Small businesses are being urged to seek professional advice and make use of mental health resources as the JobKeeper wage subsidy program enters its final days.
Final JobKeeper payments need to be made by this Sunday, March 28.
This morning, Prime Minister Scott Morrison said the end of the massive government program is about making “brave decisions” to allow the Australian economy to “take on that load”.
Referencing recent job figures that show Australia’s employment rate is now at a similar level to before the COVID-19 pandemic, Morrison said ending the wage subsidies is the right decision as “you can’t run the Australian economy on taxpayer’s money forever”.
“We know that there comes a time that you have to back Australians and back Australia’s business community,” he added.
However, many small and medium businesses across the country remain in survival mode and are bracing for the end of JobKeeper payments, along with other coronavirus support measures including commercial rent relief provisions.
Gavan Ord, senior manager of business and investment policy at CPA Australia, says it is essential that businesses still reliant on JobKeeper carefully manage their cashflow as the support is withdrawn.
In particular, Ord reminds business owners to think now about how they will cover expenses such as superannuation contributions, which have strict due dates and come with significant penalties if paid late.
“If you make your employer superannuation contributions quarterly, be aware that the next due date is April 28 and set aside money for that expense,” he advises.
“It’s very important that you don’t incur debts you can’t pay. Business owners and directors can be held personally liable for insolvent trading.”
Ord says now is the time for business owners to seek advice from their accountant about ensuring they have a sustainable, longer-term business model.
“If you’re been relying on JobKeeper until now, chances are you’ve been more focused on survival than recovery,” he says.
“Businesses that seek professional advice are more likely to survive and recover than those that don’t.”
It’s also important to recognise the added stress that the end of JobKeeper may cause, and Ord recommends business owners also take advantage of the free mental health support programs available.
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One such resource is the My Business Health portal, which was relaunched by the Australian Small Business and Family Enterprise Ombudsman this month.
Some businesses will be forced to close
The JobKeeper program supported more than 1 million businesses and 3.8 million employees during the pandemic.
The number of employees dropped to around 2.2 million workers during the second phase of the program between October and December, and again to 1.54 million workers by the end of December, according to the Australian Taxation Office.
Around 370,000 businesses and 1 million employees are still being supported by JobKeeper payments, with estimates from Treasury this week suggesting that as many as 150,000 jobs could be lost when the payments stop flowing.
CreditorWatch chief economist Harley Dale estimates that there are between 3000 and 5000 insolvent businesses currently being supported by government stimulus measures and insolvency legislation, and some of these businesses will enter external administration in coming months.
While industry associations in the travel and hospitality sector have continued to call for more targeted support as JobKeeper winds down, including cash flow boost payments and tax relief, Ord says it is important for some businesses owners to acknowledge that they may need to close their business once the “lifeline” of JobKeeper is withdrawn.
Again, seeking advice about the right way to close a business will be important, says Ord.
“If you’re shutting up shop permanently, be aware that there may be unrealised valued in your business assets or debts owed to you,” he says.
“An accountant can help you realise this value so you don’t walk away empty handed.”