From the moment you acquire or commence a business you should assume that one day you'll want to sell or merge your business with another business. To enable the best possible return, you should always keep the business in a “saleable state”. If you decide to sell your business today and want to list it for sale in 6-weeks' time, most probably, you'll not be giving yourself enough time to maximise the potential return. Ideally, the best way to sell the business is over a 2 - 3 year period. This period will allow enough time to fine tune the financial results and ensure that appropriate systems and records have been put in place to enhance the value of the key intangible asset in the business – goodwill.
Goodwill is an intangible asset. This means that its value is in the “eyes of the beholder”. Whilst your personality, skills and marketing ability have been important in the establishment of the business, when someone looks to buy your business, they ask:
Purchasers will probably ask about the “business systems” that have been implemented. “Systems” mean that the business can continue to operate without the direct involvement of the owner. If you are contemplating preparing your business for sale, we suggest that you prepare a detailed summary of the Organisation Chart together with details of the tasks allocated to each individual team member, so that the delegation system within the business can be demonstrated to a potential purchaser.
It’s a good idea to undertake a “preparation for potential sale review”. This could include:
All of these items make a contribution to the overall evaluation of the business for the determination of the value of goodwill. There are literally thousands of businesses available for sale in Australia at present as a consequence of “baby boomers” exploring the opportunity to sell their businesses and to retire. There doesn’t appear to be as many enthusiastic buyers as what there are sellers.
If you would like to have a discussion with us about how we can assist you to prepare your business for sale, please do not hesitate to contact us.
When you consider your business strategy, do you think about your business being in a completely different position to what it is today? This might mean that your business could be identified as:
There are probably some other characteristics of businesses or companies that would like to do something different.
You now have the opportunity of starting on a very interesting journey, if you wish to implement strategies that might relate to one of the above-mentioned characteristics of business activities that could encourage a business owner or company directors to seriously think about availing yourself of the opportunity of being able to raise capital direct from the public. The long-awaited amendments to the Corporations Act to enable Crowd Sourced Funding Equity Raising to be utilised by small proprietary companies becomes operational from 19 October 2018.
A small proprietary company that has annual group turnover of less than $25 million and group assets valued at less than $25 million, that is not listed on a stock exchange anywhere in the world, is potentially able to raise up to $5 million and then raise a further $5 million in the following 12- month period, if the company wishes and obviously if the market supports the company. For the first time small scale investors will have the opportunity of investing in small proprietary companies subject to an investment of $10,000 in a 12-month period per company from an individual retail investor.
If you would like to have a discussion with us about raising capital as a Crowd Sourced Funding Company, please do not hesitate to contact the accountant in our firm with whom you normally deal.
These are some of the issues that could be explored in undertaking the development of a business growth plan for 2019 for your business. If you would like to have a discussion with us relative to the development of a plan tailored to your business, please contact the accountant in our firm with whom you normally deal.
A reminder that if you are an exporter or an Australian business that is directly promoted to overseas residents e.g. hotels and tourist industry operations, a reminder that, if you wish to lodge an Export Market Development Grant Application for the year ended 30 June 2018 the grant application has to be lodged by 30 November 2018.
If you would like to have a discussion with us on any aspect of the preparation and lodgement of the grant application, please contact the accountant you normally deal with in our firm.
Taxable Payments Annual Reports (TPAR’s) have been around for quite a few years in the building and construction industry, however this regime is now being extended beyond the construction industry. Traditionally TPARs have been targeted on the building and construction industry due to the perceived non-compliance of small businesses for not declaring income on tax returns or GST on Business Activity Statements and allows the ATO to lodge default income tax return assessments and Business Activity Statement assessments with the information provided, if the taxpayer does not meet their lodgement obligations.
Due to the success and perceived improved compliance by taxpayers, the ATO has extended this regime to cover the clearing, courier and IT industries with changes in employment patterns whereby people are hired less regularly as employees and, more commonly, as sole traders via an ABN. These obligations apply from 1 July 2018 and, as such, businesses in these industries will need to lodge a TPAR every year by the 28th of August each year. These reports will need to include payments that are made to contractors for providing services to a business and include subcontractors, consultants and independent contractors regardless if they operate as a sole trader, company, partnership or trust and the information provided is fairly simple and are currently the Australian Business Number, the name and address of the business and the gross amount paid to them for the financial year including any GST.
