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Record Keeping Practices

Maintaining accurate and complete records is paramount for the success and sustainability of your business. Proper record keeping practices are not only essential for compliance but also serve as the backbone of informed decision making and financial stability.

As a business owner, it’s crucial to recognise the significance of meticulous record-keeping. These records provide invaluable insights into your company’s financial health, performance trends, and areas needing improvement. They also facilitate tax compliance, audits, and financial reporting, ensuring transparency and accountability.

Understanding Record Keeping Requirements

By tax law, businesses must maintain records of all transactions related to taxes, superannuation, and registrations. This encompasses documents concerning income, expenses, and any decisions or calculations made for tax and super affairs. It’s important for businesses to grasp which records are necessary and to keep them accurately. Failure to adhere to these regulations can result in legal and financial consequences.

Employment and common law extend the need to keep some records for longer periods.

What is the Law – Document Retention Requirements

In Australia, businesses must adhere to both common law principles and legislative requirements regarding document retention. Common law dictates that corporate documents are the property of the company, but destruction before or during litigation may result in adverse legal consequences.

Legislative requirements vary and include mandates from federal and state laws, such as:

• Privacy (Tax File Number) Rule 2015 Requires companies to securely destroy or de-identify tax file number information that is no longer required by law or for taxation, personal assistance, or superannuation purposes.
• The Criminal Code 1913 (WA) and Crimes Act 1914 (Cth) create similar offences where a person, knowing that any book, document or other thing of any kind is or may be required in evidence in a judicial proceeding, intentionally destroys it or renders it illegible or undecipherable or incapable of identification, with the intent of preventing it from being used in evidence.
• The Income Tax Assessment Act (1936) (Cth) requires retention of income and expenditure records for at least five (5) years.
• The Fair Work Act (2009) (Cth) Requires the retention of employee records for a minimum of Seven (7) years from the end of the financial year in which the document was created. Employers must maintain accurate records for each employee, including general details, pay, hours worked, leave, superannuation contributions, and agreements. Records should be accessible, legible, and in English. Employees have the right to access their records, and Fair Work Inspectors can request them for compliance checks. Failure to keep records or keeping false records can lead to penalties.
  Source: FWO – Record-keeping
• The Corporations Act 2001 (Cth) Imposes various retention requirements, including keeping financial records for at least Seven (7) years, retaining company documents and registers for specific periods, and complying with limitations on legal action.

Businesses must ensure compliance with these laws by implementing proper document retention policies tailored to their specific obligations and circumstances. Failure to adhere to these requirements may result in legal consequences, emphasising the importance of proactive compliance measures.

Source: Document retention and destruction: be aware of legal requirements

What is a Financial Record?

Financial records are important documents that show how a business manages its money. These records include things like:

• Invoices: Papers showing what the company sold and how much it charged.
• Receipts: Papers showing when the company received payments.
• Cheques: Records of payments made by check.
• Books of Prime Entry: Initial records where transactions are first noted.
• Working Papers and Other Financial Documents: Supporting papers used to make financial statements.

These records can be electronic but must be able to be turned into paper if needed. Even if someone else, like a Bookkeeper, keeps the business records, the business owner is still responsible for giving copies to auditors or anyone who has the right to see them. According to Section 286 of the Corporations Act, financial records must be retained for at least seven years after the completion of the transactions they cover. Examples of records that companies should retain include:

• Financial Statements: Including profit and loss statements, balance sheets, depreciation schedules, and taxation returns.
• General Ledgers and Journals: Primary accounting records detailing all financial transactions of the company.
• Cash Records: Records of cash receipts, bank deposits, petty cash transactions, and cheque stubs.
• Bank Statements and Loan Documents: Documents related to the company’s banking activities and any loans it has obtained.
• Sales and Debtor Records: Records of sales transactions and amounts owed to the company by customers.
• Invoices and Statements: Records of invoices issued and received, along with statements of account.
• Minutes of Members or Directors’ Meetings: Documentation of discussions and decisions made during company meetings.
• Registers: Registers of members, options, debenture holders, assets, or any other relevant items.
• Deeds: Legal documents such as deeds of trust, contracts, agreements, and inter-company transactions.

Businesses should also prepare monthly statements to track their financial performance. These statements show, for example, how much money is coming in and going out each month.

Source: ASIC – What books and records should my company keep?

Five Rules for Effective Record Keeping

To effectively meet record keeping requirements, businesses and their Bookkeepers should adhere to five fundamental principles:

1. Comprehensive Coverage: Businesses must retain records related to starting, operating, altering, and closing their operations, ensuring relevance to tax and super affairs. Maintaining clear documentation for expenses relating to business and personal use is essential.
2. Integrity and Security: The integrity of records should be preserved, preventing alterations and ensuring secure storage to prevent damage. Businesses should be prepared to reconstruct original data if their record keeping systems undergo changes.
3. Retention Period: Most records should be retained for a minimum of five years from the time they are prepared, acquired, or completed. Certain records may require longer retention periods based on specific legal stipulations. Businesses should maintain records detailing routine procedures for destroying digital records and be able to furnish them upon request.
4. Accessibility and Format: Businesses must ensure they can readily provide their records upon request. They should maintain information about their record keeping systems to demonstrate compliance with requirements. Records must contain all relevant details to meet tax, super, and employer obligations.

