Preparing your business for the 2016-2017 financial year

Summary: On 9 June 2016, the ACCC, ATO, ASIC, and the Fair Work Ombudsman hosted a webinar about what small businesses need to know and do in preparation for the new financial year.

Published: 22 June 2016

Scott Pape: Welcome to the 2016 multi-agency webinar. I'm Scott Pape also known as the Barefoot Investor and I'm passionate about increasing financial literacy in the Australian community and about increasing the capability of Australian small businesses so they can thrive and prosper. Do you know that 97% of all Aussie businesses are actually classified as small businesses so there's no denying just how significant the small business sector is within the Aussie economy and I'm one of them. Tonight we'll be discussing how you can prepare yourself and your small business so that it will be in the best possible position for the next financial year. I'm joined tonight by Lynda McAlary-Smith, who is the Executive Director of the Proactive Compliance and Education Branch of the Fair Work Ombudsman. Lynda, tell us a little bit about the Fair Work Ombudsman.

Lynda McAlary-Smith: Thanks very much, Scott. The Fair Work Ombudsman is Australia's workplace relations regulator and it's a pleasure to be here tonight to talk about our work. The majority of our interactions are helping employers and employees understand the workplace rules that apply to them around hiring employees, setting pay, managing performance and termination. This involves providing education and advice to employers and employees through our Fair Work Info Line, Small Business Help Line and our online resources. We also conduct audits of businesses to check compliance and provide assistance with particularly tricky areas.  We investigate suspected breaches of workplace laws and, for the most serious of matters, we take those who break the law to court. We also know that in every workplace there's the potential for disputes. Our compliance and enforcement policy places emphasis on resolving problems at the workplace level and the prevention of those disputes through the provision of advice and support to make compliance and interactions quicker and easier for both parties. Almost 80% of the formal 25,000-odd matters we assisted in last financial year were addressed through our collaborative dispute resolution processes.  And although we have a range of compliance tools available to us, we'd very much prefer to leave them in our bag and instead work with small businesses to get it right in the first place.  We want small businesses to come to us before a problem arises or escalates in their business. Small businesses that come to us early are best placed to receive our help.

Scott Pape: Thanks, Lynda. Now, to my right we have - from ASIC, we have Joe Zubic who is a senior manager of the Small Business Compliance and Deterrence Team within ASIC. Joe, can you tell us a little bit about ASIC and its focus on small businesses?

Joe Zubic: Thank you, Scott, and thanks for having me here tonight. ASIC is an independent Commonwealth Government agency.  It's Australia's corporate markets, financial services and credit regulator.  Now, while ASIC has a very broad mandate, we are focused on three strategic priorities or outcomes. Now, the first one is to ensure that investors and financial consumers are informed and confident. Now, education is very much the key here. We want to make sure that people understand investing preferably before they actually make the investment. Now, gatekeepers, such as business advisors, play a very, very important role here in helping ASIC inform investors and consumers.  But, you know, if these business advisors give the wrong advice, well, we'll certainly hold them to account. Our second strategic priority is to ensure that markets operate in a fair, orderly and transparent manner.  Now, we achieve this through our role as market supervision and competition and also promote good corporate governance and good corporate culture as well. Our third strategic priority is to ensure an efficient registration and licensing with a particular focus on reducing red tape for small businesses.  Now, one of ASIC's responsibilities, or key responsibilities, is to protect the financial well-being of the Australian economy. Now, small businesses play a very, very important role in the economy. For these reasons, there's about 4.1 million businesses, and I'm talking about companies and business names that are registered with ASIC, and as you said, about 97% of those are actually small businesses which makes them ASIC's biggest customer. They collectively employ about half the Australian workforce and they account for about a third of the GDP. Now, small businesses also, as we know, bring new ideas and innovation into communities so it's important for regulators like ASIC to help small business as much as they possibly can. Now, some of the ways we can do this is by, as I said, reducing red tape imposed on small businesses and also providing resources or relevant resources.

Scott Pape: Now, thanks for that, Joe. We've - down the end of the panel here we have Dr Michael Schaper who's the Deputy Chair of the Australian Competition and Consumer Commission. Michael, can you tell us a little bit more about the ACCC and give us a quick rundown on some of the key areas.

Dr Michael Schaper: Thanks, Scott. As the name suggests, we're responsible for a number of areas that are going to be of interest to almost all business operators. First up, we're the regulator of competition issues, how businesses deal with each other, how they compete, even issues such as mergers and whether big firms are misusing some of their market power against smaller businesses. A second area that we're involved with is consumer protection and interestingly enough, Scott, you'll be surprised to discover that small businesses are often regarded as consumers as well under the law as well. So it's not only about how you deal with your customers but also your rights as a small business operator. Our third area is that we're the National Products Safety regulator. We do a lot of recalls on dodgy products and the like. The fourth area is infrastructure.  We look after a range of areas, electricity, some shipping areas, a number of other ones. And the final one is in scams, which I'll be mentioning a little bit later on. So whether you are selling to customers, whether you are just selling to other businesses, common issues that people are going to have come up in areas such as pricing; what can I include in a price, what can't I include in a price, what can I say in an advertisement or what do I have to leave out, what are my relationships with my suppliers and what happens if a customer has a complaint or has a complaint against me or is unhappy with something and wants a refund, for example. So all of those things are important and we have both the Small Business Help Line, we have online educational material that people can look at if they want to do it themselves in terms of a bit of education. And, finally, we also can provide referrals, for example, if small businesses are in dispute with another one and need access to mediation as well so that's just part of it.

Scott Pape: Thanks, Michael. Very good. Now, turning over to the ATO, we've got Steve Vesperman who is the Deputy Commissioner of Small Business. Now, Steve, we've heard a lot about the ATO reinvention program. Can you tell us a little bit more about that?

