The Chartered Accountants Australia + New Zealand have compiled a checklist for small businesses impacted by natural disasters.
Here are some practical issues small business operators should consider:
1. Are you OK?
Running a business is stressful enough without Mother Nature’s interference.
Reach out to family, friends, advisers and local support groups.
2. Engage with your workers – you’ll be heartened by their support
Be upfront about the impact of the disaster on your business.
Check employment and contractor agreements. Can unutilised employees agree to reduced hours, bring forward annual leave plans or take unpaid leave if the business is temporarily closed or in re-start mode? Legal advice may be needed.
Fringe Benefits Tax concessions may apply for emergency benefits to employees.
Challenge your workforce with diverse tasks to get the business up and running.
3. Secure business records, obtaining replacement records if necessary
Get your business technology up and running again as quickly as you can.
Check current policies for coverage.
Collate details of losses (photographic evidence helps).
Engage with your insurers.
Seek a 2nd opinion on proposed payouts.
5. Government emergency grants and community support funds
Check your entitlements (business and personal). See our summary here…
6. Trading stock, equipment and buildings
For insurance, government assistance and tax deduction purposes, keep records of damaged, lost or destroyed trading stock (even if sold for reduced prices), equipment and business buildings.
Replacement equipment costing less than $30,000 attracts a 100% tax write-off (note: this threshold will end on 30 June 2020).
7. Repairs, clean-up costs, temporary storage costs etc
For insurance, government assistance and tax deduction purposes, keep records
Tax deductions apply to repairs, not improvements (there’s a difference).
8. Do you operate from leased business premises?
Engage with your landlord on possible rent relief and the timeframe for any necessary repairs to be done.
9. Your suppliers
Review purchase agreements to determine rights and obligations of both parties.
Speak to them. Will they accept delayed payment terms?
How quickly can they re-supply what’s needed to re-start business operations?
10. Your customers
Review sale agreements to determine rights and obligations of both parties.
Develop and implement a communication strategy that conveys your re-start plans and how you’ll help them as they too recover from the disaster.
Can customers bring forward payment of any amounts owed to your business?
Enlist customer support as you re-start business (e.g. sales campaigns).
11. Revise business cash flow and business forecasts for the current financial year and subsequent years
Be realistic and conservative in your estimates.
Specialist business turn-around advice may be a good investment.
Engage with the ATO and State & Territory tax authorities.
Work with your accountant to see if any favourable tax adjustments can be made in your next BAS and tax return. Lodgment extensions are available.
Seek deferred tax payment plans if necessary.
In serious hardship cases, tax debt waiver may be available.
Quantify any additional financing needed to re-start business operations and explore financing options.
Engage with existing financiers and discuss your business recovery plans.
Seek a temporary break on interest repayments if necessary.
14. Learn from this
What went well in responding to the disaster? What could have been done better?
For the longer term, should a business continuity plan be prepared?