Once reported, this information is provided to the tax agents of taxpayers for inclusion into the taxpayer's return and Business Activity Statements or also used for data matching with a tax return, once provided to the ATO, to ensure all the income tax and goods and services tax obligations are meet. If the Taxable Payments Annual Report is not lodged on time, the Australian Taxation Office is able to apply penalties of up to $1,050 per late lodgement, depending on a taxpayer's lodgement history compliance. Non lodgement of TPARs is being used by the ATO as reasons for not granting approval for payment plans for outstanding taxation debts.
A “casual conversion” is a clause that appeared in a number of modern awards administered by Fair Work Australia.
The “casual conversion clause” enabled any employee, who had met a certain pre-requisite, to have the ability to convert their employment from casual to permanent or permanent part-time.
The “casual conversion clause” generally introduced a timeframe of 6 or 12 months at which date the employer was required to advise an employee, who was engaged on a casual basis, that they have the right to elect that their employment can be permanent part-time or full-time. Recent developments in a Court Case have highlighted the necessity for employers to communicate about the casual conversion to an employee in writing and to ensure that the employee has replied in writing. The employee’s decision should be noted in the employee’s file.
What are the consequences of not informing employees that they have the opportunity to apply for conversion from casual employee to either permanent full-time or permanent part-time?
In a case considered by the Full Bench of the Federal Court the court considered a situation where an employee, who had worked for the employer for 7 years on a casual basis, but under an award that had a conversion clause was awarded a significant amount of money. The court decided that the employer had not communicated in writing with the employee and that the employee was not aware of the opportunity to apply to convert to a permanent employee. It was indicated that the employer had talked to the employee but the verbal discussions were never recorded in writing. The court ruled that the employer had to pay the employee the equivalent of 6 years of annual leave and 6 years of public holidays.
In August 2018, Fair Work Australia announced that the “casual conversion clause" would be inserted into 84 modern awards and that the new system would become operational from 1st October 2018.
Jordan Lowry, Managing Director of Blackstone Business Group, an expert in human resources and workplace health and safety issues made the following comment “The key thing for employers is to make sure you achieve compliance and ensure that you have maintained appropriate records of the invitation being issued to an employee to participate in the “casual conversion” and that the employee’s response is recorded in writing and placed in the employee’s file”.
Jordan Lowry also indicated “Employers should check their awards and, if your award is 1 of the 84 awards that have been modified, make sure that you are familiar with the award and that appropriate diary notes are made as to when the timeframes (6 months or 12 months) will occur for individual employees and then make sure that a discussion is held with that employee at the appropriate timeframe and that the discussions are recorded in writing with a copy being forwarded to the employee". The “Financial Review” has reported that “many workers like the flexibility of being paid a 25% or so casual pay loading in return for not getting permanent employment benefits such as annual leave". "The evidence shows that many Australian workers, even those employed in a reasonably regular basis, prefer to take the extra money up front”. Jordan Lowry has indicated that he is happy to undertake a complementary review of the position for your business. Jordan Lowry may be contacted on: or you can review the company’s website at www.blackstonebusinessgroup.com.au.
The Entrepreneurs Program is offering Australian small/medium sized companies and incorporated trustees of a trust assistance to enable them to achieve their potential – moving from “good” to “great”! Eligible applicants are able to request a comprehensive, confidential and independent business review to be conducted by an Entrepreneurs' Program Business Advisor at no charge to the business. The Entrepreneurs' Program Business Advisors work with the client to review the business activities to identify solutions that are sustainable for the future. The identified solutions can then be implemented by the business engaging a consultant to assist in this process. The government supplies a grant of up to $20,000, on a 50% subsidy basis, to assist the business in financing this work.
The government has identified specific industries that will be eligible for this support:
The Entrepreneur' Program also provides other services including: