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We don’t know about you, but the volume of Government press conferences and announcements relating to COVID-19 can feel overwhelming. As a small business owner, you’re busy enough trying to pivot, diversify revenue streams and care for employees (and yourself!) without being glued to the news. We get it. So we brought in Angus Capel, Small Business Advocate at Xero to give us a run down on what support measures are in place for small businesses during this difficult time.
What are some of the most common question small business owners are asking right now?
We know from our accountant and bookkeeper community that many small businesses are seeking guidance on what parts of the government stimulus packages are relevant to them. Small businesses want to know where, when and how they can access assistance for their business and employees.
With so much confusion around, the ATO website is a great resource. If you haven’t got one already, it’s also an important time to engage the services of an accountant or bookkeeper to help navigate the subtleties of your set-up.
Having to deal with such a rapidly evolving situation, a lot of small businesses are also looking for guidance on business continuity planning. For many businesses, this is the first time they will have considered the need for this kind of plan so they require urgent support to get something underway.
There’s been a lot of talk around the support measures in place for businesses. Can you outline some of the key packages that sole traders and small businesses should be aware they can access?
Federal and state governments have been working to deliver support to Australian businesses as social distancing and self-isolation requirements are enacted across the economy.
Some of the key packages available to small businesses and sole traders include:
Under the government’s JobKeeper program, employing businesses severely impacted by COVID-19 are eligible to receive $1,500 per employee per fortnight to contribute to wages. This includes self-employed, full-time and part-time workers along with casuals.
Employing businesses with a turnover that doesn’t exceed $50 million will receive up to $100,000 reimbursement of withheld tax on wages, and a 50 percent wage subsidy for apprentices.
Small businesses will also have access to an expanded instant asset write-off up to $150,000, cheaper bank loans and unsecured loans with a six-month repayment holiday for new loans.
Sole traders who experience hardship will have easier access to increased income support and the ability to draw down up to $20,000 on their superannuation.
The ATO is deferring some small business payments, remitting interest on penalties and considering low cost payment plans on a case-by-case basis.
State governments are also offering a variety of payroll tax waivers and holidays, interest free loans, grants, waivers of licensing fees, service rebates, cash apprentice incentives and acceleration of planned infrastructure work.
Can you explain the apprentice and trainee rebate? How would a business owner go about this?
The government is encouraging small businesses to keep their apprentices and trainees on board during this challenging time by subsidising their wages by 50 percent for nine months from 1 January this year. For the nine-month period, this could be worth as much as $21,000 to a small business per apprentice or trainee.
To be eligible, a business needs to have been training the trainee or apprentice as at 1 March and will need to be assessed by the Australian Apprentice Support Network (AASN). Eligible businesses can register from early April. To apply, a small business should get in contact with their accountant or bookkeeper to discuss this subsidy before contacting AASN.
We’re seeing a lot of businesses forced to make the difficult decision to stand-down employees or put them on leave without pay. Which of these will have the best outcome for my business and my employee?
The government has recently announced the unprecedented $130 billion JobKeeper payment to help businesses stay connected with their employees during COVID-19 and respond quickly with minimal disruption when it passes. The payments are $1,500 per fortnight per employee, for full and part time employees, sole traders and casual employees who have been with the business for 12 months. The payments will flow from the first week of May backdated to 30 March and offer great flexibility, well in excess of the previous options of standing down employees or forcing leave without pay.
Are there any subsidies for purchasing software and moving my business online during COVID-19 and beyond?
As it stands, there aren’t any subsidies relating to purchasing software available to businesses shifting to online operations.
COVID-19 is forcing many business owners to rethink the way they do business. Indeed, the term ‘pivot’ has quickly become a household phrase over the past couple of weeks.
In the meantime, others are considering how they want to position their business for recovery while they’re forced to close their doors or cease trade and services. A number of businesses are using this time to explore and implement new systems and processes that leverage technology so they can be more productive when the economy recovers and self-isolation and social distancing measures are eased.
The small business sector that reemerges in the aftermath of COVID-19 will likely be materially different from the one that existed in February 2020. One aspect of this will be a now non-negotiable digital presence for almost all businesses.
The Australian Banking Association has provided assistance by way of suspending mortgages and lease repayments. What does this mean for me as a commercial tenant or a commercial property owner?
Homeowners impacted by COVID-19 will be able to defer mortgage repayments for up to six months and tenants will be protected from eviction (it’s important that homeowners realise that interest will still accrue over this time).
Commercial tenancies on the other hand, are a different beast. While some landlords have agreed not to terminate tenancies as a result of non-payment of rent during COVID-19, this is not a blanket rule. It is crucial that small businesses consult with their accountant or bookkeeper to explore options, including negotiating with landlords. Flexibility has been a key feature of the response to this crisis and asking for help as early as possible will serve you well.
What are the key resources you’d suggest referring to for the most up to date and accurate information?
The best sources of information for small business owners are:
Your accountant or bookkeeper
What are you and the Xero team doing to support small businesses during this tough time?
This is an incredibly challenging time for everyone and we’re looking to support small businesses however we can. As a first step, Xero has created a business continuity hub containing a range of supportive and practical tools and education resources for small businesses, including daily webinars. It also brings together key information on government stimulus packages so you can see what they mean for your business. We’ll be updating this regularly.
What advice would you give small businesses navigating this unprecedented time?
With government support, the assistance of a qualified accountant or bookkeeper, and the latest technology, small businesses stand a better chance of making it through this trying time.
For any businesses seeking government assistance, technology will play a big role in providing the ATO with the data it needs. For example, to prove your eligibility for the JobKeeper program, you’ll need to document a 30 percent drop in revenue. And if you’re using online accounting software, the ATO will already have access to your business’s financial position.
You’ll also need to share payroll details to qualify for JobKeeper payments. This information should already be with the government care of Single Touch Payroll (STP) – a government-led initiative that has been required of all employers since mid-2019.
If you haven’t adopted STP, now is the time to do so using up-to-date accounting software. If there are future stimulus packages for employers, they too will almost certainly rely on payroll details captured by STP.
Born in the cloud, Xero is a beautiful, easy-to-use platform for small businesses and their advisors. It connects you with your business numbers anytime, anywhere and on any device, and offers features such as payroll, invoicing, payments and bank reconciliation. Xero also provides its subscribers with connections to a thriving ecosystem of more than 800 third-party apps and more than 200 banks and financial service providers.