Steve Vesperman: Yeah. Thanks, Scott. And we certainly don't need to do an introduction for the Tax Office but I would like to share with you some information about our reinvention of the ATO program. What this reinvention program is about is about how do we now build a contemporary administration of the tax system which is meeting the community's expectations on the administration of the system, taking advantage of the sort of technology that's available to us but also recognising that the administration of the system is important for people to ensure that they're meeting their obligations and to give confidence and trust in the administration of the system.  So as part of the reinvention program, we went to many businesses right across Australia and listened to what they said to us about what that contemporary administration of the system would look like.  What small business said to us was that they want a single and secure entry point into the Tax Office.  They also want a system where they tell us once where there are changes to their individual circumstances. They wanted an integrated digital solution on a stable platform that fits in with their current business applications. They also want a service any time, 24 hours, seven days a week. And they also want to ensure that every interaction with the Tax Office is personalised and tailored. Now, they also said we want the basics to be fixed and we have a program in place which is called Fix It Squad program which is looking at some of those basic irritants and resolving those irritants as much as possible. We're starting to craft some new products as well including a product that helps with cash flow management that we hope to be able distribute right throughout the small business community to help them understand how to meet their, sort of, cash flow commitments and requirements and help manage their business so they're more successful.

Scott Pape: Now, Steve, we are coming up to tax time so have you got any tips for us?

Steve Vesperman: Yes. It's – the end of the year is very important for all taxpayers that are in the small business community but I want to share with you some of the new services that will be available at this time of the year which will help into the new year. So, for example, sole traders can now link their myGov account to the ATO to access the online services the Tax Office offers. So that means that you can lodge and pay activity statements, view your account and set up payment arrangements and do much more with the online services. Now, also, people who run their businesses through a company, partnership or trust can now also use myGov to go online. They do need to link their ABN to their myGov account and I do recommend that if you are using tax practitioners or BAS agents, you check with your tax practitioner or BAS agent before doing this so that everyone understands exactly what the arrangements are with the use of those particular channels. Something that you might have heard about is that this year we have replaced the e-Tax product. Now, the e-Tax product is used by people who self-prepare. They prepare their own and lodge their own returns.  And that e-Tax product has been replaced by the myTax product. Now, the myTax product will be available for small businesses, very small businesses, for example, or part-time businesses who want to lodge and prepare their own returns. So that myTax product is now available from the start of the next financial year and it'll be a service that people will find very streamlined and very efficient. In addition to that, we have after-hours call back services, we have web chat services available to get as much assistance that you need to help with your end-of-year tax obligations.  I'd like to also suggest that where businesses are of a size where they could get real advantages with the use of computer software, we work with software developers to ensure that their products are meeting the needs of small business in terms of meeting their ongoing tax obligations.

Scott Pape: Thanks, Steve. Now, Lynda, I understand it's during this time of the year when there are potential increases to the minimum wage.  As employers, what do we need to be aware of?

Lynda McAlary-Smith: That's right, Scott. One of the most important things to be aware of is that there is a minimum wage in the first place and all workers in this country are entitled to a minimum wage which is either set by the modern Award, their enterprise agreement or if they're Award and agreement free, the national minimum wage.  Employers must pay at least the minimum wage for each hour worked.  It's not a ceiling. You can pay your employees what you think – what they're worth but they must be paid the minimum. What that wage will be will depend on a range of factors including their age, the type of work they do, whether they may be working full-time, part-time or casual and also what day or time of the week they worked that week, so if, for example, are they entitled to get penalty rates.  The minimum wage is, as you've said, subject to annual increases which are normally announced around this time of year, so usually in May or June. And, in fact, just last week, the latest decision was handed down by the Fair Work Commission and the increase for this financial year is 2.4%, taking the national minimum wage from $17.29 an hour up to $17.70 per hour.  Now, this increase will take effect from the first full pay period on or after 1 July this year. And to help you easily check what that new pay rate will be for your staff, you can use the Fair Work Ombudsman's Pay and Conditions tool, also known as PACT. By answering a series of pretty simple questions, PACT actually does the hard work for you.  It calculates the wages, allowances, over time and even the penalty rates for your employees. Also annual leave, personal leave and any other entitlements to be paid on termination can also be calculated through PACT. You can find PACT at fairwork.gov.au and it's just located under the Pay tab.

Scott Pape: So, Lynda, in my business, we pay above minimum rates of pay. Do we still need to worry about this?

Lynda McAlary-Smith: Absolutely, Scott.  It's not uncommon for employers to pay above the minimums and, as we say, you know, you pay what you need to get and, of course, keep really good staff.  But even if you are paying the employees above the minimum rate of pay, it's still really important to stay across the wage review updates.  This gives you the best chance of ensuring that, in fact, you are still paying above the minimum and - or the average and that you don't run the risk of underpaying your staff as well.  It's about being conscious about it.

Scott Pape: Thanks. Now, Joe, it's my understanding that, by law, small business owners have to keep written financial records. Can you give us a bit of an outline as to what we actually need to keep and for how long?

Joe Zubic: Certainly, Scott. I don't want to get bogged down in the technicalities of the law so I'll try and keep this pretty high level. So the Corporation Act requires that companies must keep written financial records that correctly record and explain its transactions and financial position and performance and would enable the true and fair financial statements to be prepared and audited. So for small businesses, financial records might include things like invoices, receipt borders for payment of monies, bills of exchange, cheques, working papers and other documents needed to explain the methods by which financial statements are prepared. Now, financial records may be kept in hard copy or maybe kept electronically or a combination of both. And there are numerous accounting software packages out there available for this purpose. Now, although the Corporations Act does not require small proprietary companies to prepare financial statements unless requested by ASIC or shareholders, they are considered to be a valuable tool for managing your company and checking its progress and financial position and may be helpful if you're contemplating upgrading finance.  Now, I'm often asked how long do we need to keep these invoices or records for. Well, the Corporations Act says you need to keep them for seven years after the date of the actual transaction.

