Australia's business owners are reporting revenue losses, but have a positive attitude and expect the Australian economy to improve in the next 6 to 18 months, according to the enhanced MYOB Business Monitor.

"After 6 years of conducting the MYOB Small Business Survey we've redeveloped it to better reflect the profile of Australian businesses. We've now incorporated medium businesses along with the sole traders and small businesses that were already part of the survey," explains Tim Reed, CEO of MYOB.  "Following this, we're excited to present the new look MYOB Business Monitor, the voice of Australia's business owners."

"The latest MYOB Business Monitor indicates that the economic downturn is hitting Australian business owners' pockets, 39% of business owners surveyed report business revenue losses in the last 12 months, while only 19% report revenue gains," continues Mr Reed.

However, on a brighter note, while business owners are reporting losses now, they are optimistic for the future, with just over half (54%) of business owners surveyed expecting economic improvement in the next 6 to 18 months.  Further to this, 36% of business owners believe that their business revenue will increase over the next 12 months, with only 15% expecting a decline.

Business owners in Western Australia are the most optimistic about the economy, with 50% of business owners in WA believing that the Australian economy will improve within 12 months, whereas only 35% of business owners share this opinion in Victoria.

"While business owners may be under the pump now, it is heartening to see they do have a positive attitude for the next 12 to 18 months," explains Mr Reed. "Business owners are resilient, seeing the glass half full, and the level of optimism demonstrates their positive nature and desire to ‘get on with doing business'."
However the MYOB Business Monitor also reveals that many business owners are not tracking their cash flow effectively (48%), which impacts their capacity to make business decisions based upon a proper cash flow analysis. 

"A surprising number of business owners appear to have little focus on managing their cash flow.  The economy is not out of the woods just yet and we encourage business owners to really focus on cash flow, make it a priority and take full advantage of all opportunities to maintain, and possibly improve, their business health," says Mr Reed.
When asked to choose one of seven possible changes that would make the single biggest difference to their business success in the next 12 months, 27% of business owners indicated that they would prefer additional business tax deductions, ahead of personal tax reductions (21%).

While optimistic, business owners are still realistic about the pressures ahead.  They are still concerned about the impact of fuel prices on their business, with 30% of business owners (and 39% in Queensland) expecting fuel prices to put the most pressure on their business over the next 12 months.

Other pressures business owners are expecting on their businesses over the next 12 months include price margins and profitability, cash flow and competitive activity.

When looking to the future and seeking to improve their business performance, many business owners are unlikely to seek the help that they need.  Nearly half (45%) of the business owners surveyed have not sought advice on how to improve their business performance.

"The majority, 76%, of business owners surveyed source information or advice on important tax and compliance issues from their accountant, however this drops to 31% of business owners who ask their accountant for advice on improving their business' performance," explains Mr Reed.  "I encourage business owners not to hesitate to also seek specialist business advice from their accountant.  An accountant can not only help with tax and accounting issues, but can assist business owners with business planning, financial goal setting, cash flow management and possible business performance improvements."

More detailed analysis click the link below;

http://myob.com.au/pdf/BusinessMonitor_July09.pdf

Small Business and General Business Tax Break

The Government will provide an additional $2.7 billion temporary tax break to small and other businesses to boost business investment.

Small businesses will be able to access the tax break for assets costing $1,000 or more. For all other businesses, the asset threshold is $10,000.

The tax break provides an additional tax deduction for assets acquired from 13 December 2008 to 30 June 2009, where the asset is also installed before 30 June 2010. The deduction will be equal to 30 per cent of the asset's cost.

For assets acquired between 1 July 2009 and 31 December 2009 and where they are installed ready for use before 31 December 2010, the deduction is 10 per cent of the asset's cost.

Questions and Answers

Who will be assisted?

• Taxpayers that carry on a business will be able to claim the tax break in the form of a bonus tax deduction.

When and how can it be claimed?

