In 2020, COVID-19 forced most Australian businesses to change how they operate and to seek assistance, with 55% accessing wage subsidies and 38% accessing other government support measures. Given that JobKeeper permanently ends on 28 March 2021 and other government support is finishing up, it is important that you are informed about the full extent of COVID-19's impact on your business and certain that your business is still viable. Here are three steps that might assist you:
- Keep Your Books & Tax Lodgments Up to Date
Keeping an accurate record of all your business' books and expenses and ensuring that these are correctly lodged with the tax office is the best way to know your business is turning over a profit. A business that keeps its books up to date will know straight away if their income has dropped and they are still viable.
Additionally, the tax office is often the first creditor to pursue unpaid taxes from failing businesses and will be sure to notify you that your debts are due and payable.
- Seek Professional Financial Advice
Accountants and other financial advisors are able to provide sound advice about the business's cash flow and whether the business is profitable. Financial advisors can also assist in restructuring the business and its debts to avoid potential insolvency.
The Federal government's small business insolvency reforms have set up a restructuring process for small businesses that allows companies to continue trading as the restructuring practitioner develops and proposes a plan to the creditors. For more information about the Small Business Restructuring reforms click HERE.
- Pay Invoices on Time
Overdue invoices, payment plans and the failure to respond to demands are all indicators of insolvency that the Court will look at when considering a business's solvency. To avoid being deemed insolvent by the Court and incurring unnecessary legal costs defending a debt recovery claim, businesses should ensure their invoices are paid on time.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.