Now is an ideal time to be setting a budget. Many of us think of a budget as something we ‘should’ do, but just don’t get around to it. Hopefully, there is some motivation in the following, and a budget will now become a regular priority for your business.
We can all get caught up in the day-to-day operation of our business. With all the demands of business, we don’t always give our finances the attention they deserve, even though sound financial performance is essential for our business success. You are more likely to achieve financial success if this is where your attention is.
A budget is a good tool to support setting your business goals for the coming year. A budget encourages you to quantify your goals for the coming year, and ideal business growth. For businesses with seasonally affected income, a budget will map out which months to expect higher income, and which months are more likely to be lean.
When looking at goals for increased income, a budget is a tool that allows you to factor in the increased costs of earning more income. You might need to hire more staff, which will not only increase your wages bill, but also your superannuation and workers compensation expenses. If you need to purchase a new desk or computer or chair, these costs can also be built in to your budget.
A budget is a great tool for measuring and analyzing business performance if it is used to measure actual performance against budgeted expectations on a regular basis. Meeting or exceeding budgeted sales targets can be a great motivator to continue with the hard work, a particularly successful product or service, or even marketing exercise.
A budget can help you to identify what is the absolute minimum you need to earn to cover your costs, whether or not this includes your own income.
A budget can be useful in quantifying the income needed to maintain a consistent or desirable profit margin, particularly when costs increase. Plans on how to achieve increased sales to cover cost increases can then be formulated.
A budget can provide a good basis for projected cashflows, giving you a picture of when money is going to come in to the business and when money is going to go out of the business. It will help you to identify if cashflow is going to be a problem at any stage, giving you time to prepare for this.
Your budget will give you some indication on whether or not you might need to invest more money into your business to achieve your goals, and whether or not you might need to consider some financing to cover these objectives.
Regular review of actual income and expenses against budgeted expectations, can highlight issues with greater than expected costs or lower than expected income on a more timely basis that then allows you to take action on a more timely basis. Under performance is not something you want to wait until the end of the year to discover.
The process of setting a budget and then comparing actual figures and business performance against these projections on a regular basis, will provide a lot more clarity and understanding of your business financials, and how they impact on your business success.
Budget figures don’t need to set in concrete and can be reviewed and revised as circumstances change, but the benefit lies in creating a budget and using it.
If you have another good reason to prepare and implement a budget for your business, we would love to hear it. Please email [email protected] and use Budget Reason in the subject line.
Have a question? Email [email protected] and use Budget Question in the subject line.
Let’s talk. Take advantage of our free 1 hour consultation www.swagbookkeeping.com.au
A business is required to keep records and issue payslips to all staff, including friends and family members.
Employers who don’t keep proper records or issue payslips and find themselves in a situation where an employee makes a claim of underpayment regarding entitlements will be required to disprove any underpayment in court.
If no records or payslips have been kept then the court will assume the employees’ allegations are correct. The onus is on the employer to prove they have met their obligations. This is called reverse onus of proof and is part of the Fair Work Act.
And things can change over time which may affect your obligations as an employer. eg. on 26th March 2021, sections of the Fair Work Act relating to casual employees were amended.
The Fair Work Ombudsman has developed a series of online learning courses to assist businesses and employees to understand obligations and rights within the workplace. The courses are free and interactive and take around 20–40 minutes to complete.
For more information on the courses offered by the FWO please see link: FWO – Online Learning Centre
Being a small business owner is a unique experience which can involve stress and pressure coming from many directions.
If you aren’t sleeping, struggling to concentrate, or are just feeling overwhelmed by day-to-day challenges, consider NewAccess for Small Business Owners. Developed by Beyond Blue, NewAccess for Small Business Owners is a free mental health coaching program offering flexible phone and video call support options for small business owners so they can manage stress and improve their mental wellbeing.
Coaches of the NewAccess for Small Business Owners program all have a small business background, allowing them to better understand the challenges small business owners may face. No doctor’s referral is required.
“One great thing about NewAccess was the accessibility. I was under so much stress financially and it was free.” — NewAccess participant
To find out more or enquire today visit beyondblue.org.au/newaccess-SBO, or if you know a small business owner, let them know about the new program.
The Victorian Government is providing financial support to people and people affected by Covid19 and current lockdown restrictions.