• The core provisions of the uniform capital allowance in Subdivision 40-B of the Income Tax Assessment Act 1997 (ITAA97) will provide the framework for determining which assets are eligible and who is entitled to claim the bonus deduction. This approach will reduce complexity and compliance costs for businesses.
• The allowance will take the form of a tax deduction on top of the usual capital allowance deduction able to be claimed for the asset as part of the taxpayer's income tax return.

What kinds of assets will qualify?

• Assets that are eligible will be tangible depreciating assets used in carrying on a business, for which a deduction is available under Division 40 of the ITAA97.
• Further, the tax break will be available for new expenditure on existing assets as well as for new assets. The assets must be used in Australia.
• A minimum expenditure threshold of $10,000 will also apply, except for small business entities which only have to meet a minimum threshold of $1,000.
• Draft legislation to implement the investment allowance will be released for public consultation later this month.

Helping to fend off a recession could be one of the benefits of the Federal Government's

upfront tax changes for small business - a move welcomed by the National Institute of

Accountants.

NIA president Greg Dennis said that small businesses were always under cash flow pressure

and this was drawn into sharper focus in uncertain economic times.

"This change to the tax formula could have a ripple effect through the economy as it assists

small businesses to pay suppliers faster or even expand their businesses which we would

encourage to help fend off a recession.

"This change is important to small businesses with turnovers less than $2 million as it

effectively frees up their cash. This cash can be used to meet short term payment obligations

to help keep the business solvent," he said.

Prior to this change, small businesses were required to calculate their likely tax liability by

using the previous year's turnover plus 8%. The NIA strongly welcomes this change as it will

greatly assist the cash flow of small businesses making quarterly tax instalments.

Although this move will help small business free up cash in the short term the NIA is calling for

the Government to lower the ongoing rate of tax for small business.

"The NIA in its recent submission to the Henry Review asked the Government to consider a

lower tax rate of around 20 per cent for small business," Mr Dennis said. "We have noted that

the Chinese Government has recently introduced a lower tax rate of 20 per cent for small and

micro enterprises and 15 per cent for hi-tech enterprises."

An uncertain budget in uncertain times

In an unpredictable economic climate, this year's budget redirects government policy to invest in infrastructure for future generations. However, its full impact will be unclear for some years to come, with a major tax system overhaul promised and uncertainty around where and when spending will occur. For example, the $40b spend from three new infrastructure funds is yet to be allocated.

While we welcome the government's tax review, we strongly urge business to engage throughout the process to ensure the right outcome. Government needs to consult business on the staging of the review to enable business to prepare for involvement in this important reform.

Spending on skills is also welcome, but much more needs to be done to improve productivity and increase supply in the constrained labour market.

Employers and employees can breathe a sigh of relief that the government's stock option changes focus on preventing backdated documents and inappropriate behaviour, but do not change the core tax rules for governing stock option schemes. However, employers need to urgently review salary packaging policies in light of immediate budget changes to FBT.

Find out more as Ernst & Young's 2008 Federal Budget Brief (pdf, 472kb) analyses the key components of the 2008 Federal Budget and the impact of Budget measures for business.

For further information on the 2008 Federal Budget, visit:

The Commonwealth Government's Federal Budget website
http://www.budget.gov.au/

The Treasurer's website
http://www.treasurer.gov.au/

The Assistant Treasurer's website
assistant.treasurer.gov.au

The Finance Minister's website
http://www.financeminister.gov.au/

06 Dec 2007

A third of small business owners are working over 50 hours a week, according to the latest MYOB Australian Small Business Survey (special focus report), released today.

When examining the breakdown of working hours by gender, the MYOB survey reveals that 38% of male and 53% of female small business owners work up to 40 hours a week.  While 62% of male and 46% of female small business owners are working between 41 and 70 hours a week.

"This is the first time the MYOB Australian Small Business Survey has looked into the lifestyle of small business owners, and the results are interesting," says Tim Reed, Managing Director of MYOB Australia.

