For many small businesses, EOFY is synonymous with late nights and writing cheques to the Australian Tax Office (ATO). However, Senior Workplace Consultant Josh Vikis at Employsure – a workplace relations specialist firm says it could be the best time to assess all the aspects of your business and put in place smarter business strategies with long term benefits: “There’s no better time of the year to do some strategic thinking,” says Vikis. “Rather than seeing EOFY as the time to get swamped, business owners should be using June and July as an opportunity to spring clean their business and jump ahead.”
According to Vikis, many SMEs create unnecessary burden and angst for themselves by failing to plan ahead. That’s why he encourages SMEs to capitalise on those elements that are known ahead of time:“Leaving things to the last minute can be costly if you are scrambling urgently to catch up.”
Part of this planning phase is wage forecasting; which some SME owners forget or neglect during the financial year. Vikis says the process of understanding what new wage rates and penalty rates are for each employee can be “daunting which causes some clients to keep putting off the work until their pressed for time.”
Vikis says the smarter approach is to do a simple forecast projection of what your business can financially sustain: “Make sure your draft several forecast scenarios so you are prepared and have a plan for any wage increases.”
For some business owners, “even a rise in wages above three or four percent will mean they will offset the cost to their customers; for others they will look at cutting shifts or working more shifts themselves. But it all comes down to planning for the best and worst-case scenarios.”
Perhaps the biggest change for SMEs in the 2018-19 financial year is the ATOs introduction of the Single Touch Payroll reporting, which kicks off on 1 July and is mandatory for all businesses that have 20 employees or more on their books. Under the new system, employers will need to report their payroll activities such as wages and superannuation to the ATO in real time, using a single Touch Payroll enabled software program, rather than submitting payroll information in bulk periodically. “In the long term, this automated Single Touch Payroll reporting will save employers time, but first of all you need to make sure you are paying employees the correct amount in line with the new wage rates that also come into force 1 July,” says Vikis.
Upon the annual assessment of minimum wages, if any determinations are made to change or vary wages in Modern Awards or a National Minimum Wage Order, they will apply from the first full pay period on or after 1 July each year. So even if you are fully aware of your employees’ minimum wages one year, you still need to stay on top of any potential changes on an annual basis.
“The Modern Award system is incredibly complex; so, it’s worth checking with workplace experts to make sure you are aware of ongoing changes affecting your business and make the necessary adjustments,”says Vikis adding “Protecting your business is easy if you know what the watch outs are.”
Ensuring that your tax and wage obligations are being met may not be the most glamorous task for business owners, but as it is a common cause of business failure, it is essential that you comply. According to Vikis “The goal is to free up mental room for strategic thinking around your business.”
The only way to protect yourself, your staff and your business is to know and meet your obligations as an employer. Join this free online masterclass to better prepare and protect your business before EOFY: Register today