Are you unable to work due to restrictions, or had your hours or income reduced?
Discover more and find out who is eligible.
Find out how you can apply for the $450 COVID-19 Test Isolation Payment.
For information on other supports available to landlords, including additional land tax relief, please visit the State Revenue Office Land Tax Relief.
For more information on the full range of support available and updates
https://www.coronavirus.vic.gov.au/financial-and-other-support-coronavirus-covid-19
The Victorian Government’s Small Business COVID Hardship Fund will assist eligible small and medium businesses. The program offers grants of $14,000 to eligible small and medium businesses, including employing and non-employing businesses.
Closing date 10 Sep 2021
To be eligible, businesses must:
Employing businesses must also:
Businesses are not eligible if they have received funding under any of the Victorian Government COVID-19 support packages launched on or after 27 May 2021.
For a full list of eligibility requirements and how to apply
https://business.vic.gov.au/grants-and-programs/small-business-covid-hardship-fund
This is a lump sum payment to help Victorian workers unable to earn an income due to lockdown restrictions.
The COVID-19 Disaster Payment is a one-off payment to help when lockdown lasts for more than 7 days. The payment is not available for the first 7 days of lockdown. If eligible, payment may be received for as little as 1 day of the lockdown.
Australian residents need to claim online through a myGov account linked to a Centrelink online account.
Eligible working visa holders need to call Services Australia on 180 22 66 to make a claim.
For more information and eligibility criteria
https://www.servicesaustralia.gov.au/individuals/services/centrelink/covid-19-disaster-payment
Business.gov.au have created a build your own employment contract, for an employee under Australia’s Fair Work System, that is tailored to your business needs. Making your employee’s pay and conditions clear from the start can help protect your business in the long term.
It helps small business employers to make a basic employment contract that complies with workplace laws. This tool is recommended for small businesses to create a contract for an employee under the national industrial relations system.
It can be used for full-time, part-time, and casual employees who are covered by an award, but not salaries.
For more information: business.gov.au – Get started Employment Contract Tool.
You’ll also need to attach a position description to your final contract to give to your employee.
If you don’t have a position description yet, you can download the job description template from the Fair Work Ombudsman website
This is a lump sum payment to help Victorian workers unable to earn income due to lockdown restrictions.
The COVID-19 Disaster Payment is a one-off payment to help when lockdown lasts for more than 7 days. The payment is not available for the first 7 days of lockdown. If eligible, payment may be received for as little as 1 day of the lockdown.
Australian residents need to claim online through a myGov account linked to a Centrelink online account.
Eligible working visa holders need to call Services Australia on 180 22 66 to make a claim.
For more information and eligibility criteria
https://www.servicesaustralia.gov.au/individuals/services/centrelink/covid-19-disaster-payment
The minimum percentage employers are required to pay increases to 10% due on 1st July 2021.
The superannuation guarantee is paid in addition to the base salary. An employee currently earning a gross income of $60,000 (less personal income tax withheld) also receives an additional $5,700 superannuation guarantee (9.5% of the base salary) to their nominated superannuation fund. Total income $65,700.
With the super guarantee increase to 10%, this employee’s salary will remain at $60,000 but then receive an additional $6000 to their fund. Total income $66,000.
This could be considered in part, a wage increase.
An employee on a minimum award wage cannot be paid less than the minimum rate already being paid, so therefore the SG at 10% is to be calculated on top of and without reduction to the original base amount.
Mark the date 1st July 2021 in your calendar as the date your business will need to adjust their payroll systems to pay the increased amount of super.
The new SME Recovery Loan Scheme began as of 1st April 2021 and will continue through to 31st December 2021. The government is aiming to support more businesses affected by the pandemic and boost the economy.
The loans are up to $5 million in total and can be either secured or unsecured, and for a repayment period of up to 10 years. Lenders are also able to offer a repayment holiday period of up to 24 months. The interest rate offered is determined by each lender and will generally be capped at 7.5%.
The Government is providing the banks with guarantee 80% of the loan. The banks will still assess the credit worthiness of applicants.
If eligible, your business can use the loan for a number of purposes including:
For more information
https://treasury.gov.au/coronavirus/sme-recovery-loan-scheme