Being a business owner during the Christmas requires quite a bit more planning than having an employer worry about all of it for you. You not only have to set expectations with your customers and clients about how much (or how little) you can service them over the holiday season, but you also have to be extra conscious about your finances both in the lead up to and after the holiday season.

Communicate your shutdown period

It’s not just a matter of slapping a date period on your website or social media accounts with the dates that you’re shutting down for, there are some common questions your customers and clients that would like to know; and these could differ between product and service-based businesses.

For those selling products

When is the cut-off for the last orders prior to your shutdown period?
Will you still be taking orders over the break?
Will you be responding to customer queries?
When do the first orders ship after the shutdown period?

For service providErs

What services will you continue to provide over the break: are you completely out of office or can clients expect a delayed response via email?
Can bookings still be made during the holiday season, for dates after the break?
When are you back to business-as-usual (BAU)?

Expense season - bonuses, events, gifts, etc.

Do you understand what is actually tax deductible and what isn’t, as an employer/business owner? These can get complicated but below are some general guidelines to help you out - ALWAYS consult with your accountant for specific advice.

EOY parties and events

End-of-year (EOY) parties and events are generally tax deductible as long as there is Fringe Benefits Tax (FBT) on it, BUT if the cost per employee is <$300, then it is exempt and you can claim them without any FBT implications.

Gifts for employees

Gifts under $300 are tax deductible, as long as they are classified as “non-entertainment”. Gifts that are deemed to be “entertainment” (e.g. concerts, movie tickets, etc.) cannot be claimed as tax deductions.

Gift vouchers are often a popular choice as these do not count as entertainment and can be claimed as tax deductions.

BONUSES

These are deemed to be ordinary times earnings (OTE) so they are subject to Super Guarantee as well as PAYGW. So these are treated basically the same way as salary. Make sure you prepare these appropriately when lodging payroll and STP for your staff!

Managing cash flow

If your business closes over the Christmas/holiday season, you still need to meet all your expenses and pay your staff during this period. Making sure that you have budgeted enough and have sufficient buffers in savings is paramount to getting through this period stress-free!

Budget for the break!

If you are not working for a few weeks (or more), set out all the expenses that will be due during and shortly after the break. This could be anything from rent, loans, wages, suppliers, insurance, etc. By knowing all your costs, you can overbudget for them to ensure your cash flow stays positive.

Proactive invoicing

Take a proactive approach to your invoice! Below are some strategies you can adopt, where appropriate:

Stay on top of your invoices - what’s pending payment, what’s overdue, and what are you yet to invoice?
Send debtor follow-ups for any overdue invoices prior to the break
Organise pre-payment for work in January
Send interim invoices for in-flight work

hold off on major purchases

Unless there’s a deal to be made (or a deal that’s too good to pass up), prioritise cash flow over the Christmas period, instead of buying new equipment. You’d rather have positive cash flow to tide you over until January than have to scramble for cash after making a major purchase.

Clear unsold stock

If there are slow-moving or obsolete stock, you can offer promotions to clear this out.

Examples include: bundle deals, Christmas clearance sales or targeted promotions!

Don’t want to worry about cash flow? Maybe our Virtual CFO Services can help you out!

Is your business ready for Christmas?