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Around 900,000 businesses are now on JobKeeper, covering 3.3 million employees. Once this stimulus is turned off at the end of September 2020, a business has to rely solely on its own turnover to meet expenses and provide profits for its owners. Temporary insolvency relief and the resumption of deferred loan repayments will also start to kick in then. Creditors will also seek to recover debts, some of which could have been outstanding prior to March 2020, including the Australian Taxation Office (ATO).

Business owners need to start assessing NOW whether their business can stand on its own two feet without government supports in place.

If the particular business doesn’t foresee cash flows returning to “normal” and able to meet its operating expenses, they really need to be thinking about how to move forward, whether they bring the business to an end or they change the business to allow it to keep trading.

As a minimum a detailed Cash-flow Forecast is essential to allow the business to be able to plan the required changes needed for business survival or business closure. The business needs to rethink how it can survive these turbulent times.

Creditor activity

With small businesses owing a collective $16.5 billion in tax debts in 2018–19, and the ATO looking to recommence its debt and lodgement intervention activities shortly, business owners have been urged to start negotiating payment plans with the ATO. The ATO has advised that it will be receptive to taxpayers who act in a proactive and open manner and are genuinely making an effort to pay off their tax debts.

Debts owed to other suppliers/creditors have to also be planned on how they are going to be paid to ensure supply and allow the business to return to “normal”.

If the business isn’t viable, that should be identified early so that a plan can be formulated to either turn the business around or seek help to facilitate an orderly closure with least exposure to the business owners personal assets.

Seeton Consulting accepting new clients

Seeton has recently helped a client with their cash-flow planning resulting in the client successfully applying for Small Business grants totaling $18,750 in addition to receiving the Cash Flow Boost and Jobkeeper. With the addition of a new staff member, we are able to take on new clients to assist with business cash-flow planning, accounting systems, tax planning and compliance matters.

Call us on 08 94745155 or drop us an email at info@seeton.com.au to see how we can help you or your business.