Scott Pape: Fair enough.  Thanks, Joe. Now, Steve, for people watching who are just starting out in business, how is the ATO helping them, you know, get it right from the very start?

Steve Vesperman: Yeah. Scott, you would appreciate that – and we know from experience, that the best way to ensure a successful business is to get it right from upfront. So we are really keen to ensure we provide as much support and advice as possible for those who are starting a new business. So, as of now, new businesses receive what we call a New Business Essentials Pack via an email within 30 days of a new businesses registering with us and that means that throughout the year, they receive monthly updates from us but they also get some information about how to link to online learning modules to help them get things right from the start. There's very clear and easy to navigate, sort of, tools available to provide that information and support. There's some tips, tools and other resources for business planning and success and the more we - people understand how to get it right from the beginning makes it much easier a bit further down the track. We also have available a small business news room, Scott.  I'm not sure if you're aware of it but it's a digital news and information service where subscribers can choose topics of interest, they can choose which content is received, quickly scan ATO updates for relevance to them, download important dates into their own calendars and share articles via social media. So it's another important service that we provide for all business but particularly new businesses.

Scott Pape: Thanks, Steve. Now, have you ever been offered a written contract on a take-it-or-leave-it basis by a bigger business? Have there been terms in that contract that you felt were unfair?  Well, Dr Schaper has the latest on some new protections for small businesses.

Dr Michael Schaper: And, Scott, I think one of those most memorable lines in life is just sign on the dotted line and it'll all be okay. I think all of us as customers, as consumers, at some stage or another have signed up to something, a phone contract, a hire car, whatever it might be, and thought there's a lot of fine print in here and I'm really not quite sure what it's all about. And for several years now as a general member of the public, as a consumer, we've had protections against those in the sense that anything that is regarded as an unfair contract term can be struck out by a court and an unfair contract term is something that, well, it isn't really necessary for the business to have imposed it in the first place. Secondly, it will actually cause some sort of detriment to you if it's relied upon and a number of other clauses as well.  And these are really significant ones that cause a major imbalance in the rights and responsibilities between you and the business.  Now, Parliament has recently amended the law so that it also extends those rights and those protections now to small businesses or rather it will from the middle of November this year.  So there's a really important thing to think about here right now, Scott.  If you are on the cusp of signing a contract, a standard form contract of any sort – and a standard form contract can be anything like a lease, it can be an ongoing arrangement for supplies or equipment, it could be for the purchase of services - then you need to ask yourself should I perhaps see if I can either wait until after November when these new rights come in or, alternatively, maybe take a short-term contract to cover the period up because it will only apply to business contracts – business-to-business contracts from 12 November onwards. An important thing to also bear in mind here, Scott, is that it is fairly aimed at small businesses so that means a business with less than 20 employees and where the contract itself is worth less than $300,000 or, as many people have multiple-year contracts, less than a $1 million.  Now, the sorts of industries that we've got a special interest on right at the outset are areas such as franchising, retail leasing, independent contracting, advertising and I mentioned telcos before.  And the sorts of nasties that sometimes you need to keep an eye out for in your contracts are conditions that, for example, might allow the other business, usually a bigger business, for example, to charge you if you want to get out of the contract but not them if they want to leave the contract. Another one that's very common is a term that allows the big business to change any of the conditions as they see fit but doesn't give you the right as well. And a third one is one where they shift the legal liabilities, indemnities, the responsibilities on to you rather than on to themselves so even though they may be responsible at times, you'll actually end up wearing the can.  So if you're facing those sort of things, you really need to think not only do I need to talk to a lawyer about this but, given these protections are coming in November, can I wait until then?

Scott Pape: Now, if you've ever used a credit or debit card and been hit with a surcharge, the Government has introduced new laws banning excessive surcharges and the ACCC has an important role to play. Michael, can you please fill us in on how this ban is actually going to work?

Dr Michael Schaper: Well, Scott, I think you're right at the very outset there. I think we've all used a credit card and thought what have I been charged this fee for and more importantly, this just doesn't seem to be the real cost of using the credit card. So whether it's a credit card, whether it's a debit card, whether it's EFTPOS, all of them have sometimes these same sort of – again, it's a form of a nasty. So from September, large businesses this year will be required to actually make sure that if they're charging – putting a surcharge on you, then it reflects the real cost of using that credit card. Other businesses, smaller businesses in Australia, will also have to do that but they'll be given a year's grace.  So they won't have to comply with it until next September.  So from start of September this year, big businesses will have to comply with it, from September 2017, if you're a small business operator, you'll have to comply with it. So this means, for example, that if you are charging people a fee for using, for example, EFTPOS, an Amex card, a Visa card, a Mastercard, you need to make sure that it only reflects the real cost of doing that. Your bank, if you're a small business, or your credit card merchant provider will send you that information from September next year and you'll be able to use that as the figure to work out this is the same amount.  So if it costs me 1% to use a particular credit card, then that's as much as I'll be able to charge you. If I charge anything more than that, then clearly you're going to run into problems.  But also you need to keep an eye out am I going to be hit for higher charges and then you can – you rightfully go back and ask the question there.  There's a couple of exemptions but that's the major thing to be aware of, Scott.

Scott Pape: Very, very good news, Michael. Now, Lynda, what would you recommend small business employers do to prepare themselves and their employees for the coming financial year?

