliation to business professionals.
 
 
Live Bookkeeping was born to provide a solution to this problem for Real Estate business owners across Australia. I have seen and heard almost every scenario, from the bare basics of bookkeeping to a highly qualified accountant on-site full-time. Like any business decision, your individual agencies needs must be met. It can seem costly to pay this “backoffice” task, when you are trying to build a business, but be wary of unwittingly walking into a disaster because you wished away responsibility for your accounts.
 
A qualified bookkeeper will tell you how to organize your financial accounts, and keep on top of BAS, Superannuation and PAYG requirements. They will reconcile your accounts and provide peace of mind.  But that is where bookkeeping ends, bookkeepers are not accountants.  
 
Preparing profit and losses, making changes to your chart of accounts, preparing budgets are not the mandate of bookkeepers. Running your trust account and settling property sales and property management accounts are also not bookkeeping skill sets. If you want these to be combined, you are looking for industry experience and expertise, and they are both scarce and costly.
Outsourcing is a sound option, and can provide solutions to all of the above tasks, and even better provide greater capacity for the same overall costs.
 
If you need to review how you currently operate your “back-office”, contact Live Bookkeeping to have a free assessment done, today.