Keep your business healthy this winter

It’s the simple things that keep us feeling well through winter – a daily walk in the sunshine, a bowl of slowly simmered chicken soup or a nightly ritual of peeling and sharing orange segments with our loved ones.

And winter is so much more bearable when you take these small time-honoured steps to stay well, rather than letting yourself get run down and ill.

The same goes for business. No matter how long you have been operating, it is always good to have a refresher about the things you can do to keep your business healthy and free from unnecessary fees and disputes. Here’s a few:

Business name

Remember to renew your business name when required by ASIC, and to provide this business name and your Australian Business Number on any document provided to another entity when conducting business with them.

Record-keeping

You must keep financial records that correctly record and explain your business’ transactions and financial position and performance, and enable true and fair financial statements to be prepared and audited. Financial records include invoices, receipts, cheques, working papers and other documents needed to explain the methods by which your financial reports are prepared.

Financial records must be kept for seven years, and may be kept electronically by you or on a third party’s computer (eg. your accountant) however a hard copy must be provided to a person entitled to inspect the records.

Financial reporting

If your company is a ‘small proprietary company’ or a ‘small company limited by guarantee’ you will generally not have to prepare formal financial reports each year and lodge them with ASIC.

If your company is required to prepare and lodge financial reports, you may outsource this task to appropriate professionals – however you are expected to be diligent and understand the information. Generally, companies must lodge financial reports if substantial amounts of money are involved, the general public has invested funds with the company, or the company exists for charitable purposes only and is not intended to make a profit.

If your company is required to lodge financial reports, you should lodge a Form 388 Copy of financial statements and reports along with relevant financial documents within four months of the end of the financial year. For a list of documents that must be included see http://asic.gov.au/regulatory-resources/financial-reporting-and-audit/preparers-of-financial-reports/financial-reports/.

Illegal phoenix activity

The intentional transfer of assets from an indebted company to a new company to avoid paying creditors, tax, or employee entitlements is illegal phoenix activity. This is where the directors leave debts with the old company, often placing that company into administration or liquidation unable to pay creditors, and then the same directors start up a new company which continues the same business under a new structure. This practice is a serious crime and may result in company directors and secretaries being imprisoned.

Are your contracts fair?

Do you:

  • enter into written contracts with customers; and
  • your written contracts are prepared without negotiation with your customers; and
  • your customers are acquiring your goods or services mainly for personal, household or domestic use?

If so, then your contracts are probably covered by the unfair contract terms law. You should assess whether any terms in your contract:

  • cause a significant imbalance in the parties’ rights and obligations arising under the contract and
  • are not reasonably necessary to protect your legitimate interests
  • and would cause detriment if it were to be applied or relied on.

If so, they might be considered by the Australian Competition and Consumer Commission to be an unfair contract term.

Refund policy

Does your refund policy or signage say ‘no refunds’? Be careful – if there is a problem, consumers have the right to seek a solution from the business they purchased from, regardless of that business’ policies or signage. This includes a full refund if any consumer guarantees are not met. It is a breach of the law to tell a consumer that your policy is ‘no refunds’.

Do you have a consumer compliance program in place?

A compliance program is an internal system or process employed by a business that is designed to identify and reduce the risk of breaching consumer law, remedy any breach that may occur, and create a culture of compliance within the organisation. This should be tailored to meet the individual needs of the business. The ACCC has some fab free compliance program templates here for businesses of all sizes.

Are you doing the right thing by your staff?

Check whether your worker is an employee or contractor for tax and super purposes. There are penalties if you don’t meet your pay as you go withholding and superannuation obligations for a worker. If you are uncertain, use the ATO’s employee/contractor decision tool.

Also ensure you understand your obligations under WorkSafe Victoria. You must have workers’ compensation insurance to cover workers if they are injured at work or become ill due to their work. Workers are still eligible for workers’ compensation even if their employer is uninsured or under-insured. Compensation for the worker will be paid and then recovered from you.

As an employer, you must keep all employee records for seven years. Penalties may apply for failing to meet your record keeping and pay slip obligations.

Get your head around the ten minimum employment standards that apply to employees (the National Employment Standards). If you fail to meet these Standards in any way, you may face penalties.

Next level health

Got all the above sorted? Then check out this federal government website Run that sets out even more things to think about – intellectual property protection, free trade agreements, emergency management, saving energy, training, research and innovation grants, business travel and different ways to grow your business. Yep, the list goes on and on as a business owner! There are lots of quizzes and info so you can self-assess how healthy your business is.

This is general advice only. Liability limited by a scheme approved under Professional Standards Legislation. 

Published Aug 10, 2016

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