If storing data digitally, they should be prepared to provide encryption keys and access instructions, ensuring data can be extracted and converted into standard formats such as Excel or CSV. If passwords are used for protection, accessibility instructions should be provided. Finally, businesses should organise their data and records with identifiable labels or indexes to facilitate efficient retrieval and review processes.

5. Language: Businesses must ensure that their records are either in English or easily convertible to English.

Source: ATO – Overview of record keeping rules for business

Benefits of Accurate Record Keeping

Maintaining accurate and complete records is crucial for businesses to effectively manage their finances and stay compliant with regulations. It allows them to keep tabs on their financial health, ensuring they know whether they’re making money or facing losses. Good records also empower businesses to make informed decisions and keep track of their financial obligations, such as paying bills on time.

Keeping clear and organised records helps businesses avoid potential penalties from regulatory authorities. By having everything in order, they can easily determine their tax liabilities and demonstrate their financial standing to lenders or potential buyers. Additionally, when it comes to audits, having well-maintained records saves time and effort for both businesses and auditors.

The Role of Your Bookkeeper

The business owner is responsible for understanding record keeping obligations. Even with the assistance of a registered Tax or BAS Agent, the primary accountability remains with the business owner.

However, your bookkeeper is an essential partner in maintaining accurate records and complying with laws. They ensure your data is secure and assist you in understanding regulations. By organising and safeguarding your information, they simplify financial management and enable informed decision making.

Their guidance helps prevent issues by reminding you of regulatory requirements and regularly reviewing your records. With their support, you can navigate complexities confidently, avoiding penalties and legal complications. Trust your bookkeeper to keep your records in order, providing peace of mind and allowing you to focus on growing your business.

ATO Record Keeping Course

The ATO Record Keeping Course provides business owners with essential knowledge and skills to manage their record keeping obligations effectively. This course offers a comprehensive overview of record keeping requirements, emphasising the importance of accurate and organised records for financial management and compliance.

Business owners will learn practical strategies for maintaining clear and detailed records, including documentation of income, expenses, and other financial transactions. The course covers various record keeping methods and tools tailored to suit different business needs and preferences. Additionally, business owners will gain insights into the legal and financial implications of inadequate record keeping practices and learn how to avoid common pitfalls.

By completing this course, business owners will be better equipped to fulfil their record keeping obligations and confidently manage their business finances.

For more information: ATO – Record keeping | Essentials to strengthen your small business

Digital Record Keeping – 2024 View

In the current landscape, leveraging technology is instrumental for businesses to effectively meet tax record keeping requirements. Incorporating tech solutions streamlines processes enhances accuracy and ensures compliance with tax regulations. Cloud-based accounting software allows real time tracking of income and expenses, simplifying record keeping tasks. Automation features further reduce manual input errors and save time, enabling businesses to focus on core operations.

Moreover, they facilitate the creation of summaries and reports for various tax-related purposes, including GST, income tax, fringe benefits tax (FBT), and Taxable Payments Reporting System (TPRS). Additionally, using software ensures compliance with the legal requirements for Single Touch Payroll (STP) reporting.

For businesses utilising cloud storage, whether integrated into their accounting software or provided by a separate service provider, it is imperative to ensure that the storage solution meets the ATO’s record keeping requirements mentioned above.

Businesses should download complete copies of any records stored in the cloud before transitioning to new software providers to prevent potential loss of access to critical information. Consult with the software provider or a professional advisor to understand the specific terms and conditions related to data retention and access after cancellation.

Beyond Technology

Success in record keeping goes beyond technology. It requires a steadfast commitment to compliance and best practices. By prioritising integrity and security, businesses also uphold their reputation, safeguard sensitive information, and foster a culture of accountability and transparency.

Accurate record keeping, with the expertise of Professional Bookkeepers, digital solutions, and accessible small business training, lays the foundation for financial transparency and strategic decision making. This enables small businesses to excel in today’s competitive landscape.

Leading a business can be hard work. But the good news is that you’re not the only founder, owner-manager or CEO who’s treading this path. Networking with your peers is a great way to make connections with other entrepreneurs, while also looking for new business opportunities.

5 ways to improve your networking skills

Being part of a wide network of entrepreneurs and business leaders is about being part of the business community. It’s about giving to the community, as well as being supported by it – and knowing that you’re surrounded by other entrepreneurs who share very similar goals.

So, networking is a valuable thing to take part in, whether you’re a brand new founder, or a seasoned business owner who’s been around the track a few times. But how do you get GOOD at networking? There’s no simple answer to this, but we’ve highlighted five key things you can do to get more from your networking and to give more back to your community.