"We wanted to gain an insight into the lifestyle issues facing small businesses," said Mr. Reed.  "It is important to not only gain a business insight of small business owners, but understand how satisfied they are with their lifestyle, hours worked, work-life balance, goal achievements and stress levels."

The MYOB survey found that 88% of small business owners surveyed worked as a full time employee prior to starting/purchasing their own business.  Of this 88%, more than a third (37%) believe that there is more pressure/stress now in their work as a small business owner, when compared with their time as an employee.  However, on the other hand, around two-fifths (43%) of this 88% believe that the level of stress in their work has decreased since owning a business.

"This decrease in stress levels could relate to business owners being happier with the actual work they are doing. Forty eight percent of business owners started their own business with the goal ‘To do what I like doing/work in the area I am passionate about'," said Mr Reed.

A majority (70%) of small business owners surveyed are happy with their overall lifestyle.  And in general, running a business has more of a positive impact on the lifestyle of most small business owners, with around two-thirds (67%) of small business owners surveyed believing that running their own business has affected their overall lifestyle positively. Approximately a third (32%) of small business owners surveyed honestly feel that running their own business has had a negative impact on their stress levels.

When asked about illness, 15% of small business owners surveyed responded that they have experienced a serious illness in the last 12 months that has affected the operation of their business.  Of this 15%, just over two-thirds (64%) kept working through, while 20% temporarily shut down their business and 10% had their partner/spouse manage the business for them.

It is also interesting to note that:

• Around three quarters (72%) of small business owners surveyed are satisfied with their progress in achieving the goals that drove them to start/purchase their own business.
• A majority (70%) of small business owners surveyed are satisfied with their overall lifestyle.  However stress levels are an issue, with around a third (32%) of the small business owners surveyed indicting that they are dissatisfied with their stress levels.
• Two thirds (67%) of small business owners surveyed feel that running their own business has affected their overall lifestyle positively.

From the small business owners surveyed, it is interesting to note that...

• 30% are aged between 40 and 49 years of age
• 68% are married
• 41% are sole traders
• 25% have 2 to 4 full time employees
• 38% have been operating for 10 years or more

.

06 Dec 2007

More than half of Australia's small businesses think their State Government's performance on small business development is poor, according to the latest MYOB Australian Small Business Survey, released today.

"We are seeing a continual trend towards a lack of confidence in Sate Governments by small business owners.  However small business owners do have confidence in their own business outlook and are predicting a good year in 2008," said Tim Reed, Managing Director of MYOB Australia.

The MYOB survey found that small businesses in the Manufacturing sector are most critical of the State Government (66%), with an increase of 11% since the last quarter (55% in July 2007).

The MYOB survey also reveals that small business owners in Tasmania (66%) were most likely to perceive their State Government's performance negatively (ie: "very poor" and "somewhat poor").  Small business owners in Queensland have the most confidence in the performance of their State Government, but more than 40% rate their State Government poorly.

Among factors negatively affecting small business owners, State Government policies rank third after interest rates and general business costs.

In positive news, more than three quarters (77%) of small businesses surveyed rated their current business performance positively, which has increased slightly since last quarter (74% in July).

Despite negative feelings about the State Government, concerns about interest rates, petrol prices and competitive activity, small businesses are predicting a good year in 2008.  Around three quarters of small businesses surveyed (76%) are confident about their business prospects over the next 12 months, with around a quarter (24%) expressing that they were extremely confident.  This positive outlook reflects a constant trend from previous quarters (76% in April and 77% in July).  While two thirds (65%) of small businesses surveyed expect their business performance to be better in 12 months time than it is now.

However while they are confident about their business prospects over the next 12 months, overall around a quarter (24%) of small businesses expect the Australian economy to perform better over the next 12 months. This has decreased by 7% since July (31%).

The outlook is good for employment, with 27% of small businesses surveyed intending to employ staff within the next 12 months.  This is slightly higher than previous quarters (23% in July and 24% in April).