Fire-impacted small business checklist

January 21, 2020
  • This article was first published by Chartered Accountants Australia and New Zealand to support small businesses impacted by natural disasters such as fire

Many small businesses don’t have a business continuity plan for when natural disasters strike. So here are some practical issues small business operators should consider.

1. Are you OK?

  • Running a business is stressful enough without Mother Nature’s interference.
  • Reach out to family, friends, advisers and local support groups.

2. Engage with your workers – You’ll be heartened by their support

  • Be upfront about the impact of the disaster on your business.
  • Check employment and contractor agreements. Can unutilised employees agree to reduced hours, bring forward annual leave plans or take unpaid leave if the business is temporarily closed or in re-start mode? Legal advice may be needed.
  • Fringe Benefits Tax concessions may apply for emergency benefits to employees.
  • Challenge your workforce with diverse tasks to get the business up and running.

3. Secure business records, obtaining replacement records if necessary

  • Get your business technology up and running again as quickly as you can.

4. Insurance

  • Check current policies for coverage.
  • Collate details of losses (photographic evidence helps).
  • Engage with your insurers.
  • Seek a 2nd opinion on proposed payouts.

5. Government emergency grants and community support funds

  • Check your entitlements (business and personal).

6. Trading stock, equipment and buildings

  • For insurance, government assistance and tax deduction purposes, keep records of damaged, lost or destroyed trading stock (even if sold for reduced prices), equipment and business buildings.
  • Replacement equipment costing less than $30,000 attracts a 100% tax write-off (note: this threshold will end on 30 June 2020).

7. 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).

8. Do you operate from leased business premises?

  • Engage with your landlord on possible rent relief and the timeframe for any necessary repairs to be done.

9. Your suppliers

  • Review purchase agreements to determine rights and obligations of both parties.
  • Speak to them. Will they accept delayed payment terms?
  • How quickly can they re-supply what’s needed to re-start business operations?

10. Your customers

  • Review sale agreements to determine rights and obligations of both parties.
  • Develop and implement a communication strategy that conveys your re-start plans and how you’ll help them as they too recover from the disaster.
  • Can customers bring forward payment of any amounts owed to your business?
  • Enlist customer support as you re-start business (e.g. sales campaigns).

11. Revise business cash flow and business forecasts for the current financial year and subsequent years

  • Be realistic and conservative in your estimates.
  • Specialist business turn-around advice may be a good investment.

12. Tax

  • Engage with the ATO and State & Territory tax authorities.
  • Work with your accountant to see if any favourable tax adjustments can be made in your next BAS and tax return. Lodgment extensions are available.
  • Seek deferred tax payment plans if necessary.
  • In serious hardship cases, tax debt waiver may be available.

13. Finance

  • Quantify any additional financing needed to re-start business operations and explore financing options.
  • Engage with existing financiers and discuss your business recovery plans.
  • Seek a temporary break on interest repayments if necessary.

14. Learn from this

  • What went well in responding to the disaster? What could have been done better?
  • For the longer term, should a business continuity plan be prepared?