To become a better networker:

– Be authentic and relational – if you’re going to make a success of networking, it naturally makes sense to appeal to people. Being genuine and interested in getting to know your peers will help a lot. Be yourself, be friendly and take the time to learn about the people you meet. Ask questions about their work, their interests, their goals and what generally makes them tick. This isn’t just about ‘doing business’, remember; it’s about getting to know people as people, and being part of this community.
– Be a good listener and ask thoughtful questions – in networking, listening is just as important as talking. When you’re talking to someone, listen intently, look people in the eye and pay real attention. Resist the temptation to interrupt or start thinking about what you’re going to say next. Instead, focus on understanding their perspective and asking thoughtful questions. Ultimately, you want to make it clear that you’re interested in what this person has to say, and that you’ve found some common ground together.
– Be helpful and offer your expertise – one of the best ways to build relationships is to be an asset to your industry community. Look for ways to use your experience and skills, and offer ideas, advice and help (if people are looking for assistance). This could mean sharing your industry knowledge, providing resources, or making introductions to other people in your network. When you help others, you help the community, underline that you’re a valuable resource and that you’re interested in building relationships.
– Be an asset to your niche/sector/industry – share new ideas, drive innovation and be a voice that stands out in the network. If you want to make an impact, it’s important to stand out from the crowd. A good approach is to be someone who’s known for their expertise, creativity and thought leadership. Get involved in industry discussions, and write articles and blog posts about the big issues in your sector. The more you contribute to your niche/sector/industry, the faster your star will rise.
– Follow up after networking events – getting the networking right is one thing, but it’s important to also get your follow-ups right too. Get people’s business cards, phone numbers or emails and get in touch after the event to touch base. A quick email or LinkedIn message could well be the start of a blossoming new business relationship or friendship. It’s also a good idea to connect on social media and to comment, share and repost your new contact’s posts.
What are the best places for networking?

– Industry-specific events and conferences – industry events are great places to rub shoulders with other professionals in your field. You can get involved in discussions, learn about the latest trends and developments and even present your own sessions.
– Social media platforms – you’re spoilt for choice when it comes to social media sites to help your industry networking. LinkedIn, X(Twitter), Facebook, Threads and BlueSky all help you connect with the people you’ve met through your networking, and build on those relationships to share your insights and ideas more widely.
– Local meetups and workshops – most cities and towns will have regular business meetups and workshops that you can dip into. Business breakfast events and evening get-togethers are a great way to meet local business owners and to find out what’s going on in your local community.
If you’re looking to raise your profile and improve your networking, we’d love to lend a helping hand. We’re connected to hundreds of different business owners and leaders – and we’re more than happy to introduce you.

Our advice is to put yourself out there in your industry community, track down your local business peers and get busy with your content marketing and social media posts.

In today’s digital times, you’re probably used to having unrivalled access to your financial numbers, key performance indicators (KPIs) and cashflow metrics. Without good bookkeeping, the speed and quality of your reporting can quickly fall down.

So, why is fast and accurate bookkeeping so important? And what are the main bookkeeping tasks that your business should be getting right?

The financial importance of good bookkeeping

Bookkeeping is a fundamental part of your financial process as a business. Without it, your accounting software has no financial data to work with, your FD doesn’t have the most current numbers, and your accountant can’t see the current financial health of the business.

Inputting your financial transaction into some form of record-keeping system is also a mandatory commitment if you’re a registered business and paying goods and services or value-added tax. Bookkeeping is what provides you with a historic breadcrumb trail of your finances – allowing you to track your cashflow, revenues and profits over a given period.

How to maximise your bookkeeping

So, bookkeeping is a vital part of your financial management. And the key to having your transactions recorded, available for reporting and accessible whenever you need them.

But how should the bookkeeping process work, in an ideal world? Let’s walk through the core bookkeeping steps and how you can get the most from this financial admin task.

To keep on top of your bookkeeping:

– Scan all financial paperwork – the initial part of the bookkeeping process is to scan and record all receipts, invoices and remittances. This gives you a digital copy of the paperwork that relates to your income and expenses – important when you get around to filing tax returns and expense claims etc.
– Record all transactions immediately – getting your transaction recorded and in the books ASAP is vital. This includes recording both your income and expenses, as soon as they occur, and matching them with the scanned paperwork. This not only helps you stay organised but also means your financial data is always up-to-date and can provide real-time reporting and numbers. This can be a huge help when running the business.
– Categorise transactions accurately – when recording transactions, make sure you’re accurate and categorise each item correctly. Not only does this remove the potential for errors and miss-keying in your books, it also helps you track your spending and income more accurately, so your reports are an honest reflection of your financial health.
– Reconcile your accounts regularly – reconciliation is the process of matching your transactions (both income and expenses) against your bank statement and other financial statements. It’s a key part of your bookkeeping and should be done regularly, to ensure that your balances are correct and that your records are totally up to date.
– Use a cloud-based accounting system – bookkeeping doesn’t involve books (ledgers, in accounting-speak) anymore. In the digital world, you can use cloud-based accounting software, like Xero, to record your transactions and access your financial data in the cloud from anywhere, at any time. This makes it easier to keep on top of your numbers when out of the office (and Xero will even automate the reconciliation process too).
– Outsource your bookkeeping to a professional – yes, you can do your own bookkeeping. But there’s a LOT of value to delegating all the hard work to a professional bookkeeper. If you don’t have the time or expertise to manage your bookkeeping yourself, outsourcing is a smart move. A bookkeeper will make sure your books are always accurate and under control. Plus, they can produce cashflow statements, revenue forecasts and other reports to help your business decision-making.
Talk to us about outsourcing your booking

With today’s cloud accounting software, bookkeeping is a far less tedious task than it used to be. But it’s still a regular, time-consuming job that can take you away from running the business.