Lynda McAlary-Smith: Well, the start of any financial year, Scott, is a great chance to take stock-take of what you're doing in your business and managing your employees is no different.  So the start of a new financial year is a great time to – we would encourage businesses to explore having a performance review cycle within their business.  And it doesn't matter how big or how little they are, you all want your staff to be doing the best job that they can for you so that they can help you grow your business.  Now, we have a Managing Performance course which you can access though our online learning centre on fairwork.gov.au which helps take you through the practical skills and know-how about promoting good performance in your workplace and, of course, because it happens, addressing under-performance when it does come up.  The module is interactive and offers a tool kit of useful resources to help you easily implement a performance system because it shouldn't be hard.  Some of these things include template performance agreements, template letters of warning if, unfortunately, you do need to use those, and a performance meeting plan check list that you can both use.  It also offers the opportunity to learn some best practice methods to take some of the guess work out of having these conversations around common performance topics such as not only managing under-performance but also recognising good employee performance because you want to make sure that your good employees are developing as well.  It lets you practise having some of these sometimes uncomfortable conversations so that you're a bit more confident when you're going in when the time arrives.  We also have a number of other courses to help employers prepare learning and development plans for the coming year for their employees and this includes our Hiring Employees course which takes you through the process right from day dot; how to design a job through how to interview and suss out who's just a good interviewee and who would be a good employee and carrying out a successful induction.  Our Difficult Conversations in the Workplace courses are also where you can get practice having a difficult conversation with an employee through a series of Choose Your Own Adventure videos where you actually get to practise.  We also have an employee version as well because it's really important that you can build up the capability in your staff and the confidence so that they're not scared to have these kind of conversations with their managers if there are issues.  Encouraging employees to have confidence to raise issues with you in the first instance rather than coming to us, for example, as the third party, can save your business time and effort.  We also have a range of templates designed to make it easy for you to prepare your employment documentation because nobody loves spending time on the admin side of running their business.  They want to get stuck into actually running their business.  These include record keeping templates such as our time sheet and payslip templates but also letter templates including hiring someone, performance management templates as well.  Whatever performance system you use, it doesn't need to be complicated, it just needs to be genuine and consistent.

Scott Pape: Can I just say also, as a small business owner, your templates, I have used them and they're absolutely – absolute gold so go to the website and check them out.  I did and I was amazed at what I found.  Michael, for many years we've said scams, if it's too good to be true run the other way. Small business owners, how can we make sure that we don't get conned?

Dr Michael Schaper: Look, it's an interesting one, Scott.  We often hear about scams.  I think almost everyone has got that email that's mysteriously appeared from a bank saying "Lost all your details, except your email address, just kindly tell us your name, your date of birth and all your personal information and the world will be a better place."  And yet what most people don't realise is that small businesses are actually more likely to fall victim than members of the general public. And so part of that is because small business operators are time pressed, they often don't have good security systems and there's a couple of nasty scams doing the rounds at the moment.  In fact, as you can see there from the information up in front of you, last year our Scamwatch centre saw more than 3500 contacts from small businesses about scams and a large amount of money there, almost $3 million lost.  Now, three particular ones that are doing the rounds at the moment are really worth keeping an eye out for.  First of all, almost all businesses come across false billing scams.  These can come to you as an email but they can also still come in good old-fashioned snail mail and sometimes even by a phone call, placing a product, here's a domain name registration where you think I'm sure I renewed that recently.  Here's an invoice that you think someone must have ordered it but I don't recall us doing it but, what the heck, pay it and I don't want to have the reputation of not being good with my bills so I'll pay it.  And so sometimes they're quite small amounts, sometimes they're large but just think before you pay a bill, especially if it's irregular or it doesn't seem like one that our business actually does.  Now, if you are a slightly bigger business, one of the things that's doing the rounds at the moment is the fake CEO scam.  This is where scammers are able to build up a profile of the key people in a business, who the CEO is, where they are, even their conversational style on an email, who the Chief Financial Officer is or the major people that make payments and then send emails through to the finance office purporting to be the CEO and saying, "I need you to make this payment.  It's a bit unorthodox.  Take this email, for example, as my authority to do it.  I need you pay it to this bank account.  Yes, it's an unusual bank account.  It needs to be done and it needs to be done right away."  And the reason it needs to be done right away, Scott, is that that money is going to go to probably an offshore bank account and, very quickly, it's going to be moved on somewhere else and it will not be recoverable.  So if you're getting emails and you think we don't usually operate this way inside, there's probably a good reason.  And the final one, which is really hurting a lot of business, especially small services business is ransomware.  You open up an email, you unzip a file, for example – it often comes as a zip attachment.  It seems to be from a legitimate, well known source and what it actually does is capture your database and then basically the ransomer will come to you and say, "Here is a fee that you're going to have to pay if you want to get your data back."  And this can be devastating.  I mean, many of us store all our information electronically and if you were to lose that, it's almost the death knell of your business in many cases.  So there's a really clear lesson here.  First of all, do not open things that you are not familiar with, especially if they are zip files.  And, secondly, do make sure that you back up and you back up off-line.  Now, Scott, there are probably a couple of other tips that I'd suggest also you need to think about.  If you're running your own business, make sure that you limit who's got authority to make payments so that scammers don't have the capacity to prey on different people being uninformed about what should or shouldn't be paid, keep your filing and accounting systems up to date, and I think that probably is news to the ears of people like Joe and Lynda and it certainly is of Steve because it really is what all of us are saying here.  Good records are good business practice as well as good regulatory requirements.  And I think, finally, also really basic, don't forget to update your security software from time to time as well.  Basic but still very important.

Scott Pape: Very good points, Michael. And I get - probably two or three times a year, I get the domain name from the letter telling me to renew from some place that I've never heard of so they are certainly targeting us.  Now, Joe, in my experience, some business owners find it difficult to juggle running a business and then also the keeping up to date with the paperwork.  Just how important is it for businesses to understand the true financial position that they're in?

