WHAT BUDGET 2018
MEANS FOR SMALL
BUSINESS
From cutting red tape and lowering taxes to support small
business, Treasurer Scott Morrison’s 2018 federal budget aims
to “keep backing business to invest and create more jobs” in
an ever-changing economy. This includes extending successful
measures such as the instant $20,000 tax write-off. Here’s what
you need to know.
It’s no secret that successfully operating a
profitable small business is not easy. The
good news is that Budget 2018 is building
on measures to reduce red tape for small and
medium-sized businesses.
Measures include:
The $20,000 instant asset write-off has been
extended for a further 12 months to 30 June,
2019.
A broader range of businesses will be
eligible for the reduced tax rate of 27.5
percent including those with turnover
under $50 million (pending legislation). It is
hoped that this will stimulate increased
levels of employment by these businesses.
A crackdown on anti-phoenixing activity
to support small businesses being ripped off.
A company phoenix activity involves
registering a new company to take over
the failed or insolvent business of a
predecessor company.
The Government has allocated $17.7 million
to expand its Entrepreneurship Facilitators
Program to upskill mature aged workers
and provide them with incentives to start up
their own business.
Promoting Australian exports.
The Budget also expands on the Research and
Development (R&D) Tax Incentive. This is
Australia's largest source of Government funding
provided to ensure that we stay competitive in
the global economy. This scheme is available
to a wide range of businesses across almost all
industry sectors, from startups to multinationals.
R&D Tax Incentive is a tax offset that is available
to companies undertaking eligible research
and development activities. The incentive is a
refundable offset of 43.5 percent and will either
reduce income tax or come back to the company as
cash. This is a great incentive for supporting startup
companies that are spending a minimum of $20,000
in innovation and the creation of new knowledge.
Changes to the R&D Tax Incentive in Budget
2018 do not significantly affect companies with a
turnover of less than $20 million.
If you’re an experienced hand at running
a business, you might already have a lot of
knowledge about the ins and outs of getting a
startup off the ground. But having outside advice
to inform, guide and advise is helpful no matter
what your background.
Here are our six tips for launching a startup:
Research your product/industry.
Develop a strategic plan that covers 1-3 years.
Underpin the strategic plan with a budget
(this forces the strategic plan to be realistic).
Know your numbers, especially your
breakeven point.
Talk to your accountant and invest in an
appropriate structure from the start.
Surround yourself with mentors in different
industries to yours that also have distinctive
skill sets and can play devil’s advocate to
open your mind to opportunities you may
not have previously considered.
The Australian Bureau of Statistics has reported
that within the first three years of starting, over 60
percent of small businesses have to shut their doors.
New business owners can minimise the risk of this
happening by undertaking the following steps:
Never underestimate how much time a new
business can take.
Make sure you have a strategy in place that
is comprehensive.
Regularly monitor your cash flow and
ensure you have a sufficient amount of
working capital to ride out any troughs.
Understand your numbers so that your
strategy can be adapted to take into account
changes as they occur.
Don't wait until the end of the year to make
changes. Your business should be constantly
evolving.
Element Business & Accounting Solutions are authorised to provide financial superannuation advice through our wholly owned subsidiary, Element SMSF & Advisory Pty Ltd (authorised through the SMSF Advisers Network
Pty Ltd), including advice on establishing self-managed superannuation funds, contribution strategies and pension strategies. With our practical and straightforward advice, and experienced team, we are the perfect
solution to help businesses navigate today’s ever-changing economic landscape.
98 | Pindara Magazine ISSUE 13 | 2018