If you’re thinking about outsourcing your bookkeeping, and freeing up that admin time, we’d love to talk to you. Our outsourced bookkeeping service will take on your bookkeeping tasks, to streamline the whole process. We’ll also introduce you to automated data-entry tools like Dext Prepare, Auto Entry and Hubdoc, that make snapping receipts and scanning invoices a breeze.

Let us do the books, so you can get back to talking to customers and winning work.

Get in touch to discuss our outsourced bookkeeping.

Running a business costs money. There are always costs, overheads and supplier bills that mount up – and these expenses will gradually chip away at your cash position, making it more difficult to grow and make a profit.

So, what can you do to reduce your spend levels? And what impact will this have on your overall margins, profits and ability to fund the next stage in your business journey?

Getting proactive with your spend management

Spend management is all about getting in control of your expenses – and, where possible, aiming to reduce the level of costs and overheads that you incur as a company.

Excessive spending eats into your cashflow, reduces your profit margins and stops you from achieving the profits that you’re capable of as a business. So if you can get proactive with your spend management, you can actually make your company a far more financially productive enterprise – and that’s great for your overall business health.

So, what can you do to reduce spend and slim down your company expenses?

Here are some key ways to reduce expenses:

– Reduce your overheads – your overheads are the unavoidable costs of running your business, producing your products or supplying your services. If you have bricks and mortar premises, these overheads will include rental payments, utility bills and the cost of paying your staff. Drill down into the numbers and see where there are opportunities to reduce these overhead costs. That could mean moving to smaller premises, or reducing the size of your workforce, to reduce payroll expenditure.
– Put limits on staff expenses – if your employees can claim expenses, or buy raw materials and equipment with the company’s money, these costs can soon start to rack up. It’s a good idea to put a spending limit in place, so each staff member can only spend up to an agreed amount. Having a clear expenses policy helps, as will training up your staff in good spend management techniques. Expenses cards or expense managment software will allow you to quickly set spend limits, track expenses and pull your expenses data through to your cloud accounting platform for processing.
– Look for cheaper suppliers – if you can reduce your supplier costs, this will go a long way to bringing down your overall spend. If you’ve been with certain key suppliers for years, look around for new quotes, look at current market prices and see if you can negotiate better deals. And if your old suppliers aren’t flexible enough, try swapping to newer, more eager suppliers who will be willing to meet you in the middle on price.
– Make your operations leaner – the bigger your operational costs are, the less margin you’ll make on your end products and services. One way to resolve this is to aim for a ‘lean approach’, paring back your staff, resources and operational complexity to the bare minimum. By making the business as lean as possible, whilst still delivering the same output, you keep your revenue stable, but reduce the spend level that’s eating into your cost of goods sold (COGS). The smaller your COGS, the more profit you make on each unit or sale – and that means better cashflow, more working capital and bigger profits.
– Explore tax reliefs – you might assume that tax costs are an unavoidable expense when running your business, but it’s worth exploring which tax reliefs, grants or other business benefits you may benefit from. For example, research and development (R&D) tax credits that help cut your corporation tax expenses if you can demonstrate that you’re involved in innovation and groundbreaking R&D within your industry or specialism.
Talk to us about improving your spend management

If you’d like to get in control of your expenses, we’d love to chat. We’ll review your current costs and will highlight the key areas where expenses can be cut. Then we’ll help you formulate a proactive spend management programme, to reduce your unnecessary spending.

Create a Custom Business Plan

For those thinking about starting a new business or wanting to improve your existing business plan, the business plan tool from business.gov.au is an easy way to evaluate your business idea and set goals for the year ahead. It asks a series of questions about your business and generates a custom plan for you.

Objective: A business plan aims to establish a framework and guide for setting up the management tools and requirements to run a successful business and helps you adapt as the business grows.

Evaluating a New Business Idea: Whether you’re in the early stages of conceptualising a business or exploring a new venture, the template guides you through assessing the feasibility of your ideas. It prompts you to conduct market research, analyse competitors, and define a strategic approach to ensure your business idea is viable.

Setting Goals for the Year Ahead: For those already in business, the template assists in charting a course for the future. By setting specific and measurable goals, you can outline achievable milestones for the upcoming year. This proactive approach ensures a clear direction and helps measure progress over time.

Keeping Your Business on Track: The template acts as a roadmap for your business journey. It helps establish key performance indicators, enabling you to regularly monitor your business’s performance. Providing a structured framework keeps you on track, aiding in decision-making and adapting strategies as needed to navigate challenges effectively.