Joe Zubic: Yes, Scott, I think it's very, very important for business owners to know whether or not their businesses are solvent and what that actually means is can they pay their debts as and when they actually fall due. Now, taking the time to understand financial documents will give you more control and a clearer picture of your business and how it's actually performing.  The two basic documents, or financial documents, that give you this information are the profit and loss statement and the balance sheet. So, as you mentioned, Scott, as a small business owner, learning about accounting topics and financial reports may not be the top of your list unless, of course, you might be an accountant.  However, taking or having a basic understanding of these financial reports can make a real big difference to managing your businesses.  It'll help you to make better decisions and improve your ability to communicate productive with your accountant and other advisors.  In simple terms, a profit and loss statement, otherwise known as a statement of financial performance, provides a picture of how your business is trading over a defined period, and that might be, you know, over a week, over a month or over a year.  It records sales, expenses, profits and losses and tax payments for that period.  Now, a balance sheet, otherwise known as a statement of financial position, paints a picture of your businesses financial strengths at the end of an accounting period.  Now, these are the two documents people should familiarise themselves with. So even if they did some basic course in finance, these are the two documents that I would recommend that they have an understanding of.

Scott Pape: Sure. And you can get that with your accounting software program. You can get those reports, they're fairly easy to download.  Now, in my work, I've come across many small businesses that rely on their accountant or their business advisors to help them understand and comply with all the regulation that we need to.  So how can small business advisors meet their expectations of the small business that is actually placed on them. Lynda?

Lynda McAlary-Smith: Well, Scott, we know that small business advisors, accountants, lawyers, employer organisations and the like play such an important role in supporting and providing advice to small businesses because they have a real understanding of that business and industry. As trusted advisors to small business, that brings both opportunities and also responsibilities as well.  So advisors have the opportunity to help small business make the right decisions.  And, of course, this is all about building better businesses that are more productive and more profitable in the end.  However, small business advisors also have a responsibility to ensure that they are protecting their clients' interests by promoting or helping them to implement compliant workplace practices. They also have the responsibility to be observant and proactive and to make inquiries if they think something's not quite right. They need to be confident and knowledgeable. Where advisors observe an issue, we expect them to acknowledge it and to work with their clients to fix it.  Small business advisors are encouraged also to access our suite of free tools and resources to ensure that they keep their workplace knowledge up to date, if that's what they're advising on, and only provide their clients with information that they actually know is correct not what their fellow business operator might have told them.  If a small business advisor provides advice that they know contravenes a workplace law, it's really important for the small business advisors out there tonight to be aware that they themselves can become personally liable as an accessory under section 550 of the Fair Work Act and may be subject to penalties themselves and that's personally and that doesn't mean if you have a company, if you have an incorporation.  So if you're giving the wrong advice knowingly, you can end up in a lot of hot water yourself.

Scott Pape: Thanks, Lynda. Now, Steve, what's the ATO doing to cut red tape for small businesses?

Steve Vesperman: Yeah, Scott, and before I share some exciting news with you, I would like to add to what Joe was saying about the financial position of a company.  We find, from our perspective, that understanding profit margins and understanding cash flow management is absolutely critical for a small business person because you maintain the viability of a business if you do understand those two key points. So I think it is really important that small business do focus on that.  So, yes, I have got some exciting news.  One of the key messages we heard from small business when we were doing the consulting was that there's significant costs of compliance inherent in meeting GST reporting requirements. So we've listened to that and we're now looking at ways of simplifying the GST reporting requirements on the Business Activity Statement and we're now mapping out how to deliver that outcome. So from 1 July this year, we are starting a pilot, working with tax practitioners and software developers, to simplify the GST coding and reporting requirements on the Activity Statement.  This will include the actual – what coding requirements are required and that will be built into those accounting software packages that are used by our small business people. And we'll also look at how that feeds into the preparation of the Business Activity Statement. So this pilot begins from 1 July but we are very keen to see how we roll this out over the next 12-month period.

Scott Pape: Thanks, Steve.  Now, Joe, I asked Steve about red tape, let's talk about ASIC and what you guys are doing to help small businesses comply with all the regulations that we're hit with?

Joe Zubic: Sure. Thanks, Scott. Now, there's a lot of information available to business owners that can be overwhelming.  Often that information can be in the language that the business owners just don't quite understand.  Now, ASIC and the other panellists here tonight, they know this, they understand that and have worked very, very hard to provide information that's accessible and easy to understand. Now, in regard to your obligations to ASIC, a good place to start is the ASIC website and, particularly, under a banner called For Businesses.  And there you'll find certain information that's in a language that's really easy to understand and digest.  We do have a booklet called Your Obligations As A Small Business Operator which is also available in hard copy.  It's an easy-to-read guide on your responsibilities as a company director, including your potential liabilities.  We also have the ASIC Small Business Hub. It's dedicated exclusively for small business operators.  The website provides an overview of what you need to know when you're starting up a business, compliance obligations as well as what you need to know when you're closing a business down.  The Small Business Hub contains a number of one-minute guides that provide summarised and targeted information as well as a number of useful links that sign posts you to other relevant information at ASIC or the other regulators might have.  We have a newsletter that you can subscribe to and every three or four months, we will send you some relevant information.  And we also have the ASIC Guide for Small Business Directors, which was, by the way, set up after one of the Fix It Squads that we were engaged with with the ATO and a number of other regulators, and there you'll find information specifically in relation to your obligations if you're running a business as a company.  We also have the ASIC Business Checks.  I know Steve and Michael talked about scammers that are out there.  Now, this is an app that we designed that you can download on your smart phone where you can make some easy-to – you can actually make some inquiries, easy-to-understand inquiries, basic type of things, to see whether or not you might be actually getting scammed.  And so, essentially, it follows three protocols and that is really to ask questions that are relevant to the people you're actually dealing with, make inquiries and if you suspect anything, then come and report it to ASIC or the actual other regulators.

