Businesses That Haven’t Paid Super
With an ageing population it’s not hard to understand why the government is cracking down on businesses that don’t pay any super. In 2014-2015 there was a $2.85 billion-a-year shortfall or a 5.2% gap, where companies were not paying into their staff’s retirement fund. The government are recommending much larger penalties or even up to a year in jail for employers that don’t comply. Plus, from next year on there will be a report from each super fund to the ATO, advising when payments occur, making ATO action on this matter, much, much faster.
Smaller businesses tend to be the biggest culprits in this issue. They have bigger cash flow problems, can be inexperienced at modelling their finances or simply have not made enough allowance to make these payments. In this blog Bear Loans will look at a recent case study that reveals how this problem can be overcome.
Don’t Be Afraid To Ask For Help
Sometimes it takes a village to raise a child and a growing business can be the same. Your business is your baby and sometimes needs a team of people to help it out. If your child was sick, you’d take them to a medical expert for help and when a medical firm recently needed help, it took a team of experts to get them back on track again.
The directors had been having difficulty making their super payments. They needed advice, so turned to their finance broker. They were able to step in, advise on the right process and consultants required to solve this dilemma and their lack of cash flow.
How a Corporate Restructure Can Improve Your Cash Flow
Getting them back on track wasn’t straightforward. A broker can provide finance but for a longer-term fix, they needed an independent accredited accountant and legal counsel.
Forming a team with their broker, the accountant and solicitor worked together on a corporate restructure and money shake-up. The accountant remodelled their finances, completed cash flow analysis and forecasts.
Whilst the solicitor suggested a minor corporate change, which involved the director’s homes and the directors guarantees becoming protected from any associated business risk, should something go wrong. If the company had gone bust without this being in place, their personal assets could have come into play.
The directors were then able to understand their current options and their options moving into the future. They had a much clearer knowledge of their finances, what was required of them and they were able to be legally compliant. Their finance broker was now able to step in and provide the best possible commercial proposal, with manageable repayments and added cash flow benefits.
The medical firm is now a healthy, efficient and business. They’re up to date on their super payments, GST and they have more security knowing that all their assets, including their staff are well looked after.
Disclaimer
*This information is not to be relied upon without speaking to your finance broker, tax agent or financial adviser.
