Running a small to medium-sized business in Australia brings unique challenges. From choosing the right structure and managing cash flow to protecting assets and navigating tax, superannuation, and staffing, there’s a lot to stay on top of. At Equil Advisory, we help business owners make informed decisions, streamline operations, and plan for sustainable growth.
Here are the answers to some of the most common questions SME owners ask.
1. What is corporate restructuring, and why might my business need it?
Corporate restructuring involves reviewing and modifying your company’s operations, capital structure, or debt arrangements to improve financial performance. It can help protect assets, increase efficiency, and accelerate growth.
You might need a restructure if your business is experiencing stagnating growth, cash flow shortages, declining revenue, inefficiency, high staff turnover, or competitive underperformance. Common strategies include:
- Separating business entities to protect personal assets
- Divestment or spin-offs to streamline operations
- Mergers or acquisitions to expand market reach
- Debt restructuring or refinancing to improve cash flow
- Relocating premises or production to cut costs or access new markets
A well-planned restructure can increase revenue, improve cash flow, and make your business more attractive to potential buyers. Having the right structure is crucial for longevity, and professional advice is strongly recommended to avoid potential pitfalls.
2. How can I use my accountant more effectively?
Many SME owners view accountants as providers of tax and compliance services only. In reality, a proactive accountant can help with:
- Cash flow forecasting and monitoring
- Advising on asset purchases, staffing, and expansion
- Tax-efficient business structures and grant eligibility
- Strategic advice on mergers, acquisitions, or selling a business
Choosing an accountant who offers fixed-fee arrangements and ongoing support ensures you get the advice you need without worrying about incremental charges.
Tip: Regular communication with your accountant helps you stay proactive rather than reactive, improving business decisions and results.
3. How can I improve my SME’s cash flow and asset protection?
Maintaining strong cash flow and protecting your assets are essential for business success. Healthy cash flow ensures your business can meet obligations, invest in growth opportunities, and weather unexpected challenges. Meanwhile, safeguarding your assets helps minimise personal risk and ensures your business remains resilient in uncertain times.. Strategies include:
- Reviewing operational expenses and streamlining processes
- Restructuring debt to free up capital
- Implementing tax-efficient structures, such as discretionary trusts or corporate beneficiaries
- Separate business entities
- Divestments or spin-offs
These approaches not only support financial stability but also provide flexibility for future growth, making your business more resilient and better positioned for long-term success.
4. Should I consider owning business property through a Self-Managed Super Fund (SMSF)?
Owning your business premises in an SMSF can provide a range of financial and strategic benefits for business owners, including:
- Rental income and potential capital growth
- Tax efficiency, including reduced income and capital gains tax
- Protection from creditors in the event of business insolvency
Compliance is key. SMSFs must follow strict rules, including trust structures and borrowing arrangements. Professional advice is essential to ensure the fund operates correctly.
5. What should Australian businesses know about hiring overseas contractors?
The recent Fair Work Commission decision in Pascua v Doessel Group shows that even overseas contractors can be deemed Australian employees depending on the nature of the work and the relationship. Key considerations for hiring overseas contractors include:
- Classification matters: The Fair Work Commission has confirmed that simply calling someone an independent contractor does not define the relationship. Factors like control, ongoing obligations, and whether the worker runs their own business are considered.
- Australian laws may still apply: Even if a worker is overseas, if the business is covered by the Fair Work Act, employment rights and obligations can still apply.
- Tax obligations depend on residency: Non-resident employees are usually taxed only on Australian-sourced income. Superannuation guarantee does not apply if all work is performed overseas.
- Independent contractor considerations: Genuine contractors may need an ABN, and double tax agreements can affect tax treatment.
- Permanent establishment risks: Employing foreign workers could create a permanent establishment in another country, potentially triggering local tax obligations.
For businesses navigating the complexities of hiring overseas contractors, understanding the Fair Work Commission’s approach is essential.
6. How can I maximise my superannuation contributions as a business owner?
Business owners can boost retirement savings and reduce taxable income by using concessional contributions. Key strategies include:
- Employer Super Guarantee (SG) contributions
- Salary sacrifice contributions
- Personal deductible contributions
- Using the carry-forward rule to make extra contributions in higher-income years
- Planning contributions early and regularly to manage cash flow and maximise growth.
SMSF trustees should also consider the impact of large super balances and seek professional advice to stay compliant and strategic.
7. How can I manage Division 7A and avoid unexpected tax liabilities?
Division 7A rules prevent private company profits from being used for personal purposes without tax. Key strategies for managing exposure include:
- Properly document loans or benefits to shareholders
- Charge interest at the ATO benchmark rate
- Set up a strict repayment schedule for loans
- Use franked dividends strategically to reduce loan balances
- Interpose a family trust to manage repayments and distribute income
- Limit reliance on Division 7A loans and keep personal and business finances separate
- Monitor inter-company loans to ensure they don’t inadvertently trigger Division 7A
Implementing the right strategies and seeking expert advice early can help ensure compliance, manage cash flow, and use Division 7A rules effectively.
8. Should I consider an outsourced CFO for my business?
Engaging an outsourced Chief Financial Officer (CFO) can give small and medium business owners expert financial leadership without the full-time cost. Benefits include:
- Strategic financial guidance: Access high-level planning for growth, cash flow management, and capital structure.
- Improved cash flow and profitability: Identify cost efficiencies, optimise working capital, and forecast future financial needs.
- Risk management: Ensure compliance, minimise tax exposure, and manage financial risk proactively.
- Scalable expertise: Gain CFO-level support tailored to your business size and needs, whether for short-term projects or ongoing advisory.
- Enhanced decision-making: Leverage accurate financial reporting and insights to make informed strategic decisions.
Tip: An outsourced CFO can be particularly valuable for businesses experiencing growth, facing complex financial challenges, or planning for investment, acquisition, or succession.
Running an SME in Australia requires proactive planning and informed decision-making. From managing cash flow and superannuation to structuring your business and navigating tax obligations, staying on top of these areas is key to long-term success. By leveraging professional advice and implementing the right strategies, you can safeguard assets, optimise operations, and make confident business decisions.
For more business tips, check out our Accounting Essentials for Business Owners video series or speak with the Equil Advisory Team to book a business strategy consultation.
