SME Confidence & Performance Improving

Sensis Data indicates SME Performance ImprovingThe latest Sensis Business Index Survey (December 2015) has shown a 10 point increase on a net basis in Queensland which is great for business.

The quarterly Sensis Business Index has been tracking small to medium enterprises (SME) confidence and behaviour since 1993. It surveys 1,000 metropolitan and regional SMEs from areas such as manufacturing, wholesale and retail trade, hospitality, construction, communication, property, business services, health, community services, cultural and recreational industries.

Antidotal evidence from our clients’ performance also supports this improvement. We are seeing some businesses who have really struggled over the last few years showing a real turnaround.

While we are still in uncertain times it is a great opportunity for small businesses to take advantage of the increased confidence and low interest rates to update technology and invest in the future.

One way to do this successfully is for small business to invest in assets that are revenue generating and thereby not only providing revenue to pay off the loan but at the same time providing revenue to the business.

The Federal Government’s decision to allow an immediate write-off of assets under $20,000 until 30 June 1017 is a plus, however, the government could go one step further and make the write-off permanent rather than only to 30 June 2017. It should be noted that if investing in an asset that is not revenue generating then this can be a drain on cash-flow although the immediate write-off may apply. It is suggested that investment in assets that are not revenue generating should be on an absolute needs to basis.

The concern is that it may lead to some businesses buying simply to try and reduce their tax liability in the two year period that the write-off is available and that in itself is never a good reason to invest hard earnt money or borrowed money in assets that do not generate revenue for the business. If the Government were to extend the ending date indefinitely, it is believed that would encourage better decision making by business which in turn will lead to stronger business confidence and better cash-flow. For example, the purchase of a $19,000 piece of equipment rather than the purchase of a $25,000 piece of equipment which would give significantly greater return simply because of the $20,000 write-off provision.

In terms of employment, the biggest incentive that the state governments’ can give business is the elimination of the most anti-employment tax in Australia – PAYROLL TAX. Taxing business to employ staff will always be seen as a disincentive to employ and the State Governments are the only ones who can resolve this issue.

Balanix Solutions – Taxation | Accounting | Business Advise.

Situated in Strathpine on Brisbane North, we partner with our clients to assist them in their taxation, accounting, business management and bookkeeping needs. Our clients vary in industries from professional services (such as law, vet and dentist) to the trades (mechanic, bricklaying, plasterer etc), hospitality and retail. Are clients are located in the Pine Rivers area (including Brendale, Lawnton, Albany Creek and Eatons Hill) through to Kallangur, Petrie, North Lakes and Caboolture, as well as Brisbane South, the Gold Coast and various other parts of Queensland.

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