Starting a recruitment agency in Australia offers a dynamic and rewarding path, where you become the pivotal connection between skilled professionals and their ideal roles, empowering businesses to thrive with the right talent. This venture is not only about enthusiasm; it requires detailed planning, in-depth industry knowledge, and a keen navigation of Australia’s regulatory and financial landscapes.
That’s where JD Scott + co steps in, serving as your trusted advisor, ensuring your agency’s financial foundation is as robust and reliable as the services you aim to provide, setting the stage for a successful and impactful business journey. Contact us today to find out how we can help you.
Researching Your Recruitment Agency Idea
Before you dive into the entrepreneurial world of recruitment, it’s essential to understand the landscape you’re entering. Research the current trends in the Australian recruitment industry. Are certain sectors experiencing a shortage of skilled workers? Are there emerging industries where the demand for talent is skyrocketing? Understanding these dynamics will help you identify where the most significant opportunities lie.
Identify the Target Audience
As a recruitment agency, your clients will be twofold: businesses looking for employees and job seekers looking for work. It’s crucial to define who you want to serve. Are you focusing on a particular industry, such as healthcare or tech? Will you specialise in executive placements, or are you aiming to help companies fill more entry-level roles? Knowing your target audience in detail will inform your business strategy and marketing approach. Add comments in here around your current expertise. Do you have a network you can draw upon? If currently employed, do you have a non-compete that would prevent you from using that network?
Conduct a SWOT Analysis
A SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis will provide you with a clear picture of where your agency will stand in the market.
- Strengths: What will set your agency apart? Perhaps it’s your extensive network within a particular industry or your unique approach to candidate vetting.
- Weaknesses: Are there areas where you have less experience or resources? Identifying these early on gives you the chance to address them proactively.
- Opportunities: What are the unmet needs in the recruitment industry that your agency can fulfil.
- Threats: What external factors, such as economic downturns or strong competition, could pose challenges for your agency?
Conducting this analysis will enable you to create a business plan that is both realistic and strategically focused on your agency’s success.
Leverage Your Current Contact List
When launching a recruitment agency, you’re not starting from scratch; you bring with you your experience, relationships, and reputation. Your existing contact list can be a goldmine for initial business, referrals, and testimonials.
By focusing on this aspect, you’re essentially hitting the ground running, armed with a network that knows your capabilities and can attest to your expertise. This strategy also dovetails nicely with your broader marketing and relationship-building endeavours.
Creating a Business Plan
A well-crafted business plan is your roadmap to success when starting a business. It outlines your agency’s objectives, strategies for achieving those objectives, and the resources and actions needed to make it all happen. For a recruitment agency, this is particularly important as your operations will involve managing relationships with both employers and job seekers. Not to mention, a solid business plan is essential when seeking financing or investors.
Steps to Creating a Business Plan
- Executive summary: A concise overview of your agency, summarising your mission, the market demand you aim to meet, and your business structure.
- Market analysis: A detailed look at the industry landscape, target market, and competition, backed by data.
- Service offerings: Clear definition of the services you will offer, whether permanent placements, temporary staffing, or executive search, and the industries you will serve.
- Marketing strategy: Your plan for attracting clients and candidates, including digital marketing, networking strategies, and brand development.
- Operations plan: How your agency will function day-to-day, including your staffing plans, technology needs, and processes for matching candidates with employers.
- Financial projections: A realistic forecast of your agency’s revenue and expenses, giving potential investors (and you) a clear picture of your business’s financial potential. Use our projection calculator or read our blog on how much it costs to start your own recruitment firm to find out more.
- Risk assessment: Identification of potential risks and your strategies for mitigating them.
Registering Your Recruitment Agency
Choosing a Business Structure
Another vital aspect when starting a recruitment agency is choosing a business structure. In Australia, you can operate as a sole trader, a partnership, or a company. Each has its own legal and tax implications. For a recruitment agency, operating as a company is often the most advantageous due to the limited liability it offers and its suitability for scaling the business. Find out more about setting up a company here.
How to Register a Business in Australia
- Choose and Register a Business Name: This is a name under which you will run your agency. It must be unique and not infringe on existing trademarks.
- Get an Australian Business Number (ABN): An ABN is an 11-digit number that identifies your business to the government and the community. You will need this to register for GST and to invoice clients.