Scott Pape: Thanks, Joe. And I will just say that I am a subscriber to the newsletter and I would encourage everybody to do it because it gives you just some really handy tips.  Now, Lynda, from what you've told us tonight, there seems to be a lot that we need to get across in the workplace relations space.  Where should small business's employers start when seeking to increase their, I guess, workplace IQ. What do they do? How do we make sure that we're up to date?

Lynda McAlary-Smith: I think one of the important things, Scott, is, as you do with your business, is working on the business not just in the business and prioritising that as an important focus of your attention at certain points in the year. There's a lot of good resources that we've heard about today that are available to help small businesses.  And a small business employer who's made the decision to increase their knowledge and understanding of workplace relations has made the first right step in terms of having a great workplace.  One of the second steps which I would suggest would be to access our Workplace Basics quiz at fairwork.gov.au.  As you've said, Scott, there are a lot of different things for people to get across and this quiz can take you through some of the basics, provides you with an opportunity first to test what is your actual knowledge and what's your current level of knowledge about everyday workplace issues that might come up in your business including pay and Awards, leave, record keeping and payslips, types of employment and termination, including redundancy because at different times in your business cycle, that might be something you're having to address.  The quiz also gives you the opportunity to test you on best practice topics, so not just about the bare minimum but how are you going as a business in terms of flexible work practices for your staff, helping them manage their work life balance and how do you deal with problems when they come up if there's disputes or grievances.  Each topic only takes around 10 to 15 minutes to complete and you can complete as few or as many as you like and you can dip back in and dip out.  Results and resources are all saved in the one section and you can also choose to have the links emailed to you in a resources links email to you so you can go back to them easily at a later date.  You'll also get immediate feedback as you move through the quiz because part of challenge in this space is figuring out what is your knowledge gap and if you do have one.  And if it looks like you need some help with certain topics, we've got a heap of great tools and resources which are available to help you out.  We're not just pointing out the deficiencies, we're saying we understand that could be an issue so here's some things to help you get it right.  Being proactive in refreshing your knowledge and ensuring that your business is compliant is one of the best defences against compliant action but it's also about wanting to be a great employer so good staff come to work for you and they want to stay working for you as well.  A third step if staying up to to date is to be made simple, in line with what you said about subscribing to our employer newsletter at fairwork.gov.au and you can also sign up for a personalised My Account portal where your website experience with us is personalised to your business size and also your industry as well so you're not having to look at a whole heap of content that's just not relevant.  By subscribing to our newsletter, any changes or updates that come through that are relevant to your business will be delivered straight into your inbox and you can be sure that you won't miss a thing.

Scott Pape: Now, Steve, when small businesses need info, they need it quick. What's the ATO doing to speed that up?

Steve Vesperman: Yeah, Scott, and it's a very good point. We're all saying around the table that information is the key and in a time-poor environment, the newsletters that do provide a valuable source of information for people who require an up-to-date service on the things that impact on their running the business.  But I will say there is other services that the ATO also provide to help people keep abreast of developments and also find information to help them with running their business.  Now, we heard though our consultation that we need to do more work on our ato.gov.au website and we've redesigned the website and it's now much easier to find what people are looking for in terms of – particularly in small business inquiries.  We also have an ATO app.  Now, this ATO app allows individual taxpayers and small business owners and self-managed super fund trustees to access all the tax and super information they need while on the go.  So the app is available on all the smart devices and it includes a log-in service for the online services that we provide including the lodgement over myTax, by the way, and allows tax payers to lodge and track the progress of their returns.  The app also facilitates what we call voice authentication.  So you now don't need to use passwords to get into the online services if you've registered your voice on our voice authentication, sort of, system and that means just using your voice can allow access into our online services.  But the app also has a number of useful tools and calculators and the ability to set key date reminders and alerts is very, very important.  So it's very critical that people make access of all of these sort of services that are available to them in terms of getting the information they need to ensure a successful small business.

Scott Pape: Thanks, Steve.  And now we're going to turn it over to you, the audience.  If you've got – if you have got any questions, please submit these by hitting the Ask A Question button.  And while we're waiting for questions to come through, we'd like to hear from you.  What would you find to be the most helpful in meeting your legislative requirements?  We've got a poll here.  Would you choose more online interactive sessions, such as this webinar, more on-demand resources like online courses that we've heard about and web content or more opportunities to interact face-to-face such as, you know, business-hosted events.  You can respond now by submitting your responses to the poll in the webcast screen.  But while we're waiting for that poll to come back, I've got my first question and it is to Lynda.

Lynda McAlary-Smith: Yeah?

Scott Pape: Lynda, we have – Robert asks my business is not doing as well as it used to and I can no longer afford to keep all of my staff.  Am I able to let go of an employee or will this be considered unfair dismissal?