Seek Advice from a Professional

Before finalising your business plans, it’s crucial to consult with professionals such as Bookkeepers, Accountants, or experienced business mentors. These experts possess the knowledge and insights to guide you in starting a business and can identify potential gaps in your strategy. Seeking their input ensures a thorough examination of your financial projections, helps validate your ideas, and provides valuable feedback to strengthen your overall business approach.

Guides To Help Your Business

Use these guides from business.gov.au to help you plan, start and run your business. You’ll find resources, tools and where to go for more help.

• Guide to starting a business: This guide will take you through each step of starting a business.
• New businesses: Consider what’s involved in running a business before you start.

Some Thoughts For Business Owners

Business owners have a unique opportunity at this time of year to reflect on their company’s achievements and set the stage for financial success in the upcoming year. Here’s a comprehensive guide to help business owners establish meaningful financial goals and strategies for the new year.

Evaluate Current Business Performance: Before diving into goal setting, take a moment to assess your current business performance. Review key financial indicators, analyse operational efficiency, and identify improvement areas. This baseline assessment will provide valuable insights into the overall health of your business.

Define Clear and Measurable Objectives: The most effective goals are those that are specific and measurable. Instead of vague goals like ‘increase profits’, consider setting a more precise target, such as ‘achieve a 15% increase in net profit margins’. This clarity provides direction and facilitates easier tracking and assessment of progress.

Embrace Technological Advancements: Evaluate your current technology infrastructure and set goals for leveraging technology to improve efficiency. Explore new features in your existing software, automate routine tasks, and consider implementing advanced analytics tools and staying up to date with technological advancements that can position your business as innovative and capable of adapting to changing market dynamics.

Cultivate Stronger Customer Relationships: Building solid customer relationships is integral to business success – set goals for enhancing communication, responsiveness, and overall customer satisfaction. Consider implementing customer feedback mechanisms, personalised communication strategies, and loyalty programs to foster lasting relationships with your clientele.

Develop Robust Risk Management Strategies: Identify potential risks that could impact your business, and formulate strategies to mitigate them. This may include cybersecurity measures, disaster recovery plans, and contingency plans for unforeseen events. Proactively addressing risks ensures the resilience and reliability of your business operations.

Optimise Operational Efficiency: Time management is a critical aspect of business success. Set goals for optimising work hours, streamlining processes, and improving overall productivity. This may involve reevaluating workflows, delegating tasks, and implementing time-tracking tools to identify areas for improvement.

Establish Financial Milestones: Define specific financial milestones for your business. These could encompass revenue growth targets, profit margin goals, or expansion plans. Breaking down larger financial objectives into achievable milestones provides a roadmap for success and allows for a sense of accomplishment throughout the year.

Strategies for Business Success: Achieving success in the new year involves setting transparent, achievable, and measurable goals. Business owners find success by focusing on strategic objectives that not only elevate their company’s standing but also contribute to the business’s overall financial health. By adhering to clear and attainable goals, business owners can confidently enter the new year, fostering personal growth and positively impacting their businesses.

The Value of Time Management for Business Owners: In the pursuit of increased productivity and efficiency, business owners need to recognise the value of time beyond its immediate impact on work. The strategic use of productivity tools and best practices should aim to reclaim time for meaningful pursuits – reducing work hours, spending more time with family, or investing in continuous professional education.

The ultimate goal should be to work smarter, not just harder. By adopting a holistic approach to time management, business owners can strike a balance that enhances personal well-being and growth. This strategic use of time aligns with the broader objective of achieving success that encompasses both professional and personal dimensions, contributing to a more fulfilling and balanced life outside business.

Your Bookkeeper

A skilled bookkeeper is a vital partner in steering your business towards success in the upcoming year. Beyond managing financial records, they contribute by assessing your current financial position, setting measurable objectives, and optimising operational efficiency through technology integration. Their expertise aids in defining clear financial milestones, implementing risk management strategies and providing valuable insights for informed decision-making.

With a focus on cultivating stronger client relationships, a proactive bookkeeper becomes a key asset in navigating the financial landscape, ensuring your business is well-prepared, efficient, and poised for sustainable growth.

Disaster Recovery and Business Continuity Planning

Australia’s summer brings the promise of warmth and sunshine and the potential for natural disasters such as bushfires, storms, and extreme heatwaves. For small businesses, being prepared for these challenges is crucial to ensuring continuity of operations and safeguarding against potential risks.

A Business Continuity and Disaster Risk Management Plan outlines key strategies tailored for small businesses in Australia to navigate the uncertainties of the summer season.

Risk Analysis: Identifying and Assessing Threats

The first step in developing a comprehensive plan is to conduct a thorough risk analysis. Small businesses should consider the threats they face during the summer, such as bushfires, storms, power outages, and extreme heat.

Each potential risk should be evaluated based on its probability of occurrence, potential impact on the business, and the resources required for recovery.

For instance, a small retail business may identify the risk of a power outage, which could lead to the spoilage of perishable goods and financial losses.