- Register for Goods and Services Tax (GST): If your agency is expected to have a turnover of $75,000 or more, you must register for GST. This is a crucial step, as it affects your billing and your tax obligations.
Find out more about when to register your business for GST.
Understanding Tax Basics
In the world of recruitment, fulfilling your tax obligations accurately and on time is essential. Key among these obligations are income tax, which is levied on your agency’s net earnings, and Pay As You Go (PAYG) withholdings, which involve setting aside specific amounts from payments made to employees and other business entities.
Deciphering GST: Registration Timing and Agency Implications
The Goods and Services Tax (GST), a standard 10% tax on most goods and services sold or consumed within Australia, is a significant aspect of your agency’s fiscal landscape. If your annual revenue surpasses the $75,000 threshold, GST registration becomes mandatory. This process entails incorporating GST into the fees you charge for your services and claiming credits for the GST included in your business-related purchases.
Fringe Benefits Tax (FBT)
FBT is a tax employers pay on certain benefits they provide to employees, associates, or family members in lieu of, or in addition to, salary or wages. This tax is separate from income tax and is calculated based on the taxable value of the fringe benefits. Examples of such benefits include company cars, paying for an employee’s gym membership, and entertainment like free tickets to concerts.
In Australia, the FBT year runs from April 1 to March 31, and it’s critical to assess and report any fringe benefits provided during this period. You’ll also need to lodge an FBT return and pay any tax owed for the period. Since FBT regulations can be complex and frequently change, consulting with a tax professional is advised to ensure that you’re compliant and making the most of FBT exemptions and reductions where applicable. Find out more about fringe benefits tax.
Prioritising Precise and Timely Tax Record-keeping
Maintaining meticulous and up-to-date tax records isn’t merely a legal obligation – it’s a cornerstone of savvy business management. This practice allows you to closely track your business’s pulse, staying on top of your financial statements, income origins, and expenditures. Understanding the numbers involved with your business is invaluable for strategic tax planning and making informed decisions that drive your agency forward. Choosing the right accounting software is another vital aspect for the smooth management of businesses.
Financing Your Recruitment Agency
Launching a recruitment agency demands an initial investment. From securing a professional space, scaling marketing efforts, to staffing and technological setups, the start-up phase comes with its costs. Here’s a glimpse at your financing avenues:
- Personal Savings: An option free of interest rates and external stakeholders, but demands a substantial personal financial commitment.
- Bank Loan: A prevalent approach, typically characterised by lower interest rates, although it necessitates a robust business plan and a commendable credit standing.
- Investor Partnership: Here, you exchange a portion of your agency’s equity for capital, aligning you with a partner who may influence your business’s direction.
- Government Support: Australia’s government extends various start-up grants and assistance, which are worth exploring through official channels.
Elevating Cash Flow Management to a Priority
Cash flow isn’t just numbers on a spreadsheet—it’s the heartbeat of your recruitment agency. Effective cash flow management is about vigilance: consistently monitoring the money coming in and out and ensuring there is sufficient liquidity to cover day-to-day operations. This entails routinely analysing your cash flow status and recalibrating your business tactics as needed to stave off financial challenges and sustain your agency’s vitality.
Choosing Your Location
In today’s interconnected world, a recruitment agency’s location isn’t just about a physical address – it’s also about your digital footprint. Whether you opt for a high-street office, a home setup, or a virtual space, each choice presents its own set of opportunities and challenges. Selecting the right location is a strategic decision that can significantly impact your agency’s success. It involves balancing several critical considerations to align with your business goals and client needs.
Accessibility
Will clients and candidates easily reach you? An accessible location can simplify interviews and client meetings, making your agency more appealing to both parties.
Visibility
Is the location prominent or tucked away? A visible spot can attract walk-in business, while a more discreet location might offer a quieter, focused environment for your team.
Budget
Can your finances sustain the rental or purchasing costs? It’s vital to choose a space that aligns with your financial forecast and doesn’t stretch your budget too thin.
Market Proximity
Are you close to the industries you serve? Being situated near your client base can help establish your agency as a local expert and can lead to more organic networking opportunities.
Digital Reach
Is your online platform user-friendly and engaging? In our digital age, a robust online presence is as crucial as your physical location, serving as a virtual storefront that invites potential clients and candidates in.
