Reducing Risk in your business
By Gavin Hard and Frida Andersson
June 2024
What are you most afraid of? Things can go wrong and we are never guaranteed that everything will go as we planned, but we can soften the impact on ourselves, our family, and our business if any of our worst nightmares come true. Most risks have a financial consequence which, with the right strategy, can often be reduced.
What are the risks?
There are many types of risk, but a few of the main risk events that we discuss with our clients include:
Employee risk – injury and employee disputes
Customer and product risk
Illness or death
Pure financial risk (exposure to debt, theft, losing a job or downturn in business income)
Cyber Risk
Separation or Divorce
So how do you protect yourself from these risks? In this article we highlight a few of the strategies you could consider.
Do you have the right business structure?
The first and most cost-effective way to protect yourself against any of the risks mentioned above is to ensure you have the right business structure in place. Many different factors need to be considered when choosing the right business structure, from deciding which entity should be your trading entity to which entity should hold your major assets. If you operate a particularly risky business, you may decide to trade under a company or trust with a corporate trustee rather than a partnership to increase your personal asset protection.
Do you have the right type of Insurance(s), and are you covered to a sufficient level?
Insurance can be an effective tool to reduce many of these risk events. But it does come at a cost, so a good starting point is to ask yourself the following questions;
How likely will the unwanted event occur?
What would be the consequence if it did happen? Could I get my business and myself/family back up and running if I didn’t have the insurance cover?
What will it cost to protect myself, and at what point does the cost outweigh the benefit?
Your insurer is best placed to advise you on your insurance needs. Once you have considered these questions, your next step is to contact your insurer. They will be able to outline the insurance specifics so you can make an informed decision.
Do you have sufficient knowledge of your business?
If you are running your own business, you need to have complete knowledge and awareness of all the intricacies of how your business works. Having the right knowledge is perhaps the most important part when it comes to reducing risk. To name a few;
a) Continuously know how your business is performing, so you can adapt in a timely manner to unforeseen events.
b) Be on top of all relevant employee awards and HR safety laws to ensure your staff are being remunerated correctly and working in a safe environment.
c) Know your projected tax obligations, including when they are due, so that you can make sufficient provision for those obligations.
d) Have up to date security in place for your IT equipment.
e) Be completely across any legislation which relates specifically to your industry
f) Have policies and procedures in place which are regularly reviewed and updated when required.
If you need assistance with staying on top of it all, make sure you surround yourself with people who have this knowledge and can assist. Regular meetings with your accountant (and even employing a business manager who has the knowledge and experience) may not only enhance your business performance but also play a major role in reducing your risk.
But perhaps the greatest risk of all is not taking any risks at all
We may sound a bit doom and gloom with all this talk of risk and how to mitigate it – however as they say, ‘no risk, no reward’. Sometimes not taking any risks will results in missing out on opportunities. Perhaps you are avoiding necessary risk because you feel like you don’t have the confidence or the financial backing to pursue your dreams. If you are feeling this way the first step is to voice or write down the things you like to do and share it with someone. You can then weigh up the risks. As accountants, we are always happy to be a sounding board and work out the numbers which may give you the confidence to take the next step. In the end, what’s the risk?
Need assistance with evaluating your risks? Contact us on (08) 9841 1200.
Changes to Casual Employment in August 2024
Amendments to the Fair Work Act 2009 (Cth) are once again set alter the landscape for casual employment. The changes below will come into effect on 26 August 2024 and include:
A new definition of casual employment
The different pathway for casuals to move to permanent employment
New arrangements for issuing the casual employment information statement
This information is applicable to national employers only and does not apply to employers in the state system.
New definition of casual employment
A new definition of ‘casual employee’ will be introduced. Under this definition, an employee is only casual if:
There is no firm advance commitment to continuing and indefinite work; and
They are entitled to receive a casual loading or specific casual pay rate
It’s important to be aware that whether the employment relationship is characterised by an absence of a firm advance commitment to continuing and indefinite work will be assessed on the basis of the true nature of the employment relationship, not only the written terms of the employment contract.
New pathway for converting from casual to permanent
The current rules for casual conversion are being abolished. No longer will there be a requirement for employers to offer permanent employment to casual employees.
Instead it will be up to the employee to notify you of their intention to change to permanent employment if:
They’ve been employed for at least 6 months (for employers with 15 or more employees) or 12 months (for employers with less than 15 employees); and
They believe they no longer fit the definition of a casual employee.
Casual employment information statement
There will be a new obligation for providing the Casual Employment Information Statement (CEIS) to casual employees. In addition to providing the CEIS to casual employees on commencement, employers will now be required to provide the CEIS:
What you need to do?
Review your casual workforce and assess these employees against the new definition
Ensure you have a reminder mechanism in place to meet your obligation for issuing the Casual Employment Information Statement at the required timeframes.
Please reach out to us if you have any questions or require assistance with this process.