Prioritising Risks and Developing Preventive Measures

Once risks are identified, they must be prioritised based on their likelihood and potential impact. For example, in a region prone to bushfires, the risk of this natural disaster may be higher than that of a storm.

Therefore, preventive measures such as maintaining a cleared perimeter around the business, installing fire-resistant materials, and having a well-defined evacuation plan should be prioritised.

Considering the possibility of power outages during heatwaves, businesses might invest in backup power sources like generators, and establish protocols for regular equipment checks.

Additionally, implementing measures such as fire-resistant roofing and secure storage for essential documents can significantly reduce the impact of potential disasters.

Budgeting for Disaster Preparedness

Understanding that preventative measures are an investment in the business’s future, budgeting for disaster preparedness is crucial. Small businesses should allocate funds for equipment such as fire extinguishers, backup generators, and protective infrastructure. Insurance coverage tailored to the specific risks faced, such as coverage for bushfire damage or business interruption insurance, should also be considered.

Dollars spent in prevention are worth more than dollars spent in recovery. Allocating resources upfront to minimise risks can save businesses from substantial financial losses and potential closure in the aftermath of a disaster.

Communication and Education

Ensuring that employees are well-informed and educated about disaster preparedness is vital. Conducting regular training sessions on evacuation procedures, fire safety, and the use of emergency equipment can make a significant difference during critical situations.

Small businesses should establish clear communication channels to keep employees informed about potential risks and the actions they need to take.

Additionally, maintaining open communication with local emergency services in bushfire-prone areas can provide valuable insights and support in times of crisis. Being part of local community networks and staying informed about weather forecasts and potential hazards contributes to a proactive approach to disaster management.

Developing a Detailed Recovery Plan

In the event of a disaster, having a detailed recovery plan is essential for small businesses to resume operations swiftly. This plan should outline specific roles and responsibilities within a designated recovery team. For instance, designating individuals responsible for equipment checks, data backup, and coordination with emergency services ensures a coordinated and efficient response.

Defining the sequence of actions during recovery, from assessing the damage to implementing repairs and restoring essential services, is critical.

The recovery plan should include provisions for data recovery, ensuring that vital business information is backed up regularly and stored securely at offsite locations.

Regular Testing and Evaluation

A robust plan is only effective if it has been tested and evaluated regularly. Small businesses should conduct simulated drills to assess the readiness of their teams and the efficacy of their recovery procedures. This testing helps identify any gaps or weaknesses in the plan, allowing for adjustments and improvements.

Recording test results and updating the plan accordingly ensures the business continuously improves its disaster preparedness. Regular reviews should also consider changes in the business environment, technology, and potential new risks that may emerge.

Adaptation to Changing Circumstances

Much like the climate, the Australian business landscape is dynamic, and small businesses must adapt to changing circumstances. As technology evolves, businesses should incorporate new tools and systems into their disaster preparedness strategies. Cloud computing, for example, provides an opportunity for secure data storage and accessibility, reducing the risk of data loss during disasters.

New threats may emerge, necessitating updates to the disaster risk management plan. Whether it’s a cybersecurity threat or an environmental risk, small businesses should stay informed and adjust their plans accordingly. The plan should be a living document, evolving with the business and the external environment.

A Resilient Future for Small Businesses

Australian small businesses facing the challenges of the summer season can navigate these uncertainties with a well-crafted Business Continuity and Disaster Risk Management Plan. Businesses can enhance their resilience by conducting a thorough risk analysis, prioritising preventive measures, budgeting for preparedness, fostering communication and education, and developing a detailed recovery plan.

Regular testing, evaluation, and adaptation to changing circumstances ensure the plan remains practical and relevant. By investing in disaster preparedness, small businesses protect their assets and contribute to the community’s overall resilience.

Why not consider having a discussion with your Professional Bookkeeper about assisting you in designing and implementing a Business Continuity and Disaster Risk Plan?

It is coming to that time of year again where Christmas is around the corner and the New Year follows shortly thereafter. While it is commonly a time for celebration and an annual vacation, it can be a complex time for your Bookkeeper.

The complexity comes when working with varying awards or working conditions and when there is a mix of people going on leave, some remaining at work, some that have no leave, and those that want to work but cannot.

What is a Shutdown?

According to the Fair Work Ombudsman, a ‘shutdown’ or ‘close down’ is when a business temporarily closes during a specific period. The reasons may be that it is not viable for the business to operate during this period because it may be a quiet time, or many staff are away on leave.

A shutdown is not the same as a stand-down. Reasons for stand-down are when employees cannot be usefully employed due to various circumstances, including stoppage of work for reasons for which the employer cannot reasonably be held responsible.

Understand the Award

Whilst your Bookkeeper is already across the relevant awards for the employees, it is helpful for Business Owners to understand the specific conditions that apply to a shutdown, such as during the Christmas break. The conditions can vary for each award, industry and state. This will impact on leave entitlements and other contributing factors.

Should the employees be covered by a registered agreement, then check the terms that relate to a shutdown and/or the Christmas break. To find a registered agreement, go to the Fair Work Ombudsman website.