Building Your Team
Employees or Contractors: A Strategic Decision
Hiring employees means long-term commitment and additional obligations, like superannuation and leave entitlements, you can even consider profit sharing to help retain talent. Engaging contractors offers flexibility but often at a higher immediate cost and with less control over their work.
Legal Requirements When Hiring
When you’re ready to build your team, compliance is key. This includes:
- Fair work statements: Providing new staff with the Fair Work Information Statement is mandatory.
- Tax File Number (TFN) declarations: Ensuring new employees complete this form so tax can be withheld correctly.
- Superannuation: Setting up and regularly contributing to your employees’ super fund.
- Work health and safety: Ensuring your workplace meets all health and safety standards.
Promoting Your Recruitment Agency
Building a Brand Identity
Your brand is more than just a logo; it’s the personality and promise of your agency. Crafting a strong, consistent brand identity involves defining your agency’s values, voice, and visual elements, all of which should resonate with your target audience and differentiate you from competitors. It’s this identity that will instil trust and loyalty in your clients and candidates.
Importance of a Website and SEO
In the digital age, your website is your storefront, and SEO (Search Engine Optimisation) is the path that leads clients and candidates to your door. A clean, user-friendly website showcases your services, while effective SEO strategies ensure that you’re visible and attractive to search engines.
Social Media and Digital Marketing Strategies
Leverage the power of social media platforms to connect with potential clients and candidates. A well-planned digital marketing strategy, encompassing content marketing, social media advertising, and email campaigns, can significantly expand your reach and engagement.
Establishing Your Business Operations
Operational Processes
Efficiency is key in the fast-paced world of recruitment. Establish clear, streamlined processes for tasks such as candidate sourcing, client communication, and financial management. This not only helps your agency run smoothly but also ensures that your team knows what is expected at each stage of the recruitment process.
Importance of Customer Service
In recruitment, relationships are everything. Prioritise customer service to foster long-term partnerships with both clients and candidates. This means responsive communication, transparency, and a genuine commitment to understanding and meeting their needs.
Navigating the Challenges of Starting a Recruitment Agency
Starting a recruitment agency in Australia is an exciting venture, but it’s not without its hurdles. These challenges can range from regulatory compliance and scaling effectively to managing client expectations and staying ahead of industry trends. A proactive approach—anticipating issues, seeking professional advice, and continually adapting—is key to turning these challenges into growth opportunities. Building relationships with mentors or industry peers can also be invaluable, providing support, guidance, and networking opportunities that can help your agency thrive in a competitive marketplace.
FAQs
Do I need a specific licence to start a recruitment agency in Australia?
No, Australia does not require a specific licence to operate a recruitment agency. However, you must comply with relevant employment legislation and standards. It’s advisable to consult with a legal professional to ensure that your agency operates within the bounds of the law.
How much capital is needed to start a recruitment agency?
The initial capital required can vary significantly. Costs may include office space, marketing, technology platforms, insurance, and staff salaries. It is essential to prepare a detailed business plan that outlines your startup and operating costs. Find out more about how much it costs to start your own recruitment firm.
How can I attract clients and candidates when starting out?
Building a strong digital presence, networking within your industry, and offering exceptional service are key. Consider joining industry associations, attending networking events, and utilising LinkedIn and other social media platforms to connect with potential clients and candidates.
What is the average profit margin for a recruitment agency in Australia?
Profit margins can vary, but typically range from 15-50% depending on the sector, level of service, and efficiency of operations. It is important to regularly review your financials and adjust your strategies as needed to maintain a healthy profit margin.
How do I handle compliance and legal matters?
Consulting with a professional, such as a chartered accountant or a solicitor, is essential. They can guide you through the legal and regulatory landscape, helping you to establish processes that ensure your agency remains compliant with Australian laws and standards.
Have additional inquiries? Keep in mind, JD Scott & Co stands ready to assist you throughout your business venture. Don’t hesitate to contact us whenever you need assistance.
When I started the firm, I took a very different approach to hiring a workforce than the traditional model. We always wanted to build a firm that encouraged flexibility in where we worked. We also wanted to attract the highest quality staff who would serve our clients well. Given the shortage of accountants in what I call traditional career paths, we had to look elsewhere. So we looked to hiring a part time workforce.
