A checklist for flood-impacted businesses

With flooding insurance claims in Queensland and NSW estimated at $1.3 billion, Chartered Accountants Australia and New Zealand (CA ANZ) has released a checklist for small businesses hit by the weather.

According to tax leader Michael Croker, small businesses should keep ten things in mind as extreme rainfall ravages large parts of Queensland and NSW.

1. Look after yourself so you can look after others

“This is a stressful time and many business owners will feel the pressure of so many people who rely on them. It is vital to get enough sleep, eat well and take care of yourself during this period,” said Mr Croker.

“And if there is still heavy rain and flood water about, stay put until it’s safe. It’s just not worth the risk.”

2. Not a digital business yet?

One of the losses that a business can experience after a natural disaster is damage to its physical or electronic documents.

As such, Mr Croker has advised making digital copies, backed up in the cloud.

“There’s a lot of user-friendly ways to do this now – including software-as-a-service bookkeeping, the ability to scan from your phone and many online secure cloud storage solutions.”

3. Records and repairs

Mr Crocker advised small businesses to document everything they can when it is safe to do so.

“Take photos of damage and lost assets, write down key observations and even note down a timeline of events as you remember it and all of your losses.

“This will be essential for conversations with insurers, customers, staff and suppliers, and to help you better plan and prepare for the future. 

“And, remember, tax deductions apply to repairs, not improvements.”

4. Check your insurance

“Natural disasters often prompt a review of future insurance needs. Before entering into a new insurance policy, get advice on the costs and benefits,” Mr Croker said.

Business owners are advised to also review their existing insurance policies to check coverage and entitlements and work collaboratively with insurance companies.

5. Beware of scams

Each new natural disaster brings out scammers posing as charitable fundraisers or offering clean-up services.

“Many people also want to donate quickly to help out, so be careful of scammers impersonating reputable organisations seeking donations. Only donate to registered charities and if you’re in doubt, err on the side of caution and visit the scamwatch website – where you can also report a scam.”

Most types of ATO debt collection activity is put on hold for postcodes impacted by natural disasters, so Mr Croker suggests being wary of contact by those purporting to be ATO officials.

6. Access government emergency grants

Federal and state governments are collaborating to offer emergency disaster relief payments – and a range of charities and NGOs have stepped in to help.

“So make sure you check your NSW and Queensland entitlements and keep an eye out for targeted small business support – you may need a hand from your accountant for the eligibility criteria and application processes.”

7. Speak with suppliers and customers

Business owners are advised to keep up strong communication with their customers and suppliers during times of crisis, as well as to review any purchase and supply agreements to determine the rights and obligations of both parties.

“Find out if suppliers will accept delayed payment terms and how quickly they can resupply what's needed to restart business operations.”

8. Revise business cash flow

Business owners are also advised to discuss their financial forecasts with their accountant for the current financial year and subsequent years.

“Be realistic and conservative in your estimates. It might also be a good investment to seek specialist business recovery advice and lenders will be keen to know how the flood impacts their loans and repayments,” Mr Croker said.

10. Help with tax

“If there is cash available, a business could be eligible for a 100 per cent tax write-off for equipment to replace depreciating assets lost or damaged in the flood,” the tax expert said.

“Your accountant can also liaise with the ATO should extra time be needed for tax lodgments and payment of tax debts.”

Lastly, Mr Croker advised business owners to ask for help.

“Small business owners are incredibly self-sufficient, resourceful and resilient, but this can sometimes mean they can become disconnected,” he noted.

“Take advantage of opportunities to network with local business groups, chambers of commerce – and talk to fellow small business owners. Shared experience and a little bit of communication can go a long way.”