For many businesses across Australia, the JobKeeper subsidy has ensured that operations could continue during a highly unpredictable year. However, with the end of JobKeeper fast approaching, will this still be the case? Here are the updates your business needs to be aware of before JobKeeper ceases and how to be prepared when it does.
Firstly, as it stands, JobKeeper is set to end 28 March 2021 with access being granted to this second extension via a new decline in turnover test. To pass this test your business must have had a reduction in turnover of at least 30% between Sept 2020 – Dec 2020 compared to the previous year. And as of 4 January 2021, the amount of JobKeeper subsidy for eligible employees has been reduced and continues to be in two tiers depending on their hours worked: Tier 1 $1,000 per fortnight and Tier 2 $650 per fortnight.
But what happens once these subsidies are no longer available to you? Here are the questions to ask yourself to make sure you are prepared for what is to come:
Will you have enough cashflow to meet your upcoming wages expenses?
If you are unsure then it is time to review your cashflow budget and adjust hours accordingly before you end up in a negative cashflow situation and are unable to pay your staff.
What are your financial projections for 2021?
It could be time to discuss these with your accountant ahead of 30 June, so you are crystal clear on how this will impact your financial obligations come tax time.
Is it time to review/shorten your payment terms?
If there is a concern about your clients/customers ability to pay your invoices, it could be time to review your payment terms to include a deposit or a shorter period before due.
Can you reduce the amount of stock on hand?
During times of increased business operation, it makes sense to have a larger amount of stock on hand to meet demand. However, if your predictions are pointing to a lower turnover than usual, it could be time to review this.
Have you reviewed your marketing plan and adjusted?
And, if all the above have been done as much as possible, it could be time to review your marketing plan and adjust it to match the current buyer’s climate.
There are many other financial areas of your business that can be reviewed to prepare for the end of JobKeeper. Things such as Professional Services fees, Rental Agreements and even Insurance policies could potentially be reviewed. Due to this, it is highly advisable to speak to your Accountant about how your specific business can be prepared now, rather than waiting for D-Day.
At VBA we specialise in strategic tax advice, offering tax and financial reporting for individual income earners, family businesses, tradies and construction companies.
Victor Bimrose Accountancy Pty Ltd (ASIC No. 1259423) ABN 53 010 957 294 is a Corporate Authorised Representative of Merit Wealth Pty Ltd ABN 89 125 557 002, Australian Financial Services Licence Number 409361.
Mark Foxley-Conolly (ASIC No. 1259421) is a Limited Authorised Representative of Merit Wealth Pty Ltd ABN 89 125 557 002, Australian Financial Services Licence Number 409361
General Advice Warning: This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.