Keys to success for a part time workforce
There are three keys to succeeding with a part time workforce.
We’re fully in the cloud, allowing us to operate from anywhere, anytime.
Process is critical – we use the right tools to manage our workflow
Communication – everyone hates it when they don’t hear back from their accountant. We make sure everyone understands what’s going on and what the expectations are.
Operating with a staff who work three or four days a week is more than possible. It means that you can tap a huge, highly skilled and highly motivated workforce of dedicated professionals. Once you have the systems in place and make full use of the available technologies, you can achieve anything. We were lucky – we set ourselves up on day 1 to manage a part time workforce. If you’re looking to transition, then the journey may be a little harder, but its well worth the effort.
Thanks to David Cristello and Jetpack Workflow of the oppotunity to discuss how we grew our firm. If you’re interested in finding out more about our firm click here or if you’re looking for a rewards career, then please get in contact.
Jetpack Workflow interview
B Corp certification is a certification that recognizes businesses that meet rigorous social and environmental standards. It is granted by the nonprofit B Lab, which evaluates companies based on their impact on workers, customers, communities, and the environment. In this blog post, we will discuss what B Corp is and how it can help small businesses.
What is B Corp Certification?
B Corp certification is a designation that is awarded to businesses that have met specific standards of social and environmental performance, accountability, and transparency. The certification process involves a rigorous assessment of a company’s impact on its employees, the environment, and the community. B Corp certification covers five main areas: governance, workers, community, environment, and customers. To earn the certification, a company must score at least 80 out of a possible 200 points.
How Can B Corp Certification Help Small Businesses?
B Corp certification can provide several benefits to small businesses. Here are some of the ways in which B Corp certification can help small businesses:
- Stand Out from the Competition: B Corp certification can help small businesses differentiate themselves from their competitors. It is a symbol of a company’s commitment to sustainability, accountability, and transparency. By displaying the B Corp logo, small businesses can show their customers that they are committed to making a positive impact on the environment and the community.
- Attract and Retain Customers: Consumers today are becoming increasingly conscious of the impact their purchases have on the environment and the community. B Corp certification can help small businesses attract and retain customers who are looking for sustainable and socially responsible products and services.
- Attract and Retain Employees: B Corp certification can also help small businesses attract and retain employees who are looking for a company that aligns with their values. Many employees today are looking for companies that have a positive impact on the environment and the community. B Corp certification can help small businesses attract and retain these employees.
- Access to Funding: B Corp certification can help small businesses access funding. Many impact investors are looking for companies that have a positive impact on the environment and the community. B Corp certification can help small businesses attract these investors and secure funding for their business.
- Networking Opportunities: B Corp certification can provide small businesses with networking opportunities. B Corp certified companies are part of a global community of like-minded businesses that are committed to making a positive impact on the world. This community can provide small businesses with valuable connections and resources.
- Improve Operations: B Corp certification can help small businesses identify areas where they can improve their operations and make a positive impact. The certification process requires businesses to evaluate their impact on their employees, the environment, and the community.
- Enhance Reputation: B Corp certification can enhance the reputation of small businesses. The certification is a symbol of the company’s commitment to sustainability, accountability, and transparency. This can help small businesses build trust with their customers, suppliers, and partners.
Our Journey to BCorp Certification
JD Scott + Co started our BCorp journey several months ago. While its a timing consuming and intense process, the results are well worth the effort. Read how we have tackled the BCorp certification journey in this artic`le in The Big Smoke.
In conclusion, B Corp certification is a symbol of a company’s commitment to sustainability, accountability, and transparency. It can provide several benefits to small businesses, including differentiation from competitors, access to funding, networking opportunities, and improved operations. B Corp certification can also help small businesses attract and retain customers and employees who are looking for sustainable and socially responsible products and services. If you are a small business looking to make a positive impact, consider getting B Corp certified.
Starting a Pilates studio in Australia can be an exciting and rewarding business venture. Pilates has become increasingly popular in Australia over the years, with more people recognizing the benefits of this exercise method. Starting a Pilates studio requires planning, research, and dedication. In this article, we will discuss the steps involved in starting a Pilates studio in Australia.
Step 1: Develop a Business Plan
The first step in starting a Pilates studio is to develop a comprehensive business plan. A business plan is a written document that outlines your business goals, strategies, and financial projections. It should include details such as:
The target market: Identify the type of clients you want to target, their demographics, and their fitness goals. This information will help you tailor your services to meet their needs.