Lynda McAlary-Smith: Great question, Robert. And, firstly, it's unfortunate to hear that your business is going through tough time but it's also really good to hear that you're having a think about what options might be available to you and, sort of, doing that in a planned way.  There's a couple of things to think about and there's a lot of myths around about unfair dismissal and one of the first things I would say is if you've got a genuine and lawful reason for terminating an employee and you do it in a fair and proper way, that will be okay.  And there's a few steps that you can do to make sure that you follow that process.  Whatever happens in terms of the reason for the termination, you do want to make sure you follow the correct procedure.  Before I go into that a bit, I will say, of course, particularly in small businesses, you're working with people and people potentially you might have worked with for a while, and you understand the impact that their business – about them leaving the business and losing their job could have on them and their family and that can be tough, too, so don't forget to look after yourself when you're dealing with these kind of issues and seek advice if you need to.  So if you're a small business who's got less than 15 employees, there's actually a Small Business Fair Dismissal Code which actually takes you through the steps that you could follow in terms of testing whether or not your reasons for wanting to terminate someone are lawful.  You can't terminate someone for a course for discriminatory reasons, for example, if one of your staff members tells you that they're pregnant, for example, or they want to come back to work or, you know, they're caring for a sick family member.  Those ones are a no-no and, generally, they're, sort of, a common-sense approach to what you shouldn't be doing.  If you follow the Small Business Dismissal Code, that gives you some sense of protection and some good practice as well.  Now, in terms of businesses who might have more than 15 employees but still consider themselves a small business, it's still good advice to actually follow the information that's set out in the Small Business Dismissal Code.  If you're pretty sure that you're making the right decision for your business and you're doing it for the right reasons, it's important to keep documentation that supports the reason that you've made your decision and also to think about what entitlements the employee could be owed.  If, for example, you're terminating someone because they're redundant, not only do they get things like their annual leave paid out, they're entitled to notice time and they're also entitled, potentially, to redundancy pay as well.  In terms of notice, you do have a few options up your sleeve in that space.  Obviously, if you're giving someone notice that you want them to finish up working, you may or may not want them to hang around in the workplace, depending on how they respond to that and what their other options might be.  So a number of industrial instruments actually give you the option to pay out that notice.  So, for example, if you have to give someone two weeks' notice, you could say, well, instead of working out that two weeks, I'll give you the pay in lieu and you can leave in the next day or so, for example.  So it's making sure you tick all those boxes in the first instance.  But if it's a sense check that you're doing it for the right reasons, you're doing it in a fair way and you're providing the person who's leaving with their entitlements, that's a pretty good sense check that you won't fall foul of unfair dismissal.

Scott Pape: And can I just say on a practical level, as a small business owner, I have actually been on the website and been in those situations and it's a  real help for small business owners that may not go and see a lawyer and that just want to actually get some practical advice when you're in the trenches.  I would encourage people to go there.  The next question we have is for Michael and it says you mentioned that large merchants will be subject to the surcharge laws this year and small merchants next year.  How do you know if you are large or small?

Dr Michael Schaper: Okay. Well, there's pretty much a simple definition. Lynda just mentioned one that was about the number of employees and, likewise, essentially there's a definition here.  If your firm has a turnover – there's three elements and you've got to satisfy only two of them but, really, in essence, the critical ones are if your turnover is more than $25 million, if you have more than 50 employees or if your assets of the organisation are worth more than $12.5 million, any two of those in combination.  I think the really simple way to think about that, Scott, is $25 million turnover is a really straight-forward one and so is the head count in terms of employees.

Scott Pape: Sure. I have a question here to Steve and it says is it correct that the ATO will accept scanned copies of receipts in accounting software therefore not having to keep the original?

Steve Vesperman: It is correct that scanned copies of the documents are acceptable but you do need to ensure where you are recording those scanned copies.  So where is it actually being kept in terms of the record-keeping, sort of, practices.

Scott Pape: Yep.

Steve Vesperman: So you need to be aware of where those scanned records are being kept. When we receive them, of course, they are acceptable but the real key is making sure that they are stored in a place which still can be retrieved electronically.

Scott Pape: Okay, good. Good point. Joe, we have Sophie. Sophie asks how much does it cost to register a business name compared to a company?

Joe Zubic: Okay.  So a business name currently costs about $34 for one year registration but you can – you do have the option of registering for three years and it's currently $79.  My understanding is from 1 July it'll go to $39 for one year and $80 for three years. Now, with a company, a company is around about $460 at the moment but you've just got to remember that every year you need to pay renewal fees whether it be for a business name or for a company.  And so with business names, it'll be the same amount again if you're registering for one year or for three years and for a company, it's about half that price, it's around about $220, $230.

Scott Pape: Sure.  Michael, I – Devon asks, I'm a franchisee and I think some of the terms in my agreement are harsh and unfair.  Are franchise agreements covered by the unfair contract terms law?

Dr Michael Schaper: Good question and the short answer is yes. Essentially, the unfair contract law applies to all business-to-business standard form contracts.  Even though there is a specific franchising code with a couple of stipulations in there, it's still the case.  Interestingly enough, in franchising not only is the franchise contract itself, the franchise agreement, but of course if that contract also refers to other documents and that is common practice not only in franchising but in many other industry models, they'll say here is the contract but, by the way, you're also bound into these other documents as well but in many cases those other documents will be caught by these provisions as well.  So if people are trying to think here's a clever way to get around these protections for small businesses, we'll just outsource it to another piece of paper, that isn't going to be the case.  These laws and our interpretation are designed to ensure that we give small business the biggest protection of it that we can.

Scott Pape: Sure. Aaron asks Joe, I'm considering starting up a bakery and I'm not sure whether I should have a business name or a company.  What are the differences between the two?

Joe Zubic: Okay. So I can't actually give advice about what's the proper structure to set up but under the Corporations Act, a company is seen as a separate legal entity and what that actually means is that is has its own rights.  In fact, the Corporations Act recognises it as a person so it has the same rights as a natural person.  It can raise funds, it can be sued and can actually sue itself, sue other people I should actually say.  And people generally set up a company for two reasons and one is to protect their personal assets, that's one of the reasons why they do that, and the second reason is generally to minimise their tax if they earn enough profits.  There's some downsides to registering a company and that is the compliance obligations are significantly more and there's a cost associated with that.  Now, with a business name, there's no separate legal entity between the actual owner and the business itself.  So if the company fails, then the person who runs that company's personally responsible for its debts unlike if you operate under a company structure.

Scott Pape: Sure.  Steve, we have – Meg asks where can I get help if I've maybe got a little behind with myTax?