Shutdown Payments

Many awards were updated in May 2023 regarding rules on taking annual leave during a shutdown.

The new rules outlined the following:

• Employers may require employees to take paid annual leave during a temporary shutdown.
• Employers must provide at least 28 days written notice of the temporary shutdown period to all impacted employees.
• The requirement to take annual leave must be reasonable.
• The notice period can be reduced through an agreement between the employer and the majority of impacted employees.

An employee who doesn’t have enough paid annual leave to cover the whole period can form an agreement with their employer in writing for other options for the days not covered, such as:

• Using accrued time off.
• Annual leave in advance.
• Leave without pay.

All full-time and part-time employees must be paid during this period. It is to be treated as leave. Casuals are not paid during this time, given that no work is undertaken. Depending on the type of Award or Agreement, it may or may not outline if an employee can be advised that they “must take leave” during the shutdown. The Award might indicate that the employer may request the employee take leave.

When nothing is stated in the Award or the Agreement, then the employee cannot be forced to use their leave or be forced to take unpaid leave. Typically, you can negotiate a favourable arrangement for both parties, such as partial paid and unpaid leave. It is imperative that all terms and conditions relating to the employee’s contract are adhered to during the shutdown.

Refer to the relevant award or agreement in the event that there is not enough leave accrued to cover the shutdown period. Some awards state that the employee will receive unpaid leave during the period, whereas others can take paid leave in advance. If the employee does not agree to take unpaid leave or leave in advance, the employee is entitled to be paid their usual wages.

Public Holidays

When public holidays fall during an employee’s leave, these are to be treated as public holidays and not as annual leave – it is treated as though they would have worked that day should they not have been on leave. The public holiday pay should not affect their leave accrual and be paid as another working day. The employee will be paid for any public holidays during the shutdown period that fall on days they would normally work.

An example of what can occur:

Mary is a full-time employee who has requested leave for the duration of 7 days. This includes Anzac Day, a public holiday that falls on a Monday. Because Mary is a full-time employee, she would need to be paid for Anzac Day. This means that Mary is only taking 6 days of annual leave, not 7.

When employees take sick leave on either side of a public holiday, they are still entitled to be paid for the public holiday as though they would have been at work that day. The usual sick leave process applies unless there is any evidence that demonstrates otherwise.

An exception would be when the employee has been rostered to work on a public holiday, which is not a day they would usually work. If they were to call in sick, the employee would not be paid for that day. Additionally, no payment will be made for the public holiday if the employee is on unpaid leave.

Working on Public Holidays

All employees receive their base pay for hours worked on a public holiday. The varying entitlements are included in the Awards or Agreements for every employee, including how public holidays will impact the employee’s pay.

Some of the entitlements that need to be considered:

• Additional pay, i.e. public holiday penalty rates.
• Extra day off or annual leave.
• Minimum shift lengths on public holidays (e.g. 4 hours).
• Any agreements made to substitute another day for the public holiday.

Employees cannot be forced to work on a public holiday. However, an employer can make this request if it is reasonable to the type of employment. Equally, the employee may refuse to do so when the refusal is based on reasonable grounds.

To understand what is deemed ‘reasonable’:

• Circumstances for the employee which are personal, e.g. family responsibilities.
• The amount of pay and whether there is any increase, e.g. penalty rates.
• The type of work undertaken as well as the needs of the business.
• Whether the employee’s agreement entails working on public holidays.
• The employment status of the employee – full-time, part-time, casual or shift worker.
• The amount of notice provided to either party.

The collective circumstances of the employee need to be considered prior to requesting they work on a public holiday.

Not Working on Public Holidays

With the exception of casual employees, employees who would normally work on the specific day that the public holiday has occurred are to be paid their usual base rate in conjunction with their ordinary hours that they would have worked.

The base rate does not include:

• Penalty rates.
• Loadings.
• Overtime.
• Monetary allowances.
• Bonuses or any incentive-based payments.

Please note that it is unacceptable to change an employee’s day of work to avoid making this payment.

An example of this would be:

Steven is a part-time employee who works from Tuesdays to Thursdays. This year Anzac Day fell on a Monday. Because Steven does not typically work on Mondays, he will not be paid for this holiday.

Housekeeping

• Notify all employees of your intention as a Business Owner to shutdown, and the planned shutdown dates (minimum 4 weeks’ notice).
• Ensure appropriate forms and information are received from the employees to confirm days on leave, and the confirmed intention of each employee.
• Request that your Bookkeeper calculate days each employee will not be present at work and is entitled to leave.
• Note how many public holidays there are during the shutdown period.
• Be across any employees working during the shutdown period or on a public holiday, including any relevant penalty rates or changes to the rate of pay for any employee.
• Confirm if leave is to be paid during a normal pay cycle, before Christmas, or when the shutdown is to occur.
• Is there a pay run during the shutdown, and if so, what are the implications (if any)?
• Give your Bookkeeper enough time to prepare the pay run, as often, in preparation for an annual shutdown, processing the pay run will take longer than usual.