The services you will offer: Outline the types of Pilates classes you will offer, such as mat classes, reformer classes, or a combination of both. Decide if you will offer private or group sessions and if you will offer additional services such as nutrition coaching or massage therapy.
The location: Choose a location that is accessible, safe, and convenient for your clients. Consider the rent, lease terms, and any renovation costs associated with the location.
The competition: Research the competition in the area and identify what sets your studio apart from others. Consider the pricing, class schedules, and quality of services offered by your competitors.
The financial projections: Determine the startup costs, monthly expenses, and projected revenue. Create a cash flow forecast to ensure you have enough capital to cover expenses until the business becomes profitable.
A business plan is a crucial step in starting a Pilates studio as it serves as a roadmap to guide your decisions and ensure your business is on track.
Step 2: Obtain Certifications and Training
To start a Pilates studio, it is essential to have the necessary certifications and training. The minimum requirement to become a Pilates instructor is to complete a Certificate IV in Pilates or equivalent. This certification is offered by many registered training organizations (RTOs) in Australia.
In addition to certification, it is also essential to have practical experience as a Pilates instructor. Consider attending workshops, seminars, and conferences to gain additional knowledge and skills.
Step 3: Secure Funding
Starting a Pilates studio requires a significant investment in equipment, rent, marketing, and other expenses. Consider the various options for funding your studio, such as:
- Personal savings: If you have personal savings, this is an excellent option to fund your business. However, keep in mind that you may need to allocate these funds for other emergencies or unexpected expenses.
- Business loans: You may consider applying for a business loan to cover the startup costs. Research and compare the terms and conditions offered by various lenders to find the best option for your business.
- Crowdfunding: Crowdfunding is a popular way to raise funds for a business. Consider creating a crowdfunding campaign on platforms such as Kickstarter or GoFundMe to attract investors who believe in your business idea.
Step 4: Register Your Business
To start a Pilates studio in Australia, you will need to register your business with the Australian Securities and Investments Commission (ASIC) and obtain an Australian Business Number (ABN). You will also need to register for Goods and Services Tax (GST) if your annual turnover exceeds $75,000. Our guide on registering for GST maybe helpful. For more information read out article on business registrations.
Step 5: Choose the Right Equipment
The equipment used in a Pilates studio is a critical factor in delivering quality classes and ensuring client satisfaction. The following are some of the equipment required for a Pilates studio:
a) Pilates Mats: High-quality Pilates mats provide cushioning and support during exercises.
b) Pilates Machines: Pilates machines such as the reformer, Cadillac, and chair are essential for delivering Pilates classes and ensuring client satisfaction.
c) Small Equipment: Small equipment such as resistance bands, balls, and foam rollers are
Step 6: Location, Location, Location
Choosing the right location for a Pilates studio is crucial for attracting clients and ensuring the success of the business. When selecting a location, consider the following factors:
a) Accessibility: Choose a location that is easily accessible by public transport, car, or foot, and that has ample parking.
b) Demographics: Consider the demographics of the area and whether there is a demand for Pilates classes.
c) Competition: Research the competition in the area and identify any gaps in the market.
d) Size: Choose a location that is spacious enough to accommodate the equipment, clients, and instructors.
e) Facilities: Ensure that the studio has the necessary facilities, such as a reception area, changing rooms, bathrooms, and storage.
Are you undercharging for your services? It can be hard to tell, particularly if you’re in a niche industry or you’re a contractor. Costs have been rising, so it may be time to rethink your own pricing.
Here are five signs that you might be undercharging:
- Nobody ever questions your quotes – Do all your new clients accept your quotes or charges without asking any questions, requesting a breakdown or wanting a discount? It’s possible they’re delighted to be getting such a great deal.
- You run off your feet but you can’t afford to get help – When you’re working yourself to the bone, but there’s not enough money left over to employ someone to help you, your prices are too low – or something else needs to change.
- Your prices have been the same for two years or more – In most industries, prices increase just slightly each year. Leave your prices flat for too long and you’re not keeping up with the market; make sure you review your fees annually.
- You’re overbooked – When business is booming and there’s no room for new clients, it’s time to raise your prices.
