Five ways the business Grinch could strike this year
Depending on your business, Christmas is a time of peak sales or it’s a quieter period, allowing you time to reflect on how 2012 has treated you.
For most businesses, however, there are common Christmas traps. Whether they are caused by your own poor planning or external forces beyond your control, your festive period can turn Grinch-like rather quickly.
With this in mind, we’ve outlined five of the most common disasters you need to watch out for over the next few weeks.
1. The fiscal cliff
No, not the US fiscal cliff – we’re talking about the monetary crunch that bedevils many small businesses every year as soon as the tinsel comes out.
As Greg Hayes, director of business consultancy Hayes Knight, explains: “Costs tend to go up over this time of the year: more staff, leave costs, downtime from non-trading days, as well as increased promotion costs, all mean that costs will push upwards.”
“Keep an eye on them. It’s great to get into the Christmas spirit as long as you don’t end up with a New Year hangover.”
“The new year will lead you into a quieter trading period and a tighter cashflow period. The March quarter tends to be the toughest cashflow quarter of the year.”
“You will need a cash buffer going into the new year. Don’t overcommit yourself in the run up to year end and end up in trouble.”
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2. Partying out
With economic conditions patchy, at best, and consumers still reluctant to part with their cash, even during Christmas, it’s perhaps not surprising that the annual company party is moving towards the endangered list this year.
Often the first casualty in any kind of downturn, Christmas parties will be thrown by just 63% of employers this year, down from 84% last year, according to recent research from employment law consultancy Employsure.
Failing to throw a party for your team is likely to cause an issue with morale, although there are dangers if you do decide to go ahead with a festive knees-up.
It’s worth remembering that anything that happens at your Christmas party is treated the same as if it happens in the workplace. Therefore, you need to ensure that OH&S and anti-discrimination compliance is paramount in order to avoid a potential lawsuit.
Lawyer James Omond says: “It’s up to employers to take ‘reasonably practicable’ measures to avoid risks to health and safety.”
“If you do have a problem it’s important to treat it as if it happened at work.”
Here are Omond’s top tips on how to avoid a Christmas party hangover of the legal kind.
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3. Tax trouble
Not only does Christmas usually involve plenty of parties, it also includes a flurry of gift giving, as clients, suppliers and other business partners acknowledge what a wonderful businessperson you are via a bottle of plonk.
Likewise, you may want to thank staff for their year of hard work by handing out various rewards.
However, you need to be aware of your fringe benefits tax obligations, to dodge a very unpleasant – and unexpected – bill from Christmas parties, gifts or client lunches.
“For employers hoping to avoid FBT this festive season, it is a good idea to have the work Christmas party on business premises, during work hours, with only current staff members or keep the total cost to less than $300 per person,” explains Sean Urquhart, tax partner at Nexia Australia.
“Most company Christmas parties are traditionally held at night time, off the premises, and with partners invited. All of these factors could lead to fringe benefits tax if the costs exceed $300 per person.”
Urquhart adds that gift giving adds further complexity to FBT, with some offerings, such as sporting or theatre tickets, considered ‘entertainment’ and eligible for the tax.
He says: “Instead of hosting a Christmas party, it would be more tax effective to provide non-entertainment gifts to staff (e.g. bottle of wine or a hamper) costing less than $300, as the entire cost is tax deductible to the business with no FBT payable, although probably not as much fun as the end of year party.”
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4. Going too casual
Casual staff can be a great flexible resource to deploy if your business is set to experience a sharp, temporary spike in activity over Christmas.
However, you are on trickier ground if you start to rely upon casual staff into the new year as a substitute for taking on full-time workers.
Recent research shows that just 11% of employers who use casual staff consider them to be a temporary cost-saving measure.
This suggests there are plenty of bosses out there who see casuals as long-term fixes for their businesses.
If you’re one of them, beware. Not only do you need to ensure casual staff have the right skills, experience and attitude to fit into your business, you also need to treat them properly under employment law.
“Don’t just try and solve the [problem] by using casuals only… They’ve got to be careful about the fact that they pay the right amount, pay the right loadings, etc,” says HR expert Martin Nally.
“They can’t avoid their national employment standard obligations just by calling someone a casual.”
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5. Failing to switch off
A Regus survey unveiled last week shows that 46% of Australian professionals plan to power through the Christmas break by working at least three hours a day.
Unsurprisingly, those working in small businesses are more likely to worth through the holiday than those in larger firms, with technology such as smartphones enabling people to work remotely as they are surrounded by the trimmings of Christmas Day.
If you are to bring fresh thinking and innovation to your business in 2013, you will require time off to recharge. So, even if you run a solo operation, make sure you carve out some time to switch off and unwind.