How can business automation streamline your business? Business automation uses technology to streamline and simplify all the repetitive manual tasks, processes and workflows that are part of the everyday running of your business.

Instead of spending hours of business time doing everything manually, automated systems can take on most of the heavy lifting. You can automate the data-entry of your bookkeeping, the sending of recurring invoices or the coding of transactions when doing your bank reconciliation – basically, any task that’s repetitive, rule-based and taking up your time.

Automation makes your processes faster, more accurate and more efficient. This frees up your time to focus on other important strategic and customer-facing tasks. It also means you can get more work done in less time, making the business more productive and profitable.

How does business automation affect your business?

Smart use of automation can give your small business a major boost. Instead of having to hire more people, you can grow the business and significantly reduce the admin workload for your existing human team. It’s the easiest way to set the foundations for scaling up the company.

By automating key areas of your operation, you can:

• Streamline your workflows – business automation optimises your processes by automating tasks like data entry, payment collection and approval workflows. This reduces the manual effort that’s involved and boosts your operational efficiency.
• Improve your process accuracy – automation cuts down on human errors by applying rules consistently and precisely. This means your financial calculations are more accurate, data is of a higher quality and the company has better compliance standards.
• Save time and resources – all those tedious, repetitive manual tasks are now automated. This frees up valuable time for you and your team to focus on strategic activities, innovation and working more closely with your customers.
• Become more cost-efficient – automation cuts back the labour costs that usually go hand-in-hand with manual tasks. You’re more productive, your operational costs are reduced and you don’t need any additional staff to grow the business.
• Scale your business with ease – as your small business expands, automated systems are the special sauce that helps you scale up as quickly as possible. You can effortlessly meet the increased workload, grow your systems and stay agile and adaptable – two of the key skills for any ambitious business that’s looking for fast growth.

How can our firm help you with business automation?

Working automation into your business strategy is the fastest way to achieve your key goals.

With your main tasks and processes automated, you have a sleek, systemised business to drive your growth. And we’re always here to help you maximise this use of automation. We’ll help you review your operations to look for the automation opportunities – and can suggest the most effective software automation tools to add into your tech stack.

If you’d like to know more about the benefits of automation, we’ll be happy to explain.

Understanding and Choosing the Right Method for a Business

Pay As You Go Instalments or PAYG Instalments are implemented by the Australian Taxation Office (ATO) to help businesses and individuals meet their income tax obligations throughout the financial year. It is particularly relevant for businesses that expect to have a tax liability at the end of the financial year. PAYG Instalments require businesses to make regular payments toward their expected tax liability, which are credited against their annual income tax assessment.

There are two primary methods to calculate and pay PAYG Instalments:

• Instalment Amount: Under this method, the ATO provides an estimate of your expected tax liability based on your previous year’s income and tax return. Businesses then make regular, pre-determined payments throughout the financial year, generally on a quarterly basis. The ATO’s estimate is designed to align with your expected income, ensuring your payments are proportional to your earnings.
• Instalment Rate: This method allows businesses to calculate their own PAYG Instalments based on their actual income and business activity. You are required to estimate your expected income for the current financial year and apply the applicable instalment rate, which can vary based on your business type and circumstances. Your payments will then fluctuate with your actual income, ensuring a more precise contribution to your annual tax liability.

Choosing the most suitable method for your business depends on various factors:

• Income Stability: If income is relatively stable and consistent from year to year, the Instalment Amount method may be more convenient, as it simplifies payment obligations.
• Income Variability: For businesses with fluctuating incomes, the Instalment Rate method offers flexibility by allowing adjustment to payments in accordance with actual earnings.
• Accuracy: If a business can make reasonably accurate income projections, the Instalment Rate method may help avoid overpaying or underpaying tax.

From the ATO

Case study 1: Kelly the DJ

Kelly is a DJ, working at festivals from November to January. She chooses to use the instalment rate method as it suits her seasonal business income.

Using the rate method means she needs to work out her business income each period. It helps her manage cash flow because the amounts she pays will vary in line with her income.

When Kelly receives her BAS or instalment notice, she calculates the instalment based on her income for that period, multiplied by the rate provided.

Case Study 2: David the plumber

David is a plumber with a regular monthly business income, so he chooses the instalment amount method. He won’t need to work out his business income each period to use this method.

David pays the instalment shown on his BAS. The amount is calculated from the information in his last lodged tax return.

Source: ATO – Which PAYG instalment method best suits your needs?

The BAS Agent’s Role

A BAS Agent is permitted to make the changes on the BAS – to have the BAS calculate the correct PAYGI based on the information – however, it is not the permitted role of a BAS agent (nor any contractor who is not a Tax Agent) to advise on what a new PAYGI rate should be.

A BAS Agent needs to receive instructions from the correctly authorised person within a business (or the business’s Tax Agent) regarding the new PAYGI rate or outcome. The BAS Agent can then amend the rate on the BAS.

The Tax Agent’s Role

The revision of the PAYGI rate or amounts is the realm of the Tax Agent as it requires the interpretation and application of income tax laws to the business circumstances.