Business Essentials: Money Matters for the New Financial Year Small businesses are integral to the Australian economy. Together, they employ around five million Australians and contribute about 30% of all income tax collected per annum. As smaller businesses are beginning to bounce back from the economic impacts of the COVID-19 pandemic, increased business security should remain on top of the agenda moving forward. Weld Australia has compiled a series of practical advice and tips for small business owners to take the heat out of financial year planning and boost financial security in the wake of the pandemic.
The economic impacts of the COVID-19 pandemic prompted businesses to make decisions with cascading impacts in a short period of time. As COVID-19 lockdowns took place in all Australian jurisdictions to slow the spread of the coronavirus, 910,055 businesses had enrolled in the Federal Government’s JobKeeper program by May 2020. By March this year, the Australian Bureau of Statistics found 46% of small Australian businesses said meeting their financial commitments over the next three months would be ‘easy or very easy’, when compared to just 23% in August 2020. In addition, 18% of small businesses expected to increase their staffing levels between March and the end of this financial year.
Plan Ahead Forward planning cannot be underestimated. Australia may have moved past the height of the health crisis prompted by COVID-19, but the economic conditions will linger on for many years to come. Therefore, it is crucial that small businesses plan accordingly. Take the time to update all business documents – from strategies to continuity and succession plans – as they will provide practical guides moving forward.
While these figures are promising, Senior Manager Business and Investment Policy at CPA Australia, Gavan Ord, believes smaller businesses should be aware of their capacity and security into the new financial year.
Importantly, these business documents should consider the current and future financial situation of the business, staffing levels, inputs and outputs, and future-proofing the organisation in the event of future lockdowns or rapid changes to the industry.
“With 2021 shaping up as a year of recovery tinged with uncertainty, small businesses should do a business health-check.”
Ord said smaller businesses, which are vulnerable to COVID-related disruptions, should focus on three key areas of the business.
“The diagnosis from this will give you a very good starting point for the year. It will tell you what you’re doing well and should do more of, and what issues may need to be fixed,” he said.
“Pay very close attention to your cashflow, expenses and any debts you incur,” he said.
Ord explained that COVID-19 prompted an era of uncertainty and issues for businesses of all sizes. “COVID-19 created a range of new tax issues for many small businesses and individuals.” Paying tax is a critical part of running a business. Mistakes with lodging a tax return can cost time,
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money, and lead to increased stress and financial uncertainty. However, there are a series of practical tips for small businesses to follow.
Australian Welding
Seek Advice and Support As the financial year looms large, smaller businesses can access a range of support options. A tax professional, such as an accountant or business activity statement agent, can help smaller businesses avoid costly errors and mistakes when lodging their tax returns. Businesses should report all financial details with complete accuracy, including
