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Last week, the 2016 Federal Budget was released by the Treasury, and there were some very encouraging changes to note for small to medium-sized businesses around the country. Even startups are going to take a huge amount away from the announcement, and that's going to help dramatically with the state of the business landscape and the growth of our economy.
In terms of business funding, the Budget has laid down some positives for SMEs - including tax cuts and a boost to various finance avenues. Your business may well have been affected - but what does that mean for any future growth you may now be expecting?
How is the Budget going to help?
The 2016-17 Budget will boost SMEs in a big way with the Ten Year Enterprise Tax Plan - that's going to be fantastic news for those after a tax cut! The boost to funding will enable a growing of employment opportunities and an actual difference to the wages earned by those who really make your company go round. In the long term, there's also expected to be a fantastic growth in the overall national economy - being increased by 1 per cent over the life of the Ten Year Plan.
Business confidence will only increase after that sort of growth, but getting there also means having a sound foundation for SMEs on which to build. That's where your responsibility as a business owner comes in.
Having access to solid working capital is your best bet for ensuring the continued success of your business. If you're lacking in that somewhat, Earlypay is on hand to help with invoice finance - no more waiting for clients for weeks and weeks to pay you for work or products that you've already provided! That quick injection is also going to be welcome news for purchasing of assets just before the end of this financial year.
In previous Budget releases, the small business threshold for the lower tax rate was having an annual turnover of less than $2 million. That has now been changed to $10 million, which opens the door an incredible amount for a huge number of other companies around Australia. Have you been included in this new bracket? For any business that has been, the tax rate will be 27.5 per cent with the view of lowering it to 25 per cent by 2026-27. This will be in place from July 1.
What can businesses do with this new information?
If you have previously been on the brink of putting your business in a higher tax bracket because you were edging closer and closer to the $2 million turnover mark, then you no longer have to worry about any of that. You'll be in the exact same bracket right up to $10 million, so expand away! You might have some pretty serious dreams that haven't yet been implemented in your company, but this Budget is really encouraging you to push right ahead.
There's also a pretty hefty benefit for startups in the country. A $1.1 billion investment into the National Innovation and Science Agenda specifically aimed at supporting startups and new innovations is going to be extremely helpful for anyone who is wanting to progress with a new idea they've been cooking up.
Further, if you're a business that hires young people at various stages of the company ladder, the $840 million Youth Employment Package is set to help 120,000 vulnerable young people to get into the workforce, and your hiring prospects could be significantly boosted because of this.
Treasurer Scott Morrison has said this Budget can't be "just another budget, because these are extraordinary times". The Prime Minister mirrors those sentiments: "There has never been a more exciting time to be an Australian," as reported by PWC.
There is great investment being poured into the SME side of Australia's business landscape, and it's because that's the lifeblood of the economy at present. We're a country of innovators and people who want to get things done, so it's no surprise that there are so many examples of this in our economy.
The Australian Bureau of Statistics reported in June 2015 that there were in fact 2,121,235 small businesses in operation around Australia. These made up significant portions of some sectors, including 15.8 per cent of the total number of businesses in construction, 11.6 per cent in scientific and technical services and 10.6 per cent in real estate agencies, according to the Australian Treasury.
Take the next step
The 2016-17 Federal Budget is great news for business people all over the country. Innovation and funding is a real leap forward for Australia, and it's going to keep getting better as the Ten Year Enterprise Tax Plan continues to solidify the national economy.
Have you been inspired to push your business toward growth on the back of these latest Budget changes? Get in touch with Earlypay today to discuss its small-business finance solutions.