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Small business accountant says the ATO has a heart apparently

accounting for small business 

Let’s follow on from last week’s blog post about the MYEFO with some recent annual reports that have been released by both the ATO and the ASIC in the past week. Both reports present alarming statistics that many of you, as small business owners, will already know from being at the coalface of the economy.

The annual report from the ASIC presents the alarming statistic that companies entering external administration last year were up 9.4% on the previous year.

The annual report released by the ATO further highlights the issues in the economy but sadly tries to put a positive spin on them for the ATO’s benefit. The ATO report outlines that it has granted 280,000 payment arrangements for businesses that could not meet their ATO obligations on time. This is up quite severely on last year’s figure of just 113,000. In its report the ATO basically says that it has been quite generous in granting such arrangements. As opposed to the alternative of winding up 280,000 businesses in our economy. Imagine what that would have done to unemployment and economic growth! Yes, in the true legalistic sense, the ATO would be well within its rights to demand payment on its owed debts but in reality it knows many small businesses are struggling and to wind them all up would cause more damage than granting deferral of payments until better economic conditions return.

As small business accountants and being ipa accountants specifically, dealing with small businesses across a range of industries our take on the situation is that the well run businesses will always survive the difficult times and then thrive when the economy rebounds. Many businesses are turning a profit and will succeed but even these businesses are struggling for cash flow. Blow outs in debtor payment times and incredibly strict lending criteria from the banks are hampering the recovery. Tight cash flow, will obviously affect small businesses much more than large businesses, hence the all too obvious rise in companies going to the wall whilst the survivors lean on the ATO to prop up their cash flow.

Check out some of my previous blogs for ways to monitor debtors and improve your cash flow. These tips not only assist in difficult times but will hold for the good times and allow your small business to grow and keep ahead of the pack in the race to success in your chosen endeavour.

 
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