As a small business owner, you know December brings both holiday rushes and year-end paperwork. Between serving customers and managing staff, it’s challenging to find time for essential planning and organising.
But taking a few key steps now can help you start January with confidence and clarity. Here’s a practical checklist to help you close out the year successfully while setting your business up for growth in the months ahead.
Table of Contents
Collect and clear your debts
Late payments are a serious issue for businesses everywhere. Receiving payments late can significantly affect your cash flow and ability to pay your invoices on time.
When it comes to collecting payments from others, here’s some ways to ensure you get it before end of year:
Commence Your Escalation Process Now
- Change your payment terms from 30 days to 14 days.
- Set aside a particular day to undertake debt recovery. This will involve tasks such as contacting customers who have overdue invoices, taking stock of what’s owed and by whom, and contacting a debt collector if necessary.
- Send reminder emails. Each reminder email should have a different title, depending on how overdue the payment is, such as:
- Reminder Notice – Outstanding Invoice
- Outstanding Invoice – Immediate Payment Required
- Final Payment Notice Prior to Debt Recovery
Taking things further
Sending a letter or email isn’t always the most effective way to recover overdue invoices. After 2 reminder notices are sent, it may be worth calling the debtor to seek an explanation. They may have simply forgotten and agree to pay, or they may offer to pay off the amount owing under a payment plan.
No matter the outcome of the conversations, you should always send an email to the debtor confirming what was said (and agreed to) in the conversation. Try to get the debtor to agree in writing that they owe the money. If the invoice has been outstanding for more than 21 days, have the debtor enter into a simple written payment plan and acknowledgment of debt.
If you’re concerned that the debtor still won’t pay off the debt, it may be worth referring the matter to a lawyer or debt recovery agent before 13 December. This is because many offices shut down not long after this date (including the Courts), so if you want to start the process of recovering your money before the end of the year, it should be done before this date.
Check your payment terms
The frantic atmosphere of the Christmas season doesn’t mean financial obligations should be forgotten. Here’s some things you can include in your terms and conditions to ensure you get paid on time:
- Implement 14-day payment terms
- Include indemnity costs for debt collection fees
- A clause stating that the debtor consents to being reported to a debt collection agency (if they fail to pay)
- A clause stating that the debtor consents to sharing their personal information for the purposes of debt recovery
- Default interest payment which is 8 – 12% per annum
- Notice clauses regarding defaults should specify your email address. Otherwise, notices will generally be sent to your registered office
Revisit hiring over Christmas
Find out if a Modern Award applies
Christmas is a time when casual workers are often hired in the retail and hospitality industries. Although you may only be hiring employees temporarily, these employees are still entitled to minimum wage and employment rights.
If you’re unsure which Award applies, you can also see a list of modern awards on the Fair Work Australia website. If you choose to hire casual employees, it is best to have a casual employer agreement in place.
Dismissing Christmas Hires
If you’re hiring employees on a temporary basis, it’s important to acknowledge this when you take on employees. You can do this by employing someone on a fixed-term, part-time or casual contract. When it comes to unfair dismissal, small businesses (less than 15 employees) are immune for the first 12 months of employment. Further, an employee needs to have been employed for at least 6 months at a larger business in order to lodge a claim for unfair dismissal.
Checking your business structure
The end of the year is a good time to think about your business structure, and if it’s still the best fit going into the new year. If your business has taken off over the past year, it may be time to consider changing to a company structure. Some of the benefits of having a company are:
- Minimised risk, as liabilities and debts will attach to the company (not you)
- Lower tax rates
- More clout when entering into contracts
- More appealing to investors
- You can distribute equity
Lawpath has a business structure quiz which may assist you with determining is a business structure may be required.
Companies and trusts
Many companies are structured under a trust arrangement. This can be beneficial, especially when it comes to tax. Some ways you can restructure your company are:
- Create a holding company, which will hold shares in the company
- Create a company to hold the IP assets
- Establish a family trust
Staying compliant
Registered offices and notices
Your registered office is where your company receives all its important mail. One risk is if your business is issued a statutory declaration and you’re not notified (or given the chance to pay or dispute the debt) within 21 days. If this happens, your business will be presumed to be insolvent and further, it can be wound up by the Court.
It’s important to ensure that this office is attended to over the holiday period in case anything gets missed. You can also register for a virtual office to be notified when mail arrives.
Bring your business into the future by registering a virtual office
Having a virtual office means you can securely store your documents and protect your privacy.
Company Compliance
In making sure your company remains legally compliant over the holiday period, you should consider:
- Whether your Business Activity Statements (BAS) are up to date
- Whether you need to register for GST
- Creating an annual business plan
- Reviewing your terms and conditions, employment contracts, supplier agreements, and workplace policies such as your grievance policy and social media policy. You can also take this time to review your commission structures.
Audit your contracts
End of Year Shutdown Period
As the end of the year approaches, pay careful attention to the deadlines stipulated in any contracts you enter into. You can account for this by inserting a special condition in your contract. This can state that the deadline is extended over the shutdown period, such as from 21 December to 12 January.
Conclusion
The end of the year is a natural checkpoint for reviewing what’s working and fixing what isn’t in your business. Taking care of these fundamentals now prevents headaches later and sets you up for a strong start to the new year.
For personalised advice on your specific situation, particularly around contracts, employee agreements, or business structure changes, reach out to a business lawyer with Lawpath—a quick consultation now could save you significant time and money down the track!
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