Checklist for flood-affected small businesses
Chartered Accountants Australia and New Zealand’s (CA ANZ) has released a checklist for small businesses affected by flooding.
Tax Leader for CA ANZ Michael Croker said many small businesses are still battling the impacts of COVID-19, the end of JobKeeper, and to be hit with flood damage is devasting.
More than 17,000 insurance claims have already been lodged as a result of the flooding and severe weather in NSW and Queensland according to the Insurance Council of Australia.
CA ANZ has developed the following financial checklist so small businesses can minimise financial hardship and get back on their feet as soon as possible when natural disaster strikes:
Look after yourself
“This is a stressful time and many business owners will feel the pressure of so many people who rely on them. It is vital to get enough sleep, eat well and take care of yourself during these trying times.
“Many Chartered Accountants have been trained in providing mental health support to our clients, but also ensure you reach out to family, friends, advisers and local support groups as well.” Mental health training is going to be boosted even further in 2021 with up to 5,000 accountants to receive further mental health training this year.
Secure business records
Businesses can prevent the loss of important business records and avoid the need for natural disaster document recovery, by taking a proactive approach.
“Making digital copies is a key way of securing business records.” Businesses should consider scanning their vital documents with an online secure cloud storage solution and they should regularly back-up electronic documents.
Don’t get scammed
Scammers take advantage of natural disasters, targeting victims of the disaster and those in the community who want to help them, notes CA ANZ. “Many people also want to donate quickly to help out so be careful of scammers impersonating reputable organisations seeking donations.
“There are many resources designed to help Australians avoid being scammed including Scamwatch where you can also report a suspected scam.”
Check your insurance
“Business owners should reviewing their existing insurance policies to check coverage and entitlements and work collaboratively with insurance companies.
“Where insurance cover is provided by the policy, business owners will need to collate details of losses. Photographic evidence will help with this.
“Natural disasters often prompt a review of future insurance needs. Before entering into a new insurance policy, get advice on the costs and benefits.
Government emergency grants
“Check your entitlements: Small businesses which have suffered a significant loss of income as a result of a declared disaster, may be able to access low interest Government loans and other disaster recovery assistance. The Federal Government has announced it will extend the SME Recovery Loan Scheme to provide further support to flood-affected businesses.
“Eligibility criteria and an application process applies so business may need to get help from their accountant.
Speak with suppliers
Business owners need to keep up strong communication with their customers and suppliers during times of crisis. They should review any purchase and supply agreements to determine the rights and obligations of both parties.
“Find out if suppliers will accept delayed payment terms and how quickly they can re-supply what's needed to re-start business operations.
Repairs, clean-up costs, temporary storage costs etc
“For insurance, government assistance and tax deduction purposes, keep records. Tax deductions apply to repairs, not improvements (there's a difference).
Revise business cash flow
“Following any disaster, business should discuss their financial forecasts with their accountant for the current financial year and subsequent years.
“Be realistic and conservative in your estimates. It might also be a good investment to seek specialist business recovery advice”.
“Business financiers will be keen to know how the flood impacts their loans and repayments. Be prepared with well-thought out revised budget forecasts for the 2021 financial year and beyond.
“Business owners should work with their accountant to see if any favourable tax adjustments can be made in the next tax return. If there is cash available, a business could be eligible for a 100% tax write-off for equipment to replace depreciating assets lost or damaged in the flood.
“You accountant can also liaise with the ATO should extra time be needed for tax lodgments and payment of tax debts.