- Clients don’t treat you as well as they should – When clients think they’re paying peanuts, they’ll often take you for granted. They don’t see your time as valuable, so they feel free to mess you around.
What should you be charging?
Finding your pricing sweet spot could take a little time. You’ll need to do some research, maybe ask around a little, and find out where your competitors are pitching their rates.
We can help too. If we have clients in similar industries we might be able to give you some indication of typical fees. So give us a call or drop us a note. We’d love to hear from you.
Read here to find out how to get more cash from your business.
What are your business goals for the year ahead?
An annual business review is an excellent way to review the year just finished and reflect on what worked, what didn’t, what you’d like to change and new things you’d like to implement.
Last year, there were inescapable impacts on businesses, with some thriving, others failing, and others just getting by. So what kind of year was 2022 for your business?
Take the time to review the year and acknowledge all that has happened, good, bad or indifferent. Examining the year with an objective perspective can provide valuable insights to prepare for the next business year. Planning and goal setting will help provide a focus for your business year ahead.
Your Yearly Business Review
- What were the most significant impacts on your business in 2022? How well did you meet the challenges?
- What worked well last year? What systems, technology, products or services were successful?
- What accomplishments can you celebrate?
- What situation, event or experience provided the biggest learning opportunity?
- What is the biggest challenge or frustration you face as you prepare for 2023?
- What did you most enjoy during the year? Do more of it. What did you least enjoy? Do less of it!
- Analyse your financial reports. Are you earning what you’d like to? Is the business sustainably profitable?
Get Ready for a Great Year
While there are many metrics you could evaluate to track business performance, we’ve given you just a few ideas to inspire your business planning for 2023. Here’s some tips to help you get started on 2023 goal setting.
If you’d like to chat about what you can do differently this year to enable your business to thrive, book a time with us today.
Whether you want to grow your business or take more time for yourself, these goal setting tips can help you achieve your long-term plans.
- Think big! – What do you want from your life – and how can your business help you achieve that? Think about next year and beyond; what does your business look like in 5 or 10 years? When you know what end point you’re aiming for, it’s easier to set goals that move you in the right direction.
- Pick something you can measure – Vague goals aren’t as helpful as those you can measure and monitor. Think about what you already measure in your business and how you’d like to see those metrics change. For example:
- A 3% increase in net profit year-on-year
- A 2% reduction in expenses
- 1 new customer per month
- Reduce average payment time to under 50 days
- 4 weeks of holiday during which you don’t go into the office at all
- Make a plan to achieve each goal – Once you’ve picked a few goals, come up with ways to achieve them. It could just be back-of-the-envelope thinking, or have a brainstorming session with your team or your advisers (give us a call!). When you have a plan in place, do your best to follow through and make it happen.
- Keep monitoring your progress – Check in each month to see how you’re tracking with your goals. Set yourself reminders on your calendar or make it part of your invoicing cycle. If you’re not quite on track, you can make tweaks or come up with some fresh ideas to help you reach your targets.
- Plan a celebration! – Give yourself a good reason to keep striving for your goals. It might be a long lunch, a trip to the movies, a manicure, or a beer advent calendar next December. Something you’ll enjoy that’s not going to blow the budget.
We can help
Not sure what your goals should be or how to monitor them? We can show you where to find the information you need, how to check on it, or keep an eye on it for you.
Our team also has some fantastic ideas for how to reach your goals and build your business – get in touch!
Have you reviewed how you went in 2022? Check out our guide on how to do that here
Is it Entertainment?
Entertainment is generally not a deductible business expense. Entertainment rules can be tricky, but in general, the more lavish the meal or event, the more costly, the later in the day and if alcohol is involved then it will generally be called entertainment. Fringe benefits tax may apply to entertainment benefits provided to employees, and if an event or gift is considered to be entertainment then you cannot claim a business deduction or GST. A Christmas party for employees, spouses, suppliers and customers may or may not be classed as entertainment. Check with us to see if any of the party costs can be claimed.Keep it Free From FBT
- If you give gifts to your employees keep them under $300 each. Benefits provided which have a value of less than $300 are exempt from FBT.
- Give gifts to employees that they otherwise would have claimed as a tax deduction. For example, you could pay for a professional development course or give new tools.
- Give gift cards or vouchers up to the value of $300. (Vouchers are not considered to be entertainment).
