The Importance of good record keeping | Proactive Accounting FS

Wow, a lot can change in a week or so. Business has just got tougher for most people and some industries even need to close as measures to combat the spread of the Coronavirus.

In times like these, business owners go in to survival mode and tend to ignore the things they can control as they lament the things they can’t. Many will be ignoring keeping the books up to date as they perceive that this is less important than other endeavors.

Employers

With the government’s economic responses being passed into law last night there are a number of reasons why now is not the time to ignore record keeping. The obvious one is the payment to businesses with turnover less than $50 million. This payment totaling between $20k and $100k is tax free but is payable to employers when they lodge their quarterly BAS. So, ignoring your record keeping is going to delay receipt of the benefit.

A word of caution

I have been asked the question – should I add employees to increase my benefit? To guard against ‘pop-up’ employer schemes designed to rort the incentive, the second-round statement makes clear that the cash boost will only be available to ‘active’ eligible employers established prior to 12 March 2020, the date of the first COVID-19 stimulus announcement. False or misleading statements can easily result in fines or even imprisonment. This article covers doing this the right way only.

Apprentice and trainee payments

There is also the payment for apprentices and trainees which is based on 50% of their wages, capped at $21k per apprentice. This one will require an application so if your wage records are not in order, the application so going to be a nightmare.

Sole traders

Sole traders have access to the Jobseeker payment as well as the Coronavirus supplement of up to $550 per fortnight. While the payments will not be Asset tested the Income tests will still apply. Again, good record keeping will enable you to determine the level of support you are entitled to.

The Government will allow individuals in financial stress as a result of the Coronavirus to access up $20k from your superannuation, split into two payments. The eligibility depends, for some, on showing that they have had a reduction of turnover of 20% or more. The onus will be on the individual to show this to be the case. Without good accounting records this is going to be extremely difficult.

Asset purchases

As we get further into the concessions there is the $150k immediate write off on asset purchases up to June 2020 and well as the 50% Investment allowance which will run to June 2021. While this is a fantastic opportunity for tax effective purchasing there is still the fact that it needs to be paid for somehow. Those with spare cash lying around won’t find this an issue, but most businesses I deal with will require finance. A sound cash flow projection is absolutely essential before investment decisions like these are made. Again, make sure your records are up to date and that you talk to your accountant to make sure the financing decision is viable and sound.

Conclusion

So, in closing, the time to ignore your accounting records is definitely not now. There are a number of opportunities out there in these times but good decisions can only be made on sound underlying accounting records. This article does not cover all opportunities, nor is it intended to. I just want to emphasise the importance of keeping your house in order in times where there could be a tendency to not prioritise it.

It’s just good business.

Proactive are here to assist with any queries in relation to record keeping, you can call us on (07) 5539 4143 or email us at admin@proactivefs.com.au.

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