December … Christmas parties, carols, presents, holidays, the silly season … plus Christmas penalty rates, staff gifts, fringe benefits tax, peak trade times, cash flow, shutdown period, planning for January trade and the new year … phew, there’s a lot to think about, no wonder they call it the silly season.
Before you get overwhelmed with everything that needs to be done, we’ve been hard at work like Santa’s little elves putting together this end-of-year survival guide for you for a smooth Christmas shutdown period.
It’s everything you need to know to survive the upcoming Christmas and holiday season.
Christmas shutdown period: Everything you need to know to survive the silly season!
CASH FLOW
While oftentimes retail businesses will have their best months of the year at Christmas, at Accounts All Sorted we see other businesses (usually service-based) struggle to keep the sales coming in.
Cash flow is the lifeblood of any business, and you can increase sales and cash at this time of year with some strategy and planning. Two things you can do easily right now include:
- Invoice in advance: For example, invoice in December for January and even February. This means you can keep going with your client work so it doesn’t stop, while they take their holidays, and your cashflow gets a boost too. If you have a retail business, consider a Christmas promotion.
- Follow up: If you have leads in the pipeline, follow up to get them locked in for the new year. Be sure to follow up and collect payments from outstanding invoices before Christmas too. You can also email current and past clients and customers with a new-year offer that you can lock in before your Christmas shutdown period.
EXPENSES
If your cash flow has decreased, money and extra spending can be tight. Now is the best time to look at your expenses and plan ahead.
First of all, consider the extra expenses you will have this month with Christmas and plan ahead for it at the start of the month. Now is also the ideal time to look at your overall expenses and reduce them to account for a possible lighter cash flow month in January.
Bigger expenses can be put off until the new year to help you save your cash.
CHRISTMAS PARTIES
It’s a wonderful gesture to throw an end-of-year celebration for your employees to show them how much you value them, however, it can incur a tax, known as fringe benefits tax (FBT) and may not be an automatic business expense.
While taxes may be the furthest thing from your mind as you prepare for the festivities, it’s important to understand the tax implications of “entertainment benefits” in the workplace. This is where your accountant will be invaluable to explain it in regards to your specific business.
Here are some other areas ask your accountant when it comes to fringe benefits tax:
Your Christmas party may be exempt if:
- The party is only for your employees (no other guests such as clients or employee spouses or children).
- It is held on a work day, during work hours on your work premises.
- No alcohol is served (only non-alcoholic drinks).
- Finger food, nibbles or a light meal is provided.
- The cost per employee is $300 or less (including GST).
Your Christmas party may not be exempt if:
- It is held at a venue such as a restaurant, club or other form of “entertainment” venue.
- You serve alcohol or it is included with the venue.
- Employees can bring their spouse or children.
- You invite your clients.
CHRISTMAS GIFTS
Giving a gift to an employee at Christmas shows you care for your employees, however, depending on the type of gift you give, it may incur FBT because it may be considered “entertainment”.
Generally speaking, types of gifts that may not attract FBT can include gift certificates, wine, hampers and flowers. Gifts that could attract FBT may include sporting, movie or theatre tickets.
There may be other conditions around giving gifts to employees, so be sure to talk with your accountant about gifts for your employees.
If you need a hand with understanding Christmas parties and gifts for employees, please contact us and we will put you in touch with our trusted accounting partners so you can learn more.
PEAK TRADE PERIOD & CHRISTMAS PENALTIES
Many businesses get busy in December when Christmas shopping steps up a notch and a business’s Christmas shutdown period looms. You may need to ask your employees to work extra hours or on public holidays to cover those extra busy days, such as the Boxing Day sales. Fair Work states that an “employer can ask their employees to work overtime or work on public holidays if the request is reasonable”.
A reasonable request, according to Fair Work, depends on several things, including:
- The needs of the business.
- The role and responsibility of the employee.
- The employee’s personal commitments, like family or caring arrangements.
- How much notice the employee gets about the extra hours.
- What the employee’s contract says.
Depending on your employee’s agreement or award, you may provide entitlements for working public holidays, such as Christmas Day and Boxing Day. These can include penalty rates and extra pay, however, the Fair Work Ombudsman also states that entitlements can include:
- An extra day off or extra annual leave.
- Minimum shift lengths on public holidays.
- Agreeing to substitute a public holiday for another day.
There is more information regarding working on public holidays here.
CHRISTMAS SHUTDOWN PERIOD
Many businesses have a scheduled Christmas shutdown period where they close their doors during the Christmas and New Year period. During this time, an employer can direct their employees to take annual leave while the business has shut down if their award or agreement allows it, or if the request is considered reasonable.
Each award or agreement is different. But most have rules about how and when you can direct your employees to take leave, so please check your awards for more information.
You can find more information about preparing for the Christmas shutdown period here
PLANNING AHEAD
December is the best time to stop and think about the new year and what it looks like for you and your business. If bookkeeping is on your outsourcing list in 2023, Accounts All Sorted is ready to support you with any help you need!
How can Accounts All Sorted help you in 2023?
With a bit of planning, the holiday season and Christmas shutdown period can be enjoyable on all fronts, but now is the time to plan for it.
If a bookkeeper is on your Christmas wish list and you have decided to get a professional to do your books in 2023, we’d love to help. (Link to services page)
At Accounts All Sorted, we have more than 20 years of knowledge, experience and wisdom, and our team can not only help you improve your business with our bookkeeping skills and strategies, but also assist with business solutions that are tailored to you. To have a conversation about hiring a bookkeeper (link to hiring a bookkeeper blog) and your business’s bookkeeping needs, please Contact us today.
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