Plenty of small businesses face many challenges – believe it or not, even in just getting paid. The ASBFEO reported that delayed payments to SMEs from both the public and private sectors significantly impact their cash flow.
To aid them, it may soon be a legal obligation to pay small businesses within 20 days of invoice issuance. Will your business benefit from this policy? What exactly does it take to be considered as a small business? Different regulators define “small business” in various ways based on their laws.
For example, ASIC defines a small business as:
- a business with an annual revenue of $25 million or less;
- has less than 50 employees at the EOFY or
- has consolidated gross assets of $12.5 million or less at the EOFY
The ATO, on the other hand, classifies a business small if it has an annual revenue turnover of $10 million or less excluding GST. Meanwhile, Fair Work Australia considers a business small if it has 15 employees or less, whether part time or full time.
There may still be other definitions from different government agencies and these cause complications when small business owners try to comply with requirements. It would be very helpful for business owners if there was a single definition of important terms and classifications, such as “small business”. It may benefit productivity if there is a uniform definition of a “startup,” “scale up,” “medium business” and “large business.”
Business owners are expected to be responsible and proactive when it comes to regulation and legislation. However, they tend to focus on looking for customers, building their trust and retaining them so red tape is often taken for granted.
The process becomes even more complicated because of the constantly changing local, state, federal and governing authority legislation and owners may find it difficult to know which ones are relevant for their business and how they should act on them effectively.
A single system will give business owners more time to focus more on their customers and operations. The government should have it in place if they want small businesses to effectively capitalise on the 20-day mark rule.
To know more about small business and accounting, click here. Speak to experts who specialise in startups and small to medium business consultancy. We are big believers in the use of professional tools to manage your business. The right tools can streamline your processes so that the business is best placed to trade profitably.
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