- Avoid giving ‘entertainment’ gifts over $300, such as membership to clubs, tickets to events or travel.
- Pay a Christmas bonus. Process through payroll like any other wage payment and withhold tax. Remember that superannuation applies to bonus wages.
Enjoy the Party
Talk to us when planning your Christmas gifts and events to check how much may be claimed as business expenses. Once you know the costs of throwing a party and giving gifts and bonuses, you can put your feet up and enjoy your own party! For more information on FBT here.The summer holiday period and can be confusing to employers and employees alike – public holidays worked or taken as annual leave, business shutdowns, annual leave provisions… there are many rules employers need to understand.
Employees are entitled to annual leave and public holidays (PH) under the National Employment Standards minimum entitlements.
Employers can ask employees to work on PH within reason. For example, if the business is open every day of the year, and the employment agreement states that public holidays may be required, the employer can reasonably ask an employee to work a public holiday.
An employee can refuse to work a PH if the request is unreasonable or there are reasonable grounds for refusing.
Christmas and New Year Public Holidays 2022-23
This year the following public holidays apply to employers in all states:
- Sunday 25 December 2022 Christmas Day
- Monday 26 December 2022 Boxing Day
- Tuesday 27 December 2022 Additional PH for Christmas Day
- Sunday 1 January 2023 New Year’s Day
- Monday 2 January 2023 Additional PH for New Year’s Day
Public holidays are paid at ordinary rates for employees who take the day off. Employees who work on a PH must either be paid penalty rates according to the relevant award or be given an extra day off in lieu of the public holiday. Some awards have specific provisions or additional benefits for public holidays, so it’s important to check.
If an employee has booked annual leave for the Christmas New Year periods, the PH aren’t counted as annual leave. For example, if a permanent employee is on annual leave from 26 December to 6 January, they will use eight days of annual leave, not ten. Two of the days are paid as public holidays.
Some other key points to remember:
- PH are counted as service, so annual and personal leave continues to accrue as usual.
- Overtime worked on a public holiday may be paid at a different rate than regular overtime – check the relevant award or agreement.
- Check the award or agreement for shutdown provisions. Most awards have guidance for directing employees to take leave during annual shutdowns.
- If employees don’t have enough annual leave, employers can agree to pay them in advance for leave not yet accrued. Or the employee can take unpaid leave.
The FWO has further advice on rules and entitlements during the end-of-year holiday season.
You might also need to think about cash flow planning for the holiday period, particularly if the business shuts down but still has obligations for payroll and other expenses.
We can advise you about your employer responsibilities and help plan holiday period payments so you can make the most of your summer holiday!
For a quick read on understanding profit and loss, click here.
Are you interested in comparing your business performance against the ATO Small business benchmarks? It can be a useful exercise to see whether your business is performing well, on average, or lower than the benchmark figures.
Each year the ATO publishes industry-based data to highlight specific ratios of financial and other types of performance.
You can compare your cost of sales to turnover, total expenses to turnover, or labour cost to turnover. Comparing to average data gives you an idea of how your business performs compared to others in your industry.
It’s no problem if your ratios are different – but it can be a helpful starting place to look if you want to improve financial performance or reduce costs. If your ratios are very different from the ATO’s, it could be worth diving deeper into your financial reports to see if you have problems that can be addressed. For example, a hospitality business might realise that its food cost is much higher than average. They could then take action to change suppliers and manage wastage.
The ATO benchmarks are based on your business industry code used in your activity statements and tax returns. If you’re not sure what industry you fall under, check the ATO Business industry code tool to find the correct code for your business.
To start comparing your business, you’ll need some information from your accounting software financial reports.
- Gross sales income.
- Salary and wages expenses, including superannuation.
- Vehicle expenses.
- Interest on credit cards and loans.
- Cost of sales.
- Total other business expenses, including all running costs, administration, contractors, suppliers, rent, freight, training and website fees.
Once you have these totals, either from your software or your last tax return, you can compare your figures to the ATO benchmarks.
Want to learn more? We can analyse your business performance using the ATO benchmarks as a starting place for comparison. We will discuss areas you can target to increase profitability, reduce costs and streamline operations.
JD Scott + Co is one of Sydney’s leading Chartered Accounting firms, we aim to help build your business and wealth, empowering you to reach your goals.