Steve Vesperman: Yeah.  This is a question we do get quite often and the first decision to make is to do something as early as possible.  So if you allow these things to go unchecked for a long period of time, it's harder and harder to recover.  But there's a number of places that you can go to to get some advice about that.  On our website, we do have what's called a small business assist and you can get information in that on that website using that tool about what you need to do to recover if you're a bit behind in lodging either your Activity Statements or your income tax returns.  By the way, on that website, we also have what's called Alex, the virtual assistant and that's a particular software that, as you ask questions, it learns the sorts of the questions that are being asked and provides responses to you.  So we're encouraging people to use that as much as possible.

Scott Pape: It's like a robot.

Steve Vesperman: It really is a way, again, of providing a service to the community outside normal business hours.  You can also request a visit from one of our field operatives and they can come out and help people work through if they are miles behind or just behind in their tax obligations and they will very clearly help you set through how do you ensure you get up to date and actually meet your obligations and hopefully help you work through so you continue on to meet your obligations on time in the future.

Scott Pape: Thanks, Steve. Now, another one to you, Michael.  This is actually quite a hot one.  I'd like to know the answer to this.  Why aren't taxis covered by the credit card surcharge law?

Steve Vesperman: That's a really good one, isn't it?  And the really simple answer is because most State governments have specifically introduced rules, legislation, about what the rate should be.

Scott Pape: Right.

Steve Vesperman: In many States it's essentially a 5% add-on.  So where States specifically legislate for something like this, then constitutionally they've got the full right to do so and so Commonwealth laws like this take a back seat to it so that's a short answer to it.

Scott Pape: Very good. Lynda, Peter asks, I'm in the security industry and I'm confused by some of the entitlements I have to provide to my employees.  Where can I get help specific to Peter's industry?

Lynda McAlary-Smith: Well, Peter, you can come directly to fairwork.gov.au or to our Small Business Help Line at 13 13 94.  Through our website, you can actually go through and select that you are in the security industry and then it filters out all the other content so you'll only actually see the content that's relevant to the security industry.  There are a number of requirements that are set out in the security Award, if that's what you're covered by, and it goes through all of those sorts of things in a plain English way.  So we've done the translation of some of the Awards, actually, for you and, as I said, it's industry specific so you're not seeing general information just – or generic information, you can comfortably apply it to your particular scenario.  We've also got a function I mentioned earlier around our dedicated portal, My Account, where you can actually go through and set up your business size, where your business is operating, what your type of industry is, even getting down to the level of sub-industry and then you can save all your information in that spot.  You can have a dedicated online inquiry channel through to some of our technical experts.  You can also save pay rates, for example, in there and you can subscribe to updates.  So, again, some of these workplace relations, good processes you can set up, can then operate in the background and it doesn't need to be at the forefront of your mind.  So that's at fairwork.gov.au and if you want to have a chat to someone in person or on the phone, 13 13 94 and select the Small Business Help Line number and you'll go straight through to our priority queue.

Scott Pape: Excellent.  Steve, one for you. Tim asks, I'm a sole trader running a start-up that is only just beginning to make some money.  Well done, Tim. I also registered for and charge GST. What's the minimum paperwork that I need to complete at the end of the financial year.

Steve Vesperman: Okay. So when you are registered for GST, and you do have an obligation to lodge a Business Activity Statement probably every quarter as a new business, so that – those quarterly Activity Statements are required.  Then at the end of the financial year, you do need to prepare an income tax return which is bringing to account all of the – all of your sales and, of course, all of your expenses are recorded there as well as part of lodging an income tax return itself.  Now, there is a reconciliation that's to be undertaken in terms of the Activity Statement and the income tax return and that can be done either yourself or you can actually go to a registered tax agent who could help you do some of that work as well.  But the most critical part of the end of the financial year view is looking to see the viability of the business, so are you actually operating at a profit and also are you managing your cash flows.  So if that's also considered as part of your end-of-year obligation, it just sets you up for a successful year going forward.

Scott Pape: Excellent, Steve.  Well, I've got here one last question. Satija asks, I'm a teenager and I'm starting a business that provides piano lessons.  I currently do not have a website but I'm going around door-knocking around my neighbourhood for some business.  I'm wondering if it's required for me to register for things like an ABN and a TFN as well – a tax file number – as well as many other requirements for a sole trader?

Steve Vesperman: Sounds a wonderful entrepreneur.

Scott Pape: Yes.

Steve Vesperman: And my advice there is that there is a difference between whether it's just a hobby or whether it's a particular business.  And there's information available on our website but there's also a tool available on the Department of Industry website that's now starting to help people with – get some certainty on whether it's actually a hobby or a business.  So each particular case needs to be determined on its – on its facts and by getting some advice from our website, but also using that tool that's available, can help us determine is it a hobby or a business itself.

Scott Pape: Excellent.  So returning to that poll question, what do you want more of, well, the majority of you said you want more – we're in luck, guys – online, interactive sessions such as this webinar so we must be doing well, 57% of people said that.  30% said more on-demand resources like online courses and web content like you're delivering, Lynda, and 11% said more opportunities to interact face-to-face such as hosted business events.  I'll let our regulators take that on board and see what they can come up with. So, ladies and gentlemen, we have reached the end of our session.  First of all, I'd like to thank all of our presenters, Lynda, Michael, Steve and Joe, for giving up your time this evening and providing us with some really useful information through your presentations and answers to the audience questions.  I'd also like to thank everybody that's tuned in tonight.  We hope that you've found this to be an informative session for you and your business and our goal is to make doing business easier.  I'd like to mention that a video is going to be made of this presentation that will be made available as part of the regulators' information package that will be coming out in due course. So thank you everybody for tuning in and goodnight.

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