Are debts killing your business?

How do I know if my business is insolvent?

Ultimately, an insolvent business is one that cannot pay all of its debts when they are due.

How does the Small Business Restructuring process work?

If the proposal is accepted, then the company pays what is agreed in the Plan and is then free of the balance of the debt.

Do I need to qualify for Small Business Restructuring?

To be eligible for small business restructuring, you may need to meet specific criteria and TaxAssist Accountants can help you determine whether you meet the eligibility criteria. You will need to:

• Be a small business with limited assets and liabilities.
• Identify and complete all overdue tax lodgements: The first step in getting your tax lodgements up to date is to identify which returns are overdue. TaxAssist Accountants can review your tax history and determine which tax lodgements need to be filed.
• Ensure that you have all the necessary documentation to support your application.

TaxAssist can calculate the total amount of unpaid superannuation and super guarantee surcharge that you owe to your employees. 

To be eligible for Small Business Restructuring, a company must be able to declare that:

• The company’s total liabilities do not exceed $1 million on the day it enters the process (exclusive of employee entitlements) 
• Not have been the process of restructuring under the scheme in the last 7 years

Here are some ways that the Small Business Restructuring Plan (SBR) can potentially help to save your business and wipe a large portion of your debts: 

• The SBR is designed to be a streamlined and cost-effective alternative to traditional insolvency processes. 
• The SBR allows a small business to develop a Plan to its creditors to restructure its debts with the assistance of a Small Business Restructuring Practitioner, while the directors remain in control of the business. 
• Avoid business bankruptcy: A well-executed restructuring plan can help you avoid bankruptcy and keep your business operational. This can save you time, money, and stress associated with bankruptcy proceedings. 
• Reduce debt burden: Through negotiations with creditors, you may be able to reduce the amount of debt you owe, or obtain more favorable payment terms. This can help reduce your overall debt burden and make it easier for you to manage your finances. 
• Improve cash flow: A restructuring plan can help you improve your cash flow by identifying areas where you can cut costs or improve revenue. This can help you meet your financial obligations and keep your business running smoothly. 
• Preserve jobs: By avoiding bankruptcy and improving your financial situation, you may be able to preserve jobs and keep your employees on staff. This can help maintain morale and avoid disruption to your operations. 
• Position your business for growth: By addressing your financial challenges and improving your operations, you can position your business for long-term growth and success. This can help you attract new customers, expand your product offerings, and increase profitability. 

Overall, a small business restructuring plan can provide a clear path forward for your business, helping you address your debts and position your business for long-term success.  It is worth noting that a recent ASIC (Australian Securities and Investments Commission) report found that SBRPs had a 92% success rate with an average debt reduction of 85%.

How we can help

Call us on 0403 184 157 or make an enquiry here and we’ll put you in contact with your local TaxAssist Accountant.

Date published 3 Mar 2023 | Last updated 17 Mar 2023

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.